HKIHRM Briefing Session

Understanding
Employees Compensation
Ordinance
Employees Compensation Division
Labour Department
13 October 2011
1

Agenda
1. Overview of the Employees Compensation
Ordinance (ECO)
2. Settlement of an EC claim
3. Common issues in dispute
4. Points for employers to note
5. Summary
6. Q & A

Part 1
Overview of the
Employees Compensation
Ordinance

Application
All full-time or part-time employees in Hong
Kong, including apprentices, domestic helpers
Employees employed by Hong Kong
employers but working outside Hong Kong
Government servants

Individual Employers Liability

Compensation payable by the employer if his
employee sustains an injury or dies as a
result of an accident arising out of and in the
course of his employment,
or,
contracts an occupational disease prescribed
in Schedule 2 to the ECO, except
Pneumoconiosis, Mesothelioma and
Occupational Deafness.

Injury by accident
Accident is an unlooked-for or misfortune
event which is not expected or designed by
the employee himself.
It is not an injury by accident if there is a
continuous process going on substantially
from day to day, which gradually over a
period of time produces incapacity.
Whether or not an injury is sustained by
accident is a mixed question of law and fact
to be decided by court
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Injury by accident (2)

Deeming Clause
Travelling as passenger to and from place of work in
employers transport (except public transport);
Driving direct to and from place of work in employers
transport in connection with employment;
Travelling to and from place of work during typhoon
No. 8/red/black rainstorm (4 hours before/after work);
Travelling by permitted transport between Hong
Kong and any place outside Hong Kong or between
any such places.
An accident arising in the course of an employees
employment shall be deemed, in the absence of
evidence to the contrary, also to have arisen out of that
employment (S.5(4))
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Schedule 2, ECO
Prescribed Occupational Diseases (48 items)
A. CAUSED BY PHYSICAL AGENTS
B. CAUSED BY BIOLOGICAL AGENTS
C. CAUSED BY CHEMICAL AGENTS
D. CAUSED BY MISCELLANEOUS AGENTS
Item

1.
Description
of OD

2.
Nature of trade, industry or
process applicable

A9

Carpal tunnel
syndrome

Any occupation involving repetitive use

of hand-held powered tools whose
internal parts vibrate so as to transmit
that vibration to the hand, but excluding
those which are solely powered by hand.

B11

Severe acute
respiratory
syndrome

Any occupation involving close and

frequent contacts with a source or
sources of severe acute respiratory
syndrome infection by reason of
employment :

3.
Prescribed
period
1 year

1 month

For a disease outside Schedule 2, an employee may still recover

compensation under the Ordinance if such a disease is a personal
injury by accident arising out of and in the course of employment.

No-fault Compensation
An employer is generally liable to pay
the statutory compensation even if the
employee might have committed acts
of faults or negligence when the
accident occurred.
The employee does not have to show
fault on the part of the employer to
claim statutory compensation.
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Common Law Damages

ECO allows an employee to sue for common

law damages if his injury is caused by the
negligence or wrongful act of the employer
(or third party);

The damages awarded, if any, shall be

reduced by the value of the statutory
compensation paid or payable under the ECO;

Common considerations whether a personal

injury claim be filed : contributory negligence,
legal costs, etc.
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Compulsory Insurance
ECO requires employers to take out insurance
policies from the private market to cover their
liabilities both under the ECO and at common
law in respect of work injuries sustained/
prescribed occupational diseases contracted
by their employees. Failure to take out
insurance : Max fine of $100,000 and
imprisonment for 2 years.
Reminders :
a. Ensure that all employees are covered by the insurance policy
and notify the insurer of any change;
b. Give a detailed declaration to the insurer on the annual earnings
and job duties;
c. List the usual work locations of employees; state clearly
employees who are required to work outside Hong Kong or take
overseas business trips;
d. State clearly whether employees of the sub-contractor are
covered by the policy;
e. Beware of the expiry date of the insurance policy and taking
action to renew the insurance policy in advance.

