FAQ

Labour Insurance is also known as Employees' Compensation Insurance (ECI). According to Section 40 of the Employees' Compensation Ordinance (ECO), Chapter 282 of the Laws of Hong Kong, no employer shall employ any employee in any employment unless there is in force in relation to such employee a policy of insurance to cover the employer’s liabilities under the laws (including the Ordinance and at common law) for injuries at work in respect of all employees, irrespective of the length of the employment contract or working hours, full-time or part-time employment, permanent job or temporary employment. An employer who fails to comply with ECO to secure an ECI cover is liable to prosecution and, upon conviction, to a maximum fine of HK$100,000 and imprisonment for two years.

Labour Insurance and Mandatory Provident Fund (MPF) are two social security systems with distinct characteristics and requirements. According to Hong Kong Laws, employers must purchase Employees’ Compensation Insurance for their employees before they start working to ensure coverage during their employment. This differs from the MPF regulations, which allow employers to register for the MPF within 60 days after the employee begins work, whereas there is no such grace period for Labour Insurance. Therefore, employers should ensure that adequate insurance coverage is arranged before the employee’s first day of work. Employees can also confirm with their employers that the Labour Insurance arrangements are legal and compliant, thereby protecting the interests of both parties.

In Hong Kong, Employees’ Compensation Insurance (ECI) cannot be backdated to a previous date for coverage. According to the Employees' Compensation Ordinance, employers are required to purchase ECI for their employees before they start working to ensure coverage during their employment. If an employer fails to insure an employee before they begin work, retroactive coverage will not be provided. In such cases, if the employee suffers an accident or injury during work, the employer cannot rely on the Labour Insurance that was not timely purchased to cover related liabilities.

Therefore, employers must ensure that ECI is properly arranged and purchased before the employee officially begins work to protect the rights of the employees and comply with legal requirements. In general, ECI takes effect immediately upon successful application and payment, but it is recommended to contact our Technical Representatives or Customer Support Team directly for actual situations.

In general, Employees’ Compensation Insurance (ECI) premium rates are not adjusted annually unless there have been claims under the policy in the past year, or if there have been multiple serious incidents in similar job categories within the industry that affect the risk assessment of the insurance company. The reasons for changes in Labour Insurance premiums are as follows:

• Statutory Adjustments: Labour Insurance premiums are adjusted based on factors such as wage levels, inflation rates, and other economic indicators to ensure the sustainability of the insurance fund.
• Risk Assessment: As industry risks change, premiums for certain specific job categories may increase or decrease. These changes reflect the insurance company's analysis of the risks of accidents occurring in different work environments based on various job natures.
• Changes in Sum Insured: Adjustments in employees’ annual wage roll affect the sum insured by the insurance policy. Premiums are calculated based on the latest estimated wage roll multiplied by the insurance rate, leading to changes in the calculated premium.

The steps for calculating the latest renewal premiums are as follows:

1. Provide Estimated Annual Wage Roll: First, establish the employee’s projected annual salary for the coming year (including salaries, commissions, bonuses, overtime pay, allowance, etc.), which serves as the basis for calculating the premium.
2. Applicable Insurance Category: The insurance category is determined based on the industry and specific job nature. Different categories have different premium rates. When applying for or renewing insurance, it is important to clarify the employee’s job nature and work environment, such as the frequency they are required to work outdoors, on construction sites, or overseas.
3. Calculate Premium: Multiply the employee’s annual wage roll by the applicable insurance premium rate, and add the ECI levy (10.8%) and IA Levy (0.1%) to determine the total premium payable.

For accurate premium calculations, we recommend contacting our Technical Representatives or Customer Support Team directly. We can provide detailed explanations and premium breakdowns for you.

The estimated annual wage roll refers to the lump sum of earnings of each employee declared by the Insured when applying for Employees’ Compensation Insurance (ECI). This includes basic wages, salaries, commissions, bonuses, overtime payments of a constant nature, allowance, etc. This figure is crucial because it directly affects the calculation of insurance premiums, the scope of coverage, and potential claims recovery in the event of a claimable incident.

