Hong Kong Employment Support Scheme (ESS) Explained

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Editor’s Note: Hong Kong Employment Support Scheme (ESS) Explained is a guest article written by FastLane.

Running a small and medium enterprise (“SME”) is never easy, especially right now as COVID-19 has made Hong Kong’s business environment even more challenging. Thankfully, the Hong Kong government has recently launched the Employment Support Scheme (“ESS”) to provide Hong Kong SMEs with much needed financial support.

Some of you may be scratching your head over this new scheme and are wondering where to start. So, we’ve decided to put together a quick guide on what you need to know about ESS to help you understand the scheme and to get you started with your application.

What is the ESS?

TheESS is a funding scheme, launched by the Hong Kong government in response to COVID-19. It will help provide eligible Hong Kong employers with wage subsidies to retain their employees.

The subsidy will last for a period of 6 months, from June to November 2020 with payments made in two tranches (the first pay-out is expected to be in June 2020). 

The eligibility requirements are simple. Private sector Hong Kong employers are eligible if they’ve made Mandatory Provident Fund (“MPF”) contributions or have set up an Occupational Retirement Scheme (“ORSO”), on or before 31 March 2020. Self-employed individuals who meet the above requirements are also eligible to apply.

Requirements

Under ESS, approved Hong Kong employers must commit to:

  • Not implementing any redundancies plans during the subsidy period
  • Spending the entirety of the ESS subsidy on paying wages to employees

Subsidy Calculations

Under the ESS, the Hong Kong government will cover 50% of an employee’s salaries for six months with the relevant subsidy calculations. This is based on whether the applicant has made contributions to MPF or ORSO schemes. 

Employers with MPF Schemes

  • Regular Employees” aged between 18 and 64
    • Based on 50% of actual wages paid to each “regular employee” in the “specified month”.
    • This is capped at HKD 18,000 per month (maximum subsidy per employee is capped at HKD 9,000 per month).
  • Employees aged 65 or above
    • If employers have provided basic salaries to their employees when making MPF voluntary contributions
      • Calculated based on 50% of the basic salaries actually paid in the “specified month”
      • Capped at HKD 18,000 per month (maximum subsidy per employee is capped at HKD 9,000 per month) 
    • If employers have not provided employees’ basic salaries when making MPF voluntary contributions
      • Calculated by multiplying the amount of employers’ voluntary contributions in the “specified month” by 10 times.
      • Maximum subsidy per employee is capped at HKD 9,000 per month

Employers with MPF-exempted ORSO Schemes

  • Wage subsidies will be calculated based on 50% of the actual wages paid in the “specified month”. This is capped at HKD 18,000 per month (maximum wage subsidy per employee is capped at HKD 9,000 per month).

Application Period


Application PeriodSubsidy Disbursement inCovering Wages For
First TrancheMay 25 – June 14, 2020Mid – Late June 2020June – August 2020
Second TrancheMid – late August 2020September 2020September – November 2020

Please note that at the time of writing, details on the arrangement of the second tranche has not yet been released.

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Application Workflow

  1. Hong Kong employer submits an online application via the ESS portal
  2. ESS processing agent will approach the applicants MPF / ORSO representative directly, to obtain contribution records for the applicants specified month
  3. The MPF / ORSO representative will provide record certificates to the processing agent within 3 business days upon receipt of the processing agent’s notification
  4. The processing agent will assess the ESS application, calculate the subsidy amount, and will arrange payment via the Hong Kong Treasury

Auditing and Monitoring

Approved applicants must adhere to auditing and monitoring requirements during the subsidy period to demonstrate that they have not abused, or violated the conditions of ESS.

During and after the vetting process, the ESS processing agent will:

  • Verify information submitted by the applicant
  • Conduct on-site inspection of the applicant’s offices
  • Disclose publicly the list of applicants who have received subsidies, the total number of employees that have benefited, and the number of subsidies each applicant has received 

Clawback and Penalties

If an approved applicant fails to utilise all the ESS wage subsidies received to pay their employee wages, the Hong Kong government will claw back the unspent amount.

Penalties can be imposed if an applicant makes redundancies to their staff. Penalties may also apply if the number of employees on the applicant’s payroll in any one month of the subsidy period is less than the number of staff in March 2020. 

The FastLane Group is dedicated to helping SMEs in all aspects. Not only do we regularly provide updates/insights on the developments that affect the SME community; we can also provide assistance on applying to the ESS and other government support schemes such as the Distance Business Programme.

Please contact the FastLane Group for assistance in your accounting, auditing, HR and company secretarial matters!


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