120 employees dismissed following contractor Fung Cheung Kee’s insolvency

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Following the collapse of Fung Cheung Kee, employees have turned to the Hong Kong Construction Industry Employees General Union for assistance.

2nd March 2024 – (Hong Kong) Hong Kong’s construction industry is grappling with the unexpected liquidation of Fung Cheung Kee, a venerable 44-year-old contracting firm. The sudden demise of the company last Friday has resulted in the termination of approximately 120 construction workers, with the ripple effects putting numerous other frontline jobs at peril. Close to 20 business partners have sought assistance from a trade union in the wake of the liquidation.

Chris Sun, the Secretary for Labour and Welfare, announced the establishment of a helpline by the Labour Department for the affected employees of Fung Cheung Kee. Sun assured that the workers’ due wages and severance pay would be secured through the Protection of Wages on Insolvency Fund. Additionally, the authorities are liaising with unions to determine if further subcontractors have been impacted by the fallout of Fung Cheung Kee’s closure.

The Hong Kong Construction Industry Employees General Union has been inundated with requests for support, with more than 20 appeals from the employees of Fung Cheung Kee alone. The union’s rights and complaints officer, Ryan Ng Wai-leung, expressed concern over the potential vast number of subcontractor staff affected by the situation.

Financial distress is evident as the company with the largest outstanding amount is owed over HK$60 million, and a scaffolding subcontractor awaits payment of HK$10 million. The expectation for post-Lunar New Year settlements has been dashed by the abrupt announcement of the voluntary liquidation, leaving many companies in shock and dismay.

Fung Cheung Kee’s associated firm, Cheung Kee Fung Cheung Construction Company, has initiated the liquidation process, with company records disclosing a debt of HK$6 million as of early January. Other affiliates, including Fung Li Engineering Company Limited, have filed for liquidation as well.

A staff notice, verified by unionist Ng, conveyed the company’s regret over the “extremely difficult and painful decision” necessitated by cash-flow challenges. The Mandatory Provident Fund Schemes Authority has flagged the group for defaulting on contributions, affecting approximately 10 employees.

The wider industry is also feeling the pressure of cash-flow issues, as noted by Godfrey Leung King-kwok, executive director of the Construction Association. Leung attributes these financial strains to high-interest rates and a slowdown in the private construction market, expressing hope for a decrease in interest rates and a steady rollout of public works projects.

Fung Cheung Kee’s historical projects include luxury flats in Mid-Levels, developments in Mount Pokfulam and Cheung Sha Wan, and a structure in Discovery Bay. The Development Bureau and housing authorities have stated that none of Fung Cheung Kee’s affiliates were engaged in unfinished government projects prior to the liquidation. The Urban Renewal Authority confirmed that a Kwun Tong project by the company was nearing completion and the remaining work would be managed according to contractual obligations.