By Felix Kong｜Licensed Insurance Agent
Looper Insurance Agency Limited (GA1034)
Published: 2026-08-31｜Last updated: 2026-08-31
Ask a Hong Kong SME owner how many people are named on the employees' compensation policy and a common answer is: "Three full-timers. The part-timers do not count, they are under the hours." That sentence carries the most expensive misunderstanding in Hong Kong small business: that the "418" threshold decides whether employees' compensation insurance is required. The two are unconnected, and "418" has itself been inaccurate since 18 January 2026.
Table of Contents
Two ordinances, two different tests
The 418 rule is no longer 418
Only three categories fall outside Cap. 282
Calling someone self-employed does not work
What a part-time claim actually costs
Having a policy is not the same as being covered
A five-point checklist for employers
FAQ
1. Two ordinances, two different tests
The Employees' Compensation Ordinance (Cap. 282) and the Employment Ordinance (Cap. 57) are separate statutes with separate thresholds. The mistake most employers make is to take the continuous contract threshold in Cap. 57 and read it as an insurance threshold under Cap. 282.
According to the Labour Department's concise guide, the Employees' Compensation Ordinance (Cap. 282) applies to all full-time or part-time employees employed under contracts of service or apprenticeship. Section 40 provides that no employer shall employ any employee in any employment unless there is in force a policy of insurance covering the employer's liabilities under the law, including the common law, irrespective of the length of the employment contract or working hours, full-time or part-time. An employer who fails to secure cover is liable on conviction to a maximum fine of HKD 100,000 and two years' imprisonment.
Employees' Compensation Ordinance, Cap. 282 | Employment Ordinance, Cap. 57 | |
|---|---|---|
What it governs | The employer's liability for work injury, death and prescribed occupational disease | Employment terms and statutory benefits |
Hours threshold | None, whatever the contract length, hours or full-time status | Some benefits have one: the continuous contract test |
Hiring one part-timer | Insurance is compulsory (section 40) | Wage payment and statutory holidays apply regardless of hours |
Not complying | Criminal offence, up to HKD 100,000 and two years' imprisonment | Depends on the provision |
Anything to do with 418? | No | Yes |
The two get confused because they share one question: is this person my employee? Under Cap. 57 the answer decides annual leave and sickness allowance. Under Cap. 282 it decides whether your policy responds on the day that person is hurt.
2. The 418 rule is no longer 418
The shorthand itself has expired. Under the Labour Department's concise guide to the Employment Ordinance, an employee is on a continuous contract if employed continuously by the same employer for four weeks or more, and either works at least 17 hours a week or, in a week below 17 hours, works not less than 68 hours over that week and the preceding three. The revised test comes from the Employment (Amendment) Ordinance 2025 and applies from 18 January 2026.
Before 18 January 2026 | On or after 18 January 2026 | |
|---|---|---|
Length of employment | Four weeks or more with the same employer | Unchanged |
Hours | At least 18 hours each week | At least 17 hours a week, or 68 hours across that week and the preceding three |
Benefits affected | Rest days, paid annual leave, sickness allowance, severance and long service payment | Same |
Affects the duty to insure? | No | No |
The same guide adds that where a contract's continuity is disputed, the burden of proof rests on the employer. It is for you to show that it is not.
3. Only three categories fall outside Cap. 282
The scope is drawn broadly and then narrowed. The Ordinance applies to all full-time or part-time employees under contracts of service or apprenticeship, then lists three categories to which it does not apply.
Category outside the Ordinance | The proviso most people miss |
|---|---|
Casual employees | It still applies to part-time domestic helpers; to employees employed for the purposes of the employer's own trade or business; and to employees engaged for any game or recreation through a club |
Outworkers | None |
Family members living with the employer | It still applies if an employees' compensation policy is in force for those family members |
That first proviso is where the phrase "day workers do not need cover" falls apart. If you bring in a day worker to unload stock, cover a kitchen shift or put up formwork on your site, that person is employed for the purposes of your own trade or business and the Ordinance applies. The casual worker who genuinely falls outside it is the one engaged for something unconnected with your business, such as a private house move.
