Outbreak of Coronavirus Disease (COVID-19) – Obligations and issues from an employment law perspective

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This alert was written by Ricky Lioe and Crystal Luk.

Declared by the World Health Organisation as a "public health emergency of international concern" on 30 January 2020, the outbreak of COVID-19 poses great challenges to employers and employees in various sectors in Hong Kong*. In this article, we look at the legal implications, rights and obligations of employers and employees from an employment law perspective in the midst of the current outbreak.

Protection under the Employee Compensation Ordinance (ECO)

The ECO applies to all full-time or part-time employees who are employed under contracts of service or apprenticeship as well as employees employed in Hong Kong by local employers injured while working outside Hong Kong.

Under the ECO, no employer shall employ any employee in any employment unless there is in force a policy of insurance to cover its liabilities under the laws for injuries at work in respect of all employees, irrespective of the length of employment contract or working hours, full-time or part-time employment (section 40). An employer who fails to comply with ECO to secure an insurance cover would be liable to prosecution and, upon conviction, to a maximum fine of HK$100,000 and imprisonment for two years.

However, subject to individual insurance coverage, having an insurance in place does not automatically relieve the employer from all liabilities and potential claims from employees for compensation. Under section 32 of the ECO, an employee suffering incapacity arising from an occupational disease is entitled to receive compensation from his/her employer, if the disease is one (i) due to the nature of any occupation in which he was employed[1] (ii) at any time within the prescribed period immediately preceding the incapacity caused. The occupational diseases covered and the prescribed period are specified in the Second Schedule annexed to the ECO.

While some call for the Hong Kong Government to include COVID-19 as an "occupational disease" within the meaning of the ECO, the Labour Department, on 10 February 2020, issued a press release clarifying its position that the Department would need time to amend the law, since the outbreak situation of COVID-19 is still developing and that legislative amendment can only be made when definite medical and epidemiological information is available.

That stated, an employee may still claim compensation under section 5 of the ECO for a disease outside the Second Schedule if it is certified to be a personal injury by accident arising out of and in the course of employment.  

For the contraction of COVID-19 to amount to a personal injury "by accident":

  1. there would have to be a causal connection between the accident and the injury (or disease);
  2. the "accident" should be distinct from the injury (or disease); and
  3. the accident must have been at least a contributory cause of the injury.

The phrase "arising out of and in the course of employment" means arising out of the work the employee is employed to do and what is incidental to it, in other words, out of his/her service. It is not necessary to prove that the accident arose directly out of employment. All that is necessary to show is that the employee was doing something which happened as part of the employment or is incidental to it even if he/she might be under no duty to do it[2]. This is a question of fact and degree. The paramount principle in law remains that an employee travelling on the street will be acting in the course of employment if, and only if, at the material time going about the employer's business or in pursuance of a duty owed to the employer[3].

Note that the minimum amount of insurance cover specified in the ECO is not the maximum liability that the party concerned is required to bear under the law. The party concerned should therefore carefully assess the possible risk and consult insurers for professional advice on whether an insurance policy for an amount more than the minimum under the ECO should be taken out. To minimise potential loss, employers should also be aware of their respective obligations and take precautionary measures as discussed in the sections below.

A reminder of employers' obligations, precautions and possible issues

Obligation to Take Reasonable Care of Employee's Health and Safety

Employers bear a general common law obligation to take reasonable care regarding their employees' health and safety, including a duty to provide and maintain a reasonably safe workplace. Failure to comply with such obligation may expose employers to potential tortious and/or contractual claims.

Alongside the common law obligation, under the Occupational Safety and Health Ordinance (OSHO), employers must, so far as reasonably practicable, ensure the safety and health at work of all employees.

Given the common law and statutory obligations, employers are reminded that they should not compel employees to attend the workplace if they cannot provide a safe working environment. Upon complaint or request, employers are reminded to conduct examination / evaluation as to the safety of the work environment. If, however, an employee persistently refuses to return to office without valid reason, this may amount to a breach of the employment contract.

Duty to Pay Wages

We note media reports that some corporations have taken out measures regarding unpaid leave and reduction in wages. The duty to pay wages pursuant to employment contracts and/or the Employment Ordinance (EO) continues during the COVID-19 outbreak. In general, employers also have an implied duty to provide work and employees have an implied right to work. As such, a decision requiring employees to take unpaid leave without their prior consent may be a breach. Similarly, unless genuine operational requirements of the business can be demonstrated, a unilateral reduction in wages without employees' consent may constitute an unreasonable variation of employment terms. In essence, while balancing the various business considerations during this difficult climate, employers should remain aware of potential claims and legal risks if such measures are implemented unilaterally without their employees' consent.

