Is it time to start thinking about EC Insurance?

With the news that Hong Kong’s economy is on the rebound for the first quarter of 2021, businesses are starting to loosen the restrictions that saw them survive the last 24 months of turmoil. Hiring new employees to replace any losses or departures is going to be a priority for many companies.

With that in mind, now is as good a time as any to do a refresh on Employee’s Compensation Insurance in Hong Kong, and why you need it.

What is Employee’s Compensation Insurance

Employee’s Compensation insurance is a required purchase for anyone employing any worker to perform any job in Hong Kong. Within its scope, Employee’s Compensation insurance protects employers from their liability towards employees, should workers suffer an injury or accident in the normal course of their job duties.

Under Hong Kong law, employers are legally obligated to obtain Employee’s Compensation Insurance to cover any workers they hire.

This regulation covers all workers, from domestic helpers to part time employees, Employee’s compensation insurance must be in force for all employers in Hong Kong.

Employee Compensation Insurance Penalties

The Employee’s Compensation law in Hong Kong also requires that employers document and disclose workplace accidents as they happen – disclosing these events to both their insurance company and the Labour Department.

Further to this, employers must carry the whole cost of Employee Compensation cover and cannot pass the premium for the insurance onto their employees. As employee compensation insurance is regulated by the Hong Kong government, failure to obtain the required coverage can mean stiff penalties.

Employers who fail to follow the relevant EC Insurance legislation can see up to two years in prison and a fine of up to HK$ 100,000.

While many people think that EC Insurance in Hong Kong is only for businesses and companies with large staff, this type of insurance also applies to employers of domestic and non-traditional workers. It is important to note that private employers are also responsible for abiding by the employment law that regulates Employee’s Compensation insurance coverage.

How does Employee’s Compensation Work?

As stated above, Employee’s Compensation insurance covers an employer’s liability towards staff who have experienced a workplace, or work-related, injury or accident.

Coverage is normally obtainable up to HK$100,000,000 per claim event, and ensures that an employer does not have to provide personal financial compensation to injured employees.

Domestic Helper Compensation Insurance

If your domestic helper suffers an accident in your home, during the course of their normal work duties, then they are entitled to be compensated for any injuries they receive.

For example, in the course of cooking your evening meal your domestic helper slips and spills a pan full of hot oil, causing significant burns. Your helper would be entitled to receive compensation as this is a work-related injury, and due to the extent of the injury the claim scenario would likely be higher than a simple sprain, or knock.

With people more likely to suffer accidents within a residence than outside of it, the average home is actually a pretty high-risk place. From the bathroom to the kitchen, there are a range of innocuous and innocent-seeming objects that actually present danger.

As an employer of a domestic helper, you are liable for your helper’s healthcare costs, and as an employer you are liable for their workplace safety. Paying compensation costs out of your pocket, and being exposed to Labour Department actions if you don’t have proper protection, is going to be a burden on any employer.

Thankfully Domestic Helper insurance products make covering your helper for employee compensation risks extremely easy. Plans can be setup to run concurrently with your helper’s contract, and you simply renew the policy when renewing your helpers contract.

Corporate Employee’s Compensation Insurance

Corporate and Business entities in Hong Kong are also responsible for ensuring compliance with the Employee’s Compensation Insurance law.

This means that workplace accidents happening to employees are to be covered by an adequate Employee’s Compensation Insurance policy. So, if a worker is hit by the office door and concussed, this would be covered under an employee’s compensation insurance plan. As would the situation where a worker trips over an exposed cable and sprains their ankle.

All scenarios for workplace injuries are covered under Hong Kong Employee compensation insurance products, ensuring that businesses are protected from financial exposure to workplace accidents; and enabling workers to receive fair compensation for their recovery.

With a business, in many cases there will be more than one employee. In some cases, there will be high levels of staff turnover, and employees may be departing and onboarding to the company with some regularity. In this case, Employee Compensation insurance products are able to handle new additions and subtractions on a rolling basis, with pro-rated premiums being paid based on the policy’s movement.

Thinking about Employee’s Compensation Insurance

Hong Kong’s economy, based on the newly released figures, has a fairly rosy outlook over the coming year. This could spur employers to hire more workers in an effort to catch up on the productivity lost during the Covid-19 crisis. While it may be fairly straightforward to engage in the hiring process, ensuring that you are following Hong Kong law by properly adding your employees to an Employee’s compensation insurance policy, is critical.

When it comes to how much you’ll be paying for your coverage, there are a number of considerations at play. The industry in which you operate, the age of your workers, the number of employees you have, their salary information, and their job duties are all critical pieces of information. Based on these disclosures the insurer will then calculate a premium.

It is obviously a much more straightforward procedure to calculate the premium of a single employee, as in the case of Domestic Helper coverage, and managing larger plans with a high degree of turnover can be a challenge.

At CCW Global our expert team of Hong Kong business insurance brokers is able to walk you and your business through all the options for Employee’s Compensation Insurance in Hong Kong. Our dedicated policy administration team can assist with adding and removing employees over the course of the policy year – freeing your HR department to concentrate on more important work. Finally, we are able to assist with, and manage any claims as they happen – giving you and your employees the peace-of-mind needed to know that all accidents will be taken care of.

To learn more about Employee’s Compensation Insurance in Hong Kong, or to set up a discussion to review your current Employee’s Compensation coverage free of charge, please Contact Us.