Basics of Employee Compensation in Hong Kong
In Hong Kong only one insurance is strictly mandatory for every employer, whether corporation or individual.
It is called Employee Compensation and it is regulated by the Employee Compensation Ordinance written in the Laws of Hong Kong and enacted by the Labour Department.
Failing to comply with this legal code can result in severe financial penalties for your business.
What covers the Employee Compensation?
It is an insurance that covers the liability of the employer in case one of the employees get injured/a disease or died in the course of his employment.
In other words, if an employee gets injured/a disease during his work, his employer needs to continue to pay his earnings during his recovery and his medical expenses, in the limit of the Employee Compensation Ordinance.
Furthermore, if the employee has a permanent disability due to his work injury, the employee is liable to pay him a compensation. It is the same principle if an employee died, the employer needs to pay a compensation to his family.
Employee Compensation covers all those costs that the employer must paid in case of those situations.
What are the earnings that the employer must continue to pay and how much?
During the sick leaves of the employee, the employer needs to pay him 80% of his earnings which include:
- Cash wages
- The value of any privilege or benefit which can be estimated in cash, e.g, food, fuel or quarters supplied to the employee, if as a result of the accident he is deprived of any of them
- Overtime payments of other special remuneration, whether by way of bonus, allowance or otherwise, if it is of a constant nature
- Customary tips
According to the Ordinance, the minimum rate of monthly earning is deemed to be 4,090 HKD.
What is the limit for the medical expenses covered by Employee Compensation?
The medical expenses put an upper limit to 300 HKD per day (except if you have at the same time an in-patient and outpatient treatment it is 370 HKD per day).
If the medical expenses are more than this amount the employer is not legally obliged to reimburse the difference.
How to notify a new claim and who decide the settlement?
The employer must notify the Labour Department – the public entity that will handle it – within the 14 days that follow the injury/disease and within the 7 days that follow the death of the employee.
It is the Labour department that will assess when the employee is fully recovered and do the computation and calculation of the final assessment.