Request for Medical Consultation

If an employer reasonably suspects that a certain employee may have contracted COVID-19 (e.g. that the employee has developed symptoms such as fever and coughing), in the context of the overriding duty to ensure the health and safety of employees, the employer may reasonably request the employee to see a doctor. In addition, the employer will have a contractual basis if the employment contract allows for such a request.

Data Privacy

Attention is drawn to the issue of data privacy, where employers may want to take preventative measures such as temperature checks or medical screening. Given the sensitive and personal nature of health-related data, employers should explain the purpose, the recipient(s) of such data to employees, as well as how long it will be held. Any data collected should be limited to information showing whether an employee has symptoms of COVID-19. Employers are reminded to comply with the data protection obligation under the Personal Data (Privacy) Ordinance and that any records should be properly kept and only be accessed on a need-to-know basis.

Alternative work arrangements

It is important to note employers' and employees' duty when Work From Home (WFH) is in place. Though a special arrangement, WFH should be treated similar to work at the place of employment. Employers still need to pay wages and employees must still perform their work duties to the extent practicable. There have been incidents where employees were found not to be "at work" during their usual work hours when working from home. Some form of disciplinary measures or the issuance of warning letters may be carried out if employees are found to be neglectful in their duties. However, employers should be careful not to terminate employees hastily, as summary dismissal (being a serious disciplinary action) should only be considered in exceptional cases, such as very serious misconduct.

It is advisable for employers to communicate clearly their WFH policy and provide proactive support (such as IT support) to make WFH accessible and convenient.

Things to note if an employee contracts COVID-19

If an employee contracts (or is suspected of contracting) COVID-19, it is prudent for the employer to require them to stay at home and refrain from coming to the workplace in order to minimize the risk of other employees getting infected. This is in line with the employer's general obligation to provide a safe working environment as outlined above.

Whilst an employee is on paid sick leave, the employer shall not dismiss the employee. This will expose the employer to claims under the EO and possibly complaints or claims under the Disability Discrimination Ordinance.

Final note

Employers should be aware of any quarantine restriction imposed or advised by the Hong Kong Government. On 30 January 2020, the Department of Health (DH) issued a notice encouraging people travelling from Hubei Province to Hong Kong to self-isolate for 14 days. Later with effect from 8 February 2020, the Hong Kong Government imposed quarantine orders upon all people entering Hong Kong from China Mainland to stay at home for a 14-day compulsory quarantine.

Commencing 25 February 2020, non-Hong Kong residents from Korea are restricted from entering Hong Kong and the DH issued quarantine orders to Hong Kong residents returning to Hong Kong from Daegu and Gyeongsangbuk-do in Korea in the past 14 days. Hong Kong residents returning from elsewhere in Korea are required to undergo medical surveillance for 14 days.

This is indeed a difficult time for both employers and employees – intertwined with issues and concerns of both business and a personal nature. With more understanding and consideration, including the perspective of employers' reputational and corporate images, we trust challenges can be overcome by the joint effort of employers and employees.

This publication is intended to highlight potential issues and provide general information and should not be construed as legal advice. If you have any questions, please contact a member of King & Wood Mallesons' Corporate & Securities or Dispute Resolution & Litigation practices.

*Any reference to "Hong Kong" shall be construed as a reference to "Hong Kong Special Administrative Region of the People's Republic of China".

[1] Note in the case of severe acute respiratory syndrome (SARS), while it is categorised as an "occupational disease", it is only applicable to occupations involving close and frequent contacts with a source or sources of SARS infection by reason of employment of very specific scenarios (see B11 of Schedule 2 of the ECO)

[2] see Charles R Davidson & Co v M'Robb [1918] AC 304 at 314; and R v National Insurance Commissioner, ex p Michael [1977] 2 All ER 420, [1977] 1 WLR 109 (CA), both followed in Lau Kam Nui v Sau Kee Co Ltd [1998] 4 HKC 612, [1999] 1 HKLRD 163 (CA).

[3] An employee, however, is not considered to be in the course of her employment when she has finished work after leaving her place of employment, and was on the road as a member of the public and not as an employee of her employer: see Check Chor Ching v Wik Far East Ltd [1991] HKDCLR 71 (DC); [1991] 1 HKC 296, [1991] 2 HKLR 224 (CA). On the contrary, in Chow Shu Ki v Osram Prosperity Co Ltd (unreported, DCEC 1059/2000, 21 November 2001) (DC), the deceased employee sustained fatal injury while on a bus trip one evening after leaving his office. As the Court was satisfied on the evidence that the deceased was on his way to visit customers, it was held that at the material time the deceased was still acting in the course of employment and an award of compensation was made. Note also section 5(4) of the ECO which details circumstances of which an accident to an employee resulting in injury or death is deemed to arise out of and in the course of his employment.

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