The objective of the Employee Rights and Benefits Programme is to improve and safeguard employee rights and benefits in an equitable manner. Our aim is to progressively enhance employment standards in a way which is commensurate with the pace of Hong Kong's economic and social developments and to strike a reasonable balance between the interests of employers and employees. We achieve this by:

• setting and refining employment standards in consultation with the Labour Advisory Board (LAB), the most established consultative forum on labour matters;
  
• ensuring compliance with statutory and contractual terms and conditions of employment through inspection to workplaces and investigation into suspected breaches of the statutory provisions and prosecution of offenders;
  
• processing employee compensation claims;
  
• maintaining close partnership with statutory bodies set up for protecting the rights and benefits of employees; and
  
• providing customer-oriented information service to ensure that employees and employers know their rights and obligations.

The principal legislation administered by this programme area includes the Employees' Compensation Ordinance (ECO), the Pneumoconiosis (Compensation) Ordinance (PCO), the Employment Ordinance (EO) and its subsidiary Employment of Children Regulations and Employment of Young Persons (Industry) Regulations, as well as Part IVB of the Immigration Ordinance.

The ECO establishes a no-fault, non-contributory employee compensation system under which individual employers are liable to pay compensation for work-related injuries or fatalities. The ordinance requires all employers to possess valid insurance policies to cover their liabilities under the ordinance and at common law.

The EO is the main piece of legislation governing conditions of employment in the non-government sector. The Employment of Children Regulations made under the EO prohibit the employment of children below the age of 15 in industrial undertakings and regulate the employment of children aged 13 but under 15 in non-industrial establishments. The Employment of Young Persons (Industry) Regulations set out requirements on the working time arrangements for young persons employed in the industrial sector and prohibit their employment in dangerous trades.

The Labour Department also administers Part IVB of the Immigration Ordinance to combat illegal employment in order to protect the employment opportunities of local workers.

We stepped up our efforts to safeguard the rights and benefits of employees through various activities in 2004. Some key indicators of work of this programme area are shown in Figure 6.1.

The department takes a serious view on late payment and underpayment of wages and has put in place effective arrangements to enforce statutory provisions governing payment of wages. We conducted territory-wide blitz operations and inspections to workplaces to detect wage offences. Labour inspectors actively interviewed employees during territory-wide routine inspections to combat wage offences, and the Employment Claims Investigation Division conducted in-depth investigation into suspected wage offences under the Employment Ordinance promptly. Prosecutions are taken out against the employers once sufficient evidence is available.

During the year, we continued with the drafting of the legislation for implementing the proposal to recognise Chinese medicine under the Employment Ordinance, Employees' Compensation Ordinance, Pneumoconiosis (Compensation) Ordinance and the Pneumoconiosis Ex Gratia Scheme.

We have stepped up our enforcement efforts to ensure that the statutory rights of employees under labour legislation are well protected.

In 2004, labour inspectors carried out 131 727 workplace inspections to different economic sectors, among which 129 713 inspections also covered illegal employment. (Figure 6.2) We strengthened the collection and analysis of intelligence on illegal employment activities, and organised more joint operations with the Police and the Immigration Department to apprehend illegal workers and their employers on the spot. We also publicised our complaint telephone hotline (2815 2200) to facilitate members of the public to provide intelligence on illegal employment activities. The new enforcement mode led to more effective results. A record high of 760 suspected illegal workers and 196 employers employing illegal workers were detected in the year, representing an increase of 55 per cent and 128 per cent respectively over the corresponding figures in 2003.

In the year, we continued to work closely with government departments in monitoring their service contractors to ensure that non-skilled employees of the contractors enjoyed their statutory rights and benefits. A total of 604 inspections were conducted to the workplaces of such workers, up 17.7 per cent on 2003, and 1 963 workers were interviewed. Contractors found to have breached labour legislation were prosecuted. Offence records and suspected breaches of contract terms were sent to concerned departments for administrative sanctions wherever appropriate.

To ensure compliance with the required conditions under the Supplementary Labour Scheme, we investigated 25 complaints and cases on suspected irregularities such as allegations on deprivation of statutory holidays, long working hours and underpayment of wages of imported workers.

Under the current no-fault employee compensation system, compensation is payable to injured employees or family members of deceased employees for any work-related injuries or deaths. Claims for compensation involving fatality are determined by the courts or the Commissioner for Labour under the improved settlement mechanism introduced in August 2000.

Information on employee compensation cases reported is shown in Figures 6.3 and 6.4. We processed 33 969 non-fatal cases involving sick leave exceeding three days which were reported in 2004. These included 12 077 cases settled directly between employers and employees. Compensation amounting to $7.72 million and $254 million was payable respectively to the injured employees in minor cases and in cases involving sick leave exceeding three days.

