Annual Report 2005

The objective of the Employees' Rights and Benefits Programme is to improve and safeguard employees' 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 which strikes 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;
  
• ensuring compliance with statutory and contractual terms and conditions of employment through inspection to workplaces, 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 who have attained the age of 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 2005. 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. In 2005, the department adjusted its enforcement strategy by stepping up prosecution against company directors who willfully delayed 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.

In 2005, we amended the Employees' Compensation Ordinance to include Severe Acute Respiratory Syndrome (SARS) and Avian Influenza A as prescribed occupational diseases. The amendment aims at expediting the compensation process for employees infected with the two occupational diseases during their working in the specified high-risk occupations. A corresponding amendment has also been made to the list of occupational diseases specified in the Occupational Safety and Health Ordinance to enable us to better monitor the health of workers who are at risk to occupational diseases.

In June 2005, we introduced an amendment bill into the Legislative Council to recognise Chinese medicine under the Employment Ordinance, the Employees' Compensation Ordinance, and the Pneumoconiosis (Compensation) Ordinance.

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

In 2005, labour inspectors carried out 133 014 workplace inspections to establishments in different trades, among which 131 399 inspections were also conducted to combat 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. A total of 538 illegal workers and 237 employers suspected of employing illegal workers were arrested in the year. We also publicised our complaint telephone hotline (2815 2200) to facilitate members of the public to provide intelligence on illegal employment activities.

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 or rest days, 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.

For the 46 587 employee compensation cases reported in 2004, 43 927 non-fatal cases with sick leave exceeding three days and 156 fatal cases were settled as at the end of 2005. A sum of $657 million was payable as compensation to the injured employees or family members of deceased employees. The number of working days lost was 1 171 516. (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 2005, a total loan of $330,000 was approved in 22 applications.

As at end-2005, the Labour Department received a total of 415 employee compensation claims (including nine fatal cases) relating to 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 356 employees infected with SARS to receive 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 201 non-fatal cases were resolved upon the issue of certificates of compensation assessment by the department as at year-end.

In 2005, we arranged four briefings for government departments and 35 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. We also launched a series of measures to step up publicity on employers' obligations to take out employees' compensation insurance and report work injuries in accordance with the Employees' Compensation Ordinance. In encouraging the public to build on their strengths through life-long learning and enhancing their understanding of the Employees' Compensation Ordinance, a "Web-based Introductory Self-learning Programme on the Employees' Compensation Ordinance" was also launched in 2005.

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 payment by their insolvent employers may apply to the Fund for ex gratia payment within six months after their last day of service.

We provide administrative support to the Protection of Wages on Insolvency Fund Board by verifying applications and approving payment from the Fund. In 2005, we received 9 967 applications, a substantial drop of 27 per cent as compared with 13 631 in 2004. It was also the lowest since 1997. We processed 12 392 applications, leading to payment of $205 million. A breakdown of applicants classified by economic sector 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. The Fund Board made full repayment of the sum plus interest in April 2005. The financial position of the Fund also improved continuously and recorded a surplus of $259 million by the end of 2005.

Both the department and the Fund Board attach great importance to protecting the Fund from abuse. To this end, stringent vetting procedures are in place to process all applications. An inter-departmental task force has been formed by representatives of the Labour Department, Official Receiver's Office, Commercial Crime Bureau of the Police Force and Legal Aid Department to take concerted actions against suspected fraudulent cases. In 2005, we further launched proactive measures to prevent abuse of the Fund by clamping down at source on employers evading their wage liabilities.

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 2005, 1 963 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 $160 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 payment to injured employees who are unable to receive their entitlements for employment-related injuries from their employers or insurers. In 2005, the Board approved 188 applications, leading to payment of $134 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.