Money Matter

Compensation claim raises question about illegal workers

By Anthony Lam, Solicitor, Au-Yeung, Cheng, Ho & Tin

Article exclusively contributed by Au-Yeung, Cheng, Ho & Tin

The issue of employee's compensation for illegal workers killed or injured in industrial accidents has given rise to much public concern and discussion. The Employees Compensation Assistance Fund Board recently approved an application from the widow of an illegal worker from the mainland who died in an industrial accident in 2002, following a decision by the District Court.

As indicated on 10 May 2005 by Stephen Ip, the Secretary for Economic Development and Labour, the Court's decision was not in line with government policy on combating illegal workers. The relevant laws are being reviewed and the Labour Advisory Board has been consulted to plug the loopholes.

The relevant decision was in the case of Ng Yuk Kuen for herself and other members of the family of Wong Wan Chung, deceased vs Ho Chi Yun, (the Wongs' case). In February 2002, Mr Wong entered Hong Kong from China as a visitor on a "two-way" permit and was employed by Mr Ho as a construction site worker. On 15 April 2002, Mr Wong was killed while demolishing a brick wall which collapsed.

Since he was not officially permitted to work in Hong Kong, his employment contract with Mr Ho was illegal. Even so, the District Court exercised its discretion to treat the contract as valid and awarded compensation of about HK$880,000 plus interest against the employer.

The use of discretion is allowed according to Section 2(2) of the Employees' Compensation Ordinance (Cap. 282) (the Ordinance) which empowers the Court to treat an illegal employment contract as valid after considering all the circumstances of the case. This had been done in previous instances.

However, the impact of this case was in the subsequent claim on the Employees Compensation Assistance Fund (the Fund), which is financed by a levy on employees' compensation insurance policies. The main purpose of the Fund is to protect injured workers and ensure they can receive compensation if injured in the course of employment.

Under Section 16(1) of the Employees Compensation Assistance Ordinance (Cap. 365), if a person is unable to recover payment of compensation for which their employer is liable, they may apply to the Fund for payment of that amount. Claims on the Fund usually occur when (i) the employer cannot be located and the insurer of the employees' compensation insurance policy cannot be identified; or (ii) no valid employees' compensation insurance policy is taken out and the employer is financially unable to settle the Court's award.

Mr Wong's widow took advantage of Section 16(1) and made a successful claim on the Fund.

The Court did not set out in detail reasons to justify the use of its discretion, so it is useful to refer to another case.

In the District Court's 1999 decision in Tsang Siu Hong vs Kong Hoi For trading as Wing Hing Auto Engineering Service and others, the employer denied knowledge of the applicant and that an accident had occurred. The Court found, though, that the applicant, who came from China and held a "two-way" permit, was engaged to work for the employer in a garage and, during the course of employment, had accidentally been hit on the head by a falling iron rod. The Court expressly recognised that the employer's awareness of the employee's immigration status was a key factor in their decision to exercise discretion.

It seems there is a policy for the Court to penalise employers who deliberately hire illegal workers. It appears they exercise discretion in favour of the employee and expect the employer to pay compensation even to an illegal worker. Having said that, if the employee uses a false identity card, the case will generally be decided in favour of the employer. In such circumstances, the Court may not exercise its discretion and will rule that the employment contract is illegal. The employer is not then obliged to pay any compensation.

However, if the Court exercises its discretion and holds that the employment contract is legal, the insurer of the employees' compensation policy is usually required to pay the compensation.

Q&A on the employment of illegal workers
Q1 Besides the potential liability for paying employee's compensation, what is the penalty for employing an illegal worker?
A1 Pursuant to Section 17I(1) of the Immigration Ordinance, any employer of a person who is not lawfully employable commits an offence and is liable to a fine of HK$350,000 and imprisonment for three years.

Q2 Is there any defence in such cases?
A2 Yes. Under Section 17I(1A) of the Immigration Ordinance, it is a defence if the person charged can prove that all practicable steps were taken to determine whether the employee was lawfully employable, and that it was reasonable to conclude they were.

Q3 What is the meaning of "all practicable steps"?
A3 There is no exhaustive list. However, the Court expects an employer to check the particulars on the identity card produced by the employee with the Immigration Department. An employer should also ask about domestic circumstances, skills and previous work experience and check these by getting in touch with the previous employer.

Taken from Career Times 15 July 2005

(Last review date: 23 August 2013)

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Disclaimer: The opinions expressed in this article are those of the contributor

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