All You Need To Know About Employees' Compensation Insurance (ECI)

Employees’ Compensation Insurance , commonly known as ECI or “labour insurance,” protects employees who suffer work-related injuries, including accidents leading to injury or death, or occupational diseases specified under the Employees’ Compensation Ordinance. The purpose is to ensure that employers can fulfil their compensation responsibilities.

• Is it regulated by labour laws?

Under Section 40 of the Employees’ Compensation Ordinance, all employers must obtain “Employees’ Compensation Insurance” to cover their legal responsibilities, including those under common law, regardless of contract duration, working hours, full-time or part-time status. Failure to do so prohibits employing employees for any job.

• What happens if an employer doesn’t provide ECI?

For employers, not providing ECI is illegal and can lead to prosecution, with a maximum fine of HK$100,000 and up to 2 years in prison. They may also have to pay additional fees to the Compensation Assistance Fund.

Obtaining appropriate coverage protects employers from bearing large compensation costs for employee work injuries. For example, past cases show employers being ordered by courts to pay over HK$10 million in damages for a single incident under common law.

• How can employees check if they are insured with ECI?

The law requires employers to display insurance notices prominently at the workplace, detailing the policy terms. Employees can check for these documents in their office or work area and inquire with supervisors or the HR department if needed.

If you discover your employer hasn’t provided coverage, you can report it to the Labour Department complaint hotline to protect your rights.

The main compensation items under employees’ compensation include amounts for fatal cases, funeral expenses, medical costs, and compensation for permanent total disability due to work injuries. Compensation amounts vary based on the circumstances.

Regarding medical expenses, employers have maximum payment limits as follows:

• Daily treatment costs for employees as hospital inpatients: HK$300
• Daily treatment costs for employees as non-hospital inpatients: HK$300
• Daily treatment costs for employees as both hospital and non-hospital inpatients on the same day: HK$370

1. If the number of employees is 200 or fewer, the coverage per incident must be at least HK$100 million;
2. If the number of employees exceeds 200, the coverage per incident must be at least HK$200 million.

The premium for Employees’ Compensation Insurance is influenced by various factors, but the most important ones are the type of work and the total employee income.

If insured, the premium is generally based on a certain percentage of the employer’s annual payroll amount, which varies mainly according to the type of business operated by the employer. The initial premium is temporary, and the actual amount is adjusted based on the final figures for the year.

In addition to different industries/types of work and total employee income, the following factors are also considered:

• The employer’s past claims record;
• The occupational safety and health and risk management measures taken by the employer;
• The accident rate and risks associated with the industry or type of work;
• Market conditions (such as market trends, economic environment, or social factors); and
• The insurance company’s underwriting policies, operating costs, and risk management status.

Since Employees’ Compensation Insurance is mandatory, if you want to get premium discounts or benefits, you can improve occupational safety and health performance , for example, by purchasing devices and facilities that meet safety standards and ensuring their proper maintenance, as well as providing occupational safety and health training to employees.

However, high-risk industries often complain about the difficulty in purchasing Employees’ Compensation Insurance or its high premiums. If you encounter difficulties in obtaining coverage, you can consider seeking assistance from the “Employees’ Compensation Insurance Residual Scheme” (ECIRS).

Additionally, in some cases, when attempting to purchase through an intermediary, the company may respond that it does not cover high-risk cases, but direct negotiation with the insurance company might succeed. So, if you cannot purchase through an intermediary, try reaching out directly to the Insurance Company .

1. The employer must obtain Form 2 (Notice by Employer of the Death of an Employee or of an Accident to an Employee Resulting in Death or Incapacity) or Form 2B (Notice by Employer of an Accident to an Employee Resulting in Incapacity for a Period Not Exceeding 3 Days) from the Labour Department or download it from the government’s Labour Department website, complete it in duplicate, and submit one copy each to the Labour Department and the insurance company. Additionally, the original doctor’s receipt, original medical certificate, and a copy of the injured employee’s ID card must be submitted to the insurance company.
2. If the injured person requires follow-up visits, the relevant original doctor’s receipts and medical certificates should also be submitted to the insurance company.
3. After the injured person recovers, arrange a date through the Labour Department or doctor, and bring a copy of the medical certificate to the Labour Department’s Occupational Medicine Unit for sick leave cancellation or injury assessment procedures.
4. Once the employer receives Certificate Form 7 and Form 5 from the Labour Department, they should promptly submit the original documents to the insurance company for compensation processing.

The following tips are provided by Bowtie

Employee Perspective

Suppose you suffer a workplace injury, such as an anterior cruciate ligament tear , requiring repair or reconstruction surgery. Waiting times for new orthopedic outpatient cases in public hospitals can reach up to 108 weeks*. If another wave of COVID-19 occurs, follow-up appointments may be indefinitely delayed , and non-emergency orthopedic surgeries in public hospitals could be suspended, prolonging your recovery indefinitely.

If you opt for surgery at a private hospital, for example, using Gleneagles Hospital Hong Kong’s ” All-inclusive Fixed Price Medical Packages ¹ “:

Imagine that from ECI, you would only receive the following medical expenses at most:

• Daily hospital treatment costs: HK$300
• Daily non-hospital treatment costs: HK$300
• Costs for treatment in both hospital and non-hospital on the same day: HK$370

The coverage is largely insufficient!

If your employer has not purchased group medical insurance for you, you will have to pay the substantial costs yourself and may be unable to work for a period of time.

💡 Bowtie Suggests: Get VHIS!

Bowtie VHIS offers different plans with varying coverage amounts, protection scopes, and premiums.

Employer’s Perspective

Imagine if your employee has to delay treatment due to insufficient labor insurance coverage, you might lose a valuable assistant!

💡 Bowtie Suggests: Insure with a ‘cost-effective’ group medical insurance!

Bowtie Group Medical Insurance covers a wide range from general outpatient consultations, specialist consultations, hospitalization and day surgery, diagnostic imaging and tests, to physical check-ups and flu vaccines.

There are 7 plans to choose from, one suitable for your team! Refer to the following two tables for basic differences: