The No 2 official Matthew Cheung Kin-chung who will remain in the role after June 30, said on Saturday that Lam is familiar with the Mandatory Provident Fund [MPF] offsetting arrangements – a controversial arrangement that allows bosses to claw back their contributions into workers’ pension funds to cover severance and long-service payments – and that there has been communication between the outgoing and incoming governments.

“The only benefit of the proposal is that it clearly scraps the offset mechanism. But this decision is problematic,” said Wong. “There have been long arguments in the Labour Advisory Tribunal and there is no consensus. This government made this announcement just before Leung [Chun-ying] leaves office, but it will be the next administration that will have to implement it. Will there be changes?”

“Though the proposal is not perfect, it is the best achievable way ahead,” said Cheung. “I am personally committed on this, and will treat it as a priority.”

Leung’s proposal to scrap the mechanism was part of his election pledge when he ran for the top job five years ago.

But despite having the backing of the Executive Council, the move was criticised by both the business and the labour sectors.

There were also protests against Leung’s move outside government headquarters from pro-labour groups. Pan-democrat lawmaker Leung Yiu-chung said Leung Chun-ying’s move would damage workers’ rights, and demanded Lam explain her position in the Legislative Council on July 5.

Wong said cancelling the MPF offset mechanism is something that is acceptable to the labour sector, but he said what is not acceptable is reducing the calculation basis for severance payment and long service payment from two-thirds to just half.

“All major labour groups in the city met and had a consensus on that,” said Wong. “Without any progress, the labour sector will find it hard to accept the government’s proposal.”