Compensation claim on employer who hires illegal workers

Under the Employee's Compensation Ordinance, Hong Kong employees suffering from injury or incapacity due to work, whether it is fatal or not, will be compensated in relief of their losses.

What if the injured or deceased worker was hired illegally, what liability employer has to shoulder? The Ordinance does not have a clear indication in such, which leaves flexibility on the Court's ruling. Here is a case happened in Hong Kong, where the Employees Compensation Assistance Fund Board approved an application from the widow of an illegal worker from the mainland who died in an industrial accident, following a decision by the District Court.

Mr Wong entered Hong Kong from China as a visitor and was employed by Mr Ho as a construction site worker in the early days. On a normal day of work, Mr Wong was killed while demolishing a brick wall which collapsed.

Since he was not officially permitted to work in Hong Kong, his employment contract with Mr Ho was illegal and ineffective. Even so, the District Court exercised its discretion to treat the contract as valid and awarded compensation plus interest against the employer.

The use of discretion is allowed according to Section 2(2) of the Employees' Compensation Ordinance (Cap. 282) (the Ordinance) which empowers the Court to treat an illegal employment contract as valid after considering all the circumstances of the case. This had been done in previous instances.

However, the impact of this case was in the subsequent claim on the Employees Compensation Assistance Fund (the Fund), which is financed by a levy on employees' compensation insurance policies. The main purpose of the Fund is to protect injured workers and ensure they can receive compensation if injured in the course of employment.

Under Section 16(1) of the Employees Compensation Assistance Ordinance (Cap. 365), if a person is unable to recover payment of compensation for which their employer is liable, they may apply to the Fund for payment of that amount. Claims on the Fund usually occur when

1. the employer cannot be located and the insurer of the employees' compensation insurance policy cannot be identified; or

2. no valid employees' compensation insurance policy is taken out and the employer is financially unable to settle the Court's award.

Mr Wong's widow took advantage of Section 16(1) and made a successful claim on the Fund.

It seems there is a policy for the Court to penalise employers who deliberately hire illegal workers. It appears they exercise discretion in favour of the employee and expect the employer to pay compensation even to an illegal worker.

If the Court exercises its discretion and holds that the employment contract is legal, the insurer of the employees' compensation policy is usually required to pay the compensation.

Disclaimer: This article serves as the provision of general information and reference only. It is not intended to be served or interpreted as any legal advice in any occasion, at any cost. Please seek professional help if you have any relevant legal issue.

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