Labour Insurance in Hong Kong

Hong Kong is globally renowned as one of the world’s Finance Capitals. But the city is home to a wide range of diverse businesses outside the finance industry. From manufacturing to construction and software development, if a job exists then it is probably being done in Hong Kong. 

However, it may surprise you to learn that, in addition to labour laws establishing work place safety guidelines, Hong Kong also mandates insurance for all employees in the city.

Employees’ Compensation Insurance in Hong Kong

Under Hong Kong law any person or business, paying any individual to perform any job, must take out Employees’ Compensation Insurance to cover their liability towards that worker suffering an accident or injury in the routine course of their job.

This can be a bit confusing. So, let’s break it down a bit:

Imagine you run a private business management consultancy. You have 6 employees who you pay to come to work every day and help you provide business advice to your clients. If one of your employees trips over an exposed power cord in the break room one day, and falls over suffering a broken arm, then under Hong Kong law you (as the employer of that person) would be responsible for compensating the worker for their injuries.

Because workplace injuries can be expensive, and because even as something as seemingly straightforward as a broken arm can have long lasting consequences, the HKSAR has ensured that money is available to all workers in this situation by making employers (whether individuals or businesses) purchase a form of insurance for this eventuality. If the worker does suffer a job-related injury, then the insurance, rather than the employer, is in place to provide appropriate compensation. This ensures that businesses are not bankrupted by workplace accidents and gives workers the security they need to know that they have support in a worst-case scenario.

Employees’ Compensation Insurance is often called Worker’s Compensation Insurance, or simply Workers Comp, elsewhere in the world. But the principles and ideas are very much the same no matter where this type of insurance is present – if a worker gets injured in their job, then the insurance will provide financial remediation.

Who Needs Employees Compensation Insurance in Hong Kong?

Any employee in Hong Kong needs Employees Compensation Insurance in place for their work activities. Purchasing EC Insurance is the responsibility of an employer – whether this is a private individual or a company.

A domestic helper working in a private family home is an employee, and will consequently require Employees Compensation Insurance protection under Hong Kong Law. This is also true of a factory worker making machined parts, or a desk worker in a software development firm. All these individuals are being paid to perform a job, and consequently must have the appropriate insurance taken out by the entity which is paying them.

It is important to note that, under Hong Kong law, an “employment contract” does not have to be written. Verbal contracts of employment are valid, and even though an individual may class themselves as a Freelancer or Gigworker, that person may still be classed as an “employee” for the purposes of the Hong Kong Labour department. Consequently, it is best to err on the side of caution as failure to abide by Hong Kong’s Employee Compensation laws can result in a stiff financial penalty, or even jail time.

Protecting Worker Health with Medical Insurance

Outside of Employees Compensation Insurance there are no universally required forms of protection that must be held by all businesses in Hong Kong. However, if we are considering labour insurance then it often makes sense to add Health Insurance to the conversation.

Health Insurance will not avert a workplace injury or accident, but it can be a vital part of the equation when it comes to recovery and recuperation. Providing workers coverage under a corporate health insurance or group health insurance is an optional consideration for workers – but the existence of medical protection for employees can be invaluable in a worst-case scenario. In Hong Kong it is possible to obtain group medical protection for groups of more than 5 people – which can include benefits you are unable to get anywhere else, like Medical History Disregarded underwriting.

Group health insurance plans also have the potential for customization – with employees of different seniority receiving different coverage benefits. This makes health insurance protection a flexible, supplemental tool to stand alongside EC coverage when taking the protection needs of your workforce into consideration.

Professional Indemnity Insurance Protection for Workers

One last piece of the puzzle when it comes to protecting employees, especially for companies that are in the business of giving advice, is Professional Indemnity Insurance. Also known as Professional Liability insurance, or simply Errors and Omissions insurance, this type of cover protects workers in the event that they make a mistake in the routine course of their employment.

Lets stick with our Management Consultancy example from earlier.

A junior employee working with a major client doesn’t send some necessary contracts to a vendor. This causes the client to lose money. In most cases, that client would look for compensation from the business or employee who made the error. This is where Professional Indemnity Insurance comes in.

Professional Indemnity would provide financial assistance for any legal costs needed to fight the claim of an error being made, as well as cover the fees of any judgments made against the employee or company.

This type of insurance is also not mandatory, but can provide exceptional support and security for an entire workforce if an allegation of negligence is made against you.

Free Labour Insurance Advice in Hong Kong

For more information about business insurance products in Hong Kong, or for further clarity as to your Employees’ Compensation Insurance obligations, please Contact Us. Our expert insurance brokers have a legal responsibility to work for you, and not the insurance companies. This means that we always represent your interests and will empower you to find the insurance coverage that gives you the best protection possible.

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