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Employment Protection
Employer shall not terminate the contract of
service of an injured employee before
compensation becomes determinable or
payable (S.48):
(i) CL has issued the Certificate of Compensation
Assessment (Form 5) ; or
(ii) the employer has entered into an agreement with
the employee to settle the claim directly;
(iii) the OAB or SAB has issued the Certificate of
Assessment (Form 7 or 8) or the Certificate of Review
of Assessment (Form 9 or 10);
whichever occurs first.
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Earnings
Includes :
cash wages
value of benefits which can be estimated in
cash e.g. food, quarters
regular overtime
special remuneration of constant nature e.g.
bonus, allowance (traffic allowance excluded)
customary tips

Monthly earnings :
the earnings for the month immediately
preceding the date of the accident; or
the average monthly earnings for the
previous 12 months of employment;
which ever calculation is more favourable to
the employee.

Amount of Compensation

Fatal Cases
z

Lump sum -- payable to the deceased

employees members of the family
Age at Death
below 40
40-below 56
56 or above

Amount of compensation
84 months earnings
60 months earnings
36 months earnings

(* Monthly earnings subject to max $21,500 per month)

z

Funeral expenses (Max: $35,000)

Non-fatal Cases
z

Lump sum for permanent incapacity :Amount of compensation

Age
below 40
96 m earnings X % LOEC
40 - <56
72 m earnings X % LOEC
56 or above 48 m earnings X % LOEC
(* Monthly earnings subject to max $21,500 per month)

Non-fatal Cases (Contd)

z Periodical payments (sick leave pay)
4/5 of normal pay ($21,500 ceiling not applicable)
Max : 24 months (36 mths with court approval)
z Medical expenses (daily max: $200/ $280 )
z Prostheses and Surgical Appliances
z Cost of constant attention

Part 2
Settlement of an EC claim

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Administrative Route

By Direct Payment (S.L. </= 3 days: Form 2B);

By Direct Settlement (S.L.</= 7 days: Part H,Form 2);
By Certificate of Compensation Assessment
(Form 5, after issue of Form 7 as the case may be);
Payment by employer in 21 days, otherwise
surcharge payable and offence.

Litigious Route

By adjudication at the District Court

Time limitation :
Statutory compensation under ECO : 24 months
Common law damages for personal injuries : 36 months
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Reporting of Work Accidents

Advise employees to report to employer an accident

asap (Points to Note for Employees Injured at Work)
Notify the Employees Compensation Division (ECD) of
work accidents in 14 days (7 days for fatal cases), all
internal reporting time inclusive, irrespective of whether
the accident or the occupational disease gives rise to
any liability to pay compensation.
Report details of issues in dispute in Form 2/2A/2B
10 ECD offices in 5 locations.
Lau Kwok Chiu v. Senfield Ltd t/a Tsui Wah Restaurant HCPI
245/2006 : The Court found that contents in the Form 2 are
not to be regarded as admission in the legal sense so E/R is
not bound by it or estoppel from denying it.

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Medical Treatment/Rehabilitation

Any registered medical practitioner/CMP/dentist;

Mainly HA hospitals/clinics, for occupational
diseases, two OH Clinics of LD as well;
Employers should actively follow up with injured
employees progress of treatment/rehabilitation;
Employers should closely liaise with insurers and
even doctors if necessary;
Rights of employers : An employee who has given
notice of an accident shall submit himself to a free
medical examination named by his employer. An
employee who is receiving periodical payments from
his employer shall also submit himself for free
medical examination named by his employer (S.16).

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Medical Clearance

The injured employee should start visiting OMU

(Occupational Medicine Unit) of LD for medical
clearance normally one month after the injury.
The nurses and supporting staff in OMU would
monitor case progress, vet and record sick leave
certificates, call medical reports where in doubt
and tender advice to the injured employee until
his case is settled.
For general injury cases, ECD would issue
Certificate of Compensation Assessment (Form
5) after medical clearance.
If OMU considers that the injury may result in
permanent incapacity, the injured employee
would be arranged to attend OAB. Where
appropriate, OMU would seek confirmation of the
attending doctor if the injured employee has
attained the Maximum Medical Improvement
(MMI) status.

