Case 4 : Do employers need to make MPF contributions for short-term contract staff?
|Parties Involved :||Mr Ng (a security guard)|
|Mr Lee (officer-in-charge of a security company)|
Mr Ng used to be employed by a security company. He left the job after about four months. He later found that the security company had not enrolled him in an MPF scheme, and therefore, no MPF contributions had been made for him. He immediately made a complaint to MPFA.
Investigation and Enforcement Action by MPFA
The MPFA started an investigation immediately upon receipt of Mr Ng’s complaint. In addition to collecting evidence from Mr Ng, MPFA staff met with Mr Lee, the officer-in-charge at the security company, and requested relevant information from him.
The investigation revealed that Mr Ng had signed two employment contracts with the security company during the employment period. The employment period of each contract was 59 days, and the two contracts were separated by seven days. On the surface, it appeared that Mr Ng had only been temporarily employed and therefore, in accordance with MPFSO, the security company was not required to enrol him in an MPF scheme and make contributions for him.
However, after further investigation and analysis, it was found that the second employment contract of 59 days was signed even before the first employment contract was completed. The “cooling period” between the two contracts was only seven days.
Mr Ng confirmed that he had continued to work during this cooling period. The MPFA subsequently met with Mr Lee, who initially denied the allegations of non-enrolment and default contribution, claiming that Mr Ng was a temporary employee and would report for duty whenever it was necessary. Not until the second "pre-signed" employment contract was shown did Mr Lee admit that there was a problem, but he insisted that it was just a mistake and that it was an isolated incident.
The MPFA, after seeking legal advice, decided to prosecute the security company. In the end, the security company pleaded guilty in court. It was convicted and fined $18,500.
The 60-day employment rule (#Not applicable to casual workers under the Industry Schemes)
According to MPFSO, the employer should enrol both full-time and part-time employees who are at least 18 and under 65 years of age in an MPF scheme within the first 60 days of employment. The 60-day rule:
- is counted by calendar days (including holidays);
- is determined by the employment relationship between the employee and employer (the number of the employee’s actual work days or hours is irrelevant); and
- covers both full-time and part-time employment.
An employer cannot evade its MPF obligations by intentionally breaking up an employee’s employment into periods of less than 60 days. If there is evidence that the employment relationship lasts for 60 days or more, the employer must enrol the employee in an MPF scheme and make the necessary contributions.
# Employers who have enrolled in the Industry Schemes are required to make contributions for their casual employees even if the employment period is only one day.
Legal Consequences & Penalties
Employers who fail to enrol their employees in an MPF scheme within the first 60 days of employment commit an offence and are liable to a maximum fine of $350,000 and three years’ imprisonment.
Last Revision Date: 20/12/2012