The Employment Ordinance, Cap. 57
Mandatory Provident Fund Schemes and Employees' Benefits
| Q1. | Can an employer deduct the wages of his employee for
the purpose of making employer's contribution to the Mandatory Provident
Fund Schemes? 
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| Q2. | Can an employer reduce his employee's benefits or change
the terms of his employment contract to evade liabilities under the
Mandatory Provident Fund Schemes?
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| Q3. | Can an employer re-engage his employees under a new
contract as self-employed persons in face of the implementation of
the Mandatory Provident Fund Schemes to reduce the employees' benefits
under the Employment Ordinance and other labour legislation ?
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Content |
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| Q1. | Can an employer deduct the wages of his employee for the purpose of making employer's contribution to the Mandatory Provident Fund Schemes? |
| A1. |
No. An employer is prohibited from deducting wages from his employee except under the circumstances as stipulated in the Employment Ordinance. It is an offence in law if an employer deducts his employee's wages for making his own contribution to the Mandatory Provident Fund Schemes. An offender is liable to prosecution and, upon conviction, to a fine of $100,000 and to imprisonment of one year.
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| Q2. | Can an employer reduce his employee's benefits or change the terms of his employment contract to evade liabilities under the Mandatory Provident Fund Schemes? |
| A2. |
Under the Employment Ordinance, an employee who has been employed under a continuous contract may claim for remedies against his employer for unreasonable variation of the terms of the employment contract if his employer, without the prior consent of the employee and in the absence of an express term in the contract which allows for such variation, varies the terms of employment contract (including reduction of employee's wages or benefits) other than for a valid reason as specified in the Ordinance.
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| Q3. | Can an employer re-engage his employees under a new contract as self-employed persons in face of the implementation of the Mandatory Provident Fund Schemes to reduce the employees' benefits under the Employment Ordinance and other labour legislation ? |
| A3. |
An employer should not unilaterally change the status of his employee
to a self-employed person in face of the implementation of the Mandatory
Provident Fund Schemes. Under common law, if substantial and fundamental
changes to the detriment of the employee have been made to the contract
of employment arising from the employer's conduct without the employee's
consent, an employee can claim for termination compensation from
his employer on the ground of constructive dismissal. An aggrieved
employee with two years' service under a
continuous contract may also claim remedies
for unreasonable dismissal against his employer under the Employment
Ordinance. For the employee, it is important for him to note
that the Employment Ordinance only applies to employees engaged
under a contract of employment and their employers. He should
therefore carefully assess the risks involved if he is requested
to be re-engaged under a
contract for service, since his rights as an employee
under the Employment Ordinance (and other labour legislation such
as the Employees' Compensation Ordinance) may then be extinguished.
However, if there remains in essence an employer-employee relationship,
then subject to the court's ruling on the actual circumstances of
the case, he may still be considered to be an employee and still
be entitled to the benefits under the Employment Ordinance (and
other labour legislation), though he has been labelled as a self-employed
person.
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