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Employees' Compensation Ordinance in China

12 Sep 2006

To take advantage of joining the WTO and the enforcement of CEPA, the economic co-operation between the Mainland and Hong Kong is more and more frequent. Many manufacturers set up their plants in Mainland China and recruit local workers. However, how much do you know about the labor ordinance in China?

In 1 January 2004, China enforced an ordinance called "Employees' Compensation Ordinance" to compensate the economic loss for the injured employees as a result of an accident arising out of and in the course of employment, or in respect of occupational diseases. Employers have to pay the insurance premium to Social Security Authority as a compensation fund. The "Ordinance" has been launched for more than two years, however, there are many employers do not thoroughly understand the contents of this "Ordinance" and think that their risks have been totally transferred when taking the insurance. They have to bear partial risks that are stated clearly in the "Ordinance".

The "Ordinance" requires the employer should pay the meal expenses when the injured employees is hospitalized due to the injuries arising from the course of employment, or the travel expenses incurred if the injured employees need to have medical treatment in foreign country. Also, the employer is required to pay periodical payments during the period of temporary incapacity up to 24 months. Especially, when the injured employee is justified as 5th to 10th disablement, both side of employee and employer can terminate the employment contract. Then, the employer has to pay the unemployment subsidy and medical treatment subsidy at one time. The huge amount of subsidies would be a great burden to any employer. The commercial insurance of Employer's Liability can be as a supplement to cover such excess stated in the "Ordinance", and employer can have a peace of mind and concentrate on their business operations.

For more information about the "Ordinance", please contact our Business Executive.




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