Is employees compensation insurance compulsory for Hong Kong employers

Is Employees Compensation Insurance Compulsory for Every Employer in Hong Kong?

Yes. Employees compensation insurance is compulsory for every employer under the Employees' Compensation Ordinance (Cap. 282), regardless of the number of employees or the length of their employment. Hire even one person for a single day, and you need a policy in place before that person starts work.

EC Insurance Requirement Explained

The EC insurance requirement applies to all employers who have entered into a contract of employment with any employee, whether the contract is expressed or implied, oral or written. It covers full-time, part-time, casual and temporary workers. There is no threshold for hours worked or for the duration of employment; the obligation to insure is triggered the moment an employment relationship exists.

The policy must cover the employer's liability under the Employees' Compensation Ordinance for work-related injury or death sustained by the employee in the course of employment. The insurance policy must provide cover of not less than HK$100 million per event for employers with more than 200 employees, and not less than HK$200 million for those with 200 or fewer.

Compulsory EC Insurance Hong Kong: Who Is an Employee?

For the purposes of the compulsory EC insurance Hong Kong requirement, an employee is any person who has entered into a contract of employment. This includes:

• Full-time and part-time workers
• Employees on probation
• Casual and occasional workers
• Apprentices
• Workers employed outside Hong Kong if the contract is governed by Hong Kong law

Independent contractors and self-employed persons are not employees under the Ordinance. The distinction between an employee and a contractor, however, is a question of fact determined by the Labour Department, not by the label the parties use.

Employees Compensation Ordinance: What Happens Without Insurance?

The Employees Compensation Ordinance (Cap. 282) makes it an offence for an employer to employ any employee without a valid employees compensation insurance policy in force. A breach of the ordinance is punishable by a fine of up to HK$100,000 and imprisonment for up to two years.

Beyond the criminal penalty, an employer who fails to insure will be personally liable for the full amount of compensation that the employee would have been entitled to claim under the Ordinance, plus any costs and interest. The employee can recover this directly from the employer, who cannot use the absence of insurance as a defence.

Do I Need EC Insurance If I Have Fewer Than Five Employees?

Yes. The question "Do I need EC insurance?" is often asked by small business owners who assume the requirement applies only to larger employers. It applies to all employers. There is no minimum number of employees below which the insurance requirement is waived. A sole trader with one part-time assistant must hold a policy.

Practical Points for Employers

• Obtain the policy before the first employee starts work. There is no grace period.
• Display the certificate of insurance at the workplace where it can be easily read by employees.
• Renew the policy before it expires. A lapse in cover, even for a few days, is a breach.
• Notify the insurer immediately of any workplace accident that may give rise to a claim.
• The Labour Department conducts inspections and may request evidence of insurance at any time.

If you are starting a business in Hong Kong and hiring staff, arranging employees compensation insurance should be one of your first compliance steps, alongside business registration and MPF enrolment.