LegCo Paper No. CB(2) 2075/96-97
(These minutes have been seen
by the Administration)
Ref: CB2/BC/12/96

Bills Committee on Employment (Amendment) (No.4) Bill 1996

Meeting on Monday, 10 March 1997 at 2:30 pm in Conference Room B of the Legislative Council Building

Members Present :

    Hon LEE Cheuk-yan (Chairman)
    Hon Michael HO Mun-ka
    Hon CHAN Wing-chan
    Hon LEUNG Yiu-chung
    Hon TSANG Kin-shing

Members Absent :

    Hon James TIEN Pei-chun, OBE, JP
    Hon MOK Ying-fan

Public Officers Attending :

Ms Esther LEUNG
Principal Assistant Secretary (Education and Manpower)
Mr TSANG Kin-woo
Assistant Commissioner for Labour

Clerk in Attendance :

Mrs Mary TANG
Chief Assistant Secretary (2)4

Staff in Attendance :

Miss Anita HO
Assistant Legal Adviser 5
Miss Joanne MAK
Senior Assistant Secretary 2(4)

I. Election of Chairman

Mr LEE Cheuk-yan was elected Chairman of the Bills Committee.

II. Discussion with the Administration

(LegCo Paper No.CB(2)1445/96-97)

Presentation by Mr LEUNG Yiu-chung

2. At the invitation of the Chairman, Mr LEUNG Yiu-chung briefed members on his Member’s Bill which sought to revise the qualifying period for the definition of lay-off in the Employment Ordinance (EO), Cap 57. The Bill proposed to reduce the qualifying period in which work was not provided for an employee by the employer from one half to one third of the total number of normal working days in any four consecutive weeks; or from one-third to one-fourth of the total number of normal working days in any period of 26 consecutive weeks. Hence if work was not provided within the qualifying period, an employee would be taken to have been laid off and would be entitled to a severance payment.

3. According to Mr LEUNG, piece-rated workers had long been affected by under-provision of work. Under existing legislation, they could only receive half the normal monthly wages equivalent to an average of 12 days’ pay. As such, they were unable to maintain the basic standard of living.

4. Mr LEUNG drew members’ attention to a separate amendment bill introduced by the Administration which proposed to address the problem of under-provision of work. However, he stressed that the Government bill would not have the desired effect and he therefore decided that a Member’s Bill should be introduced. The Bill introduced by him would provide better protection for workers and would ensure that a minimum of two-thirds of normal monthly wage would be earned.

Administration’s views

5. With reference to the Administration’s paper, the Principal Assistant Secretary (Education and Manpower) (PAS(E&M)) summarized the Administration’s opposing views on the proposed Bill. The Administration explained that the existing lay-off provisions under EO provided flexibility for employers not to provide work to employees temporarily in slack periods, while ensuring a reasonable income for employees without having to dismiss them. The Bill, however, would incur additional labour costs to employers which might force some of them to scale down or even close down their businesses at times of economic downturn. This would jeopardize the overall employment opportunities of workers.

6. PAS(E&M) pointed out that the underemployment situation had steadily improved with the rate of underemployment coming down from 2.5% in July - September 1995 to 1.4% in November 1996 - early 1997. Underemployment rate in manufacturing industries had also fallen from 2.4% to 1.9% during the same period. She pointed out that the number of complaints about prolonged lay-offs received by the Labour Department (LD) was relatively small, with 125 lay-off cases or 0.6% of the total complaint cases handled by LD during 1996. PAS(E&M) concluded that there was no indication of an increase in the number of prolonged lay-off cases or serious problems posed by them. The Administration thus did not see the need to revise the relevant provisions under EO which struck a reasonable balance between the interests of both employers and employees.

7. In addition, PAS(E&M) explained that it had been a well-established practice of the Government that any amendment to labour legislation should be first submitted to the Labour Advisory Board (LAB) for consultation. She pointed out that this Bill, without going through such a process, represented a unilateral attempt to amend labour legislation.

