Press Release

 

 

LCQ3:Sufficient insurance cover is required for employees

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Following is a question by the Hon Bernard Chan and a reply by the Secretary for Education and Manpower, Mr Joseph W P Wong, in the Legislative Council today (Wednesday):

Question:

Will the Government inform this Council of the following data in the past five years :

(a) the number of cases in which an employer was prosecuted under section 40(2) of the Employees' Compensation Ordinance (Cap. 282) for employing an employee without a valid policy of insurance in respect of the liability of the employer under the Ordinance, and the number of employees involved in each of the cases prosecuted; and

(b) the number of known cases in which the number of employees covered by a policy of insurance required under section 40(1) of the Ordinance is less than the actual number of employees employed by the employer; and the measures that the relevant authorities have put in place in order to deter employers from understating the number of employees when taking out such policy of insurance?

Reply:

President,

(a) Under the Employees' Compensation Ordinance (ECO), all employers are compulsorily required to take out insurance policies to cover their liabilities for injuries or death at work for their employees. Statistics on prosecutions against offending employers who failed to take out insurance policies under the ECO in the past five years are as follows:

Year Summonses Heard

1995 530

1996 753

1997 737

1998 990

1999 310

(Jan - Mar)

In respect of the number of employees involved in each prosecution case, the Labour Department only keeps such statistics since 1998. The average number of employees involved in each prosecution case is 1.5 for 1998, and 1.6 for the first quarter of 1999.

(b) In regard to the possibility that employers may have understated the number of employees in the insurance policy, we are aware that there is generally a standard clause in the employees' compensation insurance policy to the effect that the insured has to inform the insurer the actual number of employees and their earnings on the expiry of the policy. If the actual number of employees or their earnings differ from that estimated at the time when the policy was taken out, the difference in premium will be adjusted proportionately. As this is a contractual matter between the insurer and its customers, the Government has not kept statistical information on these adjustments. But I would like to point out that, even if the number of employees as stated in the insurance policy is less than the actual number of employees, all employees who are injured or died arising out of and in the course of employment, or their dependents, are entitled to receive their compensation in full under the ECO.

The Labour Department has stepped up efforts to remind employers to take out sufficient insurance cover for their employees. These included enhanced publicity and more frequent inspections undertaken by Labour Inspectors.

In addition, we are planning to revise upwards the maximum fine for failure to take out a valid insurance policy under the ECO from the existing $50,000 and two years' imprisonment to $100,000 and two years' imprisonment.

End/Wednesday, April 28, 1999

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