Gov’t to enhance target suspicious business closures amid $250M wage fund payouts

Secretary for Labour and Welfare Chris Sun Yuk-han pledged to intensify investigations into potential employer fraud after a government wage protection fund paid nearly HK$250 million last year, three times more than that in 2020.

The Protection of Wages on Insolvency Fund (PWIF) approved 4,671 applications in 2024, a 32 percent increase from 2023 and nearly double the 2,428 cases recorded five years ago.

The surge has sparked concerns that some employers may be deliberately shutting down businesses to exploit the safety net fund, which is designed to cover unpaid wages for workers when companies go bankrupt.

Speaking at a Legislative Council meeting on Wednesday, Sun noted the government is concerned about suspected abuse and took the issue very seriously, so it has formed an inter-departmental task force to initiate investigation into suspicious cases.

The task force includes representatives from the Labour Department, the Commercial Crime Bureau of the Hong Kong Police Force and the Official Receiver’s Office (ORO).

He revealed that the Labour Department referred five suspected fraud cases to the Police between 2020 and 2024, though no confirmed abuse was found. 

During the same period, the ORO disqualified 15 company directors and/or responsible persons from forming or managing businesses following the Department referrals.

As of 2024, the fund’s reserves stood at HK$7.329 billion. Sun assured that the PWIF Board would continue closely monitoring the fund’s financial position to ensure stable income and maintain reasonable reserves.