Enforcement

Employers

How to avoid non-compliance?


Employers may take note of the following common misconceptions to ensure compliance and avoid contravening the law. For details about the employers’ MPF obligations, please refer to the Employer’s Handbook on MPF Obligations.

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Enrolling employees into MPF schemes

Misconception: I don’t have to arrange MPF enrolment for employees who do not fulfil the “418” rule under the Employment Ordinance.

 

Part-time Employees

  • An employee who has been employed continuously by the same employer for four weeks or more, and worked for at least 18 hours each week, is regarded as being employed under a “continuous contract”. It is commonly known as the “418” rule.
  • MPF enrolment is not subject to the “418” rule.
  • The MPF System covers both full-time and part-time employees.
  • No matter how many hours of work they perform in a week, as long as they have been employed for 60 days or more, their employers are required to enrol them into an MPF scheme and make contributions.


Misconception: I can sign a series of short-term employment contracts of less than 60 days with my employees, so that no MPF enrolment is necessary.


Multiple employment contracts of less than 60 days

  • Even if the period of each employment contract is less than 60 days, if there is evidence that an employment relationship exists for 60 days or more, employers are still required to enrol the employees in an MPF scheme.


Misconception: If I change my employees into self-employed persons by signing a written contract for service with them, I am no longer required to arrange MPF enrolment for them.

 

Changing employees to self-employed persons

  • Self-employment is not simply based on an agreement or the signing of a “self-employed” contract between the employer and an employee.
  • It depends on whether an actual employment relationship exists between the two parties.
  • There are different factors to consider when determining this relationship, such as whether the company has considerable control over the employee’s work, whether the company provides work facilities to the employee, and whether the company bears the capital expenditure and financial risk, etc.


Misconception: If my employees do not want to join MPF, I do not have to enrol them into an MPF scheme.


Employees request employer not to enrol them into an MPF scheme

  • It is clearly written in the law that employers have the legal obligation to enrol their employees into an MPF scheme.
  • Even if there is a mutual agreement between the employer and an employee, or even if an employee requests not to join MPF schemes, it does not exempt the employer from the legal obligation to enrol that employee into an MPF scheme.

 

Handling MPF contributions

Employers should ensure prompt payment of MPF contributions for employees and submit duly completed remittance statements to MPF trustees on or before the contribution day (i.e. the 10th day of each month) on a monthly basis. For the contribution day of each month in the current year, please refer to the Contribution Days Calendar.

 

Using online systems or contribution software is the most effective way to avoid being imposed surcharges. At present, all MPF trustees are providing electronic services. To ensure accuracy and save time, employers should make use of the online systems or contribution software provided by MPF trustees to submit their remittance statements and make contributions. Please contact MPF trustees for more details.

Employers should be mindful of the “Common misconceptions in handling MPF contributions” to avoid making late payments or defaulting on payments.

TV programmes and short films
Through TV publicity programmes, MPFA strives to enhance the public’s understanding and requirements of the MPF System so as to help them avoid contravening the law. The relevant TV programmes and short films are as follows: 

Landmark cases


This section sets out some actual enforcement cases that MPFA has handled. The relevant legal requirements are illustrated by the offences committed by some employers. Employers are advised to take note of the lessons of these cases so as to ensure that they comply with the law.

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Case 1: Why do I have another employer?

Parties involved:

 

Ms A (a cosmetologist at Company 1)

Mr B (the sole-proprietor of Company 1)

Ms C (the sole-proprietor of Company 2)

 

Case details

 

Ms A lodged a complaint with MPFA, claiming that although Mr B had enrolled her in an MPF scheme, the MPF enrolment was done three months after the prescribed period (i.e. the first 60 days of Ms A's employment).

Ms A said that Mr B had deducted 5% from her wages every month as employee contributions, but had never paid them to the MPF trustee, nor had he ever paid the employer's contributions for her.

 

MPFA’s investigations and enforcement actions

 

Upon receiving Ms A's complaint, MPFA started an investigation. MPFA met with Mr B and requested him to provide the relevant documents. Mr B denied that he had employed Ms A and insisted that Ms A was employed by another company (Company 2), which was solely owned by Ms C. According to the information from the Business Registration Office, both Company 1 and Company 2 had the same registered business address. However, Company 2’s registration was completed only after the departure of Ms A from Company 1. Moreover, it was found that Mr B had amended Ms A’s date of employment in the enrolment form to tie in with Company 2's registration date to make it seem as though Ms A had been hired by Company 2.