Apprentices and interns follow the same logic. The Ordinance expressly covers contracts of apprenticeship and carves out no exception for interns: the only question is whether, in substance, the person works for you under a contract of service. The exemption for specified student interns sits in the Minimum Wage Ordinance and does not carry across to Cap. 282.
4. Calling someone self-employed does not work
The second common move is to have the part-timer sign a self-employed contract, or issue an invoice each month.
The Labour Department's booklet on distinguishing employees from self-employed persons is blunt about this. No single factor is decisive; all relevant factors must be weighed, including control over the procedure, timing and manner of the work, who provides the tools and materials, and whether the person runs their own business and bears investment and management responsibility. Where an employment relationship exists in substance, the employer must still discharge its obligations under the labour legislation, even if the contract calls the person self-employed.
Section 31 of the Employees' Compensation Ordinance closes the door from the other side: any agreement between employer and employee that purports to remove or reduce the employer's liability to compensate under the Ordinance is void. A signed waiver is worth nothing here.
5. What a part-time claim actually costs
The next line of defence is usually: "The wage was tiny, so the claim must be small." The Ordinance does not work that way.
Compensation for death and for permanent total incapacity is subject to a statutory minimum that does not move with the wage. According to the Labour Department's concise guide, for accidents or prescribed occupational diseases occurring on or after 17 April 2025, the minimum death compensation is HKD 514,510 and the minimum for permanent total incapacity is HKD 584,220. Monthly earnings used to compute compensation are deemed to be not less than HKD 5,710, while the earnings figure used for those two heads is capped at HKD 38,670.
Head of compensation | Statutory basis for cases on or after 17 April 2025 |
|---|---|
Death | 36 to 84 months' earnings by age band, or the minimum of HKD 514,510, whichever is higher |
Permanent total incapacity | 48 to 96 months' earnings by age band, or the minimum of HKD 584,220, whichever is higher |
Permanent partial incapacity | The permanent total figure, pro rated to the assessed percentage of loss of earning capacity |
Temporary incapacity (periodical payments) | Four-fifths of the difference between earnings at the time of the accident and earnings during the incapacity (section 10) |
Medical expenses (current caps) | HKD 300 per day as an in-patient; HKD 500 per day as an out-patient; HKD 700 where both fall on the same day |
Funeral and medical attendance expenses | Up to HKD 98,950 |
Reporting carries its own deadlines. An accident causing incapacity for more than three days must be reported to the Commissioner for Labour on Form 2 within 14 days, and a fatal case within 7 days. Reporting late without reasonable excuse, or supplying false information, carries a maximum fine of HKD 50,000.
6. Having a policy is not the same as being covered
Most owners say they already have cover. The question is how many people it covers.
The Labour Department's leaflet on taking out employees' compensation insurance states that when placing or renewing cover an employer should give accurate figures for the number of employees and their actual earnings, and that the declaration must take in every employee, irrespective of contract length or working hours, full-time or part-time, permanent or temporary, trade or position. The leaflet sets out the consequence plainly: where the declaration contains false or inaccurate information, the insurer may take legal action to recover amounts it has already paid out under the policy.
Under-declaring your part-timers is therefore not a saving on premium. It moves you from being insured to being pursued by your own insurer after the claim has been paid. Having no policy at all compounds further: on top of the criminal liability, the employer must pay a surcharge to the Employees Compensation Assistance Fund Board under section 36A of the Employees Compensation Assistance Ordinance (Cap. 365), and the compensation liability still lands on the employer. The Labour Department's leaflet on going without cover sets out two enforcement examples drawn from real cases. In the first, a renovation worker fell from height and was injured; his employer had taken out no cover and had also failed to make the periodical payments due to him, and was sentenced to two months' imprisonment suspended for 18 months and fined a total of HKD 42,000. In the second, an employee was injured at work, his employer had taken out no cover, and the employer was sentenced to six months' immediate imprisonment.
There is also a statutory floor on the sum insured: not less than HKD 100,000,000 per event where the employer has 200 employees or fewer, and not less than HKD 200,000,000 per event above that. The Labour Department adds a caution worth repeating: the statutory minimum is not a ceiling on what the law, including the common law, may require the employer to pay.
