Your Employer Has Gone Under: What the Fund Pays, What the Priority Is Worth, and What Taking the Money Costs You

The thirty-second version

Your employer having no money does not mean there is nothing to chase — because the first pot of money was never your employer's. The Protection of Wages on Insolvency Fund is financed by a levy on business registration certificates. Moving the Bill in 1985, the Commissioner for Labour told the Legislative Council that it existed because insolvency and bankruptcy proceedings were complicated and time-consuming, so workers waited months for wages owed and might never recover them in full if the employer's assets were insufficient. The employer having nothing is not the end of the road — and nor is it the statutory test: what s.16 requires is unpaid entitlements in the listed heads plus a winding-up petition presented against the employer.

• The entry condition is a petition, not a judgment. Where the employer is a company, Cap. 380 s.16(1)(b) lets the Commissioner pay once a winding-up petition has been presented. It does not matter who presented it, and where the employer has fewer than 20 employees, sufficient evidence exists to support the presentation of a petition (on the ground that a company employer is unable to pay its debts, or that a non-company employer is liable to have a bankruptcy petition presented against him), and a petition would be unreasonable or uneconomic, s.18 lets the Commissioner pay with no petition at all. The three conditions are cumulative: the Commissioner must hold all three opinions.
• Five heads, four ceilings. Arrears of wages, wages in lieu of notice, severance payment, pay for untaken statutory holidays, pay for untaken annual leave. No long service payment. Every ceiling is amendable by resolution of the Legislative Council under s.16(3) and (3A); the two most recent changes took effect on 17 June 2022 and 21 March 2025.
• Two clocks, not one — and the five heads do not share an anchor. For wages (s.16(2)(d)): a 4-month look-back — wages for services rendered more than four months before your last day of service are not paid at all — and a 6-month deadline to apply, measured from that same day. But the six months for wages in lieu of notice runs from the date of application, not from your last day of service (s.16(2)(e)(ii), subject to s.16(2A)); for a severance payment it runs from the date the liability arose (s.16(2)(f)(ii)); for untaken annual leave pay, from the date that pay became due (s.16(2)(h)(iii)); and untaken statutory holiday pay is anchored on the last day of service, as wages are (s.16(2)(g)(i) and (iv)). The ceilings differ too: $80,000 for wages, and for notice pay the lesser of one month's wages and $45,000. The resolution power reaches the amounts and the one-month multiplier, and not one of the time limits; no provision empowers anyone to change those periods by notice, order or resolution, so changing them takes an amending Ordinance. Section 6 sets them out limb by limb.
• The preferential debt in the winding up is far smaller, and it has stood a very long time — though not all of it from the same year. The wage, severance and notice-pay limits have not changed since 1977; the $8,000 long service preference was added in 1985 and has not changed since; and accrued holiday remuneration is uncapped, so it is not one of these figures at all. The amounts are: wages $8,000, severance $8,000, long service payment $8,000, wages in lieu of notice one month's wages or $2,000 whichever is the lesser. On Cap. 57's maximum severance entitlement of $390,000 the Fund pays up to $295,000 (75.6%) and the preferential debt is $8,000 (2.05%). No delegated power anywhere in Cap. 32 reaches those figures.
• There is one payment where taking the Fund's money costs you something, and the cost has two halves. For wages — and, through s.24(3), for notice pay, statutory-holiday pay and annual-leave pay — s.24(2A)(a) uses a does not affect formula for the balance. For the severance payment, s.24(2A)(b) uses a subject to formula, so the balance ranks behind the Board in the liquidation. That distinction was written into the Ordinance in 1991, and two current Labour Department publications apply the limb-(a) rule by name to the severance balance — section 4 sets the two texts side by side. The second half of the cost is not in the liquidation at all: under s.24(2B) to (2D) (4 of 2022 s. 28), an ex gratia payment for an unpaid severance payment also transfers the applicant's rights in their employer-funded (specified) ORS benefits or employer-funded (voluntary) MPFS benefits to the Board, measured by the amount that would be available to be reduced under Cap. 57 s.31IA — those two, alongside gratuities based on length of service, are the only things the unmodified s.31IA(1) names, so accrued benefits derived from mandatory MPF contributions are outside it; but for an employee whose employment began before 1 May 2025 (the transition date) s.31IA is the version modified by Cap. 57 Schedule 11 s.3, under which mandatory MPF accrued benefits can still be set against the pre-transition portion of the severance payment — see section 4. Both halves follow the severance payment alone.

1. The company has closed. Is there really nothing to chase?

No — and that belief is the expensive one. The step people take is from the company is gone straight to the money is gone, with nothing in between. In fact there are two separate pots, funded from different places, and one running dry says nothing about the other.

• Pot one: your employer's assets. A liquidator realises them and distributes in order. This pot may genuinely be empty, and the Labour Department says so itself: its booklet A Guide on Employee's Rights in Bankruptcy, Winding-up and Receivership (11/2024), at ¶2.8, warns employees against treating a bankruptcy or winding-up order as a guarantee of payment: everything turns on how much the employer actually has, and on how much of it the trustee or liquidator manages to get back and sell.
• Pot two: the Protection of Wages on Insolvency Fund. It is financed by a levy on business registration certificates and has nothing to do with how much your employer has left. The levy has resumed. The Inland Revenue Department's Business Registration Fee and Levy Table (www.ird.gov.hk) sets out that for 1-year business and branch registration certificates whose commencement date falls between 1 April 2024 and 31 March 2026 the levy is $0, and that for certificates commencing between 1 April 2026 and 31 March 2027 the levy is $150 on a 1-year certificate and $450 on a 3-year certificate. And the power that moves the amount is s.18(2) of the Business Registration Ordinance (Cap. 310):

(Cap. 310 s.2 defines levy as an amount prescribed in item 3 of the Table in Schedule 2 and determined in accordance with sections 3 and 4 of that Schedule.)

The two pots answer different questions. Pot one asks is there anything left. Pot two asks has a winding-up petition been presented against your employer. That gateway has nothing to do with how much the employer has left, and it is not a gradient on which being poorer fits better — because what Cap. 380 s.16(1)(b) requires is precisely that a petition has been presented:

In other words: what the provision needs is a petition filed, not an order made, and it does not require you to be the person who filed it. Where there is no petition at all, s.18 opens a narrow door — and the door opens onto the same room. Its chapeau reads:

*Read the words subject to subsection (2) of that section. A s.18 payment is still a payment under s.16, so every ceiling in s.16(2), the statutory declaration in s.16(2)(a), and both clocks apply to it unchanged.* Section 18 removes the petition requirement and nothing else. The Commissioner may pay if, in his opinion,

sufficient evidence exists to support a petition, and

He must then give notice in the Gazette. That route is limited to employers with fewer than 20 employees.

The route to the Fund starts at the Labour Department. Answering a question in the Legislative Council on 20 January 2016, the Secretary for Labour and Welfare explained that the filing of a bankruptcy or winding-up petition against the employer is a pre-condition of an ex gratia payment; that where the amount owed is undisputed and the employer has confirmed inability to pay, the Department can process the application once it has the relevant information, without the employee first obtaining a Labour Tribunal determination. The same reply also notes that because every item of ex gratia payment carries a statutory ceiling, the amount the Department approves may be less than the amount a Labour Tribunal awards.

