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Speech on the Resumption of the Second Reading Debate of the Employees Compensation Assistance (Amendment) Bill 2002

Speech by Mrs Fanny Law, JP Secretary for Education and Manpower on the Resumption of the Second Reading Debate of the Employees Compensation Assistance (Amendment) Bill 2002 at the Legislative Council on Wednesday, 26 June 2002

Madam President,

The Employees Compensation Assistance (Amendment) Bill 2002 was introduced into the Legislative Council on 27 February 2002. The objective of the Bill is to reform the Employees Compensation Assistance Scheme so as to restore its long term financial viability.

2. I am most grateful to the Honourable Audrey Eu and Members of the Bills Committee for their efficiency in scrutinising the Bill. I would also like to thank Members of the Bills Committee for their constructive and pragmatic views. In response to their suggestions, I shall move several amendments to the Bill at the Committee Stage.

3. I am pleased to note that the Finance Committee of this Council has approved an additional loan of $220 million to the Employees Compensation Assistance Fund Board last Friday. This loan is an essential component of the set of financial arrangements that aims to tide over the cash flow problem faced by the Board in meeting the liabilities that arise from the insolvency of two local subsidiaries of the HIH group of insurers.

4. In moving the second reading of the Bill, I pointed out that the Bill would repeal relevant sections of the principal ordinance relating to insurer insolvency. I also informed Members that the Commissioner of Insurance had been discussing with the insurance industry on a separate scheme to cover insurer insolvency. I understand that the Bills Committee had a thorough discussion on this issue and received submissions from concerned parties, in particular the insurance sector.

5. Notwithstanding the reservations which the Hon Bernard Chan has expressed on behalf of the insurance industry regarding the establishment of an industry-based scheme to cover insurer insolvency in relation to employees' compensation insurance. I am pleased to note the insurance industry is now prepared to commerce work on the establishment of the Fund. As I pledged when moving the Second Reading of the Bill, we will not put into effect those provisions that remove insurer insolvency from the principal ordinance unless and until the separate scheme is in place.

6. The Hon Audrey Eu and have expressed concern about the complexity involved in administering the relief payment and the increased workload on the Board in processing applications from eligible persons. The Labour Department will liaise with the Board to help work out the necessary procedural changes to implement the changes. The aim will be to streamline procedures as far as possible so as to expedite the payment of relief and at the same time, to build in sufficient safeguards to minimise disputes and avoid inadvertent mistakes.

7. Madam President, the Employees Compensation Assistance (Amendment) Bill 2002 is the outcome of protracted negotiations between employer and employee representatives with a view to restoring the long term viability of the Employees Compensation Assistance Scheme. The agreed financial package provides reasonable protection for injured employees and family members of deceased employees on the one hand, and on the other hand, more prudently manages the financial exposure of the Fund with the introduction of a monthly relief payment. The intention of the Bill is not, as the Hon LAU Chin-shek suggested, to reduce the entitlement of injured employees but rather to even out the cashflow of the Fund by replacing lump sum payment of common law damages with monthly relief payment.

8. This exercise has involved prolonged discussion in the LAB and the interactive process between the Bills Committee and the LAB through the intermediary of Labour Department. Throughout these discussions, we fully appreciate the goodwill on both sides to accommodate each other.

9. I appeal to Honourable Members to support the Bill and the amendments which I shall propose at the Committee Stage.

10. Thank you.

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Speech by Mrs Fanny Law, JP
Secretary for Education and Manpower
on the Committee Stage Amendment
to be moved by the Administration
at the Legislative Council on Wednesday, 26 June 2002

Madam Chairman,

I move the amendments to the clauses read out just now as set out in the paper circularised to Members.

2. The first amendment to Clause 1 spells out clearly that the Amendment Ordinance, save for the provisions relating to insurer insolvency, shall come into operation on 1 July 2002. The second amendment to the same clause is consequential to the Legislative Council Resolution passed on 19 June 2002 which transfers the statutory functions under the Employees Compensation Assistance Ordinance from the Secretary for Education and Manpower to the new principal official under the Accountability System.

3. We also propose to amend clause 29 to update the reference to the new principal official who shall exercise the relevant statutory functions under the Ordinance.

