[Archive] Review of employees' compensation system

Asked by : Hon. Andrew CHENG

Replied by : SEM

Question :

Regarding the review of the employees' compensation system and rehabilitation policy, will the Government inform this Council:

1. of its initial assessments on the recommendations made in the Review of Employees' Compensation System in Hong Kong, published by the Hong Kong Federation of Insurers last November, in particular about adopting a step-down approach after statutory compensations have been paid to injured workers over a certain period of time, stipulating that employees are not entitled to statutory and civil compensations at the same time, and implementing a mandatory rehabilitation programme;
   
   
2. whether it plans to set up a committee to review comprehensively the employees' compensation system and the relevant legislation in Hong Kong; and
   
   
3. whether it will consider formulating a comprehensive rehabilitation policy in respect of injured workers for the sake of providing better treatment to them and protecting their rights for reinstatement after recovery?
   
   

Reply:

Madam President,

1. According to the Review of Employees' Compensation System in Hong Kong published by the Hong Kong Federation of Insurers (HKFI), the total amount of employees' compensation doubled over the past six years but the amount of premium collected decreased by half, resulting in serious under-funding of the employees' compensation insurance business. The crux of the problem lies in the intense competition within the industry, improper risk management and excessive fees charged by the intermediary. In face of these problems, the Report makes a number of recommendations such as re-formulating the premium strategy, imposing limits on intermediary commission, enhancing information management and data collection on occupational safety records. These recommendations are constructive. I hope the industry will give serious consideration to these recommendations and make concerted efforts to put them into practice.
   
   The Report also makes a number of recommendations for better managing pay-out in respect of employees' compensation. As a matter of principle, the Government considers that operation of the insurance industry is the main cause of under-funding. Unless there is sufficient evidence that the existing system is being abused, we do not agree to reduce, by any means, employees' compensation which is lawful and reasonable.
   
   The length of sick leave for an injury at work is decided by a registered medical practitioner or the Employees' Compensation Assessment Board, taking into account the injury sustained by the injured employee, while the loss of earning incapacity of the injured employee is assessed by the Employees' Compensation Assessment Board. In the light of the relevant assessment, the amount of compensation will be calculated in accordance with the provisions in law. We should not suspect that these independent professionals would make biased and unfair decisions. In fact, the Labour Department's statistics show that, for all work-related injuries in 1999 for which sick leave of more than three days were granted, 75% were granted sick leave of less than 30 days and 95% less than 6 months.
   
   The information provided in the HKFI's report also indicates that statutory compensations amounted to 65% of total employees' compensations awarded. While compensations for civil law damages are on the rise, their proportion has remained relatively small. As for mandatory rehabilitation programme, it is not a common international practice and the HKFI study has not comprehensively assessed its effectiveness. At present, there are local agencies providing rehabilitation services to employees who suffer permanent disability as a result of work-related injuries and offering them training courses to help them recover as soon as possible and re-enter the labour market. We consider it inappropriate to introduce legislation to require employers to offer jobs to employees who have not yet fully recovered. Such a move will also create problems for small and medium enterprises.
   
   
2. The Government agrees with paragraph 5 of Part II of the Report, which states that the existing employees' compensation system has been able to provide fair and equitable compensation to employees injured at work as well as family members of deceased employees. There is therefore no need to set up a Task Force to review the existing system and the legislation concerned. To resolve the problem within the insurance industry, members of the industry should exercise self-discipline and draw up solutions.
   
   In addition, it is noted that in conducting the study, the consultant had interviewed members of the insurance industry only, without seeking the views of other stakeholders, e.g. the labour sector, employers, claimants, legal and medical practitioners handling employees' injury cases and relevant Government departments etc. The Government will consult relevant parties on the Report.
   
   
3. At present, the Hospital Authority provides medical treatment and rehabilitation services, including occupational rehabilitation, to members of the public who sustain injuries. Employees who have sustained injuries, be they of a temporary or permanent nature, are entitled to such treatment and rehabilitation services.
   
   In addition, the Employees' Compensation Ordinance prohibits an employer from dismissing an employee while the latter is on sick leave resulting from work-related injury. Offenders will be liable to a maximum fine of $100,000 on conviction. This provision would enable an injured employee to resume work after rehabilitation.