A Complete Guide to Employees’ Compensation Insurance in Hong Kong

A Complete Guide to Employees’ Compensation Insurance in Hong Kong

A Complete Guide to Employees’ Compensation Insurance in Hong Kong

blüüm
employee benefits
Jun 22, 2021
A Complete Guide to Employees’ Compensation Insurance in Hong Kong

Accidents can happen to you and your employees at work. Whether the accident is serious or not, employers often still find themselves on the line. This is where Employees' Compensation Insurance comes into play that protects your employees and business.

What is Employees' Compensation Insurance?

Under Hong Kong law, Employees' Compensation Insurance (also known as EC Insurance) is mandatory for all employers in Hong Kong. This insurance policy covers an employer’s liability in the event of an employee suffering from injury or illness due to work related activities, which is a common practice in many Western countries.


Employers who employ at least 1 employee are required to take out Employees' Compensation Insurance. Failing to comply with the Ordinance can result in prosecution, financial penalties and imprisonment. 


What are the minimum requirements?

For companies with less than 200 employees, the required minimum insurance cover limit is HK$100 million per event. For companies with more than 200 employees, the limit is a minimum of HK$200 million per event. Nevertheless, this is only the minimum requirement, employers should consider a sufficient cover amount, because in the end this is a protection for your business as well.  

Do I need to provide Employees' Compensation Insurance to part-time workers or employees on probation? 

Employers need to provide Employees' Compensation Insurance not only for full-time employees, but also for part-time / temporary staff and employees on probation. Here is a list of workers that should be covered: 

  • Temporary staff
  • Permanent employees
  • Employees on probation
  • Ad-hoc workers
  • Domestic helpers
  • Seasonal workers

My staff mostly works overseas, do they need to be insured?

As long as your staff was recruited in Hong Kong and you as the employer submits to the jurisdiction of the Courts of Hong Kong, these employees will still need to be insured under Employee Ordinance.

How much does Employees' Compensation Insurance cost?

Employees' Compensation Insurance is mostly affordable at under HK$1,000 per employee. However, the premium is affected by a range of factors, mainly by the industry/occupation and total earnings of employees. Total earnings forms an important basis of Employees' Compensation Insurance, as it helps to inform an appropriate amount of compensation in relation to the salary. High-risk occupations such as construction workers with a higher chance of accidents, are subject to more expensive premiums. 

Apart from the industry/occupation and total earnings of employees, other factors that are taken into account by insurers include: 

  • Claims history of the employer 
  • Occupational safety and health and risk prevention measures taken carried out by employer
  • Accident rate and risks to be undertaken in respect of the industry or occupation
  • Market condition (e.g. market trend, economic environment, social factors, etc.)
  • Underwriting guidelines, operational costs, risk management of the insurance company, etc.

Bear in mind an employee should bear the full cost of the insurance policy and not deduct from the earnings of an employee which is an offence.

Why do I still need Group Medical Insurance?

Unlike Employees' Compensation Insurance, group medical insurance is not mandatory by Hong Kong law, however it is an important part of your employee benefits to help recruit and retain talents. According to Randstad’s Employer Brand Research Report 2020, 75% of employees in Hong Kong ranked healthcare as the most coveted employee benefit. You can also download our Guide to Employee Wellness in SMEs 2021 for free to understand more about the latest trends on employee benefits.


Need help on Employees' Compensation Insurance and Group Medical Insurance? 

blüüm is a licensed insurance agency in Hong Kong, specialised in providing employee benefits solutions for SMEs. We partner with Generali Hong Kong, one of the global leading insurers in employee benefits, to offer your team flexible and transparent group medical insurance.

If you need any advice on your employee benefits, click here to check out our services and request a free consultation call today. 


References: 
Labour Department, A Concise Guide to the Employees’ Compensation Ordinance
Randstad, Employer Brand Research: 2020 hong kong sar market report

employee benefits
Jun 22, 2021
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