Employees Compensation Insurance
Like most Western countries, Hong Kong has labour laws requiring employers carry insurance to protect employees against workplace injuries. Employees Compensation Insurance (also commonly referred to as EC Insurance) is mandatory under Hong Kong Employee’s Compensation Ordinance enacted by the Labour Department.
According to this ordinance, any Hong Kong employer, whether corporation or individual, employing at least 1 person must carry Employees Compensation insurance. This insurance protects both employee and employer in the event an employee is injured or becomes ill due to work related activities. Failing to comply with this legal code can result in severe financial penalties for your business.
For business owners who do not completely understand the ordinance or have unanswered questions regarding its content or requirements, the following is a list of the most frequently asked questions about the Employee’s Compensation requirement in Hong Kong.
What Does Employees Compensation Insurance in Hong Kong Cover?
Employees Compensation Insurance in Hong Kong provides cover for any employee who becomes injured or ill as a result of job-related activities. For example, if one of the servers in your restaurant accidentally spills hot tea on themselves while bussing a table, your Employee Compensation policy would cover your liability for the waiter’s injuries including their medical bills, etc.
The minimum limit that must be purchased by a business with less than 200 employees is HK$100 million. If you have a business that employs more than 200, then you are required to purchase a minimum limit of insurance of HK$200 million. These are just minimum limits employers are required to purchase, the actual action amounts paid out to employees that are injured in the course of their duties vary based on age, severity of the injury, and numerous other factors.
Generally speaking, employers are liable for injuries their employees sustain while in the course of their employment. So it’s important to note that this cover isn’t just meant to protect employees. It also protects the employer, as the insurance company will now protect them against liability for the costs of workplace injuries or illnesses to employees.
Must I Provide Employees Compensation Insurance For Part-Time Workers Or Seasonal Workers?
Yes, the Hong Kong Ordinance specifically states that all employees must be covered. This means that there are no exception for part-time workers, seasonal workers, employed family members, contract employee, apprentice, or a local domestic helper.
Is It the Employer’s Responsibility to Report an Injury or Illness?
When an employer is made aware of a work-related injury or illness, they must file a report with the Commissioner for Labour and the insurer providing cover. The employer should also keep detailed records of the event and the compensation actions of the insurer. For detailed information, and the appropriate forms, employers should visit the Hong Kong Labour Department.
Can I Deduct My Cost Of Insurance From Employee Wages?
No. The cost of Employees Compensation Insurance must be paid fully by the employer so no deductions are allowed.
Are There Penalties For Not Having EC Insurance In Place?
Any business with at least one employee who fails to comply with the Employees Compensation ordinance has committed an offence and can be liable for a fine of up to HK$100,000 and in the worst cases: imprisonment for up to two (2) years. The employer may also be forced to pay a surcharge to the Employee’s Compensation Assistance Fund.
With stakes this high, it makes sense to make sure you’re compliant with these statutory requirements.
What if I can’t get Employees Compensation Insurance in Hong Kong?
If you’re running a business that’s classified as “High Risk”, you may not be able to get EC Insurance coverage from a regular insurer. If you’ve been denied by 3 different insurance companies or been quoted premiums over 30% the standard market rate, you would be able to get EC insurance through the Employees’ Compensation Insurance Residual Scheme Bureau.
Other Issues to Consider
Since employees come and go, it is the business owner’s responsibility to notify the insurer of periodic changes to your roster.
Employee’s Compensation rates are based on the job classification of each employee so the employer should be specific about each employee’s job tasks when completing the application for insurance.
Employees working outside of Hong Kong
Employers must list any employees that work outside of Hong Kong either temporarily or permanently.
For hired subcontractors, make certain that you retain a certificate of insurance from their Employee’s Compensation insurer.
Minimum Limit for Employee Compensation Insurance
Although the minimum coverage required is HK$100 million, employers should consider buying more coverage to mitigate their risk.
Do I need Employee Compensation Insurance?
Yes. As a business owner, it is incumbent upon you to know and understand employment ordinances put forth by your government. Whenever you are in doubt, contact your insurance broker for details regarding your business and the laws or ordinances that may affect your business operation.
Speak to your Trusted Union insurance adviser to get a free no obligation quote or learn more about the EC ordinance and your employee’s compensation insurance coverage.
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