LCQ4 : Government takes a serious view on non-payment wages to construction workers

Following is a question by the Hon Tam yiu-chung and an oral reply by the Secretary for the Environment, Transport and Works, Dr Sarah Liao, in the Legislative Council meeting today (December 8) :-


Trade unions and I have received many complaints alleging that some contractors of government building and construction projects have defaulted on payment of wages to their workers.  In this connection, will the Government inform this Council:

(a) of the total number of cases handled by the authorities in the past three years involving allegations of default in payment of wages to construction workers, as well as the number of persons affected and the amount of defaulted wages involved and, among such cases, of the number of those involving government building and construction projects, as well as the number of workers and the amount of wages involved in these cases;

(b) of the total number of contractors of government building and construction projects penalised for default in payment of wages to their workers in the past three years, together with a breakdown by the penalty imposed; and

(c) whether it has any plan to eradicate non-payment of wages to workers in government building and construction projects, and to increase the penalties for contractors who default on payment of wages to their workers; if so, of the relevant details; if not, the reasons for that?


Madam President,

(a) From 2001 to 2003, the Labour Department (LD) handled 561 labour disputes, each involving more than 20 employees, over alleged non-payment of wages to construction workers.  A total of 24 512 employees were involved and the total amount claimed was over $641 million.

Regarding cases involving not more than 20 employees each, the LD handled 7 812 claims relating to the vicarious liability of principal contractors and their sub-contractors to pay wages to construction workers from 2001 to 2003.  A total of 30 806 employees were involved. The LD has no statistics on the amounts claimed in these cases.

In the first 11 months of 2004, the LD handled 127 labour disputes over non-payment of wages to construction workers and 2 706 claims relating to the vicarious liability of contractors to pay wages.

The LD does not keep a separate record of the number of cases involving government projects.  This is because in the conciliation of labour disputes and claims, the LD will not ascertain whether a case involves government projects.  In fact, whether or not a case involves government projects has no bearing on the statutory rights and liabilities of the parties concerned under the Employment Ordinance.

However, with effect from September 2002, all works departments under the Environment, Transport and Works Bureau (ETWB) are required to submit to the Bureau monthly reports on cases of wage disputes in connection with public works contracts.  For all of 2003, the ETWB recorded 59 cases of non-payment of wages involving public works contracts.  The same number of cases were registered in the first 11 months of 2004.  Since the works departments do not specialise in handling labour disputes, they could not provide strictly accurate data on these cases, such as the number of workers and the amount of wages involved.  A rough estimate is that about 1 500 workers and $25 million in claims were involved in 2003.  All of the cases have been referred to the LD for follow-up action and assistance.  The works departments have also rendered assistance to the workers concerned as far as practicable.

(b) & (c) The Administration takes a very serious view on the non-payment of wages by employers, including those cases involving government building and construction projects.  The ETWB stipulates that if a contractor has been convicted of an offence under the Employment Ordinance (Cap. 57) for three times or more in a consecutive period of 12 months and each of the cases involves an independent incident and carries a maximum fine at Level 5 or above as specified in Schedule 8 of the Criminal Procedure Ordinance (Cap. 221), the contractor will be automatically barred from bidding for public works contracts for at least six months.  In addition, according to the current General Conditions of Contracts for public works, if a worker employed by the principal contractor files a claim against the principal contractor in respect of wages payable to him and can prove to the satisfaction of the Commissioner for Labour that the claim is reasonable, the Government may deduct the amount claimed from the contract sum payable to the principal contractor so as to settle the claim.

The Construction Workers Registration Ordinance was passed in July this year.  Upon the implementation of the new registration scheme, a card-reader will be used to verify the registration status of every worker entering or leaving a construction site.  The data collected can serve as the attendance records of the workers.  Not only can this arrangement help settle certain wage disputes between the contractors and the workers, but it can also help combat the employment of illegal workers at construction sites.

We are also working with the industry to tighten the control over sub-contractors.  The Provisional Construction Industry Co-ordination Board (PCICB) launched the Voluntary Sub-Contractor Registration Scheme in November 2003.  With effect from August this year, the Government has made it a contractual requirement for the contractors of public works contracts to engage sub-contractors registered under the scheme.  According to the rules and procedures of the registration scheme, the PCICB may take regulatory action, such as issuing written warning and suspending or withdrawing the registration status, against registered sub-contractors convicted of wage offences.

In September 2002, the LD set up an Employment Claims Investigation Division to thoroughly investigate cases of non-payment of wages in order to pursue prosecution action against the offenders more effectively.  With stepped-up enforcement action, the LD secured convictions for 115 summonses on wage offences relating to the construction industry in 2003, representing a marked increase of 505 per cent over the 19 summonses in 2002.  The corresponding figure for the first 11 months of this year is 103 summonses.  Acting on the information provided by the LD, our Bureau has taken regulatory action against two contractors on our List of Approved Contractors for Public Works.  These two contractors have been temporarily disqualified from bidding for public works contracts.

We believe that the measures that I have just mentioned, such as the registration and disqualifying mechanisms, together with stepped-up enforcement action taken by the LD, can help prevent non-payment of wages to employees in the construction industry, including workers in government building and construction projects.

End/Wednesday, December 8, 2004