Violations and Loopholes
There are three methods by which the terms of the ESS may be violated by an employer. These include the following:
- Reduction in company headcount during the subsidy period when compared to that of March 2020
- Failure to completely use the subsidy to pay employees’ wages
- Involvement of fraud in relation to the company’s subsidy payments
Each of these violations are to be regarded as criminal offenses. They will cause the subsidies to be granted to the offending company to be adjusted accordingly. Further punishments will also be doled out as required by law.
There are also several loopholes inherent in the ESS. One way by which a company may take advantage of these loopholes is by making staff members who earn high salaries redundant and replacing them with employees who earn less in order to receive additional subsidy payment money. Some companies might also compel employees to take salary cuts or unpaid leave even if such is not necessary.
While it is not explicitly illegal to take advantages of these loopholes, doing so is highly discouraged. A company’s public reputation and consequently revenue and profitability will plummet if it chooses to do so. Members of the public may also report such instances to the government.
To prevent the violation of regulations and instead of taking advantages of the loopholes, consult with Paul Hype Page on how to fully utilise your ESS. Feel free to speak to us, if you require any assistance in applying the ESS for different sectors, catered to your needs.
It is important to note that the wage subsidies from the Employment Support Scheme (ESS) do not cover casual employees. To be better placed in receiving the subsidies, you should ensure that your Mandatory Provident Fund (MPF) accounts and that of your employees have been set up and backdated to reflect the specified month by the appropriate authorities. Be sure to specify a different month from that in the first tranche if you got the ESS subsidy.
To better utilize the ESS to meet specific needs, having a strong understanding of your company’s current financial status will be favorable. While planning for support schemes, it will be advantageous to seek professional services for in-depth assistance. At Paul Hype Page, we have the professional expertise to suit your needs.