Labour chief warns against employers' response to abolishment of offsetting scheme
Employers across Hong Kong have been advised against replacing their existing staff with new recruits following the abolishment of the offsetting mechanism under the Mandatory Provident Fund (MPF) savings, according to reports.
Secretary for Labour Chris Sun told RTHK that he doesn't think employers can save money by replacing an experienced employee with a new one.
"Think about this: the new worker needs training and takes time to understand the company's operations, so employers may stand to lose more than they gain," Sun said as quoted by RTHK.
"Also, the existing worker's length of service before today can be offset, but not for the new hires. Therefore, by doing so, it does no good to the employers."
He made the remarks following reports that some employers plan to replace their existing employees with new recruits who earn less in order to avoid spending much on future termination payments.
The plans come after the government this month abolished the offsetting scheme under the MPF savings.
The offsetting scheme allows employers to use their contributions to the MPF to offset the cost of severance or long-term service payments when an employee leaves the company.
But this scheme has been criticised for impacting employees' retirement savings.
Hong Kong Chief Executive John Lee said on Facebook that abolishing the offsetting scheme will benefit more than three million employees in Hong Kong.
In a bid to assist employers, the government launched a 25-year subsidy scheme to help businesses with their expenses on severance payment and long service payment.