2. What does the Fund pay, and who can apply?

Five heads, four ceilings — and the gateway definition has already excluded one payment you may care about most.

Start with the gate. Cap. 380 s.2 defines who is an applicant, and it does so by naming paragraphs of Cap. 32 s.265(1) one by one:

There is no (caa) — and (caa) is the long service payment paragraph (section 8). An employee whose only claim is a long service payment is not an applicant under the Ordinance at all.

Then what is covered. Section 15(1) lists five items, and its closing words name all five together:

First, one requirement placed on the applicant, which is easily missed. Section 16(2) opens as a prohibition — "(2) The Commissioner shall not make any payment under subsection (1)—" — and its first paragraph is not about money. It concerns verification by the applicant:

So the application form on its own is not enough. The Ordinance requires the applicant to verify the application by a statutory declaration in a form approved by the Commissioner, failing which the Commissioner shall not pay.

And if the Commissioner's decision does not go the applicant's way, the Ordinance itself provides an internal route. Cap. 380 s.17, headed Review by Board, lets any applicant aggrieved by a decision of the Commissioner under s.16 request in writing that the Commissioner give reasons for that decision, and then, after reasons have been given, request in writing that the application be referred to the Board. The Commissioner must forward all documents relating to the application to the Chairman of the Board, and the Board may confirm or vary the decision, or require the Commissioner to make further inquiries relating to the application.

*Outside the Ordinance, the Labour Department's Guide describes two things (this site's summary). First, company directors. Under the heading Company Directors, the Guide describes a standing administrative policy under which the Fund will, as a general matter, turn down an applicant who holds, or has at any time held, a registered directorship of the company concerned. ⚠ That is a statement of administrative policy, not of the Ordinance. Second, there is a step before the formal s.17 review: the Guide* says an applicant unhappy with the Commissioner for Labour's decision may first ask the Wage Security Division to look at the application again, and that where the outcome of that second look is still unsatisfactory, the Division will help pass the matter up to the Fund Board. So s.17 is the Board layer; the practice the Guide describes puts a reconsideration by the Wage Security Division in front of it.

And how much. Section 16(2) sets a limit for each. The figures below come from the Labour Department's Guide to the Protection of Wages on Insolvency Ordinance (August 2026) and the Fund Board's 2024-25 annual report:

<table> <caption>Maximum ex gratia payments from the Protection of Wages on Insolvency Fund, by the date the liability for payment arose. Figures from the Labour Department's <em>Guide to the Protection of Wages on Insolvency Ordinance</em> (https://www.labour.gov.hk/eng/public/pdf/wsd/PWIOGuide_eng.pdf, August 2026) and the Protection of Wages on Insolvency Fund Board <em>Annual Report 2024-25</em> (https://www.labour.gov.hk/common/public/pdf/wsd/PWIFB_AnnualReport20242025_en.pdf, September 2025). <strong>All four ceilings are amendable by resolution of the Legislative Council under Cap. 380 ss.16(3) and 16(3A)</strong>; the two most recent changes took effect on 17 June 2022 and 21 March 2025.</caption> <thead> <tr><th>Item</th><th>Liability arose 17 Jun 2022 – 20 Mar 2025</th><th>Liability arose on or after 21 Mar 2025</th><th>Provision</th></tr> </thead> <tbody> <tr><td>Arrears of wages</td><td>$80,000</td><td>$80,000</td><td>s.16(2)(b)</td></tr> <tr><td>Wages in lieu of notice</td><td>1 month's wages or $45,000, whichever is the lesser</td><td>same</td><td>s.16(2)(e)(i)</td></tr> <tr><td>Severance payment</td><td>the first $100,000 in full, then half of anything above it</td><td><strong>the first $200,000 in full, then half of anything above it</strong></td><td>s.16(2)(f)(i)</td></tr> <tr><td>Pay for untaken annual leave and untaken statutory holidays</td><td><strong>$26,000 for both combined</strong></td><td>same</td><td>ss.16(2)(g)(iii)(B), (h)(ii), (i)</td></tr> <tr><td>Long service payment</td><td colspan="2"><strong>Not covered by the Fund at all</strong></td><td>s.2 definition of <em>applicant</em>; s.15(1)</td></tr> </tbody> </table>

Three things that are easy to read past.

• The severance figure is not a flat cap; it is a formula that rises with the claim. The provision gives the aggregate of $200,000 and half of that part of the entitlement in excess of $200,000. The Fund Board publishes the worked maxima itself: $295,000 where the liability arose on or after 21 March 2025, $245,000 between 17 June 2022 and 20 March 2025, and $220,000 on or before 16 June 2022.
• Annual leave and statutory holiday pay do not stack. Section 16(2)(i) sets a combined ceiling for the two, not one each.
• The notice-pay figure is a lesser-of rule, so $45,000 is a ceiling and not the payment. And the lesser-of is itself only a ceiling: what the Fund pays is the unpaid wages in lieu of notice the employer owes, capped at the lesser of one month's wages and $45,000. Someone earning less than $45,000 a month does not thereby receive a month's wages — an employee entitled to seven days' notice is owed seven days.

Who can change these figures, and how, is set out in the Ordinance:

Section 16(3A) does the same for the three leave and holiday amounts.

Why can the Fund pay more than Cap. 32's $8,000? Because the Ordinance says so expressly. The definition of severance payment in Cap. 380 s.2 borrows the category from Cap. 32 s.265(1)(ca) and then, in its saving words, disapplies Cap. 32's ceiling:

So the two sets of figures were never the same thing: the $8,000 in Cap. 32 governs ranking in a winding up, and what the Fund pays is settled by s.16(2) alone. (The same formula appears in the definitions of wages and wages in lieu of notice, naming s.265(1A) or (1B).)

One route can raise the severance entitlement the ceiling is applied to, and it is easy to miss. Section 16(2B), added by 77 of 1999 and amended by 4 of 2022, deals with the case where an applicant's wages were cut in the 12 months before dismissal or lay-off and the employer had, before the cut, promised that any severance payment would be worked out more favourably than Cap. 57 s.31G provides:

What it does is arithmetical, not discretionary: for the purposes of the s.16(2)(f)(i) ceiling, the entitlement may be computed under Cap. 380 Schedule 2 or in the manner the undertaking specifies, whichever gives the lesser amount, and only if that is more favourable to the applicant than the ordinary calculation. Whether it applies turns on the facts and the employer's own undertaking.

There is also an asymmetry of time worth remembering. Section 16(1B) lets the Commissioner defer consideration of a severance application until the severance payment falls due, and the subsection sets no outer limit on that deferral — while the applicant is on a hard six-month clock (section 6).

3. What is the preferential debt actually worth? $8,000 — and the costs of the winding up come first

The preference is real, and it ranks higher than most people expect: employees come ahead of the Government's statutory debts. But the amount is small, and the costs and expenses of the winding up come out of the assets before the preferential debts are reached.

The figures on the face of the section are not the operative ones

Section 265(1) says, on its face, $3,000 for paragraphs (b) and (c) — a clerk's or servant's wages and a labourer's or workman's wages — and $6,000 for paragraph (ca), the severance payment:

What actually operates is the subsection below it:

In other words: for any winding up today, the relevant date under Cap. 32 is necessarily after 1 April 1977, so all three paragraphs read $8,000.

