Sufficient fund to settle employees' claims


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


Regarding the Employees Compensation Assistance Fund Board (the Board), will the Government inform this Council:

(a) of the respective numbers of settled claims in 1997/98 and outstanding claims as at April 1, 1998;

(b) of the total amount paid in respect of the settled claims in 1997/98;

(c) of the surplus of the Employees Compensation Assistance Fund as at March 31,1998;

(d) whether the surplus of the Fund is adequate for settling the outstanding claims; and

(e) whether the Board will consider taking a more active approach in negotiating and settling claims at an early stage before going to court, so that the resources of the Fund can be enhanced?


The Employees Compensation Assistance Fund Board (the Fund Board) was established on July 1, 1991 under the Employees Compensation Assistance Ordinance (the Ordinance) for the protection of the entitlement of employees to compensation or damages for employment-related injury and of employers against default of their insurers. Under section 4 of the Ordinance, the Fund Board is mainly responsible for holding the Employees Compensation Assistance Fund (the Fund) upon trust, administering the Fund in accordance with the objects of the Ordinance, and determining the eligibility of persons applying for payment from the Fund. The Fund mainly comprises income from a levy imposed on the premium of employees compensation insurance policies.

Under section 16 of the Ordinance, employees or dependents of deceased employees who are unable to receive compensation under the Employees' Compensation Ordinance or damages under the common law from their employer or insurer after exhausting legal and financially viable means of recovery as are reasonable in the circumstances may apply for payment from the Fund. Sections 17 and 18 of the Ordinance provide for applications from employers in the event that their insurers with whom they have taken out employees compensation insurance become insolvent.

So far, all cases assisted by the Board have been applications from employees or dependents of deceased employees. Answers to the specific questions are:

(a) The Fund Board assisted and settled 23 cases in 1997-98. As at April 1, 1998, there were 6 outstanding cases and they have now been settled.

(b) The Fund Board paid a total amount of $47.27 million in respect of the cases settled in 1997-98.

(c) The Fund had an accumulated surplus of $34.09 million as at March 31, 1998.

(d) The Fund Board continues to receive new applications after April 1, 1998. In the five months from April to August 1998, the Fund Board paid $5.69 million to settle 10 cases. As at September 1, 1998, there were 13 outstanding cases with a total estimated claim of $14 million. There will be sufficient financial resources in the Fund to settle the 13 outstanding claims at the current claim level.

(e) Under section 28 of the Ordinance, where it appears to the Fund Board that a person is or might be entitled to apply under the Ordinance for a payment from the Fund, the Fund Board may, in the interests of the protection of the Fund, and on such terms as it sees fit, offer to pay from the Fund to that person an amount in satisfaction of such entitlement. So far, all applications received by the Fund Board are cases of which the employees or dependents of deceased employees concerned have already filed claims for employees' compensation or damages against the employer in court. Upon receipt of an application for assistance, the Fund Board will carry out necessary inquiries and consider available documents to assess the applicant's eligibility for payment. Where the Fund Board is satisfied that a case may fall under section 28 of the Ordinance, it will attempt to negotiate settlements before the court makes an award on the liability or amount of compensation.

In 1997-98, the Fund Board assisted 8 cases by settlement negotiations under section 28. This represented 35% of the cases settled in that year. In the five months from April to August 1998, the Fund Board settled 2 cases (or 20%) under section 28 out of a total of 10 cases settled in the same period. The total amount of settlement paid out in respect of those 10 cases was $3.7 million as compared against the original claim amount of about $6.7 million (interest not yet included). In negotiated settlements, applicants could receive earlier payment since concerned parties need not wait for a court award on the amount of compensation.

End/Wednesday, September 16, 1998