 

It was obvious that Mr B had deliberately made the arrangement to shirk his legal responsibilities and deprive Ms A of her legitimate MPF benefits. After seeking legal advice, MPFA decided to prosecute Mr B for not enrolling Ms A in an MPF scheme within her first 60 days of employment and for not making the relevant contributions for her.

 

In the court hearing, Mr B was convicted and sentenced to 60 hours of community service. The magistrate's judgment pointed out that the court had the responsibility to send a clear message to the public that such offences were serious crimes. A sentence with a strong deterrent effect has to be imposed in order to combat such crimes.

 

Understanding the MPFSO

 

Enrolling employees in an MPF scheme and making contributions for them

 

An employer must enrol both full-time and part-time employees aged 18 to 64 in an MPF scheme within the first 60 days of employment (except for certain exempt persons ). Self-employed persons are also required to enrol themselves in an MPF scheme within the first 60 days of becoming self-employed.

 

Moreover, under the MPF System, Industry Schemes have been established for employers and employees in the catering and construction industries. Employers in the catering and construction industries are required to make contributions for their casual employees (any person employed by an employer on a day-to-day basis or for a fixed period of less than 60 days), even if the employment period is only one day.

 

Legal consequences and penalties

 

Employers who fail to enrol their employees in an MPF scheme or make MPF contributions for them commit an offence and are liable to a maximum fine of $350,000 and imprisonment for three years. Employers who deduct wages of employees as contributions but do not submit the contributions to their MPF trustees are liable to a maximum fine of $450,000 and imprisonment for four years.

 

Case 2: Who is the employer?

Parties involved:

Mr D (waiter)
Ms E (the officer-in-charge of Limited Company 1, Company 2 and Company 3)


Case details

Mr D made a complaint to MPFA about his former employer, Ms E. Every month, Ms E deducted 5% from his salary as MPF contributions, but she had never remitted the contributions to the MPF trustee for Mr D. Mr D said that during his employment, the company had changed its name several times, namely Limited Company 1, Company 2 and Company 3. But he forgot when the name-changing took place. He could only recall that no matter which company had employed him, all employment arrangements were made by Ms E.


MPFA’s investigations and enforcement actions

After receiving the complaint from Mr D, MPFA immediately started an investigation. It was confirmed that Ms E was the manager of Limited Company 1, and that she was also the sole proprietor of Company 2 and Company 3. According to the information provided by the respective MPF trustees and from MPFA’s own records, Limited Company 1 and Company 3 had enrolled Mr D in an MPF scheme but neither company had ever made any contributions for him, while Company 2 had never enrolled him in any MPF scheme.

 

Ms E said that she was merely the manager of Limited Company 1 but not the person-in-charge, and that Company 2 and Company 3 had no money to make contributions because they had been closed down.

 

Although Ms E was only the manager of Limited Company 1, that company had enrolled Mr D in an MPF scheme and, without any reasonable excuse, failed to make contributions for him with her consent or negligence. Therefore, she had breached the MPFSO. Similarly, as the sole proprietor of Company 3, Ms E had also breached the Ordinance by failing to make contributions for Mr D.

 

Moreover, as the sole proprietor of Company 2, Ms E failed to enrol Mr D in an MPF scheme within the first 60 days of his employment. Thus, she had again breached the Ordinance.

 

In view of the above offences, MPFA initiated a prosecution against Ms E. In the court hearing, Ms E was convicted of the above allegations and fined a total of $14,300.

Understanding the MPFSO

Enrolling employees in an MPF scheme and making contributions for them 

 

Employers must enrol both full-time and part-time employees aged 18 to 64 in an MPF scheme within the first 60 days of employment (except for certain exempt persons). Self-employed persons are also required to enrol themselves in an MPF scheme within the first 60 days of becoming self-employed.

 

Moreover, under the MPF System, Industry Schemes have been established for employers and employees in the catering and construction industries. Employers in the catering and construction industries are required to make contributions for their casual employees (any person employed by an employer on a day-to-day basis or for a fixed period of less than 60 days) even if the employment period is only one day.

 

Legal consequences and penalties

 

Employers who fail to enrol their employees in an MPF scheme or make MPF contributions for them commit an offence and are liable to a maximum fine of $350,000 and imprisonment for three years. Employers who deduct wages of employees as MPF contributions but do not submit the contributions to their MPF trustees are liable to a maximum fine of $450,000 and imprisonment for four years.

Case 3: What is genuine self-employment?

