HONG KONG 2005

The Employment Ordinance provides for various employment-related benefits and entitlements for employees. On top of the statutory requirements, employers and employees are free to negotiate on the terms and conditions of their employment.

Since December 2000, all employers have to enrol their employees in Mandatory Provident Fund schemes in accordance with the Mandatory Provident Fund Schemes legislation. The participation rate of the relevant employers in the schemes, which are regulated by the Mandatory Provident Fund Schemes Authority, reached 98.2 per cent by year-end.

The employment of children under the age of 15 is generally prohibited by law. Subject to stringent requirements, children aged 13 and 14 may be employed in non-industrial establishments. Young persons aged 15 to 17 may work in industrial establishments, subject to regulations governing their employment conditions. Specific provisions under labour legislation protect their safety, health and welfare.

Labour inspectors conduct rigorous workplace inspections to monitor employers' compliance with the various provisions of labour legislation to safeguard the statutory rights and benefits of local and imported workers, and to ensure that employers possess valid insurance policies covering their liabilities for work injuries of their employees. Labour inspectors also check employees' proof of identity during workplace inspections and mount intelligence-led operations with the Police and the Immigration Department to clamp down on illegal employment activities. In 2005, 176 joint operations were mounted, up 69 per cent compared to 2004. A total of 538 illegal workers and 237 employers suspected of employing illegal workers were arrested in these operations. The department also widely publicised the complaint hotline (2815 2200) to encourage reporting of illegal employment activities.

In April 2005, the Labour Department implemented a standard employment contract for contractors of government service contracts that rely heavily on the deployment of non-skilled workers to sign with their non-skilled employees. The standard employment contract, which sets out clearly the employment terms, helps safeguard the rights and benefits of non-skilled employees.

The Labour Department initiated amendments to the Employment Ordinance in December to raise the maximum penalty for wage offences to a fine of $350,000 and imprisonment for three years. The new penalty will take effect from March 30, 2006. Former experienced police officers were recruited during the year to strengthen the investigative work and collection of intelligence.

The department secured convictions for 587 summonses on wage offences in 2005, an all-time high and up 16.5 per cent over the 504 summonses in 2004. A company director and two other employers were jailed for wage defaults — the first sentence of imprisonment for such an offence. The department has also taken prompt action to detect wage offences through inspections of targeted workplaces. It has strengthened its educational and promotional efforts to remind employers of their statutory obligations to pay wages on time and educate employees on the right to lodge claims and the importance of serving as prosecution witnesses.

In Hong Kong, the employees' compensation system adopts the no-fault principle whereby compensation is payable irrespective of whether the injury, occupational disease or death was the employee's fault. The Employees' Compensation Ordinance covers injuries or death caused by accidents arising out of and in the course of employment or by specified occupational diseases. An employer must be in possession of a valid insurance policy to cover his liabilities both under the ordinance and common law.

The Labour Department started a review of the employees' compensation insurance system in Hong Kong in 2004 and consulted the Labour Advisory Board in 2005 on ways to improve the system. As a result, the insurance industry agreed to introduce a number of improvement measures, including the setting up of a residual scheme in 2006 to provide employees' compensation insurance cover to employers who cannot obtain such cover from the market. The industry also promised to facilitate the rehabilitation of injured workers and help promote occupational safety and health.

The Employees' Compensation Division of the Labour Department, which administers the Employees' Compensation Ordinance, assists injured employees and deceased employees' families to obtain compensation from their employers and administers a scheme to provide interest-free loans if they need financial assistance as a result of a work-related accident. In 2005, loans totalling $330,000 were made to 17 injured employees and the families of five dead employees.

The Employees Compensation Assistance Scheme provides assistance for injured employees or family members of deceased employees in cases where employers default payment of compensation for work-related injuries. The scheme is financed by a levy imposed on all employees' compensation insurance policies taken out by employers.

By the end of the year, the Labour Department had received 415 employees' compensation claims (including nine fatal cases) relating to Severe Acute Respiratory Syndrome (SARS) reported by employers under the Employees' Compensation Ordinance. Since employees infected with SARS might have residual complications, they would be fit for assessment by the Employees' Compensation Assessment Board only when their medical conditions had stabilised. By year-end, the Labour Department had arranged for 356 employees infected with SARS to receive assessments for respiratory impairment. As some of the SARS employees had other complications and had received treatment from orthopaedic, endocrine and other specialists, the department also arranged assessments by the relevant specialists. As a result of the department's follow-up action, the statutory compensation claims in seven fatal cases and 201 non-fatal cases have been resolved with the issue of certificates of compensation assessment by the department.

Pneumoconiosis sufferers are eligible for compensation under the Pneumoconiosis (Compensation) Ordinance administered by the Pneumoconiosis Compensation Fund Board. Those diagnosed prior to the commencement of the ordinance in 1981 may receive ex gratia benefits from the Government under the Pneumoconiosis Ex Gratia Scheme. By the end of the year, 2 185 pneumoconiosis sufferers were receiving compensation in the form of monthly/quarterly payments under the ordinance or the ex gratia scheme. Family members of 92 pneumoconiosis sufferers who died as a result of the disease were also granted compensation.

The Occupational Deafness Compensation Scheme compensates employees suffering from noise-induced deafness due to employment in specified noisy occupations. It is administered by the Occupational Deafness Compensation Board. In 2005, the board approved 60 applications for compensation due to employment-related, noise-induced deafness, and paid out $5.65 million in compensation. The board also approved 210 applications for payments for hearing aids amounting to $550,000.

The Minor Employment Claims Adjudication Board adjudicates claims under the Employment Ordinance and in accordance with individual employment contracts. The board hears and determines employment claims involving not more than 10 claimants for a sum of money not exceeding $8,000 per claimant. During the year, the board concluded 2 539 cases and made awards amounting to $5.9 million.

The Labour Tribunal is part of the Judiciary and provides a quick, inexpensive and informal method of adjudicating disputes between employees and employers, which are not within the exclusive jurisdiction of the Minor Employment Claims Adjudication Board.

In 2005, there were 6 900 cases filed with the tribunal, of which 6 841 were initiated by employees and 59 by employers. Of these, 85.4 per cent were referred by the Labour Relations Division of the Labour Department after unsuccessful conciliation attempts. During the year, the tribunal dealt with 6 570 cases and made awards amounting to more than $335 million, down by 2 052 cases and $153 million compared to 2004.