Employees Compensation Insurance is mandatory under the Hong Kong Employee’s Compensation Ordinance. Any Hong Kong employer (corporation or individual) that has at least one employee, 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, 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 Cover?
This insurance provides cover for any employee who becomes injured or ill as a result of job-related activities. The minimum limits that must be purchased by a business with less than 200 employees is HK$100 million. This cover also protects the employer, as now they are no longer liable for the costs of workplace injuries or illnesses to employees.
Must I Provide Employees Compensation Insurance for Part-time Workers or Seasonal Workers?
The Hong Kong Ordinance specifically states that all employees must be covered and there is no exception for part-time workers, seasonal workers, employed family members, 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.
Are There Penalties For Not Having The 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 imprisonment for up to two years. The employer may also be forced to pay a surcharge to the Employee’s Compensation Assistance Fund.
Other Issues to Consider
- Since employees come and go, it is the business owner’s responsibility to notify the insurer of periodic changes.
- 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.
- 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.
- Although the minimum coverage required is HK$100 million, employers should consider buying more coverage to mitigate their risk.
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.
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