LEGAL BRIEFING
Higher fines set for employers who flout health and safety rules This could lead to higher business costs and insurance premiums, court watchers have warned.
H
ong Kong’s Labour Department is proposing higher fines for offenders of the Occupational Safety and Health Ordinance. This could lead to higher business costs and insurance premiums that may result in raising market entry barriers and reducing competition, according to Angela S. Y. Yim and Regina G. B. Ng of Mayer Brown law firm. The two main pieces of occupational safety legislation in Hong Kong is the The Factories and Industrial Undertakings Ordinance (FIUO) and the Occupational Safety and Health Ordinance. Occupational Safety and Health statistics in 2019 showed that there was a decline in the number of occupational injuries recorded at 32,872 from a record of 35,964 in 2018. The injury rate per 1,000 employees was said to be 10.8 in 2019 compared to 11.8 in 2018. Out of the 32,872 occupational injuries 16 were fatal. Occupational injuries refer to injury cases that resulted in death or incapacity to work for over three days and reported under the Employees Compensation Ordinance.
An update is long overdue as Hong Kong lags on fines and penalties for occupational safety and other health breaches Most industrial accidents in 2019 were in the food and beverage sector with 4,425 accidents for that year. Accident types range from contact with hot surfaces or substance, slip, trip or fall in the same level, and injury by a hand tool. Yim and Ng said though industrial accidents in Hong Kong have declined steadily over the years, the number of fatal industrial accidents has been hovering at around 20 cases annually for the past two decades. The point of concern for the Labour Department is that one-third of the defendants are repeat offenders of the OSHO in cases of serious injury. There are three categories of offenses under the OSHO: minor offenses, serious offenses to very serious offenses that have a maximum fines between, $10,000, $50,000 and $200,000 respectively. Offending individuals may be imprisoned for a maximum of 12 months. “Very serious offenses are those that are very likely to cause serious consequences such as death or limb amputation and those that are related to a major failure in safety management systems or use of prohibited carcinogens.” These fines are comparatively low compared with other countries such as Canada who has a maximum fine at around $9m. 14
HONG KONG BUSINESS | JANUARY - MARCH 2021
New fines may stifle small businesses
Angela S. Y. Yim
Regina G. B. Ng
Last December, the Labour Department issued a consultation paper on increasing the penalties for occupational health and safety offences. They proposed 215 offence provisions be reassessed, with the seriousness of 145 offences raised and 70 lowered. The department proposed almost threetimes the previous amount for their new fines. They range from $30,000 for minor offenses, $150,000 for serious offenses, and around $600,000 for very serious offenses. With consideration to the affordability of fines from employees’ perspective lowered the fine of $600,000 of the provisions concerning employees down to $150,000. In early consultations, the department mulled a maximum fine of 10% turnover without a cap but some oppositions voiced that this may be too heavy a burden for small businesses. The Labour Department said it aims to submit the amendment bill to the Legislative Council as soon as it is possible so that the amendment exercise can be completed within the term of the current government for immediate commencement. Yim and Ng observed that there has been a trend with the department on taking a tougher stance on occupational safety and health offenses with the aim to lower industrial accidents. Even with concerns that the imposition of higher penalties might have adverse effects for the smaller businesses, Yim and Ng agreed that an update for the ordinance is long overdue, with Hong Kong lagging behind other developed countries in relation to the fines and penalties for occupational safety and other health breaches. They stated that though it is encouraging to see the department taking action, there is no data to prove a correlation between higher penalties and fewer industrial accidents.
