Firms warned on wage fixing

Top News | Sophie Hui and Phoebe Ng 10 Apr 2018

Sophie Hui and Phoebe Ng

The Competition Commission has warned employers against doing "pay trend" surveys on expected salary increases of their employees, saying it would contravene the Competition Ordinance.

It will be against the law for competitors to exchange sensitive information such as their employees' pay, the watchdog said in an advisory bulletin for human resources professionals, employers and employees.

No matter that they share it mutually or unilaterally, or if it occurs directly or through a third party, exchange of such information will cause problems in competition, it warned.

One common practice is for industry associations to ask an independent third party to conduct a survey on future salaries and benefits in the industry. The watchdog said this kind of act should be avoided, as members of the association are probably competitors.

If a survey is to be conducted, it should focus on historical salary increases from the past instead of trends in the future.

Such exchanges of information have the affect of harming competition, and are considered market-sharing, which is a core offense under the First Conduct Rule of the Competition Ordinance.

Also forbidden is the signing of so-called "non-poaching agreements" with competitors, which ensures the companies involved would not poach talent from the other company.

Such action is also considered to be market sharing, as in sharing of future pay information.

The watchdog also warned employers not to reach wage-fixing agreements with other companies.

It refers to agreements to fix salaries, benefits and allowances of employees in different companies. They can be considered price-fixing, another core offense under the law.

The commission's executive director of operations, Jindrich Kloub, said the commission has seen some businesses coordinating among themselves when it comes to hiring workers and finalizing employment terms and conditions, which may hurt competition.

"It is important for competition to be working effectively in the labor market which affects the Hong Kong workforce and the economy in general," said Kloub.

"Employers must make their decisions about hiring and the terms and conditions of employment offered to workers independently."

He added that the commission will take appropriate enforcement action against contravention of the Competition Ordinance.

Federation of Hong Kong Industries chairman Jimmy Kwok Chun-wah said his federation employs independent researchers to study salary trends yearly, which serves as an important indicator for many small and medium-sized enterprises.

If future trends cannot be discussed, the survey would lose some of its significance. Small and medium enterprises would feel lost, he said.

Jimmy Ng Wing-ka, industry sector legislator, dismissed the report for "going too far for something too academic."

He said companies often regard remuneration of top-level executives as commercial secrets, while for other workers, their salary levels are mostly transparent on job advertisements.

"If the commission thinks it is a problem, I am afraid they have their heads in the clouds," Ng said.

In response to the Standard's inquiries, the commission said while research agencies are often regarded as independent third parties in the employment market, they should minimize the risk of contravening the ordinance when sharing employees' compensation information with their clients.

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