Ten limbs, five different shapes — do not treat them alike

The two $8,000s have different provenance, and the difference matters. Subsection (1B) was added by 4 of 1977. The long service payment paragraph arrived eight years later:

Subsection (1B) never mentions (caa). (caa) was added by 77 of 1985 and was $8,000 from the start.

The notice-pay limit is not $2,000; it is a lesser-of rule:

For someone earning $1,500 a month the limit is $1,500.

And accrued holiday remuneration is one of four limbs in s.265(1) that carry no cap at all — and the only one of the four that comes off your payslip:

The paragraph carries no sum, and subsection (1B) does not reach it.

*How wide is accrued holiday remuneration? Subsection (6) defines it, and the definition runs straight into the $26,000 from section 2:*

So: the Fund pays at most $26,000 for untaken statutory-holiday pay and untaken annual-leave pay combined (s.16(2)(i)), and the part above that is an uncapped preferential debt in the winding up.

The other three uncapped limbs are easily overlooked, and one of them may well be yours. Paragraph (cb) is employees' compensation under Cap. 282. Paragraph (cg) is salary the company deducted from your pay for an ORSO scheme and never paid into the scheme's funds. Paragraph (ci) is the amount the company deducted from your relevant income for MPF and never paid to the approved trustee:

Note the difference between those and the (cf)/(ch) rows in the table above. Paragraphs (cf) and (ch) are about the employer's own unpaid contributions and carry the half-above-$50,000 rule. Paragraphs (cg) and (ci) are about money already taken out of your pay and never remitted, and they carry no ceiling of any kind. The Fund pays none of these four — not one of them is among the five heads in s.15(1) — but in the winding up they rank equally with your arrears of wages and abate rateably with them.

Note in passing that s.265(6) defines wages to include a Lunar New Year bonus and to exclude accrued holiday remuneration, while s.265(5C) deems remuneration for holiday, sickness or other good-cause absence to be wages for that period — two separate calculations that must not be run together:

You beat the Government. You lose to the cost of the winding up

First: employees rank ahead of the Government. Section 265(3) opens with a chapeau, and the chapeau is the text that names all thirteen paragraphs:

Three things follow: the thirteen paragraphs named in subsection (3) — which include every one of the ten limbs in the table above — rank ahead of the statutory debts due to Government in subsection (1)(d); they rank equally among themselves; and if the assets fall short they all abate together, in equal proportions. The third point decides what raising a cap would actually do (section 5).

Second: employees beat a floating charge and lose to a fixed one — and the second half is not a rule Cap. 32 states.

Note the two limits built into the words: a floating charge only, and only so far as the assets available for payment of general creditors are insufficient. As for a fixed charge — Cap. 32 does not use the phrase. *So employees rank behind a fixed charge is a consequence derived from the words, not a Hong Kong rule that can be quoted: an asset subject to a fixed charge is not among the assets available for payment of general creditors. The Labour Department publishes that consequence in plain English itself* — at ¶¶3.5 and 3.6 of its 11/2024 booklet, it explains that where a debenture names and identifies particular fixed assets, a receiver appointed under it need not meet employees' preferential claims out of those assets — but that if money does come in from goods over which the charge floats, the receiver must settle those claims before the debenture holder, and it gives as the usual examples factory raw materials, trading stock, and money owed to the company by its debtors.

Third: a whole layer of winding-up costs and expenses sits above the preferential debt. Taken apart:

• Realisation expenses come off before the queue starts. Cap. 32H r.179(1) applies to the assets "remaining after payment of the fees and expenses properly incurred in preserving, realizing or getting in the assets".
• Rule 179(1) does list ten payments — but all ten are costs and expenses of the winding up, not ten classes of creditor. The rule is headed Costs payable out of the assets. It reads "shall, subject to any order of the court, be liable to the following payments, which shall be made in the following order of priority", so that internal ordering of expenses itself stands subject to any order of the court. It begins with "First.—The fees, percentages and charges payable to, or costs, charges and expenses incurred by or authorized by, the Official Receiver" and ends with the reasonable expenses of the committee of inspection. The employee's preferential debt is not on that list at all, so ten items plus one is not a creditor rank.
• Then s.265 adds a further layer of its own:

In a voluntary winding up, s.256 is blunter still:

(Section 256 is headed Costs of voluntary winding up and sits in the voluntary winding-up Part; for a court winding up the position comes from Cap. 32H r.179 and Cap. 32 s.265(4).)

Putting it together: from the company's free assets, the fees and expenses properly incurred in preserving, realising or getting in the assets come off first; the costs and expenses of the winding up are then paid in r.179(1)'s internal order, subject to any order of the court, and s.265(4) requires the retention of such sums as are necessary for those costs and expenses; only then are the s.265 preferential debts reached, and s.265(3B) puts them ahead of a floating charge on the terms it states. That structure is not an absolute ordinal rank — r.179(1)'s ten items are an ordering of expenses, not ten classes of creditor, and the actual outcome turns on the asset pool and the security taken over it. CLIC, the Government-funded public legal information service, states the same order in reader-facing terms: the costs and expenses of realisation, then those of the petition, then the liquidator's, then preferential creditors, then ordinary creditors.

$8,000 against $390,000

Illustrative calculation, on figures already cited above:

• Cap. 57's Seventh Schedule, Table A, terminal row: "On or after 1 October 2003 $390,000" — the maximum severance or long service payment where the relevant date under Cap. 57 falls on or after 1 October 2003.
• The Fund: $200,000 + ½ × ($390,000 − $200,000) = $295,000, which is 75.6% of $390,000.
• The preferential debt: $8,000, which is 2.05% of $390,000.

And what did a preferential creditor historically actually get, and when? The Official Receiver's Office, reported through the Law Reform Commission's Corporate Rescue and Insolvent Trading report of October 1996 at ¶1.20: in 1991/92 an average of 4.00 years to a first and final dividend averaging 58.54%; in 1992/93, 3.30 years and 71.97%; in 1993/94, 2.85 years and 63.37%; in 1994/95, 2.88 years and 59.28%. These are 1990s figures.

4. You took the Fund's money. Where did your priority go?

For wages, notice pay, statutory-holiday pay and annual-leave pay, taking the Fund's money costs you nothing in the liquidation: the balance is untouched. For the severance payment — and only for the severance payment — there are two costs: the balance ranks behind the Board in the liquidation, and part of your employer-funded (specified) ORS benefits or employer-funded (voluntary) MPFS benefits passes to the Board as well, to the extent of the amount reducible under Cap. 57 s.31IA, and accrued benefits derived from mandatory MPF contributions are not among the things the unmodified s.31IA(1) names. ⚠ That sentence has to be said twice, for two classes of employee. For an employee whose employment began before 1 May 2025 (the transition date) and ended on or after it, ss.31I and 31IA are the versions modified by Cap. 57 Schedule 11 s.3: mandatory MPF accrued benefits can still be set against the pre-transition portion of a severance payment, and only the post-transition portion is out of their reach.

Step one: the transfer, limited to what was paid

Note the limiting words in the subsection: the transfer operates only to the extent of the amount the Fund actually paid. Note also the subsection's two further limbs — that it applies to a severance payment whether or not it is due when the s.16 payment is made, and that it ends by empowering the Board to take such steps as it considers necessary to enforce what it now holds. So far, nothing surprising.

