Protecting Refunds to Parents and Employee Salaries when Student Care Centres Cease Operations

Mr Jackson Lam asked the Minister for Education (a) whether security deposits required of new Student Care Centre and Kindergarten Care operators will be sufficient to cover refunds owed to parents and outstanding employee salaries in the event of an operator's sudden failure; and (b) whether similar safeguards will eventually apply to existing operators.

Mr Desmond Lee: My response will address oral question No 68 on today's Order Paper and the related oral question (PQ 3109) scheduled for the 7 October sitting, on the security deposit requirements for Student Care Centre (SCC) operators in our schools. [Please refer to "Impact of New Financial Deposits and Requirements on Student Care Operators Managing Multiple Centres", Official Report, 7 October 2026, Vol 96, Issue 39, Written Answers to Questions for Oral Answer not Answered by End of Question Time section.]

For new SCC contracts commencing December 2026, operators will be required to provide a new security deposit. This includes existing operators who are awarded new contracts. The security deposit is intended to mitigate financial losses incurred by the Ministry of Education (MOE) in the event of an operator's default or failure to meet its contractual obligations. MOE will support affected students as appropriate. The operators are responsible for outstanding employee salaries.

MOE has sized the security deposit at about one month of the SCC's total fees to guard against potential losses, while avoiding excessive burden on operators. The security deposit is tiered by enrolment so that operators with lower revenue from a smaller enrolment provide a smaller deposit. The quantum is also pegged to the lower bound of each enrolment tier to ensure operators of centres with enrolment just above a threshold are not unduly burdened.

To ensure operators have sufficient time to make the necessary arrangements, the estimated enrolment and security deposit computation for each SCC are stated upfront in the tender documents. Operators are required to fulfil this requirement through a letter of guarantee from a financial institution six months from the commencement of the contract. The requirements imposed by financial institutions, including whether collateral is required, will depend on commercial factors such as the operator's creditworthiness, financial standing, and existing relationship with the financial institution.

MOE will monitor and review the implementation of this requirement.