HK$350 on paper, HK$950 in hand: how wage under-reporting dodges MPF contributions

This article is a rewrite of a report from January 2012.

A construction workers’ union found subcontractors exploiting a legal loophole: employment contracts stated only part of a worker’s wage — a HK$950 daily rate shrank to HK$350 on paper. When labour disputes arose, workers could not recover the full amount. The union said more than ten daily-rated concreters had wages withheld the previous month, accusing subcontractors of forcing workers to sign sham contracts to dodge legal liability.

What are an employer’s MPF obligations in Hong Kong?

Contributing MPF for employees is not optional. An employer’s MPF obligations in Hong Kong include enrolling employees in an MPF scheme and contributing on time based on their true relevant income; main contractors and subcontractors must state real wages in contracts — under-reporting pay through split-wage arrangements to evade workers’ compensation and MPF contributions leaves workers unable to recover their full wages and contributions in a dispute.

One concreter’s case was typical: hired at HK$950 a day on a government site, all went well until his wages were withheld late last month. Seeking the union’s help, he discovered his contract listed only HK$350 — HK$600 short — making full recovery impossible. He said under-stated contract wages were widespread: sign, or get no work.

The union’s chairman said split-wage practices were spreading, even on public sites: the first-tier contractor pays part of the wage, with second- or third-tier contractors paying the balance. Contractors use the trick to evade workers’ compensation and MPF, keep wage-arrears records clean, and stay eligible for the next government tender. The union received 11 such public-site disputes last year, involving HK$5 million in withheld wages.

It demanded three things: contractors and subcontractors must state true wages in contracts, pay wages by autopay, and the government must vet contractor-worker contracts more strictly. It criticised officials for turning a blind eye even when contract rates fell far below the Construction Industry Council’s wage guidelines. The Secretary for Labour and Welfare told lawmakers in a written reply that upcoming mega-infrastructure works would challenge site safety, and that the Labour Department had stepped up inspections and enforcement since last year — prosecuting violations immediately, with no prior warnings. Workers can learn about their contribution rights at the MPF education hub.