Step two: what is transferred expressly includes your $8,000

This is not a general subrogation clause. It names s.265(1)(ca) by paragraph — the severance paragraph, the one that carries $8,000 once s.265(1B) is read with it. So on a severance claim, the $8,000 priority discussed in section 3 belongs to the Board from the moment the cheque reaches you. The Law Reform Commission described the same shape from the other side in its October 1996 report at ¶5.47: employees become ordinary creditors of the company for any balance, while the Fund is subrogated as a preferential creditor for one amount and is an ordinary creditor for the difference.

Step three: the balance — and here the provision forks

On the wages side:

*And wages is enlarged for the purposes of that section:*

So the protective rule in s.24(2A)(a) covers four of the Fund's five heads.

On the severance side, the words run the other way:

In one line: on the wages side the drafting says the section does not affect the balance; on the severance side it says the balance is subject to the rights the Board now holds. The first means this does not touch you; *the second means you come after (this site's reading).* The subsection was added by 45 of 1991 s. 4.

Step four: a second cost, and it is not in the liquidation at all — it is your retirement money

Section 24 does not stop at subsection (2A). Subsections (2B) to (2D), replaced and added by 4 of 2022 s. 28, are not about ranking in a winding up. They are about your own retirement savings:

Where does that amount come from? Subsection (2C) pins it to Cap. 57:

And subsection (2D) performs a substitution. Section 31IA of Cap. 57 is ordinarily about what happens after the employer pays a severance payment; (2D) makes the reference in that section to a severance payment paid under Part VA read as a reference to the ex gratia payment instead — so the Fund's payment is treated, inside s.31IA, as though it were the employer's.

How much does s.31IA reduce?

Three points. First, the three conditions named in the unmodified s.31IA(1), as replaced by 4 of 2022 s. 6, are gratuities based on length of service, employer-funded (specified) ORS benefits, and employer-funded (voluntary) MPFS benefits — accrued benefits derived from mandatory contributions are not among those three. But that sentence states only the unmodified section; for a large class of employees s.31IA is the modified one, and once modified the mandatory benefits do count — which is set out immediately below. Second, the reduction in (1A) reaches only the same years of service. Third, subsection (2B) opens by naming the severance payment alone: an ex gratia payment for wages, notice pay, statutory-holiday pay or annual-leave pay does not engage it. *⚠ For a large class of employees, ss.31I and 31IA are the modified versions.* Both s.31I and s.31IA carry the same Note:

Section 31ZEA is the gate.

Which day the transition date is. Section 2 says:

and the same text carries an editorial note against that asterisk:

An employee who meets those three conditions is what s.2 calls a specified employee.

For a specified employee the sum is cut in two. Schedule 11 Part 1 calls the part of a severance payment or long service payment attributable to employment before the transition date the pre-transition portion, and the part attributable to employment after the transition date begins the post-transition portion. Schedule 11 s.3 then modifies ss.31I and 31IA into two separate reductions.

The two lists differ by items (d) and (e), and (e) is the mandatory one.

The modified s.31IA has the same shape running the other way. Subsection (1A) sets the long list in (1C)(a) to (e) against the pre-transition portion of the severance payment; subsection (1B) sets the short list in (1C)(a) to (c) against the post-transition portion; and (1C)(e) is again:

So: For an employee whose employment began on or after 1 May 2025, accrued benefits derived from mandatory contributions are never on the s.31I / s.31IA list at all. But for a specified employee — employment begun before that day, ended on or after it — the same mandatory MPF accrued benefits can still be set against the pre-transition portion of a severance payment (and of a long service payment); what they cannot be set against is the post-transition portion.

So the answer this section gives has two halves. On a severance payment, taking the Fund's money costs you once in the liquidation — s.24(2A)(b), the balance ranking behind the Board — and once outside it — ss.24(2B) to (2D), the retirement benefits passing to the Board to the extent of the s.31IA amount.

The Secretary for Labour and Welfare's written reply of 15 June 2016 records that there was a Court of Final Appeal judgment of 17 May 2016 arising from an application for judicial review; the reply itself refers to the approach the Labour Department adopted before that judgment was handed down, states that the Government respects the judgment and will follow the Court's approach in determining the amount of the Fund's ex gratia payment in respect of severance payment, and states that the Government does not consider it necessary to review the Cap. 380 provisions on that calculation. The Legislative Council's Public Accounts Committee Report No. 77, Appendix 16, independently records that from March 2016 to September 2017 the Labour Department engaged an additional contract Labour Officer on a time-limited basis to process the resulting shortfall claims.

It is Yung Chi Keung v Protection of Wages on Insolvency Board and Commissioner for Labour, FACV 14/2015, Court of Final Appeal, judgment 17 May 2016, Ma CJ, with Ribeiro, Tang and Fok PJJ and Lord Clarke of Stone-cum-Ebony NPJ agreeing.

What it decided. The appeal was about the cap in Cap. 380 s.16(2)(f)(i) — whether it applies to the gross severance payment computed under Cap. 57 s.31G, or to the net amount actually owing after the Cap. 57 s.31I reduction. The Commissioner had used the gross method for decades, as the Court records at [6]. The Court held the gross method wrong. At [9]:

At [11(8)] and then [11(9)]:

At [20(2)]:

The reasoning turns on the Cap. 380 s.2 definition of severance payment, which points to what an applicant could claim in a winding-up or a bankruptcy — at [11(4)], "Priority is given to actual amounts owing, not theoretical ones". At [23] the Court allowed the appeal and declared the applicant entitled to $25,377.50, because "the sum against which the limits in s 16(2)(f)(i) of the PWIO were to be seen, was the net amount of severance payments due to the Applicant".

What it did not decide. The provision this section is about is s.24(2A)(b) — how the residual claim ranks. Yung Chi Keung is about s.16(2)(f)(i) — how much the Fund pays. The Court did not construe s.24(2A)(b), so nothing about s.24(2A)(b) can be inferred from the case. It did reach s.24(2B), on which the Commissioner had relied, and rejected that reliance, at [20(3)]:

⚠ But the s.24(2B) the Court was describing is not the s.24(2B) quoted earlier in this section. The present ss.24(2B) and (2C) were replaced, and (2D) added, by 4 of 2022 s. 28. What can be taken from [20(3)] is the characterisation — that this run of subsections does subrogation work.

Its relevance after the s.31I and s.31IA amendments. Two things changed after 2016, and they changed different halves of the sum:

• In its operative words the provision the Court construed still reads the same way. Section 16(2)(f)(i) still measures the cap against the applicant's entitlement to severance payment. The money figure has moved — $50,000 at the time of the appeal, $200,000 in the current version (L.N. 46 of 2025) — but a change in the figure is not a change in what the figure is applied to, and it was the second of those that the appeal decided.
• What is deducted before the cap is applied has narrowed. Cap. 57 s.31I was replaced by 4 of 2022 s. 5, and in Cap. 57 as so replaced the reduction reaches only gratuities based on length of service, employer-funded (specified) ORS benefits and employer-funded (voluntary) MPFS benefits. Accrued benefits derived from mandatory contributions are outside it — the same boundary as for s.31IA(1) above. The same pre-transition / post-transition split applies here too: for a specified employee whose employment began before 1 May 2025, the s.31I modified by Cap. 57 Schedule 11 s.3 still allows the mandatory benefits to reduce the pre-transition portion of the severance payment (see section 4 above). In Yung Chi Keung the s.31I benefits were $106,319.04 against a gross severance payment of $131,696.54 [5]; on the narrower s.31I the same arithmetic runs on a smaller deduction.