For the 44 346 employee compensation cases reported in 2003, 41 859 non-fatal cases with sick leave exceeding three days and 140 fatal cases were settled as at the end of 2004. A sum of $694 million was payable as compensation to the injured employees or family members of deceased employees. The number of working days lost was 1 116 741. (Figure 6.5)

The Loan Scheme for Employees Injured at Work and Dependants of Deceased Employees provides temporary relief to victims of work accidents. Under the scheme, an interest-free loan up to $15,000 in each case will be made to eligible applicants. In 2004, a total loan of $164,600 was approved in 13 applications.

As at end-2004, the Labour Department received a total of 414 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 other residual complications, they would be fit for assessment by the Employees' Compensation Assessment Board only when their medical conditions had stabilised. As at year-end, the Labour Department arranged a total of 247 assessments in respect of respiratory impairment. Since some of the SARS employees had other complications and had received treatment from other specialties, such as orthopaedic and endocrine, the department also actively arranged assessments by the relevant specialties. As a result of the department's active follow-up action, the statutory compensation claims in seven fatal cases and 76 non-fatal cases were resolved upon the issue of certificates of compensation assessment by the department as at year-end.

The Telephone Enquiry Service handles general enquiries on labour legislation and on services offered by the department. Guided by an interactive voice processing system, callers can listen to pre-recorded messages and obtain fax information 24 hours a day by making a selection from a wide range of topics. The service is supplemented by telephone enquiry officers handling more complicated enquiries during office hours. The service handled 538 548 calls from January to June in 2004. In July 2004, the service was merged with the telephone enquiry service operated by the Integrated Call Centre of the Efficiency Unit to enhance the enquiry service. Since then, the department's enquiry hotline 2717 1771 is handled by the "1823 Citizen's Easy Link".

In 2004, we arranged four briefings for the public sector and 31 briefings for imported workers to publicise the rights and obligations of the parties concerned.

Extensive publicity campaigns were launched to warn against illegal employment and to educate employers and employees about their rights and obligations under the Employees' Compensation Ordinance.

The Protection of Wages on Insolvency Ordinance (PWIO) provides for the establishment of the Protection of Wages on Insolvency Fund (the Fund) and its administration by a board. Under the PWIO, employees who are owed wages, wages in lieu of notice and severance payments by their insolvent employers may apply to the Fund within six months after their last day of service for ex gratia payments.

We provide administrative support to the Protection of Wages on Insolvency Fund Board by verifying applications and approving payments from the Fund. In 2004, we received 13 631 applications, a substantial drop of 39 per cent as compared with 22 350 in 2003. We processed a record high of 22 071 applications, leading to payments of $381 million. A breakdown of applications received by economic sectors was shown in Figure 6.6. The Fund Board secured a government bridging loan of $695 million in 2002 and made the first drawdown of $22 million in March 2004 in order to enable the Fund to tide over its short-term cash flow problem. As the economy continued to improve, the number of applications decreased. The Fund turned from deficit to a surplus of $49 million by the end of 2004.

The department and the Fund Board take a serious view on possible abuse of the Fund, particularly with employers dishonestly shifting their liabilities on wage payments to the Fund. Stringent vetting procedures are in place to process all applications. An "inter-departmental task force" comprising representatives of the Labour Department, Official Receiver's Office, Commercial Crime Bureau of the Police Force and Legal Aid Department was set up in 2002 to further prevent possible abuse.

The Pneumoconiosis Compensation Fund Board (PCFB) is established under the Pneumoconiosis (Compensation) Ordinance (PCO) to provide compensation to persons suffering from pneumoconiosis. The Board is financed by a levy collected from the construction and quarrying industries. Under the PCO, the Labour Department is responsible for determining whether an applicant is entitled to compensation. As at the end of 2004, 1 995 eligible persons were receiving compensation in the form of monthly payments from the PCFB. In the year, the Board made a total compensation payment of $165 million.

The Employees Compensation Assistance Fund Board (ECAFB) is set up under the Employees Compensation Assistance Ordinance (ECAO). The ECAFB is responsible for running the Employees Compensation Assistance Scheme which provides payments to injured employees who are unable to receive their entitlements for employment-related injuries from their employers or insurers. In 2004, the Board approved 282 applications, leading to payments of $132 million. With effect from 1 April 2004, the Employees Compensation Insurers Insolvency Bureau established by the insurance industry has taken over from the ECAFB the responsibility of meeting the liabilities arising from employees' compensation insurance policies in the event of the insolvency of the relevant insurers.