New minimum wage regime

Introduction
New minimum wage amounts
Penalties for non-compliance
Comment

Introduction

Amid the global COVID-19 crisis, on 16 April 2020 the Legislative Assembly approved Law 5/2020 on workers' minimum wage, which will enter into force on 1 November 2020. The law aims to protect workers and avoid overly low salaries.

The new law has expressly revoked the minimum wage for cleaners and security workers in the property administration industry and is the first almost-universal regulation to set a minimum wage in Macau. The domestic and disabled support workers who are expressly excluded in the law are the only workers to fall outside its scope.

The new regime will apply to all labour contracts which are executed before the law enters into force (unless the above exceptions apply) and are ongoing; it does not apply to contracts which are terminated before the law enters into force.

New minimum wage amounts

According to Article 4 of the law, the minimum wage will vary depending on how remuneration is calculated:

• Where remuneration is calculated on a monthly basis, the minimum wage is MOP6,656 per month.
• Where remuneration is calculated on a weekly basis, the minimum wage is MOP1,536 per week.
• Where remuneration is calculated on a daily basis, the minimum wage is MOP256 per day.
• Where remuneration is calculated on an hourly basis, the minimum wage is MOP32 per hour.
• Where remuneration is calculated based on the number of hours worked per month, the average minimum wage is MOP32 per hour (calculated by dividing the monthly salary by the hours worked). However, such remuneration must take into account the worker's average remuneration over the past two months.

Article 9 of the law states that the minimum wage amounts will be subject to review every two years and will be updated in line with Macau's economic development. The law does not provide for the competent authority in this respect; however, this task is likely to be carried out by the Economic Department in conjunction with the Labour Affairs Bureau.

The above amounts are based on workers' 'basic remuneration' (Article 3), which is defined by the Labour Relations Law (7/2008) and includes:

• the basic wage;
• overtime remuneration;
• extraordinary remuneration for night or shift work;
• the food allowance;
• the family allowance;
• subsidies and commissions relating to the exercise of functions; and
• charges levied by an employer to customers as extraordinary amounts and subsequently paid to an employee.

Penalties for non-compliance

The new law has a wide scope of application and will affect not only new labour contracts, but also ongoing contracts which were signed before it comes into effect. In such cases, where an employee's remuneration is less than the new minimum wage, it must be increased in accordance with the new law. Failure to do so will incur the penalty of legal non-existence.

The law pays special attention to 'overtime work' (as defined in Article 37 of the Labour Relations Law). Specifically, the hourly remuneration for such work must be updated according to the hourly amounts stipulated in the law.

The law's application will be subject to the supervision of the Labour Affairs Bureau, whose responsibilities have increased.

Failure to pay the new minimum wage will result in a fine ranging between MOP20,000 and MOP50,000 per worker. Further, failure to follow the new rules of calculation for overtime will result in a fine ranging between MOP5,000 and MOP10,000 per worker. These penalties already exist under the Labour Relations Law.

Comment

Macau is taking big steps to follow the rules of the International Labour Organisation, whose mandate is to advance social and economic justice through international labour standards. By striving to avoid the payment of low salaries for both local and non-resident workers, Law 5/2020 aims to ensure the just and equitable payment of workers and realign Macau's employment regime with international standards.

For further information on this topic please contact Pedro Cortés or Helena Nazaré Valente at Rato, Ling, Lei & Cortés Advogados by telephone (+853 2856 2322) or email (cortes@lektou.com or valente@lektou.com). The Rato, Ling, Lei & Cortés Advogados website can be accessed at www.lektou.com.