⚠ The Court decided the case on the statutory text then in force; the later amendments are amendments, not anything the Court said about them.

How many people does this affect? The Board's own table

The Fund Board's 2024-25 annual report, Appendix II, bands the applications received in that year, on a total of 5,188.

Calculated from the Board's published banding:

• 1,805 of the 1,853 who claimed a severance payment — 97.41% — claimed more than the entire $8,000 preferential cap. For arrears of wages: 4,145 of 4,695, or 88.29%, above $8,000. For wages in lieu of notice: 3,340 of 3,404, or 98.12%, above $2,000.
• 686 of the 1,853 — 37.0% — claimed above $100,000, the first part of the formula that governed almost the whole of that year's cohort. The Fund pays only half of anything above the first part, and the severance balance is exactly what s.24(2A)(b) subordinates. But the table bands amounts claimed, not entitlements as finally determined, so these 686 cannot be read as the applicants who had a determined excess after the Fund payment — see limit 1 below.
• Applying the $200,000 first part that took effect on 21 March 2025 to the same distribution of claims gives 296, or 16.0%.

Three limits:

• *The table measures amounts claimed, not entitlements as finally determined.* The Fund pays on the latter.
• The 2024-25 cohort is governed almost entirely by the $100,000 line, because the $200,000 first part took effect on 21 March 2025, eleven days before the Board's year end. So 37.0% is the figure for that cohort, and 16.0% is what the same distribution would produce under the current ceiling.
• The Government's own metric does not reconcile with this. In the resolution debate of 16 June 2022, the Secretary for Labour and Welfare projected, from 2020-21 application data, that a $100,000-plus-50% ceiling would raise the fully covered rate for severance claims from 57% to 78% — i.e. 22% not fully covered. The derivation above, from 2024-25 data on the same ceiling, gives 37.0% not fully covered.

Those percentages are calculated from the Board's own banding and are for reference only.

5. Why does one set of figures move while the other has stood for decades?

It is not neglect. One route was given a mechanism and the other was not — and the proposal to create one was put in writing in 1998 and set aside.

1977: the $8,000 was not chosen by feel. It was an index. Moving the second reading on 19 January 1977, the Commissioner for Labour explained that the priority limit for salary, wages and severance pay was going up from $6,000 to $8,000. The $6,000 dated from a time when Employment Ordinance s.4(2)(a) carried $1,500 a month, and was four times it; the new $8,000 was four times the $2,000 that provision had carried since 1974. The $2,000 limit for wages in lieu of notice was set in line with the same provision, at one times. The same speech described the package as of a minor nature, involving no change in principle except the inclusion of wages in lieu of notice, and the parallel Bankruptcy amendment was moved the same afternoon in the same manner — which is why Cap. 6 s.38 and Cap. 32 s.265 carry the same frozen $8,000 to this day — though from different face figures, and on a differently worded trigger. Cap. 6 deems $8,000 for $300 and $100 where Cap. 32 deems it for $3,000, and Cap. 6's deeming opens with a two-limb condition that Cap. 32's does not have:

*1985: the Fund opened, and its ceiling was the preferential limit. Tabling the Fund's first annual report on 30 July 1986, the Chairman of the Fund Board told the Council that where an employer became insolvent, an employee's wages were assured as far as the $8,000 that the Companies and Bankruptcy Ordinances made preferential — and no further. In that year the two numbers were the same number.*

1986: raising the cap was asked for and refused. In an oral question on 14 May 1986 a Member asked why limits fixed in 1977 should not be raised so that the protection workers enjoyed would not fall in real terms. The Secretary for Education and Manpower replied that the limits had been set by reference to the non-manual wage ceiling then in force under the Employment Ordinance; that there were no plans to raise them; that there was no necessary link between the two sets of Ordinances; and — decisively — that raising the preferential limits would give better-paid employees a somewhat bigger slice of a fixed pot, the pot being whatever a company's remaining assets fetch, and would leave the worse-paid with less.

That is a structural fact, and s.265(3)(c) guarantees it. Preferential debts abate rateably among themselves, so raising a preferential cap creates no money — it redistributes a fixed pool, and it redistributes it from the lower-paid to the higher-paid. The Fund is different, because it is financed by a levy and therefore can add money. The two sets of figures were never going to move together, and the Government said so in 1986.

An annex to the same sitting shows how far the cap had already failed. In the year to 31 March 1986, apparent-insolvency cases sent on to the Legal Aid Department by the Labour Department's Labour Relations Service carried severance claims from 4,093 workers; 1,652 of those claims came to $8,000 or less and 2,441 came to more — 59.6%, in the cap's ninth year. (The denominator is referrals to the Legal Aid Department in one year, not all insolvencies.)

1990: the index itself was repealed. Open Cap. 57 s.4(2) today and paragraph (a) is a single line:

The benchmark that generated $8,000 and $2,000 no longer exists. The Official Receiver confirmed the same derivation to the Law Reform Commission in 1998, and added that the wage limit brought in when the manual/non-manual distinction went — $22,500 at the time — had stopped serving as the yardstick for the statutory limits under Cap. 380.

1998–99: the Fund Board and the responsible Bureau both asked, in writing, and the only body ever to review s.265 went the other way. The Law Reform Commission's consultation paper of April 1998, at ¶15.32, quotes the Education and Manpower Bureau: the limits for preferential payments under the Companies Ordinance had not been revised since 1977, producing a big gap between the two sets of payments, and the Fund Board considered that they should be revised. At ¶15.48 the Board's own words are recorded — that it sought only to restore the real value of preferential limits which had not been revised for two decades. The Commission's July 1999 report recommended, at ¶20.16, that preferential payments for employees under the Companies Ordinance be abolished (while making clear that employees should continue to receive compensation on their employer's liquidation), and at ¶20.27 recommended abolishing the Fund Board's right of subrogation preference as well.

And the one proposal that would have stopped the figure freezing again was recorded in the same report and put down. The Hong Kong Society of Accountants proposed that all references to amounts be excluded from s.265 and placed in a separate schedule, to facilitate future revisions by subsidiary legislation. The Commission's entire response, at ¶20.89, was that it simply noted the submission for the purposes of the report because its own recommendations would abolish most preferences, and that if those recommendations were not accepted the submission would be worth considering. Neither branch happened: the abolition was not enacted, and the fallback was never taken up.

2005: organised labour asked again, and the reason it gave was the Fund's, not the employee's. The Rights Committee of the Hong Kong Federation of Trade Unions, in a submission to the Legislative Council Panel on Manpower (LC Paper No. CB(2)1388/04-05(01), 26 April 2005) at ¶1.2.4, proposed amending Cap. 6 s.38 and Cap. 32 s.265 so that the preferential amounts matched the Fund's payment ceilings; the reason it stated was that this would help the Fund Board exercise its subrogated rights and recover a larger debt for the Fund. (On a severance payment, the $8,000 is the Board's — see section 4.)