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Medical Assessment

Employees Compensation (Ordinary Assessment)

Boards (OABs) are set up under ECO in 16 HA
hospitals. An OAB comprises of 2 registered
medical practitioners and 1 Labour Officer to assess
(a) period of sick leave necessary and (b)
percentage of permanent loss of earning capacity
caused, according to Schedule 1 of the Ordinance;
The HA medical doctors appointed by
Commissioner for Labour attend assessment in the
capacity of members of the OABs and in
accordance with provisions of the ECO;
OABs would interview and examine the injured
employees as appropriate, and review all relevant
medical records/reports and information. OABs do
not have the role of diagnosis and giving treatment;
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Medical Assessment (2)

The Labour Officer who is a member of the OAB

would issue Certificates of Assessment (Form 7)
on behalf of OAB. Under ECO, the Certificate
shall be admitted in evidence without further
proof on its production in any court;
Based on Form 7, ECD would issue Certificate
of Compensation Assessment (Form 5);
Where necessary, an OAB may refer a case to
the Special Assessment Board (SAB) in light of
the special circumstances of the injured
employee.

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Injuries under Schedule 1, ECO

Item
1.
2.
3.
4.
5.
21.
22.
35.
36.

40.
45.

Percentage of loss of earning capacity

Loss of 2 limbs
100
Loss of both hands or of all fingers and both thumbs 100
Loss of both feet
100
Total loss of sight
100
Total paralysis
100
Loss of index finger
3 phalanges
14 (15)*
Ankylosis of
all these 3 joints of the index finger
9
Loss of foot
55
Ankylosis of ankle joint
in optimum position
15
in worst position
25
Total loss of hearing, both ears
100
Loss of one kidney
if the other kidney is normal
15
if the other kidney is abnormal
65-90
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Assessment of non-scheduled
Injuries
ECO (s.9(1)) provides that in the case of
injury not specified, the percentage shall be
assessed having regard so far as possible
to the First Schedule. Administratively, OAB
would make reference to Guidelines laid
down by the Commissioner for Labour, AMA
Guides, overseas/local established norms
and experience, etc as appropriate.

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Part 3
Common issues in dispute

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Common issues in dispute

1.

Existence of a personal injury by

accident

FACTS : I/P claimed that she suffered injuries while working on 2

occasions. Her claim relating to the 1st accident was settled.
She claimed that when she took out the Chinese cakes
from the storeroom at the Shop for the purpose filling the
warming cabinet, she felt severe pain at her waist. The
nature of injuries as a result of the 2nd accident was
identical to that as a result of the 1st accident.
E/R defended that I/P filed a notice of the 2nd accident with
the LD some 1 1/2 yr later; and that they had received no
prior notice.
HELD : I/P failed to prove the 2nd accident did happen. Case
dismissed.
[Tse Sin Yee v. Wing Wah Cake Shop Limited, DCEC
251/2008]
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Common issues in dispute

2. Arising out of (work-relatedness) and in
the course of (occurrence) employment
a.

Before/after work

FACT : The deceased (D) was a bartender at a pub. An argument

arose between a waitress and a group of customers. D
intervened. After work, D accompanied the waitress to leave
the pub. On the way, 2 customers attacked D with knives,
causing him fatally wounded.
HELD : D was in the course of employment when he was murdered.
So long as it could be said that the activity upon which D was
engaged was reasonably incidental to the work that he was
employed to do, his course of employment could extend
beyond the normal hours or place of work. In this case, D was
expected to ensure his colleagues safety when leaving work.
[Cheung Shuk Wah Jessica v. Wong Kang Hung Darwin t/a
New Voice Pub, DCEC 842/2007]
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Common issues in dispute

b.

