Title

Moral hazard, insolvency and employees as creditors: what governance lessons can be learned from Hong Kong model?

Document Type

Article

Publication details

Ho, JKS & Price, R 2011, 'Moral hazard, insolvency and employees as creditors: what governance lessons can be learned from Hong Kong model?', The Journal of Corporate Law Studies, vol. 11, no. 2, pp. 525-550.

Published version available from:

http://dx.doi.org/10.5235/147359711798110583

Peer Reviewed

Peer-Reviewed

Abstract

This article argues that each of the US, the UK and Australia could take inspiration from Hong Kong's Protection of Wages on Insolvency Fund (POWIF) because it has the makings of a world-leading model for the protection of employee entitlements in circumstances of business failure. In particular, it is argued that although POWIF is open to fraud by unscrupulous employers it does not unduly increase moral hazard because its coverage provides only a modest safety net, it is funded by a mandatory private sector levy and it operates on a self-sustaining basis.