Updates on Employees’ Compensation Ordinance in Hong Kong | Typhoon Season
The Labour Department has reminded employers to make prior work arrangements for staff to ensure the safety of employees and smooth operation of establishments now that it’s typhoon season.
The Labour Department (LD) reminded employers to make prior work arrangements for staff during and after tropical cyclone warnings, including arrangements on reporting for duty, release from work, resumption of work and work from home (if applicable) to ensure the safety of employees and smooth operation of establishments.
There are several changes to the Employees’ Compensation Ordinance in Hong Kong. Companies need to be aware of these changes which essentially means that more people are now eligible for compensation if they suffer an injury or illness as a result of their work.
The key details about the ordinance are:
1. The scope of coverage has been expanded to include those who are not employees, such as domestic workers.
2. The definition of ‘compensable injury’ has been broadened to include mental health conditions caused by work stress.
3. The maximum amount of compensation that can be awarded has been increased.
4. The time limit for making a claim has been extended from one year to three years.
How will this affect businesses in Hong Kong?
Companies will need to take measures to protect workers from injuries and illnesses, both physical and mental. This may include providing safe working conditions, and training staff on how to cope with work stress. They may also need to budget for higher compensation payments in the event that an employee does suffer an injury or illness.
The penalty for non-compliance is HK$100,000 and 6 months imprisonment.
The reaction of employers to the new ordinance has generally been positive, as they recognise the importance of protecting workers’ health and safety. Some have raised concerns about the increased financial burden that may be placed on businesses, but overall most seem to support the changes.
One way for employers to reduce the financial burden from their end is to purchase employee compensation insurance, which will now become even more essential.
The cost of employee compensation insurance for a small business is estimated at around $2,000 per year while it costs a medium-sized business $3,000 to $4,000 and a large business $5,000 to $15,000.
Domestic helper insurance policies cost about $500 per year for up to four helpers. Coverage includes personal accidents, hospitalization and repatriation expenses.
Employers and businesses are expected to comply starting from the first day of employees’ first policy year. Changes to the ordinance in 2022 will make it mandatory for all businesses with employees to have employee compensation insurance in place.
Need help finding an employee insurance policy? Our advisors can help you find the right cover for your business.