Ferry company insolvency exposes flaw as seamen found ineligible for compensation

The closure of Macao Dragon ferries has exposed a weak link in labor ordinances that leaves seafarers unprotected if their employers become insolvent.

The 66 seafarers suddenly thrown out of work by the abrupt shutdown of the company may be ineligible for compensations, the Small Craft Workers Union said on Friday, adding the workers are very anxious about the situation.

Macao Dragon Company Limited, which offered cut-rate ferry service between Hong Kong and Macao, ceased operations on Thursday, claiming insolvency and owing debts estimated by the liquidator in excess of HK$10 million.

About 130 Macao Dragon employees went to the Labour Department and the Marine Department on Friday seeking government assistance.

Around 70 employees have already applied for payment from the Protection of Wages on Insolvency Fund.

The government fund was established in 1985 to provide payment to employees who are owed back pay, wages in lieu of notice and severance payments by their insolvent employers, as set out under the Employment Ordinance.

However, the 66 seamen were not eligible. Seafarers are unlike other staff working on land, said a spokesman for the union.

The land staff are protected by Hong Kong's Employment Ordinance and the Fund. But seafarers are regulated by a different system, known as the Merchant Shipping (Seafarers) Ordinance.

That ordinance, however, provides no guidance concerning the compensation for employees of insolvent companies.

"We were not aware of it until this time," the spokesman said.

The Labour Department said it cannot help, and the Marine Department stated the matter was beyond its jurisdiction, he added.

The Macao Dragon's shutdown revealed the problem, said the Chairman of Hong Kong Seamen's Union Lee Chi-wai.

He told China Daily that the city has no precedent to refer to, since there has been no prior liquidation of shipping companies.

"We asked the Labour Department, they don't know; we asked the insurance company, they don't know," he said.

The Small Craft Workers Union estimated that the entire staff is owed HK$1.5 million in salaries for the first half of September. With compensations added, the sum may well reach HK$5 million.

The Labour Department said on Friday that it has agreed to make "initial registration" for the 66 seamen, and, if necessary, will help them to get payment from the fund.

A three-party meeting in early October has already been arranged among the department, affected employees, and the provisional liquidator, in order to find a solution to this issue.

guojiaxue@chinadailyhk.com

China Daily

(HK Edition 09/17/2011 page1)