4. The original Clauses 7 and 8 have sought to amend sections 17 and 18 of the principal ordinance so as to enable a principal contractor who has taken out an insurance policy in accordance with section 40(1B) of the Employees' Compensation Ordinance (ECO) to apply for assistance from the Employees Compensation Assistance Fund. During the deliberations of the Bills Committee, the Hong Kong Construction Association sought clarification over the protection to principal contractors affected by the insolvency of two local subsidiaries of the HIH group of insurers. To address this concern, we have decided to make it clear that the right to apply for assistance by virtue of the amended sections 17 and 18 shall be applicable to all eligible claims irrespective of whether the notice of insurer insolvency is issued by the Employees Compensation Assistance Fund Board before, on or after the commencement of the Amendment Ordinance.

5. Clause 17 adds section 25A so that the Board may join in the proceedings at the High Court with a view to protecting the interests of the Fund. It is proposed to make a number of minor amendments to section 25A by clarifying that the Board may also apply for joining in the proceedings at the District Court in accordance with the Rules of District Court as the case may require.

6. Clause 17 also adds section 25B(1) so that a potential applicant is required to notify the Board when he initiates proceedings to claim compensation or damages. Section 25B(3) further requires such applicants to notify the Board within a stipulated time period when he proposes to reach a settlement or obtain a judgement against the other party. Any applicant who fails to comply with the provisions shall not be entitled to any assistance under the Scheme. However, it is considered that there might be practical difficulty in ascertaining the date on which a proposal is made by the applicant. Therefore, we propose to amend section 25B(3) so that the applicant is required to notify the Board not less than 10 days before the date of the agreement or judgement as the case may be.

7. Some members of the Bills Committee also considered that the Board should be given the discretion to allow applicants, in appropriate cases, to give a shorter notice under section 25B(3). After careful consideration, we agree to add section 25(3A) so as to allow the Board to shorten the 10-day period if it is satisfied that the applicant has good reasons for failing to comply with the notice requirement.

8. Clause 23 adds section 36A to provide that uninsured employers shall be liable to pay a surcharge to the Board at three times the levy payable to the Board in respect of the insurance policy taken out afterwards. During the deliberations at the Bills Committee, it was suggested that employers who repeatedly contravened the compulsory insurance requirement under the ECO should be required to pay a higher level of surcharge to the Board. With the support of the Labour Advisory Board, we now propose to amend the clause to require that employers who contravened the compulsory insurance provisions again within a period of two years shall be liable to pay a surcharge at twice the amount of the normal rate of surcharge.

9. On the advice of the Judiciary Administrator, we also propose to refine those provisions under section 36A on appeals by employers if they are not satisfied with the determination by the Board in relation to the surcharge.

10. Clause 32 adds a Schedule 4 to prescribe the amounts of relief payment or surcharge. This is to reflect the agreement reached in the Bills Committee to provide an enhanced amount of monthly payment to severely injured employees who are in need of long-term care and attention.

11. The rest of the amendments relating to clauses 14, 19, and 30 are textual in nature.

12. The above-mentioned Committee Stage Amendments have been agreed with the Bills Committee after detailed discussion. I commend them to Honourable Members.

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Speech by Mrs Fanny Law, JP
Secretary for Education and Manpower
on the Committee Stage Amendment
to be moved by the Administration
at the Legislative Council on Wednesday, 26 June 2002

Madam Chairman,

I move the amendments to clauses 3 and 12 as set out in the paper circularised to Members.

2. During the deliberations by the Bills Committee, some Members considered that the proposed minimum amount of the monthly relief payment at $10,000 would not be sufficient to meet the needs of severely injured employees who need long term care and attention of other persons.

3. Having regard to such concern, the Administration consulted the Labour Advisory Board on a proposal to provide further assistance to these severely injured employees. After careful consideration, the Labour Advisory Board agreed to the Government's proposal that an enhanced monthly payment at $10,000 shall be payable to a severely injured employee who suffer from quadriplegia or paraplegia resulting from the injury, as a result of which is unable to perform the essential actions of life without the care and attention of another person, and who is awarded expenses for such care and attention by the court. This enhanced amount of monthly payment shall be payable until the death of the injured employee or the aggregate amount of the relief payment has been exhausted, whichever is the earlier.