Impact on employer and employee groups

8. Members noted that the Bill under discussion aimed at addressing those employees who were provided with work for fewer than 32 hours in a week, or for fewer than 16 days in a month. However, the Assistant Commissioner for Labour (AC(LR) ) acknowledged that the 125 lay-off cases quoted above only referred to those handled by LD based on the existing lay-off provisions under EO. The Chairman stated that since the existing lay-off provisions only addressed employees who were provided with work for fewer than 24 hours a week, the quoted 125 lay-off cases did not take into account possible cases involving under-provision of work to employees for fewer than 32 hours a week. Mr LEUNG Yiu-chung supplemented that under existing legislation, employees who were provided with work for only 13 to 15 days a month could not seek any compensation.

9. The Chairman enquired about the estimated number of employees who were provided with work for 25 to 31 hours a week. Mr LEUNG Yiu-chung estimated that there would be some 20,000 employees who would directly benefit from the Bill. However, AC(LR) opined that it would be difficult to estimate the number because sometimes underemployment was only temporary which appeared when the company concerned suspended production due to seasonal fluctuations of business.

10. AC(LR) said that members should not look at the underemployment problem at a time span of four consecutive weeks; but at a wider time span of, say, 26 weeks during which the employee might be receiving normal monthly wages for most of the time. However, Mr LEUNG Yiu-chung responded that an employee simply could not put up with under-provision of work for even as short as two to three consecutive months because he could not maintain his living during this period. Some would prefer to resign of their own accord in the circumstances. The Chairman pointed out there was a loophole with the existing legislation. He referred to a period of 26 consecutive weeks and hypothesized that during the 26 weeks, if an employer subjected his employers to a prolonged period of under-provision of work until the last one and a half months in which the employees were given full provision of work, the employer would still have provided on average adequate work for the employees during the 26 weeks and he needed not pay any severance payments.

11. The Chairman also recalled that the Administration had once contemplated on amending the existing legislation to ten consecutive weeks, as against the current 26 consecutive weeks, in the context of Section 31E(1)(b) of EO. He wanted to know why the Administration had subsequently given up this option. AC(LR) indicated that he was not sure whether this option had been considered before.

(Post meeting note : When reviewing the definition of ‘lay-off’, the Administration had explored a number of options. The existing definition amended in 1990 was endorsed by LAB.)

12. Mr Tsang Kin-shing expressed support for the Bill which provided more protection for workers, especially those in the manufacturing sector who were the most vulnerable group during the economic transitions of Hong Kong. He also pointed out the malpractice of some textile and clothing manufacturers who employed Chinese workers for production but had all along been using Hong Kong’s textile quota. He believed that with the implementation of the Bill, employers would be obliged to provide more work to the local employees to ensure that the latter would earn at least a monthly wage equivalent to 16 days’ pay.

13. AC(LR) opined that the passage of the Bill would have an adverse effect on the financial viability of small manufacturing industries and would force them to relocate or close down their operations in Hong Kong. However, Mr TSANG Kin-shing pointed out that there was a practical need for the employers to maintain their Hong Kong manufacturing base to utilize the United States textile quota allocated to Hong Kong. The Hong Kong workers were often responsible for the final stage of adding labels to the products which were manufactured by the Chinese workers. He was of the view that since the Government had failed to stop this malpractice of the manufacturers, it was obliged to increase protection for the workers who had directly suffered from it.

14. Mr LEUNG Yiu-chung supplemented that, with passage of the Bill, the employee could still choose not to have his employment terminated even if the number of days on which work was provided for him was less than that prescribed in the legislation. Therefore, the Bill would allow employees to choose unemployment with severance pay, or to put up with the under-provision of work.

15. In response, AC(LR) pointed out that those employees who chose to ask for termination of their employment and claimed for severance pay might increase the financial burden of the employer who might be forced to close down the company. This would affect adversely other workers who preferred to stay and work for the employer. However, AC(LR) admitted that, at this preliminary stage of discussion on the Bill, there was no statistical figures to support his point made.

16. At the Chairman’ enquiry, AC(LR) replied that there had been no analysis made to the occupational distribution of the 125 lay-off cases handled by LD in 1996. The Administration would try to conduct the analysis and provide the required information to the Panel.

