Chapter 6 Employmee Rights and Benefits

• 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 employees' compensation claims;
• Maintaining close partnership with statutory bodies set up for protecting the rights and benefits of employees; and
• Providing customer-oriented information 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 and Mesothelioma (Compensation) Ordinance (PMCO), 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 non-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 PMCO provides compensation to persons who suffer from pneumoconiosis and/or mesothelioma. Compensation is paid from the Pneumoconiosis Compensation Fund, which is administered by the Pneumoconiosis Compensation Fund Board.

The EO is the main piece of legislation governing conditions of employment in the non-governmental 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 2010. Some key indicators of work of this programme area are shown in Figure 6.1.

The Occupational Deafness Compensation Scheme compensates employees who have worked in specified noisy occupations and are suffering from noise-induced deafness. To improve the protection of the Scheme, the Occupational Deafness (Compensation) (Amendment) Ordinance 2010 came into operation on April 16, 2010. The Amendment Ordinance made monaural hearing loss compensable, provided further compensation for claimants whose hearing loss deteriorates as a result of their continued employment in noisy occupations and increased the maximum and first time reimbursable amounts for the expenses incurred relating to hearing assistive devices. At the same time, the rate of levy charged on the premium of the employees' compensation insurance policy taken out by employers was decreased by 0.5 percentage point, taking into consideration the functions and financial position of the Employees Compensation Assistance Fund Board, Occupational Deafness Compensation Board and Occupational Safety and Health Council. The decrease became effective on July 1, 2010.

In 2010, the ECO was amended to raise the amounts of five compensation items in respect of cases mainly involving death or permanent incapacity. The revised levels of compensation are applicable to work accidents which happen on or after August 1, 2010.

In 2010, the Labour Department continued to adopt a proactive strategy to tackle the problem of non-payment of wages at source through enhancing publicity and promotion, stepping up enforcement and prosecution, and making use of the early warning system set up in collaboration with trade unions to gather intelligence on non-payment of wages. We also proactively monitored selected sectors and establishments with a view to forestalling and detecting at an early stage cases of wages default and intervening early to tackle the problem.

In 2010, the department continued to step up prosecution against employers and responsible persons of companies for wage offences. 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 conducted investigation speedily into the suspected offences. The Employment Claims Investigation Division continued to vigorously conduct prompt investigation into suspected wage offences under the EO. Prosecutions were taken out against employers and company responsible persons whenever sufficient evidence was available.

With the department continuing in stepping up enforcement action, 1 854 summonses were heard in respect of wage offences in 2010. As for summonses convicted, the number was 1 481, representing an increase of 12.7 per cent compared with the 1 314 convictions in 2009. Three company responsible persons and one employer were jailed or given suspended sentences for wage defaults. In addition, community service orders were imposed on five company responsible persons and nine employers for committing wage offences. An employer was fined $320,000 in one prosecution case. These sentences sent a strong message to employers on the seriousness of wage defaults.

We continued our vigorous enforcement efforts to ensure that the statutory rights of employees under labour legislation are well protected.

In 2010, labour inspectors carried out 140 267 workplace inspections to establishments in different trades to enforce labour laws (Figure 6.2). To deter illegal employment, we organised 217 operations with the Police and the Immigration Department.

We conducted routine inspections and trade-targeted operations to enforce the compulsory requirement of taking out employees' compensation insurance policy under the ECO. In the year, a total of 80 667 inspections were conducted to enforce the statutory requirement. Employers failing to comply with the requirement were prosecuted.

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 685 inspections were conducted to the workplaces of such workers and 2 181 workers were interviewed to check contractors' compliance with labour laws.

To ensure compliance with the required conditions under the Supplementary Labour Scheme, we investigated 49 complaints and cases on suspected irregularities involving imported workers such as allegations of improper deployment, long working hours and late payment of wages.

Under the current no-fault employees' 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.

