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HKIHRM Briefing SessionHKIHRM Briefing Session

UnderstandingUnderstandingEmployeesEmployees’’ Compensation Compensation

OrdinanceOrdinance

EmployeesEmployees’’ Compensation DivisionCompensation DivisionLabour DepartmentLabour Department

13 October 201113 October 2011

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Agenda

1. Overview of the Employees’ Compensation Ordinance (ECO)

2. Settlement of an EC claim3. Common issues in dispute4. Points for employers to note5. Summary6. Q & A

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Part 1

Overview of the Employees’ Compensation Ordinance

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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

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Individual Employer’s 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.

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Injury by accidentAccident 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 employer’s transport (except public transport);• Driving direct to and from place of work in employer’s 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 employee’s 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, ECOPrescribed Occupational Diseases (48 items)

A. CAUSED BY PHYSICAL AGENTSB. CAUSED BY BIOLOGICAL AGENTSC. CAUSED BY CHEMICAL AGENTSD. CAUSED BY MISCELLANEOUS AGENTS

Item 1. Description of OD

2.Nature of trade, industry or process applicable

3.Prescribed period

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.

1 year

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 : ………

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.

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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 InsuranceECO 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 ProtectionEmployer 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.

EarningsIncludes :

• 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 CasesLump sum -- payable to the deceased employees’ members of the family

Age at Death Amount of compensationbelow 40 84 months’ earnings 40-below 56 60 months’ earnings 56 or above 36 months’ earnings(* Monthly earnings subject to max $21,500 per month)

Funeral expenses (Max: $35,000)

Non-fatal Cases

Lump sum for permanent incapacity :-Age Amount of compensation

below 40 96 m earnings X % LOEC40 - <56 72 m earnings X % LOEC56 or above 48 m earnings X % LOEC

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

Non-fatal Cases (Cont’d)

Periodical payments (sick leave pay) 4/5 of normal pay ($21,500 ceiling not applicable)

Max : 24 months (36 mths with court approval)

Medical expenses (daily max: $200/ $280 )

Prostheses and Surgical Appliances

Cost of constant attention

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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 monthsCommon 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, ECOItem Percentage of loss of earning capacity1. Loss of 2 limbs 1002. Loss of both hands or of all fingers and both thumbs 1003. Loss of both feet 1004. Total loss of sight 1005. Total paralysis 10021. Loss of index finger —

3 phalanges 14 (15)* 22. Ankylosis of —

all these 3 joints of the index finger 935. Loss of foot 5536. Ankylosis of ankle joint —

in optimum position 15in worst position 25

40. Total loss of hearing, both ears 10045. Loss of one kidney —

if the other kidney is normal 15if the other kidney is abnormal 65-90

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Assessment of non-scheduled InjuriesECO (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 workFACT : 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 breakFACTS : 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 judge’s 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, LD’s 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 employer’s 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 (Cont’d)

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 Lee’s 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

37Proposed flowchart for handling suspected work injury cases by employers

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 days5. Don’t dismiss injured employee before compensation

becomes determinable or payable

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Q & A

Thank you