17. Members noted that only one written submission had been received from the Neighborhood and Workers Service Centre expressing support for the Bill. The Chairman proposed and members agreed that representatives from the employer and employee groups as well as the various trade unions should be consulted on the provisions of this Bill. On behalf of the Federation of Trade Unions, Mr CHAN Wing-chan stated that the Federation basically agreed with the spirit of the Bill but it required more time to consult its members.

Consultation with LAB

18. Mr LEUNG Yiu-chung pointed out that the Bill was actually introduced in July 1996, thus there should have been plenty of time for LD to conduct consultation with LAB regarding the Bill. In reply, AC(LR) said that no such consultation had been done because as proposer of the Bill, Mr LEUNG Yiu-chung did not indicate to the Commissioner for Labour (C for L) of his wish to forward the Bill to LAB for consultation. PAS(E&M) supplemented that with the consent of Mr LEUNG Yiu-chung, LD would make the necessary arrangements to conduct the consultation with LAB. Members queried why it required to seek Mr LEUNG’s consent for the consultation once the Bill was gazetted and C for L, being the Chairman of LAB, should have full authority to decide on his own whether consultation with LAB was necessary. Mr LEUNG Yiu-chung explained that what he understood was that Legislative Council (LegCo) Members could not directly ask LAB to discuss their proposed Bills. He was worried that it would now be too late to consult LAB on this Bill.

19. Mr Michael HO considered it necessary to clarify the procedures regarding the need for a LegCo Member’s approval for C for L to discuss a Member’s Bill at LAB. He stressed that C for L as the Chairman of LAB should have the full discretion to decide whether it was necessary to discuss this Bill which touched on labour legislation. He queried if C for L would refrain from conducting the consultation if Mr LEUNG Yiu-chung objected to it.

20. Mr TSANG Kin-shing queried the role of LAB and how the Government assessed its importance if C for L did not even consult LAB on this Bill which would have serious implications on the employer and employee groups.

21. AC(LR) reiterated that the consent of Mr LEUNG Yiu-chung was required and thus, without it, C for L could not bring this issue up for discussion at LAB.

22. Mr Michael HO was dissatisfied with the Administration’s reply and its way of handling the matter. He considered that Mr LEUNG Yiu-chung was not in the position nor obliged to give instructions to C for L on what he should do relating to labour matters. He pointed out that the Administration was self-contradicting in stressing the importance of LAB but at the same time neglected to consult it for such an important Bill.

23. Mr TSANG Kin-shing said that since C for L did not bring this Bill up for discussion at LAB, it could be interpreted that C for L considered it unnecessary to conduct the discussion over the past eight months. He opined that the Administration thus should not say that it objected to this Bill because it had not been discussed by LAB.

24. AC(LR) explained that the Administration could not presume that LegCo Members wanted to consult LAB about the Bills they introduced. Thus, it was necessary for the LegCo Member concerned to indicate his wish for C for L to take the necessary action.

25. Mr TSANG Kin-shing opined that C for L, with extensive experience in handling labour legislation matters, should be able to judge that consultation with LAB on this Bill was necessary.

26. AC(LR) repeated that it was all due to the lack of consent obtained from Mr LEUNG Yiu-chung to conduct the consultation with LAB. Mr Michael HO expressed dissatisfaction with the answer and asked if LegCo Members were required to give instructions to C for L on matters relating to his official duty.

27. Mr LEUNG Yiu-chung quoted from para. 15 of the minutes of the LegCo Panel meeting on Manpower held on 1 November 1996 which read, "Hon James TIEN expressed concern that the Bill might increase the financial burden of small employers and accelerate the closing down of their business during difficult periods. He urged that LAB should be consulted on the Bill so that employer and employee groups could have an opportunity to discuss the proposal." Mr TSANG Kin-shing queried the role of LAB and asked if the Bills Committee would consider requesting an explanation from C for L on why he did not respond to the request of Mr James TIEN as quoted above. The Administration was asked to provide an explanation at the next meeting.

28. The next meeting was scheduled to be held at 8:30 am on 18 March 1997 to proceed with consultation with employer groups as well as the five major trade unions in Hong Kong.

29. The meeting ended at 4 pm.

Legislative Council Secretariat
21 April 1997

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