Money Matter

MPF coverage for employees working in mainland China

Article exclusively contributed by the Mandatory Provident Fund Schemes Authority

Marcel is a young marketing professional working for a medium-sized agency in Hong Kong. Like many other companies, the firm is planning to expand its business and take advantage of the huge potential for growth in the mainland market. As part of these plans, a new office has been set up in Shanghai and Marcel has been asked by his employer to work there for one year.

He was initially uncertain about whether to accept the offer. Therefore, he consulted his friend Kevin and the two met for dinner to discuss the various pros and cons. Kevin, who had worked for a mainland company in Shanghai for three years before returning to join a local enterprise in Hong Kong, thought it was an invaluable opportunity to get broader exposure and learn about the business environment in China. He pointed out that the job was only for a year and had the guarantee of being able to return to Hong Kong afterwards.

Nevertheless, he advised Marcel to pay special attention to arrangements for his MPF contributions. In particular, he explained that as a Hong Kong resident and the employee of a company operating in Hong Kong, Marcel's MPF contributions should continue as before. Even though his actual place of work would be in Shanghai for twelve months, his contract of employment with the Hong Kong employer would still be in effect and the basic MPF arrangements should not be changed.

Kevin emphasised that under MPF legislation if the employee is a Hong Kong resident and his employer operates in Hong Kong, the employer is required to enroll the employee in an MPF scheme regardless of the location where work is carried out. Both employer and employee then have to make MPF contributions.

Kevin's own case had been different. He had been directly recruited by a mainland-based company and signed his three-year contract to work in Shanghai with them. He had not been appointed by a Hong Kong employer and, at the time, had no contractual tie-up with any other company.

"To my surprise, my mainland employer was not obliged to enroll me in an MPF scheme," he explained to Marcel. "I called the Mandatory Provident Fund Schemes Authority (MPFA) hotline to clarify the issue. They told me this was correct because my employer's company did not operate in Hong Kong and I was not engaged in an employment contract under the jurisdiction of the Hong Kong Employment Ordinance."

Kevin suggested that Marcel call the MPFA hotline at 2918 0102 or ask his company's human resources department for clarification so that he was 100 percent sure about the relevant MPF arrangements before going to Shanghai. To avoid any uncertainties, he also suggested that an addendum could be attached to the formal employment contract making everything clear.

Q&A on MPF contributions when working overseas
Q1 If I am hired by a Hong Kong company to work on the mainland, how can I be enrolled in an MPF scheme?
A1 The application process is the same as for an employee who works in Hong Kong. You will need to fill in an enrolment form and submit it to the relevant trustee directly or through your employer.

Q2 How can Marcel ensure that his employer is making MPF contributions for him while he is stationed in Shanghai?
A2 Scheme members should check their MPF accounts regularly to ensure that their employers have made contributions on time and that the amounts are correct. Marcel can check the relevant information from the pay records provided by his employer or through the trustee's service hotline. Some MPF trustees also provide an Internet enquiry service.

Q3 What should Marcel do if his employer does not make MPF contributions for him during his stay in Shanghai?
A3 Marcel should lodge a complaint with the Mandatory Provident Fund Schemes Authority (MPFA). Upon receipt of the complaint, the MPFA will investigate the case immediately. In dealing with employers who have defaulted on MPF contributions, the MPFA will serve warnings and issue surcharge notices. If employers still fail to make good the unpaid contributions, the Authority may institute criminal proceedings and/or take civil action on behalf of scheme members to recover the contributions in arrears and any applicable surcharges.

Q4 Marcel's company will also recruit a few local administrative staff to support the Shanghai office. Will his employer need to enroll these employees in MPF schemes?
A4 No. The Mandatory Provident Fund Schemes Ordinance aims to provide retirement benefits for the workforce in Hong Kong and the legislation does not have extraterritorial jurisdiction. Marcel's employer is not required to enroll the mainland employees recruited in Shanghai.

Taken from Career Times 31 December 2004

(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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