APPENDIX D

Letter of 21 September 1998 to the Chief Executive tendering
advice on the Administration's proposal to standardise the rate
of compensating stand-by duty by time off in lieu

21 September 1998

The Honourable TUNG Chee Hwa
The Chief Executive of the
    Hong Kong Special Administrative Region
    of the People's Republic of China
Chief Executive's Office
Hong Kong

Dear Sir,

Proposal to Standardise the Rate of Compensating
Stand-by Duty by Time Off In Lieu

             We have been invited by the Administration to advise, under Clause 1(e) of our Terms of Reference, on its proposal to standardise the rate used to compensate stand-by duty by time off in lieu (TOIL).

Background

2.        Where, for operational reasons, staff are required to perform overtime and/or stand-by duty, they are normally compensated by TOIL or, where TOIL is not practicable, by an allowance.

3.        While the rates of the allowances are specified in the relevant Civil Service Regulations, this is not so with regard to the rates of compensation by TOIL. For overtime, the rate of TOIL specified in CSB Circular Memorandum No. 115/91 is 1:1 (i.e. 1 hour of overtime compensated by 1 hour of TOIL). For stand-by, however, the rates are not specified and vary from 1:1 in some departments to 2:1 in others.

The Administration's Proposal

4.        The Administration proposes to rectify this disparity by standardising the rate of TOIL for stand-by duty at the ratio of 3:2 (i.e. 3 hours of stand-by duty to be compensated by 2 hours of TOIL). The new rate takes account of the fact that stand-by duty, when compensated in the form of an allowance, is set at 2/3 the rate of overtime work. The proposal has the merit of aligning the rate of compensation for stand-by duty and overtime work. Since taking TOIL is rarely possible for most disciplined services staff, the proposal affects mainly civilian staff, although it is the Administration's intention to extend the new standardised rate to all departments.

Commission's Views and Recommendations

5.        The lack of a standard practice has led to disparity of treatment which, for staff relations reasons, must be rectified. We, therefore, support the Administration's proposal to standardise the rate of compensation for stand-by duty by TOIL. In setting the new rate at the ratio of 3:2, the Administration has had regard to the existing relativity between the rate of compensation by an allowance for overtime work and that for stand-by duty for civilian staff. We see no objection to this approach.

6.        We would, however, like to make one observation. This relates to the fact that while the rate of compensation for overtime work by TOIL is 1:1, the hourly rate of compensation for overtime work by an allowance is 1/140 of an officer's monthly salary for civilian staff which works out to be roughly equivalent to 1? times hourly salary. At the Commission's informal meeting with the Staff Side of the Model Scale 1 Staff Consultative Council on 14 May 1998, the MOD 1 representatives drew our attention to this apparent anomaly and suggested that the TOIL ratio for overtime work be changed accordingly from 1:1 to 1:1.5.

7.        We have invited the Administration to comment on this suggestion. In the Administration's view the current TOIL ratio for overtime work is appropriate for two reasons. Firstly, TOIL is considered more valuable than an allowance. This is because TOIL may be taken flexibly, at a time convenient to the officer concerned and that during time off, the officer earns leave and pension in addition to salary. There are no such associated benefits with regard to overtime allowance. Secondly, if the rate of TOIL compensation were higher than 1:1, this would mean that the hours of work in the week when overtime work is performed and in the week when compensatory time off is given are taken together, the aggregate would be less than the conditioned hours the officer should have worked in the two weeks. Given these considerations, the Administration does not think that there are strong justifications to change the current TOIL ratio for overtime work.

8.        We have considered the above arguments carefully. We agree with the Administration that the current TOIL ratio of 1:1 for overtime work is appropriate and that it should remain unchanged. However, whether the extra value inherent in one day of time-off is equivalent to the value of half a day's salary has not been quantified by the Administration. While this may not be totally satisfactory to the MOD 1 staff, the issue raised by the MOD 1 representatives should not have any bearing on the Administration's current proposal which concerns TOIL for stand-by duty.

Conclusion

9.        In conclusion, we support the Administration's proposal to standardise the rate of compensation of stand-by duty by TOIL and to set the new rate at the ratio of 3:2 (i.e. 3 hours of stand-by duty to be compensated by 2 hours of TOIL).