Blaming a discrepancy in their employee headcount numbers, Hong Kong Airlines is under fire after receiving wage subsidies it wasn’t entitled to. A group of former cabin crew recently brought the situation to a head. The former employees lodged a complaint with Hong Kong’s administration about the wage subsidy payments. As a result, regulators hit the airline with an undisclosed penalty.
Former cabin crew lodge a complaint about Hong Kong Airlines
Danny Lee in The South China Morning Post first reported the news over the weekend. His report details a complaint made by a group of former Hong Kong Airlines cabin crew calling themselves the Hong Kong Airlines Concern Group.
In December 2020, 250 cabin crew lost their jobs at Hong Kong Airlines. That followed the airline cutting 400 jobs earlier in the year and asking most of their remaining employees to take unpaid leave.
Frequently tagged as Hong Kong’s third airline, Hong Kong Airlines operates a fleet of 35 Airbus aircraft (of which 24 are presently parked) and approximately 3,000 employees. China’s HNA Group owns Hong Kong Airlines. The high profile Hainan based conglomerate entered into bankruptcy protection in January. However, the group’s aviation business remains mostly unimpacted by the bankruptcy proceedings.
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Hong Kong Airlines has received around US$20 million in ESS payments
Hong Kong Airlines had accessed Hong Kong’s Employment Support Scheme (ESS). That scheme provides time-limited financial support to employers to retain employees who may otherwise be made redundant. Hong Kong Airlines confirmed to The South China Morning Post it had received almost US$20 million in ESS payments.
As a condition of payment, ESS recipients must not implement redundancies during the subsidy period. Furthermore, all wage subsidies must go to paying employees their wages.
Hong Kong Airlines took advantage of the ESS program between June to August 2020 and then between September and November. Shortly after the last round of subsidy payments ended, Hong Kong Airlines axed 250 cabin crew jobs, in early December.
The Hong Kong Airlines Concern Group worked out the airline had used the same employee headcount figure in both the first and second round of payments. This was despite employee headcount numbers dropping during the second round of payments owing to more employees going out on unpaid leave.
Hong Kong Airlines not entitled to certain wage subsidies
For their employer to receive the wage subsidy, employees must receive a salary or wage. But this was not happening at Hong Kong Airlines. In this case, the Hong Kong Airlines Concern Group established Hong Kong Airlines received more ESS payments than it was entitled to.
Based on current employee numbers, Hong Kong Airlines has received around US$6,750 in ESS payments per employee. However, the overpayment claims do not apply to all employees or across the full subsidy periods.
Hong Kong Airlines told Simple Flying ESS funding was calculated based on 50% of their employee’s monthly salary in January 2020.
“If an employee’s monthly salary is HK$8,000, we will only receive HK$4,000 to support their salary payment,” a spokesperson said.
Hong Kong Airlines declined to say how much they paid in penalties for the breach, the airline’s spokesperson only saying;
“Hong Kong Airlines has addressed the headcount difference in the first tranche of ESS application with the authorities. The penalty has already been deducted from the second tranche of ESS funding that we received from the government.”