Lunch break

FACTS : The deceased (D) was employed as a painting worker. On

the date of accident, a fire broke out at the temporary
storeroom at the site. After the fire subsided, D's was found
dead inside. The fire broke out between 12:15 pm to 12:25 pm.
The lunch hour of D was from 11:45 am to 1:00 pm.
HELD : The Court of Appeal agreed with the trial judges findings that
D returned to the storeroom after the lunch break at 12:10 pm,
and could be for getting tools, changing into working gear and
getting himself prepared for work before resuming work. These
are all "natural incidents connected with the class of work" or
"reasonably incidental to his employment. The Court ruled in
favour of D.
[Ng Mung Khian v. Wing Kwong Painting, CACV 217/2004 ]
Also, LDs advice in a recent hospital case

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Common issues in dispute

c.

Private entertainment

[Chan Ho Yuen v. Multi Circuit Board (China) Ltd. DCEC

549/2008; DCEC 1527/2008, CACV 2162010; CACV 2172010
dd 30.9.2011]
Distinguish from [Hsu Shu Chiao v Lung Cheong Toys Ltd
[2002] 1 HKC 479]
FACTS : Two employees attended employers annual dinner in
Shenzhen, after which they went to karaoke parlour with
another colleague (Mr Lee) for their own entertainment.
Thereafter, the employees drove to the border. The car met
with an accident en route. One of the employees was killed
whilst the other sustained personal injuries.
HELD : District Court : Attending the annual dinner was incidental to
employment, but there was a break in the course of
employment as the visit to the karaoke parlour was for private
entertainment only. EC liability did not attach.

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Common issues in dispute

c.

Private entertainment (Contd)

HELD : Court of Appeal: There must be a limit to the course of

employment and it may be necessary to apply common sense
in deciding whether,on the facts of a particular case, the
deviation in the journey in question operates as more than a
temporary interruption. Ultimately, each case will depend on its
own facts. The detour to the karaoke parlour only operated as
a temporary interruption to the journey undertaken in the
course of the employment of the two employees and did not
mean that they were no longer in the course of their
employment when they resumed their journey in Mr Lees car
and when the accident occurred.

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Common issues in dispute

d. Pre-existing injuries
There is a great difference between a claim for damages in
negligence at common law and a claim for compensation
under the Employees Compensation Ordinance (ECO).
Employees compensation must be assessed solely under the
statutory provisions and unless the Ordinance provides for a
reduction of the basis compensation specified, no reduction
may be made. Thus, where the accident and the pre-existing
condition were concurrent cause, there ought not be any
apportionment.
The ECO took no account of the fact that the injury might be
more severe as a result of a pre-existing condition, nor was
there any basis in the ECO for taking account by way of
apportionment or otherwise of any congenital defect or injury
or disease received or contracted before the accident.
[Hong Kong Paper Mills Ltd v. Chan Hin Wu]
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Part 4
Points for employers to note

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Points employers should note :

To establish in-house a work injury
management system
To take out Immediate investigation
To secure written statements
To conduct interviews
To record every details
To fetch relevant documents
To preserve evidence
To seek advice of insurer/lawyer
To be co-operative with LD
 It would be a long battle
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Proposed flowchart for handling suspected work injury cases by employers

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Summary

How an EC case is settled

1.

Employee sustaining injury by accident (or POD) arising

out of and in the course of employment;

2.

Employee to notify employer or supervisor asap;

3.

Employer to notify LD of accident within 14 days;

4.

Employee start turning up at OMU of LD for medical

clearance 1 month after accident;

5.

For routine cases, LD to issue Certificate of

Compensation Assessment (F.5) after medical clearance;

6.

If permanent incapacity is likely, OMU to arrange

employee to attend assessment. OAB to issue Certificate
of Assessment (F.7) and LD to issue Certificate of
Compensation Assessment (F.5);

7.

Employer to make payment in 21 days to settle the case

if no objection/appeal.

Employers Responsibilities under ECO

1.

Take out insurance policy for all full-time and part-time

employees and post the insurance notice

2.

Notify LD of work accidents in 14 days (7 days for fatal

cases)

3.

Make periodical payments (sick leave pay) to injured

employees on normal pay days

4.

Pay the compensation determined by LD within 21 days

5.

Dont dismiss injured employee before compensation

becomes determinable or payable

Q&A

Thank you

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