Parties involved:

Mr F (cross-border container truck driver)

Mr G (the officer-in-charge of a China-Hong Kong transportation company)

 

Case details

Mr F, a container truck driver who worked between the Mainland and Hong Kong, was employed by Mr G, the officer-in-charge of a China-Hong Kong transportation company. Mr G asked Mr F to set up his own company as a sole proprietor. The business registration fee was shared equally by the transportation company and Mr F. The company signed a truck leasing and rental agreement with Mr F, claiming that no employment relationship existed between them. Mr G said that Mr F was a self-employed person and therefore Mr G’s company did not need to make MPF contributions for him.

 

Mr F said that his duty was to deliver goods using the container truck of Mr G’s company and that all the work was arranged by the company. His pay was calculated in the form of profit sharing between them. The company paid him by depositing a cheque in his bank account every month. Mr F could not refuse the work arranged by Mr G’s company. Also, the container truck was owned by Mr G’s company, which never charged Mr F any rental fee.

 

All expenses relating to the container truck, such as maintenance fees, vehicle insurance and vehicle license fees, as well as all the daily expenses of Mr F in relation to his work, such as fuel charges, bridge tolls, tunnel tolls, customs fees and line-up fees, were paid by Mr G’s company. Mr F did not need to pay any capital expenditure or bear any other financial risks. He was never involved in determining the fees that Mr G’s company charged its customers, nor was he involved in the operation and management of the company.

 

Mr F thought that he was an employee of Mr G’s company and not a self-employed person, so he made a complaint to MPFA.

 

MPFA’s investigations and enforcement actions


MPFA contacted Mr G immediately and requested him to provide the related documents. The company provided a signed truck leasing and rental agreement with Mr F, and claimed that no employment relationship existed between the company and Mr F.

 

After meeting with Mr G, MPFA took a written statement from him, in which Mr G denied the charges and insisted that Mr F was not the company's employee.

 

Finally, as there was sufficient evidence, MPFA decided to prosecute Mr G’s company for not enrolling Mr F in an MPF scheme. The employer eventually pleaded guilty in court, and was convicted and fined $14,000.

 

Understanding the MPFSO

 

Definition of a self-employed person

Under the MPF System, a self-employed person is someone who receives income from the provision of services or goods in a capacity other than that of an employee. Self-employment is based not simply on an agreement between the employer and the employee, or the signing of a “self-employed contract”. It depends on whether an actual employment relationship exists between the two parties.

There are different factors to consider when determining the relationship between both parties, such as whether the company has considerable control over the employee’s work, whether the company provides work facilities to the employee, and whether the company bears the capital expenditure and financial risks, etc.


Legal consequences and penalties

 

Employers who require their employees to change their status to “self-employed persons” intentionally without enrolling them in an MPF scheme thereafter are regarded as evading their MPF responsibilities. Employers who fail to enrol their employees in an MPF scheme or default on MPF contributions commit an offence and are liable to a maximum fine of $350,000 and imprisonment for three years. Employers who deduct wages of employees as MPF contributions but do not submit the contributions to their MPF trustees are liable to a maximum fine of $450,000 and imprisonment for four years.

Case 4: Do employers need to make MPF contributions for short-term contract staff?

Parties involved:

 

Mr H (security guard)

Mr I (the officer-in-charge of a security company)

 

Case details

 

Mr H 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.

 

MPFA’s investigations and enforcement actions

 

MPFA started an investigation immediately upon receipt of Mr H’s complaint. In addition to collecting evidence from Mr H, MPFA met with Mr I, the officer-in-charge of the security company, and requested relevant information from him.

 

The investigation revealed that Mr H 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 H had only been temporarily employed and, therefore, in accordance with the MPFSO, the security company was not required to enrol him in an MPF scheme and make contributions for him.

 

However, after further investigations, it was found that the second employment contract of 59 days was signed even before the first employment contract was completed. There was a so-called “cooling period” between the two contracts, which lasted for only seven days.

 

Mr H confirmed that he had continued to work during this cooling period. MPFA subsequently met with Mr I, who initially denied the allegations of non-enrolment and default contribution, claiming that Mr H was a temporary employee and would report for duty only when it was necessary. It was not until the second "pre-signed" employment contract was presented that Mr I admitted that there was a problem. But he insisted that it was just a mistake and an isolated incident.

 

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.

 

Understanding the MPFSO

 

The 60-day employment rule (#Not applicable to casual workers under the Industry Schemes)

 

According to the MPFSO, an employer must enrol both full-time and part-time employees aged 18 to 64 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 the employer (the number of the employee’s actual working 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 in the catering and construction industries who participate in the Industry Schemes are required to make contributions for their casual employees (any person employed by an employer on a day-to-day basis or for a fixed period of less than 60 days), even if the employment period is only one day.

 

Legal consequences and 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 imprisonment for three years.