4. In order to give effect to the proposal, it is necessary to add relevant definitions under Clause 3 and amend sections 20C and 20D under Clause 12 to provide for the details of the proposal.

5. Under clause 12, we also propose to introduce technical amendments to sections 20A and 20B so as to make it clear that, in a non-fatal work injury, the injured employee's surviving spouse/cohabitee, children under the age of 21 and parents shall be entitled to relief payment even though the injured employee dies (for a cause not relating to the employment-related injury) before the court passes down the award of damages.

6. I urge Members to vote in support of these amendments.

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Speech by Mrs Fanny Law, JP
Secretary for Education and Manpower
on the Committee Stage Amendment
to be Moved by the Honourable Audrey Eu
at the Legislative Council on Wednesday, 26 June 2002

Madam Chairman,

The Administration is against the amendment proposed by the Hon Audrey Eu on behalf of the Bills Committee.

2. The Amendment Bill provides that in a non-fatal accident, a relief payment shall be payable to an injured employee who has been awarded common law damages for the employment-related injury by the Court. In the situation where the injured employee dies before exhausting the full amount of the relief payment to which he is entitled, the payment would be made to the surviving spouse, cohabitee and children under the age of 21. Where the employee does not leave any such family member, his surviving parents would be entitled to the relief payment.

3. We do not agree with the Bills Committee's proposal to include the dependent brother and sister under the age of 21 as eligible persons for relief payment upon the death of the injured employee for the following reasons.

4. First, the relief payment is ex-gratia in nature. In principle, damages should only be paid to the injured employee and should terminate when the injured employee dies before exhausting the full amount of the relief payment to which he is entitled. Our proposal to extend the payment to the surviving spouse, cohabitee, children and parents of the injured employee enables the most closely related family member to continue to benefit from the remaining balance of the relief payment and strikes a reasonable balance between the interests of the employer and the injured employee.

5. Second, the scope of the relief payment was discussed at length by the Labour Advisory Board and a clear consensus was reached on the group of persons who should be entitled to the relief payment. Brothers and sisters were not included in the agreed categories. The Bills Committee's proposal would give rise to questions as to why other dependents of the injured employee should not be treated equally as brothers and sisters under the age of 21. To re-open the issue for further consultation with the LAB on the amendment of the Bills Committee will unscramble the agreed financial arrangements and delay the implementation of the reform package to the Employees Compensation Assistance Fund which urgently in need of a injection of fund to meet recurrent commitments.

6. Third, furthermore, the Bills Committee's proposal to include dependent brothers and sisters under the age of 21 as eligible persons for relief payment upon the death of the injured employees would introduce a dependency criterion. The existing provision of the Amendment Bill does not require the other family members such as the spouse, children or parents to prove their dependency on the injured employee before they are entitled to the relief payment. The Bills Committee's proposal would therefore create two different categories of eligible persons, those that do not need to prove dependency and those that do.

7. The Chairman of the Employees Compensation Assistance Fund Board which is responsible for the administration of the Fund, has expressed serious reservations on the proposal because of the difficulty of determining "dependency". As a statutory body, the Board could only determine applications in accordance with clear guidelines under the law. In the absence of a clear definition of what constitutes the proposed amendment in "dependency", the Board's executive decisions and discreetion will easily lead to arguments and appeals that they lead to court proceedings.

8. Honourable Members may recall that the Employees' Compensation Ordinance was amended in August 2000. One of the major change was to replace "dependants" of the worker at the time of the accident as persons entitled to compensation for death by his family members. The reason for this change was that dependency had to be determined by the Court and the determination involved time-consuming processes. Many people had to wait for many months or even years before they could receive any compensation. The long time taken has inflicted much hardship on the family members of the deceased worker. The new element introduced by the Bills Committee will be a retrograde step. Such delay in payment is contrary to the spirit of the Scheme in providing prompt relief.

9. For the reasons which I have outlined, I am afraid I have to disappoint the Hon LEE Cheuk-yan again on my last sitting, I urge Honourable Members to vote against the amendment put forward under the name of the Bills Committee.

Last revision date: 26 June 2002
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