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Elements to Determine 'Employee' and 'Independent Contractor'
Mandatory Provident Fund Schemes (MPF Schemes)

Employees' Compensation and Employers' Negligence

To protect employees, Hong Kong has established workers' compensation laws so that employees can receive compensation from the employer for work related injuries. Although the amount that can be is limited, a worker can be compensated regardless of whether the business was negligent. These law (the Employee's Compensation Ordinance) provides that the employee need only prove that the injury arose in the course of employment. This concept is construed very broadly.

Awards to Employees

Worker's compensation rules generally provide that the employee can recover only the cost of medical treatment and lost wages. In serious cases in which the Board of Assessment has assessed that the injured worker has suffered from a certain percentage of loss of earning capacity, the injured workers can collect an amount to compensate for his or her impaired future earning capacity.


The Ordinance establishes what an employer must do to provide adequate workers' compensation benefits. The employer is required by law to purchase workers' compensation insurance. The insurance premiums are usually based on factors such as the industry, the types of jobs involved, and the size of the payroll. More "accident prone" employers pay higher rates.

Businesses do not need to purchase workers' compensation coverage for true independent contractors . If you are a sole proprietor, you probably are not covered by your workers' compensation insurance. Workers' compensation does not cover self-employed, name sole proprietors and partners. Sole proprietors and partners therefore have to take out insurance policy normally through a life insurance agent to cover their loss of income due to disability. While it is not necessary for the small business owner to know every workers' compensation rule, care should be taken to work with an insurance agent who is familiar with the laws. An insurance agent can also help determine the appropriate amount of coverage and provide guidance additional employee related coverage that may be necessary in situations not covered by workers' compensation laws.

Negligence Claims on Workplace Injuries

While employees' compensation laws prevent the collection of damages for pain and suffering, loss of amenities, common law allows workers these claims based on the employer's negligence.

An injured worker can sue his or her employer on common law for work related injuries if the business owner was negligent. Common law sets out that the employer owes a duty of care to his fellow employees. This include: safe workplace, safe and proper tools and apparatus, proper co-workers. Compensation paid to the workers out of employees' compensation paid under the Employees Compensation Ordinance will be set-off from the negligence claim. An employee's compensation insurance policy normally covers this area of employer's risk.