Injury & Compensation

Compulsory employees' compensation insurance

Article exclusively contributed by
the Gain Miles Group

Mr Cheung was a full-time designer at Company A and worked as a casual designer at Company B. One day, he sustained an injury in a traffic accident when leaving work at Company A and going to meet a client of Company B. He applied for employees' compensation from both companies. Both applications were rejected.

Were the employers at Company A and Company B both acting legally by rejecting Mr Cheung's application for employees* compensation?

Under section 40 of the Employees' Compensation Ordinance, an employer is required to take out a valid insurance policy, covering his liabilities under both the ordinance and common law for death or injuries involving any of its employees caused by an accident arising out of and in the course of employment.

Employees include all those who are employed under contracts of service or apprenticeship, including domestic helpers, agricultural employees and crewmembers, etc. The ordinance also applies to employees employed by local employers in Hong Kong who are injured while working outside Hong Kong. Even if the employee is a person carrying on business outside Hong Kong or a member of the crew of a foreign ship, the ordinance still applies if the employer submits to the jurisdiction of the Courts of Hong Kong.

However, some employees are not covered in the ordinance, including:

- casual employees (other than part-time domestic helpers or employees employed for the purpose of the employer's trade or business or for the purpose of any game or recreation and engaged or paid through a club);
- outworkers;
- members of the employer's family who live with him (they are not covered even if an employees' compensation insurance policy is in force in respect of such family members).

In the case of Mr Cheung, although the employer at Company A was obliged to take out an employees' compensation insurance policy for Mr Cheung, the accident was not covered by the policy because he had already left work at Company A. The employer was not liable to pay any employees' compensation.

Although Mr Cheung was carrying out business on behalf of Company B by meeting the client when the accident occurred, he was only a casual employee and the employer was not obliged to cover him in the company's employees' compensation insurance policy. Mr Cheung was therefore not eligible to claim any employees' compensation from Company B.

If an employer fails to have valid insurance cover, he is liable to prosecution and, on conviction, a maximum fine of HK$100,000 and two years' imprisonment.

The employer must also display a notice in both English and Chinese giving details of the insurance policy on the premises where anyone is employed.

Q & A about compulsory employees' compensation insurance
Q1 Ms Chan employs an employee who works in her store and lives with her. Should Ms Chan take out an employees' compensation insurance policy for this employee?
A1 Yes. Although the employee lives with Ms Chan, he is only an employee under a contract of service and not the employer's family member.

Q2 Company B employs some students for summer jobs and is questioning its obligation to take out an employees' compensation insurance policy.
A2 The employer at Company B is required to take out an insurance policy to cover liabilities in respect of these students, because they are employed under contracts of service.

Q3 Mr Lee is employed by a local employer but will have to work in mainland China for a year. He would like to know if he is covered by his company's employees' protection policy in the event of an accident at work.
A3 Yes. A valid employees' compensation insurance policy must cover the employer's liabilities both under the ordinance and common law for death or injuries involving employees that are caused by accidents arising out of and in the course of their employment, regardless of whether the place of work is in or outside Hong Kong.

Taken from Career Times 21 March 2003

(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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