The three findings that come up most often when we check an SME's cover: the insured headcount has not moved since the company's first year, the declared trade does not match what people actually do, and part-time and casual earnings were never in the declared wage roll. None of the three shows up in the premium figure; you only see them by reading the schedule against the payroll and MPF records. Looper Insurance Agency Limited (GA1034), as a licensed insurance agency, can compare terms across several insurers and put your part-time and temporary staffing arrangements to them in writing.
7. A five-point checklist for employers
Count people, not job titles. Before placing or renewing, list everyone paid in the last twelve months, including those who worked two evenings and left, and declare their earnings.
Declare the real trade. An office classification while somebody is on a platform, driving deliveries or working a kitchen becomes an underwriting argument at claim stage.
Do not rely on a self-employed contract. Substance decides status, and section 31 voids an exclusion agreement.
Post the notice. The Ordinance requires a bilingual notice in a conspicuous place at every workplace showing the insurer, the policy number, the commencement and expiry dates, the number of employees covered and the amount insured.
Report the accident anyway. Form 2 within 14 days where incapacity exceeds three days, 7 days for a fatal case. A minor-looking incident is not a reason to delay.
FAQ
Q: I employ one part-timer for two evenings a week. Do I need EC insurance?
A: Yes. Under section 40 of the Employees' Compensation Ordinance (Cap. 282) every employer must take out employees' compensation insurance, irrespective of contract length, working hours or full-time status. Failing to do so is a criminal offence carrying a fine of up to HKD 100,000 and two years' imprisonment, plus a surcharge to the Employees Compensation Assistance Fund Board.
Q: Does the 418 rule decide whether EC insurance is required?
A: No. The 418 shorthand refers to the continuous contract test under the Employment Ordinance (Cap. 57), which governs rest days, paid annual leave, sickness allowance, severance and long service payment. It has nothing to do with the duty to insure, and it has changed: from 18 January 2026 it is four weeks or more with the same employer plus at least 17 hours a week, or 68 hours over four weeks.
Q: Are day workers and temporary staff exempt from Cap. 282?
A: Generally no. The Ordinance excludes casual employees, but the proviso in the same sentence keeps within scope anyone employed for the purposes of the employer's own trade or business. A day worker doing your core work is inside the Ordinance.
Q: My part-timer signed a self-employed contract. Does that remove the requirement?
A: No. Labour Department guidance states that where an employment relationship exists in substance, the employer must still discharge its obligations under the labour legislation even if the contract calls the person self-employed. Section 31 of Cap. 282 also voids any agreement that removes or reduces the employer's liability to compensate.
Q: Part-time wages are low, so surely any claim is small?
A: Not necessarily. Death and permanent total incapacity carry statutory minimums, for cases on or after 17 April 2025 HKD 514,510 and HKD 584,220. Monthly earnings used to compute compensation are also deemed to be not less than HKD 5,710, so a low casual wage cannot take the figure below that floor.
Next step
If you use part-time, casual or temporary staff, the useful first move is not a higher limit. It is three checks: whether the insured headcount matches your last twelve months of payroll, whether the declared trade matches the actual work, and whether part-time and casual earnings sit inside the declared wage roll. Send us the policy, the schedule and the payroll records and we will work through them.
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Free Quote
Looper Insurance Agency Limited (GA1034) offers a free policy check and quotations for Employees' Compensation cover.
Tel: 2633 6813
Email: cs@looperin.com
Website: www.looperin.com
Disclaimer: This article is for reference only and does not constitute insurance or legal advice. The text of the Employees' Compensation Ordinance (Cap. 282), the Employment Ordinance (Cap. 57) and the latest Labour Department publications prevail. Statutory amounts are those in force at the date of publication and are revised periodically. Actual coverage is subject to policy terms and conditions. For legal advice, consult a solicitor.
Conclusion
The 418 rule sits in the Employment Ordinance and has nothing to do with the duty to insure. A signed self-employed contract does not get you out of it either, since what matters is the substance of the relationship, not the label on the page. Under-declaring your part-timers is not a saving, it becomes a claim the insurer can later pursue against you. WhatsApp us to get your declared headcount checked.
Felix Kong
CEO
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