Referring to Chapter 6 of A Concise Guide to the Employees’ Compensation Ordinance, “earnings” (i.e., the estimated annual wage roll/ income that the insurance company requires to be disclosed) includes cash wages; the value of any privilege or benefit which can be estimated in cash, e.g., food, fuel or quarters supplied to the employee, if as a result of the accident he/ she is deprived of any of them; overtime payments or other special remuneration, whether by way of bonus, allowance or otherwise, if it is of a constant nature; and customary tips. Under the Ordinance, “earnings” does not include items such as remuneration for intermittent overtime, casual payments of a non-recurrent nature, the value of travelling allowances or concession and the employer’s contributions to provident funds.

All applicable items summed together constitute the estimated total annual wage roll/ income of the insured employees. If the insured amount is insufficient, it can have serious implications for the recovery amount of the claims. For example, if the insured amount is lower than the employee's actual annual salary when an accident happens, the insurance company can only provide partial compensation based on the ratio of the insured amount to the actual wage roll, and the insurance company has the right to refuse to process the claim due to any significant difference in the figures, this could leave employers responsible for covering the shortfall in compensation. Therefore, it is crucial to ensure accurate calculation and reporting of employees' annual salaries when applying for insurance to ensure sufficient coverage.

Salary Adjustments/ Changes: If the change is within 10% of the insured amount, it can usually be handled at the insurer's discretion. Generally, you only need to declare it accurately during the next renewal and arrange for a year-end adjustment as needed.

Personnel Changes: If the insurance was taken out on a named basis, you must report any personnel changes immediately to the insurance company. This ensures the validity of the insurance and the scope of coverage, avoiding potential claims issues.

Adding or Reducing Staff: If there is an increase in the number of insured employees and/ or with changes in job roles, the insured should notify us before the new employees start working. Please provide the nature of the new employees' jobs, the estimated annual income, and the effective date of the changes. We will inform the insurance company to update the policy coverage by endorsement accordingly, and the premium difference will be calculated pro-rata based on the number of insured days. If reducing the number of insured employees, please notify us of the nature of the departing employees' jobs, the originally reported estimated annual income and the effective date of the changes. The premium difference will be refunded on a pro-rata basis on the number of uninsured days. Refunds may be subject to the terms and conditions of the policy, and the details for changing the policy will depend on the actual circumstances and policy terms.

We understand that personnel changes can occur frequently throughout the year, so minor adjustments are acceptable as long as the company is not making large-scale hirings or layoffs. If you need to report changes to your insurance company, please fill out the Policy Amendment Application Form and email the completed form to our Technical Representatives or Customer Support Team.

The processing time for work injury compensation claims is typically longer than that for other types of claims. Insurance companies need sufficient time to investigate incidents and verify all relevant information thoroughly. If compensation has not been received after reporting a work injury, several factors may contribute to the delay:

Improper Reporting: If the required procedures for reporting the injury were not fully followed, it may result in an incomplete claim, affecting the progress of compensation. Our claims department reviews your application and notifies you of any missing documents. Please respond to these requests promptly to facilitate the process.

Missing Documentation: Before compensation can be issued, the insurance company must verify all relevant documents with the employer to ensure their completeness and accuracy. This includes forms such as the Certificate of Compensation Assessment and/ or the Certificate of Review of Assessment from the Labour Department, proof of periodic payments (commonly referred to as sick leave payments for work injury), and medical certificates. Generally, all original documents related to periodic payments, medical certificates, and Labour Department forms must be submitted before the case is closed. Incomplete documentation may hinder the claims process.

Case Development Stage: Insurance companies typically begin calculating compensation only after the work injury case has been closed (i.e., when the Labour Department has finalised the case, often referred to as “completed injury assessment”). This means that compensation will not be disbursed until the case is closed.

Legal or Regulatory Complexities: Certain work injury cases may involve complex legal or regulatory issues, which can require additional time to address.

If you are unclear about the status of your claim or have any questions, please do not hesitate to contact our Claims Department to inquire about the specific progress of your claim and any potential issues.

Employees’ Compensation Insurance is a protective system based on an employment relationship. According to the laws, there must be an employer-employee relationship to purchase labour insurance. Therefore, in a limited company, salaried directors, owners, and employees are all considered employees of the company. The limited company should purchase labour insurance for the "business owner" to cover potential risks of work-related injuries or occupational diseases.

However, the owners of unlimited companies are classified as self-employed individuals and do not fall under the category of “employees”. As such, they are not required to purchase labour insurance and are also not covered by it. In this case, Regional Insurance recommends that these self-employed individuals consider purchasing Personal Accident Insurance for protection against injuries or losses resulting from accidents during work tasks.