Letter | Gym’s closure underscores need for whistle-blower protections

Posted by Admin October 11, 2024 Fitness

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Hong Kong’s Consumer Council has received over 5,300 complaints against Physical Fitness with claims totalling more than HK$190 million (US$24.5 million) as of October 4, nearly a month after the company abruptly shut down its fitness centres throughout the city. Around 670 employees have sought help from the Labour Department to recover unpaid wages. The fitness chain also withheld about HK$3 million worth of Mandatory Provident Fund contributions.

Physical blamed high rents for the closures. Undeniably, retail rents in Hong Kong are sky-high and have led to the closure of many long-time businesses. Nonetheless, the branch I frequented as an ex-member of Physical was seemingly doing pretty well. The gym was busy. Classes were often fully booked.

In my experience, staff could be aggressive in pushing fitness plans. Some continued these sales tactics until right before the closures. Many customers signed multi-year membership plans, ranging from HK$1,000 to HK$1.8 million. So where did all the money go? Apparently Physical didn’t spend it on paying its rents or its workers.

Eight former employees have filed a police report over possible unfair trade practices. These trainers said they were offered a bonus to promote higher-priced fitness plans just days before the closure. I applaud them for their courage in coming forward.

When companies struggle financially, the staff and creditors are usually the first ones to spot the signs since they are the first to be affected. Physical’s closure came after the Mandatory Provident Fund Authority threatened legal action over missed pension contributions since June. But why did it take three months to expose Physical’s financial troubles? An earlier disclosure could have protected more consumers.