2022 and 2025: the Fund's side used the 1977 arithmetic again. In the resolution debate of 16 June 2022 the Secretary for Labour and Welfare explained that the arrears-of-wages ceiling was going from $36,000 to $80,000, taking as its basis the Census and Statistics Department's median monthly earnings figure for the fourth quarter of 2021, which excludes foreign domestic helpers and stood at $20,000 — $80,000 being four months of it. The same speech records that the Fund's coverage and its ex gratia ceilings have been revised eight times over the years. Four months of a published wage median — the same construction as 1977, forty-five years later.

2026: the four figures in Cap. 32 have not changed a character, and no delegated power reaches them — changing them takes an amending Ordinance. The same holds for Cap. 6 s.38 and for the $390,000 in Cap. 57's Seventh Schedule.

By contrast, the $22,500 in Cap. 57 does have a route:

(That $22,500 is the wage input to the severance formula. It is a different figure from the Fund's pre-2022 $45,000-predecessor ceiling for notice pay, which was also $22,500.)

A comparison — and other places' figures are frozen too, for a different reason

The United Kingdom's preferential cap has not been kept current either.

Schedule 6 to the Insolvency Act 1986, Category 5, paragraph 9 caps the same debt over the same four-month period and delegates the figure:

Paragraph 16 of the same Schedule provides that such an order

The mechanism exists, and it was exercised — the 1986 Order is itself an exercise of it. What has not happened since is any revision of the employee-remuneration figure. The Insolvency Service's Technical guidance for official receivers, chapter 43 at ¶43.90, records that the limit is £800, footnoted to Schedule 6 paragraph 9 and article 4 of the Insolvency Proceedings (Monetary Limits) Order 1986 — an order dated 29 December 1986.

The comparison that actually bites is inside one Minister's portfolio. Section 34 of the Employment Relations Act 1999 lists the sums that must be re-indexed to the retail prices index each year, and the list includes

and the operative words are a duty:

… make an order increasing or decreasing each of those sums by the same percentage as the change in the index,

Section 34 does not include the preferential cap. *The same Secretary of State is under a statutory duty to re-index the guarantee fund's weekly ceiling every 6 April, and holds a bare discretion over the preferential cap that has never been exercised.*

A preferential cap decays wherever one exists; in Hong Kong it can only be changed by an amending Ordinance.

6. Two clocks: one limits how far back, the other limits how long you have

The Fund runs two clocks, not one. One limits how far back a claim reaches; the other limits how late an application can be made.

In plain terms: limb (i) is a 4-month look-back measured backwards from your last day of service — wages for services rendered before that are not paid at all; limb (ii) is a 6-month deadline to apply, measured forwards from the same day. Someone owed eight months' wages loses the earliest four however promptly they apply. But note what they are: these two clocks are s.16(2)(d)'s clocks for wages, not a pair shared by all five heads — the other anchors are in the third point below.

*And last day of service is defined by Cap. 380 itself:*

*That, and not any relevant date, is Cap. 380's anchor. Be careful with the phrase the relevant date* on its own: Cap. 32, Cap. 57 and Cap. 6 each have one and they mean different things.

Second point: no delegated power reaches either clock. The resolution power in section 2 above names amounts and the one-month multiplier in the notice-pay limb. The six paragraphs that carry the time limits — (2)(d), (e)(ii), (f)(ii), (g)(i), (g)(iv) and (h)(iii) — are not named at all. The Fund's money is delegated; the Fund's clocks are not. Both periods have stood since 68 of 1996, and changing either takes an amending Ordinance — the same position as Cap. 32's four figures.

Third: the Ordinance uses three anchors across five limbs: the last day of service, the date of application, and the date the payment fell due or the liability arose. In the ordinary case they give the same answer, because severance and notice pay usually fall due on termination — but s.16(1B) expressly contemplates them coming apart, since it lets the Commissioner defer a severance application that is not yet due, with no outer limit on the deferral.

Fourth: making the application re-anchors your Cap. 32 priority window. Section 265(6) defines the relevant period — the span of service for which wages are preferential — in two branches, each with two limbs:

Taking it apart: limb (i) is the traditional four months before Cap. 32's relevant date; limb (ii) exists only for a person who has made an application under Cap. 380 s.15(1), and it is anchored on Cap. 380's own last day of service; and the closing words decide which one governs: the earlier of the two periods. What triggers limb (ii) is making the application, not having it approved and not being paid. That limb was replaced by 68 of 1996 s.5, so the wiring between the two Ordinances was deliberate and late.

Why would the two windows differ? Because the delay the Government names first is the time it takes to present the petition (section 7): for someone dismissed long before a petition is presented, the two windows contain different months of service. The earlier of the two periods governs.

7. When does the money actually arrive? Two clocks, and both readings are true

The Labour Department's published pledge is met in full, and Audit has measured the whole wait: period averages of 6.5 to 7.7 months across 8,263 approved applications, and 64 weeks across the 30 files it separately examined. All three are true, because the pledge's clock starts late.

The pledge first. The Labour Department's Performance Pledges, item 31 of its 2025 results table, sets an eight-week standard: once the Department holds everything it needs to process a claim, a qualified applicant is to be paid inside eight weeks. The 2025 result against that standard is 100%, and the 2026 table keeps the same eight weeks.

Then a sentence the Government has said itself. On 21 April 2021 the Secretary for Labour and Welfare replied in writing that the Labour Department keeps no figure for the interval between an employee lodging a claim and the Fund paying it. The figure it does keep starts later: it runs from the moment the Department holds a complete file. Annex 3 to that reply gives the figure it does keep: average 2.1, 2.2 and 2.1 weeks for 2018, 2019 and 2020, longest 7.7, 6.1 and 6.4 weeks, against a target that was then 10 weeks. (The target was later tightened from 10 weeks to 8.)

Then Audit's measurement. Chapter 6 of the Director of Audit's Report No. 77 measured the period from the Wage Security Division's receipt of the application to the Labour Department's issue of the first cheque:

• The population: over 8,263 applications approved between 1 January 2018 and 30 June 2021, average time elapsed of 6.7, 7.2, 6.5 and 7.7 months; the share taking more than a year rose from 83 of 1,690 in 2018 to 208 of 2,435 in 2020 and 325 of 1,604 in the first half of 2021.
• The sample: at ¶2.7 of the same chapter, Audit examined 30 applications approved between 2018 and 2020. For all 30, payment was effected within 10 weeks of receipt of all required information and documents — but on average payment was effected 64 weeks after the applications were received, with a range of 28 to 104 weeks.

Note: the 30 files are those Audit examined, not the population average; the typical wait is the 8,263-application figure.

What does the Government say about the delay? At ¶2.18(a) of the same chapter, the Administration responded that some of the elapsed time is not the Department's to control: getting a winding-up or bankruptcy petition presented against an insolvent employer can itself take a long while, and in cases with many applicants or difficult issues, liquidators and MPF trustees take longer to assemble the records and information that are needed. Audit also recorded two qualifications of its own: shortfall claims arising from the 2016 Court of Final Appeal decision were excluded from the Table 3 analysis, and the Department explained the 2021 rise as the effect of clearing a backlog, which lengthened the elapsed time of the cases being closed.

