Based on the same model than in UK, Employee Compensation insurance in Hong Kong is mandatory by law for all registered businesses and their employees.
1. What is Employee Compensation (EC) insurance?
In simple words, Employee Compensation (EC) insurance in Hong Kong covers a company against its liability towards employees if they suffer bodily injuries at work.
As per the Employees’ Compensation Ordinance (ECO) Chapter 282, the employer must cover its liability both under the say Ordinance and at common law in respect of work injuries sustained and prescribed occupational diseases contracted by their employees.
EC insurance wordings are similar from a company to another one. However, few important extensions could be added on request.
Lastly, it could be contracted on a stand-alone basis or included in a “Business Package” insurance.
2. Who is it for?
The ordinance applies to all HKG registered companies who employ somebody in Hong Kong to do a task and pay him/her.
It does not matter whether the staff are permanent staff or temporary, whether staff are working on a trial basis or working on hourly or seasonal contracts. Also it applies to domestic helpers and to the founder of the company if he/she is getting a salary.
Finaly, it is important to notice that the Ordinance applies to employees employed in Hong Kong by local employers even though they are working outside Hong Kong.
3. What is covered?
If an employee sustains an injury from accident arising out of and in the course of his employment, his employer is in general liable to pay compensation under this Ordinance. Furthermore, the employer is even liable if the employee have committed acts of faults or negligence when the accident occurred.
An employee suffering incapacity arising from an occupational disease is entitled to receive compensation as well.
Some accident arising outside of the work are considered being under the scope of the ECO such as accident happening while attending a first aid training or while commuting during the duration of a weather warning.
4. How much does it cost?
Premium will depend on the industry, annual salary levels of each member and claims history. Rates could go from 0.15% to 2% on the annual salary and even more for certain highly exposed occupation.
5. What is the limit of insurance?
Limit of insurance is 100,000,000 HKD per event for companies with less than 200 employees. For companies above, limit of insurance is 200,000,000 HKD per event.
6. Why is it important to have this insurance?
Firstly, in case an employer fails to contract such insurance, it can potentially be subject to a max fine of HKD 100,000 and imprisonment for 2 years.
Then, under the ECO, the employee does not have to show fault on the part of the employer to claim statutory compensation. Therefore, it means that if the accident is a work related one, the probability for the employers to compensate an employee is extremely high
It is not the same when the employee sues for common law damages as the employee must prove the negligence or wrongful act of the employer. However, chances to sue the employer to compensate the work accident exist as well.
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