Money Matter

Increased penalties for employers providing false pay records

Article exclusively contributed by the Mandatory Provident Fund Schemes Authority

Ms Kaye has been working for a Hong Kong trading company for the past five years. During this time, her employer has regularly provided her with monthly pay records indicating her Mandatory Provident Fund (MPF) contribution details.

Things changed at the end of last month, when the company failed to issue her with a pay slip. Having waited for two weeks, Ms Kaye approached her employer, Mr Lee, who then gave her the pay record, reflecting both her own and the company's MPF contributions, as well as the date of contribution.

As Ms Kaye checked her MPF account regularly, she noticed that her employer had in fact not made an MPF contribution the previous month. This puzzled her and she confronted him about it.

Mr Lee conceded that he did not make MPF contributions in the previous month, as the company was experiencing financial difficulties. Admitting that he had provided his employees with false records, he promised Ms Kaye that he would make the outstanding contributions as soon as the company's finances improved.

New amendment

The Legislative Council passed the Mandatory Provident Fund Schemes (Amendment) (No 2) Bill 2007 on 18 June 2008. Under the bill, the Mandatory Provident Fund Schemes Authority (MPFA) may institute criminal proceedings against employers who provide false or misleading information in pay records given to employees.

Mr Lee had already breached the Mandatory Provident Fund Schemes' general regulations when he failed to provide his employees with pay records. After the new amendment becomes effective, Mr Lee will have committed an offence by providing false records to his employees, and the MPFA will be able to prosecute him.

Other amendments empower the MPFA to institute criminal prosecutions and civil actions against employers who fail to enrol their employees in MPF plans or fail to pay in their contributions. These also impose heavier penalties on non-compliant employers to achieve better deterrence and to improve the supervision of MPF schemes.

Current penalties

Mandatory Provident Fund Schemes regulations require employers to furnish their employees with monthly pay records no later than seven working days after payment date. Failing this, the MPFA can impose a financial penalty of HK$10,000.

The law requires pay records to state an employee's income, the amount of mandatory and voluntary contributions deducted, and the date on which these contributions are paid to the trustee.

Employees can use the contribution details in the pay record to verify that the employer has properly ascertained the amount of relevant income and correctly calculated the amount of employer and employee contributions.

There have been cases where employers have deliberately provided false or misleading information to deceive their employees. To protect the interests of scheme members, the new amendment makes it an offence for employers to knowingly or recklessly provide false or misleading information in pay records given to employees. Convicted offenders will be liable to a fine of HK$100,000 and one year's imprisonment on the first occasion, and to a fine of HK$200,000 and two years' imprisonment on each subsequent conviction.

The new bill also includes a number of amendments increasing the maximum penalties for offending employers, including:

  • Raising the maximum penalty for non-enrolment or non-payment of MPF contributions to a fine of HK$350,000 and three years' imprisonment to align with the penalty for wage defaults under the Employment Ordinance.
  • Raising the maximum penalty for non-payment of employees' MPF contributions that have been deducted from employees' salaries to a fine of HK$450,000 and four years' imprisonment. (Currently the maximum penalty for this offence is the same as for non-enrolment and non-payment.)

Q & A on employers providing false pay records
Q1 What should employees do to verify that their employers had made the required MPF contributions and that contribution amounts are correct?
A1 Employees should ensure that their employers have made the correct contributions by checking their accounts through their MPF trustees' hotline, website or customer service centre. The MPFA has also set up an MPF contribution enquiry hotline to enable scheme members to obtain contribution information for the previous three months. Regardless of which fund members belong to, they can check whether their employers have made their contributions. Should employees find that their contributions have not been paid, or that the amounts of the contributions are incorrect, they should confront their employers or report it to the MPFA.

Q2 Once the MPFS (Amendment) (No 2) Bill becomes effective, what will the maximum penalty be for employers who fail to enrol an employee in an MPF scheme or neglect to pay contributions within the prescribed time?
A2 On conviction, employers who fail to enrol an employee in an MPF scheme, or fail to make mandatory contributions, will be subject to a maximum fine of HK$350,000 and three years' imprisonment. Employers who do not remit the mandatory contributions deducted from employees' wages to the relevant MPF scheme will face an even higher penalty on conviction, namely a fine of HK$450,000 and four years' imprisonment.

Taken from Career Times 29 August 2008, p. A19

(Last review date: 23 August 2013)

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Disclaimer: The opinions expressed in this article are those of the contributor

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