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The Labour Department has reminded employers to take out employees' compensation insurance policies for their employees, including full-time, part-time and casual staff. If they fail to do so, they are in breach of the law and may face prosecution. In the first nine months of this year, the number of convictions in respect of employers' failure to take out employees' compensation insurance policies or failure to produce the policies for inspection reached 701.
Labour inspectors conduct regular workplace inspections to check employers' compliance with the compulsory insurance requirement under the Employees' Compensation Ordinance. In the first nine months of this year, 46,960 workplace inspections were conducted.
Apart from routine inspections, two special inspection campaigns were mounted during 2005 to check if employers have taken out employee insurance policies, one in relation to the personal services trade such as beauty salons, hair salons and foot massage shops, the other for private tutorial schools during their peak months from July to August. These special campaigns covered 4,489 target establishments and 163 employers were found not to have taken out employee compensation insurance policies or were unable to produce insurance policies for inspection.
An employer is, in general, liable to pay compensation under the Employees' Compensation Ordinance if an employee sustains an injury or dies as a result of an accident arising out of and in the course of his employment, or suffers incapacity arising from prescribed occupational diseases. The ordinance also requires employers to take out insurance policies to cover their liabilities both under the ordinance and the common law. Employers failing to take out insurance cover for their employees face prosecution and, on conviction, are subject to a maximum fine of $100,000 and imprisonment for two years.
In one recent case, a restaurant was fined $12,000 for failing to pay periodical payments in accordance with requirements of the Employees' Compensation Ordinance. The employer failed to pay periodical payments to an employee on the normal pay days or within seven days thereafter as required by the ordinance. The amount of periodical payments involved was about $33,000.
Section 10 of the ordinance stipulates that during the period of temporary incapacity, the employer must pay the injured employee periodical payments at the rate of four-fifths of the difference between the employee's monthly earnings at the time of the accident and his monthly earnings during the period of temporary incapacity. The periodical payments are payable on the injured employee's normal pay days. An employer who, without reasonable excuse, fails to pay within seven days of the due date commits an offence and is liable on conviction to a fine of $100,000.
...back to 13 October 2005
Further information:
Employers must take out employees' compensation insurance policy
Employer fined for contravening Employees' Compensation
Ordinance
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For Payroll and Human Resource Professionals
