Employees Compensation Insurance

A Guide To Employees’ Compensation Insurance

Under the Employment Ordinance, Hong Kong limited companies are legally required to take out Employees’ Compensation Insurance to cover their liability should their staff suffer an injury or illness during the normal course of their work. Employees’ Compensation covers all work-related injuries regardless of the length of service or employment status (full or part-time, permanent or temporary). A company is considered an employer when it engages someone to do a task and agrees to pay them. Even if the founder of a company is the only person working for their own limited company, he/she is still defined as an employee and the company is legally required to take out Employees’ Compensation.

An employer who fails to comply can potentially be subject to hefty fines and imprisonment. Read on to find out more.

Employee's Compensation Insurance 1

In essence, everyone who is paid a wage must be covered. The good news is that Employee’s Compensation insurance is relatively inexpensive. For average staff, the cost is normally less than HK$1000 per employee per year. There are no variations in policy coverage, but different rates might apply depending on the position an employee holds, while jobs that require a significant amount of travel will have higher premiums.

Having difficulty buying Employees’ Compensation for your business which runs in a “High Risk” group? Employers denied coverage by at least 3 different insurance companies, or who have been quoted premiums of more than 30% the standard market rates for Employees’ Compensation may be eligible for coverage provided through the Employees’ Compensation Insurance Residual Scheme Bureau.

Types of employees that must be covered by Employees’ Compensation Insurance

  • Permanent staff
  • Temporary staff
  • Staff working on a trial basis
  • Staff working during their probationary period
  • Hourly workers
  • As-needed workers
  • Seasonal workers
  • Domestic helpers

Premium will depend on the industry, travel status and annual salary levels of each member of a company’s team. Companies with just a few staff members may have difficulty getting coverage for Employees’ Compensation insurance only. In such cases, because the premiums are so low, insurance providers tend to combine the coverage with other critical office-related insurance benefits into one package. A typical package for SMEs will include:

  • Employees’ Compensation;
  • Third party or public liability;
  • Property insurance;
  • Damage to the premises; and
  • Dishonesty and theft by employees.

Other insurance to consider

Employees’ Compensation is legally required and is straightforward to put in place. Meanwhile, other insurance you might consider to protect employees, employers and companies and also attract staff to your business include:

  • Professional Indemnity Insurance can cover legal costs related to any claims for damages made to your business.
  • Medical a.k.a. Health Insurance is intended to help employees with the cost of medical expenses.
  • Business Loan Protection Insurance is a form of life insurance policy that covers bank loans when key staff pass away to ensure business can continue uninterrupted.
  • Key Person Protection is a critical illness and life insurance policy owned by the company that ensures the death or extended incapacity of a key person does not cause irreversible damage to the organization. It covers the company in case of loss of profits, paying off loans, reassuring customers and other stakeholders as well as pay for recruitment and training of a replacement.
  • Executive Retention Insurance is a life insurance policy specifically designed as a tool to attract and retain key staff members. The staff member owns the policy while the company pays the premium.
  • Legacy Planning Insurance provides a way for business owners to pass their business to interested family members, while the payout from the policy equalizes the benefits received by other surviving loved ones.
  • Business Succession Insurance is a life insurance policy that pays out to the surviving business partners giving them an opportunity to purchase the shares back from the estate of the deceased at a predetermined value.
  • Directors and Officers Insurance protects named staff and the company from claims made against them even if they did not have any direct involvement in the incident.

There are many different insurance companies in Hong Kong all offering a wide range of policies with varying levels of cover. One provider’s policies might not be suitable or adequate for your requirements. An option is to use an independent broker who can give you access to the whole of the market since they are not tied to a single insurer.


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