In line with many Western countries, Hong Kong’s government has enacted labour laws requiring employers to carry employees compensation insurance. The Employees’ Compensation Ordinance, requires employers to carry insurance to protect employees against injuries sustained in the workplace.
The EC Ordinance requires Hong Kong’s businesses, regardless of legal structure (ie. incorporated or a sole proprietorship), to carry Employees’ Compensation insurance if they employ one (1) or more employees. This includes everyone from full time workers, part-time employees, employed family members, apprentices, to households that employ a nanny. All of these businesses must carry valid insurance to avoid penalties under this ordinance.
Employees’ Compensation insurance compensates employees that are injured or become ill due to work-related activities. Common examples include someone being hurt on a construction site, a worker accidentally catching his hand in a machine, or even a nanny slipping and falling on a wet kitchen floor. When a loss occurs and the insurance company is notified, they will pay for medical bills, lost wages, and other miscellaneous expenses involved in your employees’ treatment and recovery. If you’re ‘hiring’ a subcontractor, you need to make sure you have a certificate of insurance from their insurer.
Payments under the EC insurance is made on a no-fault basis. That means the insurance will pay regardless of who was at fault for the accident. Even if an employee was texting while driving, the EC insurance will pay his medical bills if he is injured in a subsequent crash.
EC insurance also provides coverage on a worldwide basis so even if you’re injured while on a business trip, you would have coverage.
According to the ordinance, the minimum limit of insurance required varies based on the number of employees a business retains. For businesses with less than 200 employees, the minimum limit required for each employee is HK$100 million. If you employ more than 200 employees in Hong Kong, you need to purchase a minimum limit of HK$200 million per employee.
Failing to meet these minimum requirements can result in harsh penalties. Violators of the EC ordinance can face fines up to HK$100,000 and imprisonment for up to two (2) years for the most egregious offenders.
Purchasing Employees’ Compensation Insurance is not only necessary to satisfy legal requirements, it’s a good way to protect the financial well being of your business if an employee is injured while in the course of their duties. Having the proper insurance in place also ensures that your valuable employees can recover as quickly as possible.
EC insurance premiums can vary widely based on the type of business you run, the limit of insurance you purchase, and how many employees you have. Insurance for an animation studio would be much lower than a factory or workshop of the same size due to the difference in risk levels. Many businesses also contain a mix of employees as some may have administrative duties while others are working in more hazardous environments. When purchasing EC insurance, be specific about each employee’s job tasks when completing your application for insurance. Despite the potentially high costs, this insurance must be paid for completely by the business. Owners cannot deduct their employees’ pay cheques to pay for this coverage.
If you are unable to secure EC insurance at reasonable rates through regular insurers, you can still get coverage through the Employees’ Compensation Insurance Residual Scheme Bureau. That said, a good insurance brokers who specializes in working with business owners on complex situations, will be able to find you the right coverage for your business.
Visit to get more information about the employee’s compensation insurance, product liability insurance.