Annual Report 2008

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 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 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 PMCO provides compensation to persons who suffer from pneumoconiosis and/or Mesonthelioma. 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.

In 2008, the ECO and the PMCO started to recognise the medical treatment, examination and certification given by registered Chinese medicine practitioners for the purpose of employees' entitlement to benefits under the two ordinances.

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 2008, 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, 1,088 summonses were heard in respect of wage offences in 2008. As for summonses convicted, the number was 958, a figure comparable with the 960 convictions in 2007. Three company directors and responsible persons and one employer were given custodial sentences in 2008 for wage defaults. In addition, community service orders were imposed on one company director and two employers for committing wage offences. An employer was fined $110,000 in one prosecution case. 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 2008, labour inspectors carried out 132 525 workplace inspections to establishments in different trades to enforce labour laws and in 131 835 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 186 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 67 882 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 688 inspections were conducted to the workplaces of such workers and 2 218 workers were interviewed to check contractors' compliance with labour laws.

To ensure compliance with the required conditions under the Supplementary Labour Scheme, we investigated 66 complaints and cases on suspected irregularities involving imported workers such as allegations of deprivation of statutory holidays or rest days, 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 2008, 59 867 employees' compensation cases, including 15 826 minor cases involving sick leave of not exceeding three days, were received. At year-end, among the 44 041 fatal cases or non-fatal cases involving sick leave exceeding three days, 29 535 cases were processed or settled. Compensation amounting to $215 million was payable to the injured employees in these cases. The remaining cases are in the process of recovery and are being followed up. (

In 2008, 59 867 employees' compensation cases, including 15 826 minor cases involving sick leave of not exceeding three days, were received. At year-end, among the 44 041 fatal cases or non-fatal cases involving sick leave exceeding three days, 29 535 cases were processed or settled. Compensation amounting to $215 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 2007, 62 241 employees' compensation cases, including 16 239 minor cases which involved sick leave of not exceeding three days, were received. As at the end of 2008, among the 46 002 fatal cases or non-fatal cases with sick leave exceeding three days, 42 976 cases were settled. A sum of $593 million was payable as compensation to the injured employees in these cases. The number of working days lost was 1 145 017. 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 2008, a total loan of $46,500 was approved in four applications.

The Labour Department has settled all SARS cases which can be resolved by the issue of certificates of compensation assessment by the department, seven of which are fatal cases and 283 are non-fatal cases.

In 2008, we arranged seven briefings for government departments and 48 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 stations and 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 11 talks on ECO, and published six 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. Due to the impact of the global financial crisis, we received 6 448 applications in 2008, a substantial increase of 33 per cent as compared with 4 836 in 2007. A breakdown of applicants classified by economic sector is shown in Figure 6.6. During the year, we processed 5 728 applications, leading to payment of $96 million. The financial position of the fund improved continuously and recorded a surplus of $371 million for 2008.

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 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 2008, 1 877 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 $140 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 2008, the board approved 63 applications, leading to payment of $33.5 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 58 applications for compensation with a total compensation payout at $7.5 million and 305 applications for payment of expenses on hearing assistive devices with a total payout at $680,000. The board also provided 565 rehabilitation programmes for people having occupational deafness.

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 58 applications for compensation with a total compensation payout at $7.5 million and 305 applications for payment of expenses on hearing assistive devices with a total payout at $680,000. The board also provided 565 rehabilitation programmes for people having occupational deafness.