Forum: Managing agents should try to pass on JSS payouts where possible

I refer to the reply by the Association of Strata Managers (ASM) (Managing agents have also been affected by Covid-19 pandemic, July 2).

First, it is important to note that the ASM is not a government body but a private association representing some of the managing agent firms.

Council members representing management corporations, or MCSTs, do not need to treat pronouncements from the ASM as if they were from the authorities.

Most MCST contracts with managing agent firms tend to comprise three components: accounting and headquarters support fee, direct payment of site staff salaries and an additional profit element.

In an ideal case, the MCST would directly employ the site staff and pay a pure accounting and headquarters support fee to the managing agent firm.

However, it is administratively simpler to let the managing agent firm account for the site staff headcount even though, for all intents and purposes, the site staff are seen as employees of the MCST.

Any variable bonus and increments are directly paid for by the MCST.

In other words, the managing agent firm has very little influence over the selection, retention and compensation of the site staff.

In a pure managing agent firm where there are accounting and headquarters staff, with all site staff directly paid for by the MCSTs, the Jobs Support Scheme (JSS) becomes an unintended 3.25-month salary windfall as there is no real risk of job losses for the site staff or headquarters staff amid the coronavirus pandemic.

For managing agent firms that also dabble in other businesses, they should not use this as an excuse for cross-subsidy.

On the other hand, most MCSTs have been trying to find ways to provide rebates or reduce the management fees paid by subsidiary proprietors.

They would have been hoping that the JSS payouts would be passed on to them so that the subsidiary proprietors can benefit.

We hope managing agent firms will be good partners with their MCSTs, and pass on as much of the JSS payouts as possible for eligible site staff.

Richard Koh