Hong Kong’s safety net for workers left unpaid by bankrupt employers is facing growing financial pressure amid a wave of business closures, while government figures reveal that no one has been prosecuted for allegedly abusing the system despite years of investigations.
Official data show that the number of successful claims made to the Protection of Wages on Insolvency Fund (PWIF) reached 5,533 in 2025, up 160% from 2022. During the same five-year period, the Labour Department referred 11 cases of suspected abuse of the fund to law enforcement agencies, yet not a single prosecution has been brought.
The figures come as Hong Kong experiences one of its most significant waves of business failures in recent years, raising fresh concerns that some employers are using the publicly funded scheme to evade wage obligations while workers continue to bear the cost.
A growing number of workers left unpaid
Over the past two years, a string of prominent businesses, including restaurant chains and large employers have collapsed without paying staff, forcing hundreds of workers to rely on the PWIF for compensation.
Among the companies that shut down in 2025 were Star Seafood Restaurant, Taipan Bread & Cakes, and Ocean Empire Food Shop, each leaving employees with unpaid wages.
The closures have continued into this year. Biotechnology start-up Sanwo Biotech Limited allegedly owed more than HK$24 million to over 30 employees, some of whom reportedly went unpaid for as long as 15 months before the company folded. Thai restaurant chain Golden Thai Food closed all of its outlets while allegedly owing wages to both local employees and migrant workers. In another case, Sun Kong Banquet Hall in North Point ceased operations without warning, reportedly leaving more than 20 workers owed around HK$1 million.
Claims rise as the fund slips into deficit
Figures released by the Labour Department in response to the Budget questions from the LegCo members show that the PWIF handled 5,917 applications in 2025, approving 5,533 of them. Both figures have increased for the third consecutive year, rising by 19% and 18% respectively compared with 2024. Compared with the low point in 2022, the number of approved claims has risen by 160%.
The food and beverage sector accounted for the largest share of approved claims, with 1,640 cases, representing around 30% of the total. Construction followed with 1,375 cases, or roughly one quarter of all successful applications.
The fund paid out HK$267 million in compensation during 2025—more than three times the HK$74.7 million disbursed in 2022. The average successful claimant received HK$48,255.
The sharp increase in claims has pushed the fund into its second consecutive annual deficit. By February of the 2025–26 financial year, expenditure had reached HK$270 million, while income stood at HK$199.3 million, leaving a shortfall of HK$71.1 million. Combined with a HK$30.4 million deficit in the previous financial year, cumulative losses have now exceeded HK$100 million.
The financial pressure has been exacerbated by the government’s decision to waive the HK$150 annual levy on business registrations that normally finances the fund. Introduced in April 2024 as a two-year measure to reduce costs for businesses, the waiver has significantly reduced the fund’s income just as compensation claims have surged.
Critics say employers are treating the fund as a ‘cash machine’
The concerns about employers using the PWIF as a means of shifting wage liabilities onto the public purse is increasing.
One of the most controversial cases involved Taipan Bread & Cakes. Employees told local media that, on the eve of the company’s closure, management instructed staff to transfer cash from individual shops back to company headquarters, prompting questions over whether company assets had been moved before workers received the wages they were owed.
The Labour Department says that where there is evidence of illegal asset transfers, theft, fraud or deliberate attempts to evade debts, cases are referred to either the Police or the Official Receiver’s Office. If sufficient evidence is found, offenders can be prosecuted under Hong Kong’s Theft Ordinance or Crimes Ordinance, with fraud carrying a maximum sentence of 14 years’ imprisonment.
Eleven referrals, no prosecutions
Despite repeated government pledges to crack down on abuse, enforcement figures paint a starkly different picture.
Between 2021 and May 2025, the Labour Department referred 11 suspected abuse cases to law enforcement agencies. Four investigations have since been completed, but officials said they found insufficient evidence of wrongdoing. The remaining cases are still under investigation.
Five years on, however, none has resulted in a prosecution.
The figures inevitably raise questions about whether the referral mechanism is effective, whether investigations are sufficiently rigorous, or whether potentially abusive corporate conduct is escaping meaningful scrutiny.
Government data released last year showed that only five suspected cases had been referred to the Police between 2020 and 2024, suggesting that six additional cases emerged in 2025 alone.
Over the same period, the Official Receiver’s Office obtained court orders disqualifying only nine company directors or responsible persons. While such orders may prevent individuals from managing companies for a period of time, critics argue that they fall far short of providing a meaningful deterrent against employers who deliberately evade paying workers.
Workers continue to pay the price
For employees, unpaid wages represent earnings they have already worked for. Yet even when claims are successful, the PWIF compensates workers only up to statutory limits, meaning many recover only a fraction of what they are owed. The application process can also be slow, with some workers waiting as long as a year for their claims to be processed.
Without stronger enforcement and successful prosecutions against employers who deliberately evade wage obligations, the current system risks creating a moral hazard—allowing unscrupulous businesses to externalise the cost of wage theft onto a publicly funded scheme. A fund established to protect workers, they say, should not become a mechanism through which employers escape responsibility while employees are left waiting for justice.