Annual Report 2007

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 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 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 (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 PCO provides compensation to persons who suffer from pneumoconiosis. 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-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 2007. Some key indicators of work of this programme area are shown in Figure 6.1.

In 2007, we reviewed the PCO and proposed to extend its coverage to include cancerous mesothelioma. The legislative exercise to implement the proposal was conducted with priority so that eligible mesothelioma sufferers could be accorded with the same compensation and benefits as those for pneumoconiotics as early as possible.

The department takes a serious view on wage default and has put in place effective arrangements to enforce statutory provisions governing payment of wages. In 2007, 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 also conducted in-depth investigation into suspected wage offences under the EO promptly. Prosecutions were taken out against the employers and the company responsible persons whenever sufficient evidence was available.

With the department continuing in stepping up enforcement action in 2007, the number of summonses heard in respect of wage offences rose to 1 225, representing an increase of 17.5 per cent over the figure of 1 043 summonses in 2006. As for summonses convicted, the number was 960 for 2007 as against 785 in 2006, an increase of 22.3 per cent. Five company directors and two other employers were given custodial sentences in 2007 for defaulting wage payments. Community service order was first imposed on two company directors for committing wage offences. On the other hand, an employer was fined $150,000. These sentences should have 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 2007, labour inspectors carried out 131 818 workplace inspections to establishments in different trades to enforce labour laws and in 131 224 of such inspections, they also checked the employees' proof of identity and the employee records kept by employers to deter illegal employment. (Figure 6.2) We strengthened the collection and analysis of intelligence on illegal employment activities, and organised 170 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 Employees' Compensation Ordinance. In the year, a total of 63 595 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 2 055 workers were interviewed to check contractors' compliance with labour laws.

To ensure compliance with the required conditions under the Supplementary Labour Scheme, we investigated 61 complaints and cases on suspected irregularities involving imported workers such as allegations of deprivation of statutory holidays or rest days, late payment / underpayment of wages.

In consultation with the Labour Department and the Insurance Authority, the Hong Kong Federation of Insurers launched the Employees' Compensation Insurance Residual Scheme on May 1, 2007. The scheme serves as a market of last resort to assist employers, in particular those in the high risk groups, who have difficulties finding employees' compensation insurance cover.

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.

Information on employees' compensation cases reported is shown in Figures 6.3 and 6.4. We processed and settled 31 834 non-fatal cases involving sick leave exceeding three days which were reported in 2007. These included 12 238 cases settled directly between employers and employees. Compensation amounting to $9.3 million and $220 million respectively was payable to the injured employees in minor cases and in cases involving sick leave exceeding three days.

For the 50 235 employees' compensation cases reported in 2006, 46 913 non-fatal cases with sick leave exceeding three days and 157 fatal cases were settled as at the end of 2007. A sum of $631 million was payable as compensation to the injured employees or family members of deceased employees. The number of working days lost was 1 211 650.5. (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 2007, a total loan of $105,000 was approved in seven applications.

As at the end of 2007, the Labour Department arranged a total of 371 employees infected with SARS to receive assessments by the Employees' Compensation Assessment Board in respect of respiratory impairment. Since some of the SARS employees had other complications and had received treatment from other specialties, such as orthopaedic, psychiatry and endocrine, the department also arranged assessments for these employees by the relevant specialties. As a result of the department's active follow-up action, the statutory compensation claims in seven fatal cases and 283 non-fatal cases were resolved upon the issue of certificates of compensation assessment by the department as at year-end.

In 2007, we arranged eight briefings for government departments and 44 briefings for imported workers, to publicise the rights and obligations of the parties concerned.

Extensive publicity campaigns were launched to warn against illegal employment. We widely publicised our complaint telephone hotline (2815 2200) through press releases, posters, advertisements on tram body and inside train compartments, as well as distribution of souvenirs etc. to encourage members of the public to provide intelligence on illegal employment activities.

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.

We actively educated employers and employees about their rights and obligations under the ECO. In the year, we held 15 talks on ECO, and published eight articles on the handling of employees' compensation cases in the press.

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. 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, verify applications and approve payment from the fund. In 2007, we received 4 836 applications, a substantial drop of 36 per cent as compared with 7 532 in 2006. This is an all-time low since 1990. A breakdown of applicants classified by economic sector is shown in Figure 6.6. During the year, we processed 5 789 applications, leading to payment of $95 million. The financial position of the fund also improved continuously and recorded a surplus of $442 million for 2007.

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, Official Receiver's Office, Commercial Crime Bureau of the Police Force and Legal Aid Department to take concerted actions against suspected fraudulent cases.

The Pneumoconiosis Compensation Fund Board (PCFB) is established under the 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 2007, 1 910 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 $149 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 2007, the board approved 68 applications, leading to payment of $59.6 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. During the year, the board approved 47 applications for compensation with a total compensation payout at $4.6 million and 289 applications for payment of expenses on hearing assistive devices with a total payout at $710,000. The board also provided 321 rehabilitation programmes for people having occupational deafness.