In 2010, 58 791 employees' compensation cases, including 16 165 minor cases involving sick leave of not exceeding three days, were received. At year-end, among the 42 626 fatal cases or non-fatal cases involving sick leave exceeding three days, 27 063 cases were processed or settled. Compensation amounting to $198 million was payable to the injured employees in these cases. The remaining cases are in the process of recovery and are being followed up. (Figures 6.3 and 6.4)

In 2009, 55 799 employees' compensation cases, including 15 503 minor cases which involved sick leave of not exceeding three days, were received. As at the end of 2010, among the 40 296 fatal cases or non-fatal cases with sick leave exceeding three days, 37 299 cases were settled. A sum of $563 million was payable as compensation to the injured employees in these cases. The number of working days lost was 1 076 813. The remaining cases are in the process of recovery and are being followed up. (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 2010, we arranged five briefings for government departments and 38 briefings for imported workers, to publicise the rights and obligations of the parties concerned.

Extensive publicity campaigns were launched to publicise our complaint telephone hotline (2815 2200) through press releases, posters, and advertisements on tram body, at MTR stations and on newspapers, as well as distribution of souvenirs etc. to encourage employees to report suspected breaches of employment rights.

We strengthened promotion on timely reporting of work accidents by employers and publicity on employers' statutory obligation to take out insurance policies to cover their liabilities for injuries at work sustained by their employees through TV and radio announcements, leaflets, posters, newspapers, departmental homepage and seminars on the ECO. In the year, we held seven talks on ECO, and made announcements on employers' statutory obligation to take out insurance policies via TV and via outdoor electronic media.

We maintain close partnership with various statutory bodies that are set up for implementing the different schemes for the protection of the rights and benefits of employees.

The Protection of Wages on Insolvency Ordinance (PWIO) provides for the establishment of the Protection of Wages on Insolvency Fund and its administration by a board. 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 in accordance with the PWIO.

We provide administrative support to the Protection of Wages on Insolvency Fund Board, verify applications and approve payment from the fund. With the continual improvements of the local economy, we received 4 453 applications in 2010, a drop of 38.7 per cent as compared with 7 260 in 2009. A breakdown of applicants by economic sector is shown in Figure 6.6. During the year, we processed 5 046 applications, leading to payment of $99 million and the fund recorded a surplus of $404 million.

By providing a safety net for employees affected by business closures, the fund plays an important role in maintaining harmonious labour relations and social stability. 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, Commercial Crime Bureau of the Police Force, Official Receiver's Office and Legal Aid Department to take concerted actions against suspected fraudulent cases.

The Pneumoconiosis Compensation Fund Board (PCFB) is established under the PMCO to provide compensation to persons suffering from pneumoconiosis and/or mesothelioma. The board is financed by a levy collected from the construction and quarrying industries. Under the PMCO, the Labour Department is responsible for determining whether an applicant is entitled to compensation. As at the end of 2010, 1 794 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 $146 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 2010, the board approved 66 applications, leading to payment of $45.3 million. With effect from April 1, 2004, the Employees Compensation Insurer 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.

The Occupational Deafness Compensation Board is established under the Occupational Deafness (Compensation) Ordinance to provide compensation and reimbursement of expenses incurred in purchasing, repairing and replacing hearing assistive devices to those persons who suffered from noise-induced deafness due to employment in specified noisy occupations. The board also has an important role in providing educational and publicity programmes for the prevention of occupational deafness, and providing rehabilitation programmes for those suffering from noise-induced deafness by reason of employment. With the commencement of the Occupational Deafness (Compensation) (Amendment) Ordinance 2010 on April 16, 2010, additional benefits have been introduced to improve the Occupational Deafness Compensation Scheme. During the year, the board approved 591 applications for compensation with a total compensation payout at $17.34 million and 541 applications for payment of expenses on hearing assistive devices with a total payout at $2.23 million. The board also provided 455 activities under its rehabilitation programmes for people having occupational deafness.