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Guide to Hong Kong Employees’ Compensation Insurance – All Employee Should Know

Guide to Hong Kong Employees’ Compensation InsuranceThe Employee Ordinance law highlights that limited companies in Hong Kong are rightfully required to take out Hong Kong Employees’ Compensation Insurance policy to conceal their liability if their worker suffers an injury or illness during the usual period of their work. Under the Employees’ Compensation, all work-related injuries regardless of the service length or employment status (full or part-time, permanent or temporary) are covered. One way to identify a company as an employer is when it engages another person to perform a duty and agrees to pay them. He/She is still considered an employee even though the founder of the company is the sole person working for their limited company and the Employees’ Compensation is legally required to be taken out. When an employer fails to fulfil the rules stated, they can be penalised.

If you have trouble buying Employees’ Compensation for your business which runs in a “High Risk” group, employers who are denied coverage by at least 3 different insurance companies, or who have been quoted premiums of over 30% the standard market rates for Employees’ Compensation can apply to the Employees’ Compensation Insurance Residual Scheme Bureau.

Essentially, anyone under a payroll must be covered. One good thing is that Employee’s Compensation insurance is affordable.  Regular staff usually pay less than HK$1,000 per employee per year.  Furthermore, variations in policy coverage does not happen, but there might be different rates applied depending on the employee position held. If you are required to travel often, there will be higher premiums.

Here is a list of the different types of employees that must be covered by Employees’ Compensation Insurance

  • Temporary staff
  • Permanent staff
  • Staff working on a trial basis
  • Hourly workers
  • Staff working during their probationary period
  • Ad-hoc workers
  • Domestic helpers
  • Seasonal workers

To qualify for premium, the industry, travel status and annual salary levels of each member of a company’s team will be taken account. Companies with less staff members tend to have difficulties getting coverage for Employees’ Compensation insurance. Therefore, due to low premiums, there will be cases where insurance providers combine the coverage with other serious office-related insurance benefits into one package. Below is a typical package for SMEs:

  • Employees’ Compensation;
  • Third party or public liability;
  • Property insurance;
  • Damage to the premises; and
  • Dishonesty and theft by employees.

 

Other Business Insurance Policy to consider

It is lawfully required to have an Employees’ Compensation which is pretty much straightforward. Some of the other business insurance you might consider to protect employees, employers and companies and also attract staff to your business include:

  • Professional Indemnity Insurance allows coverage of legal costs associated to any claims for damages made to your business.
  • Legacy Planning Insurance is another way for business owners to hand over their business to their next of kin, while the payout from the policy balances the benefits received by other surviving loved ones.
  • Medical a.k.a. Health Insurance helps employees with the cost of medical expenses. Medical insurance covers the costs of physician and surgeon fees, hospital rooms, and prescription drugs.
  • Business Loan Protection Insurance is a form of life insurance policy that covers bank loans in case of the demise of key staff to ensure the continuity of business without any problem.
  • Executive Retention Insurance is another kind of life insurance policy especially aimed to attract and retain key staff members. This works in such a way that the staff member holds the policy while the company pays the premium.
  • Key Person Protection comes under the critical illness and life insurance policy owned by the company that ensures the death or extended disability of a key person does not cause irreversible damage to the organization. Loss of profits, paying off loans, reassuring customers and other stakeholders as well as pay for recruitment and training of a replacement is some of the areas it covers.
  • Business Succession Insurance works as a life insurance policy that pays out to the surviving business partners, allowing them to purchase the shares back from the estate of the deceased at a fixed value.
  • Directors and Officers Insurance protects named staff and the company from claims made against them even if they did not have any direct involvement in the incident.
  • Disability Insurance replaces all or part of the income that is lost when a worker is unable to perform their job because of illness or injury. This benefit is not commonly offered.

Hong Kong is a hub for many different insurance companies, all offering various policies with different levels of coverage. It is obvious that we seldom find one provider that offer policies which is suited to our preferences. This is where we have an option to use an independent broker who is not tied to a single insurer and has the capacity to give you access to the whole market.