You may have heard of Employees’ Compensation Insurance in Hong Kong but do you know whom it applies to and what are the full implications of it? Read this guide to find out all about employee compensation insurance.
According to the Employment Ordinance, all limited companies are legally required to take out employees’ compensation insurance to cover any liability, in the event of an illness or injury during the course of their work.
Regardless of the service period or employment status, this insurance covers all work-related injuries. A company is deemed as an employer when it engages someone to do a task and agrees to pay a certain amount. Under the ordinance, even if the founder of the company is the single person working on their own limited company, he/she is considered an employee of the company and is required to take out employees’ compensation insurance.
If an employer fails to comply, he/she is subject to hefty fines and imprisonment so the employee compensation insurance is a must.
Employee compensation insurance in Hong Kong
In a nutshell, anyone who is paid a wage needs to be covered. Fortunately for employers, the insurance is relatively inexpensive. On average, the cost comes down to less than HK$100 yearly per employee. While there are no differences in the policy coverage, the difference in rates may occur due to the varying job titles or positions of each employee. In addition, jobs that require a higher amount of travel require higher premiums.
What types of employees must be covered by Employees’ compensation insurance?
- Permanent staff
- Temporary staff
- Employees working on a trial basis
- Anyone working during their probationary period
- Hourly workers
- As-needed workers
- Seasonal workers
- Domestic helpers
The premium varies and some of the factors that impact the premium are the industry, travel status, annual compensation packages for each employee of a company.
Often companies that have limited staff members might face difficulty in getting the coverage for Employees’ Compensation insurance. In these scenarios, insurance providers are likely to combine the coverage with other critical office-related insurance benefits, since the premiums are so low.
A typical comprehensive package for small and medium enterprises may include:
- Employees’ compensation insurance
- Property insurance
- Third party or public liability
- Damage to the premises
- Dishonesty and theft by employees.
It is worth noting that a majority of the Maid Insurance Policies include the employees compensation insurance coverage as a standard.
Employees’ Compensation for High-Risk Groups
Often employers that fall under the “High Risk” group, find it difficult to purchase employee compensation insurance. Sometimes smaller businesses find it challenging to get insurance or people who need cover for their domestic help are denied coverage.
In all such cases, employers are eligible for help for coverage from the Employees Compensation Insurance Residual Scheme Bureau.
However, in order to access coverage via ECIRS bureau, the employer must have been denied by at least three different insurance companies, or given quotes for premiums in excess of 30 percent of the prevailing Hong Kong EC rates.
For more information on this, you can visit the Employees’ Compensation Insurance Residual Scheme Bureau’s website.
Last but not the least
The good news is that there are umpteen providers in Hong Kong offering a wide range of policies with levels of cover. Ask questions and review our options before you settle on an insurance plan.