One part of the route has since changed. The 2016 reply described a path in which an employee needing legal aid to present a petition was referred to the Legal Aid Department, which generally required a Labour Tribunal determination of the items and amounts first. The Fund Board's 2024-25 annual report records two changes made to shorten processing time. Since November 2022 the Fund has retained private law firms to put in winding-up or bankruptcy petitions for section 16 applicants, which spares those applicants a legal-aid application and the means test that goes with it. And from April 2023 the Fund's own in-house lawyers, rather than the Legal Aid Department, have been the ones recommending section 18 cases straight to the Labour Department.

And the Ordinance says expressly that a Fund payment does not close the legal-aid door. Section 22 is a single sentence:

So taking the ex gratia payment does not, of itself, affect a right to legal aid to recover the further amount due under the contract or under Cap. 57. Whether a person qualifies for legal aid is for the Legal Aid Department to decide.

Audit's measurement stops on 30 June 2021, and one of the named causes was removed in November 2022.

Moving the second reading of the Protection of Wages on Insolvency Bill on 13 March 1985, the Commissioner for Labour explained that the Bill enacted what a working group on the difficulties faced by workers of companies placed in receivership had recommended — recommendations the Executive Council had accepted in principle, announced on 5 October 1983 — and gave the reason: workers in that position were then waiting months for their wages because insolvency and bankruptcy took so long and involved so much, and if the employer's assets ran short they might never be paid in full.

8. Long service payment: preferential in the winding up, invisible to the Fund

This is the one payment the two Ordinances treat differently.

On the Cap. 32 side it is a preferential debt. Section 265(1)(caa), quoted in section 3, makes it preferential up to $8,000, and s.265(3) names it expressly in the list that abates rateably. Section 265(2), which gives a third party who advances money to pay an employee a corresponding right of priority, names long service payment expressly too.

On the Cap. 380 side it cannot even get through the door. The definition of applicant quoted in section 2 names (b), (c), (ca), (cc) and (cd), and not (caa); and the five heads in s.15(1) do not include a long service payment. Cap. 380 does not mention a long service payment at all.

Why is the gap there? Cap. 380 commenced on 19 April 1985, and long service payment became a preferential debt eight months later. Moving the second reading of the Companies (Amendment) (No. 2) Bill 1985 on 4 December 1985, the Secretary for Education and Manpower said only two things: that the Bill went with the Employment (Amendment) Bill 1985, and that it put a long service payment on the same preferential footing in a winding up as a severance payment already had. The legislative steps that created the preferential status did not mention the Fund.

So where does that leave it? As a matter of the Ordinances: a long service payment cannot be claimed from the Fund, but is a preferential debt in the winding up up to $8,000, with anything above that a non-preferential debt. How it is calculated, when it arises and how it relates to a severance payment are covered in our severance and long service payment guide and how severance and long service payments are calculated .

9. Proof of debt in the liquidation

The preferential/non-preferential split you are trying to understand is two lines on the proof of debt — but they are not lines you fill in.

Form 63A, the statutory proof of debt prescribed under rule 80 of the Companies (Winding-up) Rules, divides a single claim on its face, bilingually, into an amount admitted to vote, an amount admitted preferentially, and an amount admitted non-preferentially. Each of those three boxes is printed beside a date and a signature space for the Official Receiver, provisional liquidator or liquidator, so what they record is how the admitting office adjudicates the claim, not a figure the creditor supplies. What the creditor supplies is set out in r.82: name and address; the total amount of the claim as at the date of the winding-up order; whether that amount includes outstanding uncapitalised interest; particulars of how and when the debt was incurred; particulars of any security held, the date it was given and the value the creditor puts on it; and the capacity and means of knowledge of anyone signing for the creditor. Rule 94 requires the liquidator to examine every proof lodged with him.

And a wage claim may cost nothing to file. The fee is prescribed by the Companies (Fees and Percentages) Order (Cap. 32C), Schedule 3, Table A, item 10:

Which power moves it? Cap. 32C is an order made under Cap. 32 s.296, and s.296(3) reads:

So $35 is not a price the Official Receiver's Office sets. It is subsidiary legislation, changed by order of the Chief Justice with the approval of the Legislative Council, and the figure in force was brought in by L.N. 173 of 2013.

Two statutory texts in force on the same day do not agree:

• The amounts do not agree. Form 63A as prescribed by Cap. 32H, in the text consolidated on the same 14 July 2025, still reads $15:

The form the Official Receiver's Office currently issues (numbered ORO 44 (3/2014)) prints $35, which matches Cap. 32C. Under Cap. 32C the current fee is $35; the Cap. 32H form text still reads $15. The Official Receiver's Office's practice governs what you actually pay.

• The exemptions are not worded the same. Cap. 32C exempts a proof for workmen's wages. Cap. 32H's Form 63A exempts claims for wages or salary. Those are not necessarily the same class — Cap. 32 s.265(1)(b) and (c) separately address the wages and salary of a clerk or servant and the wages of a labourer or workman, which is exactly the distinction section 3 turns on. *So proving for arrears of wages is free is safe on the face of the form, and on the Fees Order depends on which paragraph you fall under.*

*What the Official Receiver's Office page Submission of Proof of Debt (www.oro.gov.hk) describes (this site's summary):*

• Where the Official Receiver is himself the trustee or liquidator, an unregistered creditor may file a proof of debt online at any time through the Public Portal of the Office's electronic submission system, completing the form on screen and uploading documents that substantiate the debt.
• Signing: someone registered for iAM Smart+ signs on screen through that mobile app; alternatively the Office takes a Hong Kong-recognised digital certificate, personal or organisational.
• Fee: the page gives the same figure as Cap. 32C above — $35 — and states that claims not exceeding $250, and claims in the nature of an employee's claim for wages or salary, are exempt. Online payment is by FPS, credit card or PPS.
• The page also lists what the form needs (case number, year and name; the date of the bankruptcy or winding-up order; the creditor's name, address and telephone number; the amount claimed as at the date of the order with supporting documents; how and when the debt was incurred; particulars of any security held), and which file formats may be uploaded (PDF, Word, Excel, image; 25MB per attachment).
• It also states that if the proof is not subsequently accepted, the fee already paid is not refunded.

⚠ Whether a proof is admitted is for the liquidator, who must examine every proof under Cap. 32H r.94; the Office currently charges $35.

What happens to the part above the caps? The Labour Department's 11/2024 booklet says it directly, at ¶2.7: once arrears of wages, notice pay or a severance payment run past the specified amounts, the excess stops being preferential, and for that excess the employee joins the ordinary creditors when what is left of the proceeds of the employer's assets is shared out. *And the Ordinance treats lodging that form as proceedings. Section 23(1) makes a document under the Commissioner's hand — stating what was paid from the Fund, to whom, on what date, and what the employer owed immediately before it — admissible without further proof and prima facie evidence of the facts in it. Subsection (2) then says what proceedings* covers:

So the certificate the Commissioner can issue is built to be used in exactly the place this section is about.

The Fund files for what it has paid, too — the Board's 2024-25 annual report explains that when it exercises the rights it has taken over, it can lodge a proof of debt in the winding up or bankruptcy — with the Official Receiver, or with a private liquidator — to get back what it paid the applicant.

