The 10-week period of statutory maternity leave was first introduced in the Employment Ordinance of 1970. Initially, the time off work was unpaid, but this changed in 1981 after a legislative amendment.
That gave pregnant employees, under continuous employment for not less than 40 weeks, paid maternity leave equivalent to two-thirds of their average daily wages. The statutory pay was subsequently raised to four-fifths of average daily wages in 1995, but the leave entitlement has remained the same for almost 50 years.
The issue of paternity leave moved centre stage in 2006 when the Labour Department started to promote a more family-friendly culture. At the time, a key aspect of the debate was whether paternity leave should in fact be implemented.
Many expressed the concern that such a step would have an adverse impact on the running costs of small and medium-sized enterprises. It was felt that employers would have to bear additional costs associated with providing paternity leave and would be unwilling to do so.
After discussions stretching over more than eight years, a consensus was eventually reached among employer and employee members of the Labour Advisory Board. This led to the Employment (Amendment) Bill 2014 being passed, with three days’ paternity leave becoming a statutory benefit. Even so, Hong Kong continued to lag behind a number of other jurisdictions with regard to the length of paternity and maternity leave allowed.
As a result, the subject and its attendant issues are once again back on the table.
The current proposal for paternity leave, as presented in the Employment (Amendment) Bill 2018, is to increase the statutory entitlement for working fathers from three to five days. The bill takes due account of a review of relevant factors and has support from the Labour Advisory Board and the Legislative Council Panel on Manpower. Also, in her 2018 policy address, Chief Executive Carrie Lam stated that the government will aim to secure Legislative Council support for early passage of the bill.
As for maternity leave, the proposal outlined in the policy address looks to increase maternity leave from the current 10 weeks to 14 weeks. The criteria for entitlement to such leave and the rate paid would remain unchanged.
However, regarding the pay rate for the additional four weeks, there would be a cap of HK$36,822 per employee. In other words, employees who earn HK$50,000 or less per month will receive the full four-fifths of their wages during the additional four weeks, whereas employees earning more than HK$50,000 per month will be subject to the cap.
In addition, in an effort to minimise any adverse financial impact these changes might have on employers, especially small or medium-sized enterprises, the government intends to implement a reimbursement system for the additional four weeks’ maternity pay. The Labour Department is currently reviewing this proposal and will report to the Labour Advisory Board later this year on outcomes.
Some may argue that the proposed changes for parental leave are major steps towards creating a more family-friendly culture. But it is important to examine some of the practical implications that arise.
In the case of paternity leave, the possible impact is relatively limited, given that it is just an extra two days off work. In effect, employers would have to fund this, but past practice shows that many employees have supplemented their official paternity leave by taking annual leave or unpaid leave in order to extend the period.
For maternity leave, the changes will be more significant. If there is indeed a cap on the rate of pay for the additional four weeks for employees earning more than HK$50,000 a month, they may face a choice. Some who earn more than that figure may prefer to return to work early rather than take the additional four weeks off with a significantly reduced income.
Also, while the government has plans to implement a reimbursement system for the additional four weeks’ maternity leave, the details of how this will operate remain unclear. It is likely that employers will first have to pay employees before claiming reimbursement, and they may not welcome the extra administrative duties.
Whether for maternity or paternity leave, employers who currently provide enhanced schemes will have to ensure in due course that the terms and conditions are consistent with the statutory changes. For example, they would have to remove or amend any caveats or terms applying to leave of between 10 and 14 weeks. If not, they might fall foul of the new statutory requirements.
In general, all employers should continue to monitor progress of the proposed legislation, so that any policy or procedural updates can be implemented in line with the timing and details of any statutory changes.
