on 10 January 1997 FCR(96-97)89
ITEM FOR FINANCE COMMITTEE
HEAD 112 - LEGISLATIVE COUNCIL COMMISSION
Subhead 872 Setting up and winding up allowances for Members of the
Members are invited to approve modifications to the current conditions governing the reimbursement of winding up allowance for Members of the Legislative Council as recommended by the Commission on Remuneration for Members of the Legislative Council with immediate effect.
The Commission on Remuneration for Members of the Legislative Council (the Commission) has recommended modifications to the current conditions governing the reimbursement of winding up allowance for Members of the Legislative Council (LegCo).
2. To implement the recommendations of the Commission, we propose that the winding up allowance should no longer be set at the limit of $180,000, but should consist of two elements -
- a fixed component equivalent to the allowance for office and staff costs and the district office allowance under the monthly operating expenses reimbursement, i.e. up to a
maximum of $92,780 at present rates, payable on a reimbursement basis, of which $10,000 may be claimed against certified claims of expenses incurred, to enable LegCo Members to cover all expenses incurred (including liabilities arising from premature termination of tenancy agreements in relation to district offices financed by the district office allowance) when they have to leave office for reasons beyond their control; and
- a separate component with no pre-set ceiling, payable on the basis of the actual severance payment paid in accordance with the provisions of the Employment Ordinance to staff employed using the operating expenses reimbursement. Where the staff have worked for the Member for less than two years, this component will cover the severance payment calculated on a pro-rata basis to the notional statutory compensation payable under the Employment Ordinance, as previously approved by Members (vide FCR(96-97)4).
3. The Commission has completed its consideration of the report of the LegCo Subcommittee on Review of Allowances for Members of the Legislative Council (the Subcommittee) on winding up allowance. It has recommended certain modifications to the conditions governing the reimbursement of winding up allowance for LegCo Members. We have decided to accept the Commissions recommendations.
4. As regards paragraph 2(a), the Commission recommends that Members may claim the fixed component of the winding up allowance to cover the payment of one months wages to staff in lieu of notice and to continue renting offices for up to a month after leaving office to enable Members to wind up all outstanding matters. However, LegCo Members may make a claim to cover payment of one months wages in lieu of notice only if they cannot give their staff one months notice of termination for reasons beyond their control. The Commission also recommends that Members may use the allowance to meet Members liabilities arising from premature termination of tenancy agreement with no break clause before the end of the agreement or the normal four-year term, whichever is earlier, provided that they should inform their landlords as early as possible of their intention to terminate their tenancy agreements prematurely so as to enable their landlords to identify new tenants and reduce Members contractual liabilities as far as possible. The Commission further recommends that in future Members should make every effort to negotiate with their landlords to insert a break clause in their tenancy agreements.
5. As regards paragraph 2(b), the Commission considers that since the granting of severance payment is a statutory requirement, it is reasonable to fully reimburse LegCo Members the actual amount of severance payment paid in accordance with the provisions in the Employment Ordinance to the staff whom they employ using their operating expenses reimbursement. Furthermore, if Members have to cease office for reasons beyond their control before the end of a LegCo term, they should be able to claim the winding up allowance to compensate staff who have worked for them for less than two years on a pro-rata basis, as previously approved by Members (vide FCR(96-97)4). The Commission emphasises that LegCo Members must settle such severance payments as soon as possible after stepping down from LegCo if they intend to claim the winding up allowance to cover their severance payment.
6. The Commission reiterates that the general conditions for the release of winding up allowance should remain unchanged, i.e. when Members cease to be Members of LegCo, either because they choose not to stand for re-election or for reasons over which they have no control such as death, serious injury, defeat in an election or the dissolution of LegCo. LegCo Members who are disqualified from continuing to hold office for reasons relating to criminal conviction or imprisonment under section 21 of the Legislative Council (Electoral Provisions) Ordinance should not be eligible for the winding up allowance.
7. On 14 July 1995, Finance Committee approved a commitment of $17.8 million for paying one-off allowance to LegCo Members for setting up and winding up their offices during the term commencing 1 October 1995. We estimate that the maximum financial implications of the proposed revised two-part winding up allowance should be within the limit of the approved commitment. There are no other staffing or financial implications.
8. The financial implications of the winding up allowance for LegCo Members in future LegCo terms will depend on the severance pay liabilities of Members in respect of staff employed by using their LegCo allowance. We will assess the financial requirement and seek the necessary funds in the normal way.
9. On 14 July 1995, Members approved that all LegCo Members should be eligible to claim a winding up allowance of up to $180,000 subject to certain conditions. In June 1996, the Subcommittee submitted its report on the review of winding up allowance for Members of LegCo to the Commission for consideration. The Commission has recently completed its consideration of the Subcommittees report. It has recommended certain modifications to its previous recommendations on conditions governing the reimbursement of LegCo Members winding up allowance. The Administration has advised LegCo of these recommended modifications on 11 December 1996.
Administration Wing, Chief Secretarys Office
Last Updated on 5 August 1999