This site's reading: the Ordinance does not make them an either/or. Section 24(1) transfers rights only "to the extent of the amount of that payment under section 16"; s.24(2A)(a) read with s.24(3) expressly preserves the applicant's rights and remedies in the excess for wages, wages in lieu of notice, pay for untaken statutory holidays and pay for untaken annual leave; and s.23(2) counts "the lodging of a proof of debt in any bankruptcy or winding-up" as proceedings for the purposes of s.23 — so the Ordinance itself contemplates someone who has taken a Fund payment going on to prove for the balance. The two routes measure different things: the Fund side is a payment with a published ceiling and a published service pledge; the liquidation side is a residual claim reached only after the costs and expenses of the winding up. And one thing the provisions state plainly: waiting on the liquidation does not stop the Fund's clocks. The six-month limits in s.16(2) run from the last day of service, the date of application, or the date the pay became due or the liability arose (section 6), and no provision suspends them because a liquidation has not yet produced a result.

Quick reference table

<table> <caption>Provisions cited are from the following statutory texts: Cap. 32, Cap. 32H, Cap. 32C and Cap. 6 (consolidated 14 July 2025), Cap. 380 (1 May 2025) and Cap. 57 (14 May 2026). <strong>Every amount in Cap. 380 s.16(2) is amendable by resolution of the Legislative Council under ss.16(3) and 16(3A); the 4-month and 6-month periods in Cap. 380, the amounts in Cap. 32 s.265 and Cap. 6 s.38, and the $390,000 in Cap. 57's Seventh Schedule are reached by no delegated amending power, and changing them takes an amending Ordinance.</strong></caption> <thead> <tr><th>Question</th><th>Answer</th><th>Provision</th></tr> </thead> <tbody> <tr><td>Which five items does the Fund pay?</td><td>Arrears of wages; wages in lieu of notice; severance payment; pay for untaken statutory holidays; pay for untaken annual leave</td><td>Cap. 380 s.15(1)</td></tr> <tr><td>Does the Fund pay a long service payment?</td><td><strong>No</strong> — paragraph (caa) is not even in the definition of <em>applicant</em></td><td>Cap. 380 ss.2, 15(1)</td></tr> <tr><td>What must exist before a payment?</td><td>A winding-up petition presented against the employer (where the employer is a company); it does not matter who presented it. <strong>And the Commissioner shall not pay unless the applicant has verified the application by a statutory declaration in a form approved by the Commissioner</strong></td><td>Cap. 380 ss.16(1)(b), 16(2)(a)</td></tr> <tr><td>And if there is no petition?</td><td>The Commissioner may still pay where the employer has fewer than 20 employees, <strong>sufficient evidence exists to support the presentation of a petition</strong> (a company employer being unable to pay its debts; a non-company employer being liable to have a bankruptcy petition presented), and a petition would be unreasonable or uneconomic — <strong>all three conditions, not two</strong> — then give notice in the Gazette. <strong>That payment is made <em>subject to subsection (2) of that section</em>, so every s.16(2) ceiling, the statutory declaration and every one of the time limits still apply</strong></td><td>Cap. 380 s.18(1); Cap. 380 s.16(2)</td></tr> <tr><td>Is there a route if the Commissioner's decision goes against you?</td><td>Yes: request reasons in writing, then request that the application be referred to the Board; the Board may confirm or vary the decision, or require further inquiries</td><td>Cap. 380 s.17</td></tr> <tr><td>What are the two time limits?</td><td><strong>For wages:</strong> a 4-month look-back before the last day of service; a 6-month deadline to apply after it. <strong>The other heads are anchored differently:</strong> notice pay is not paid where it became due more than 6 months before the date of application (subject to s.16(2A)); severance, where the liability arose more than 6 months before the date of application; untaken annual leave pay, where the application is made more than 6 months after that pay became due; untaken statutory holiday pay shares the wages anchor</td><td>Cap. 380 ss.16(2)(d), (e)(ii), (f)(ii), (g)(i), (g)(iv), (h)(iii)</td></tr> <tr><td>Can those limits be changed?</td><td><strong>Not by any delegated power</strong> — the resolution power reaches amounts and the one-month multiplier only; changing a period takes an amending Ordinance</td><td>Cap. 380 ss.16(3), 16(3A)</td></tr> <tr><td>Preferential limit for wages in a winding up?</td><td>$8,000 (the face of the section says $3,000; the deeming subsection substitutes)</td><td>Cap. 32 ss.265(1)(b), (c), (1B)</td></tr> <tr><td>Preferential limit for a severance payment?</td><td>$8,000 (the face of the section says $6,000)</td><td>Cap. 32 ss.265(1)(ca), (1B)</td></tr> <tr><td>Preferential limit for a long service payment?</td><td>$8,000 — its own figure, not a deemed one</td><td>Cap. 32 s.265(1)(caa)</td></tr> <tr><td>Preferential limit for wages in lieu of notice?</td><td>One month's wages <strong>or</strong> $2,000, whichever is the lesser</td><td>Cap. 32 s.265(1)(cc)</td></tr> <tr><td>Preferential limit for accrued holiday remuneration?</td><td><strong>None</strong>; the s.265(6) definition expressly includes pay for untaken statutory holidays and pay for untaken annual leave</td><td>Cap. 32 ss.265(1)(cd), (6)</td></tr> <tr><td>Which other limbs carry no cap at all?</td><td>Employees' compensation (cb); salary deducted for an ORSO scheme and never paid in (cg); relevant income deducted for MPF and never paid to the approved trustee (ci). <strong>The Fund pays none of the three, and all three are preferential</strong></td><td>Cap. 32 ss.265(1)(cb), (cg), (ci)</td></tr> <tr><td>Employees before or after the Government?</td><td>Before; equally among themselves, abating rateably if assets fall short</td><td>Cap. 32 s.265(3)</td></tr> <tr><td>Employees before or after the bank?</td><td>Before a floating charge; behind a fixed charge — the second is a consequence of the wording, not an express rule of Cap. 32</td><td>Cap. 32 s.265(3B)</td></tr> <tr><td>What comes before the preferential debts?</td><td>Realisation expenses, then the ten payments in r.179(1), then the sums retained under s.265(4). <strong>The r.179(1) order applies subject to any order of the court</strong></td><td>Cap. 32H r.179(1); Cap. 32 s.265(4)</td></tr> <tr><td>After a Fund payment, what happens to the wages balance?</td><td><strong>Unaffected</strong>; and <em>wages</em> includes notice pay, statutory-holiday pay and annual-leave pay</td><td>Cap. 380 ss.24(2A)(a), 24(3)</td></tr> <tr><td>After a Fund payment, what happens to the severance balance?</td><td><strong>Subject to the rights transferred to the Board</strong></td><td>Cap. 380 s.24(2A)(b)</td></tr> <tr><td>What does proving cost?</td><td>$35 on a proof above $250, other than a proof for <em>workmen's wages</em>; prescribed by Cap. 32C Schedule 3 Table A item 10 (the figure in force from L.N. 173 of 2013) and movable by order of the Chief Justice with the approval of the Legislative Council. <strong>Cap. 32H's Form 63A text still reads $15 and words the exemption as <em>claims for wages or salary</em> — the two texts do not agree</strong></td><td>Cap. 32C Schedule 3 Table A item 10; Cap. 32 s.296(3); Cap. 32H Form 63A</td></tr> </tbody> </table>