Under the Mandatory Provident Fund Schemes Ordinance (the "MPFSO"), any employer who, without reasonable excuse, fails to make a timely payment of mandatory contributions commits an offence and is subject to a maximum penalty of a HK$450,000 fine and four years' imprisonment.

In 2012, the MPFSO was amended to make it an offence for any employer who fails, without a reasonable excuse, to comply with a court order to pay outstanding MPF contributions and surcharges. Convicted employers are liable to a maximum penalty of a HK$350,000 fine and three years' imprisonment. When the employer is a company, then any officer (i.e., director or manager) may also be liable if that person knew or ought to have known about the breach.

In a recent case, the Mandatory Provident Fund Schemes Authority had brought civil claims against the employing company to recover outstanding MPF contributions and surcharges of about HK$380,000 from 2015 and 2016 (the "Outstanding Sum"). Although partial payment was subsequently made, a large part of the Outstanding Sum remained unpaid when the employer pleaded guilty in June 2017. The defendant, being the company's director, was sentenced to 21 days' imprisonment for failing to comply with the court order to pay the Outstanding Sum.

Although convictions for defaulting on MPF contributions and breaching the MPFSO are not new, this is the first case in which a company director has been sentenced to imprisonment. This case is a handy reminder to employers that defaulters on MPF contributions and court orders to pay MPF contributions can result in hefty punishment.

Information of the case can be found at the following link:
http://www.mpfa.org.hk/eng/information_centre/press_releases/7410_record.jsp

Originally published 13 July 2017.

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