HK hikes penalties for occupational safety and health standards violations

If convicted on indictment, employers can be slapped with a $10m (US$1.28m) fine and 2 years in jail.

With over a hundred workers dying from occupational injuries in the first half of 2023 alone, it became evident for the government to enforce heftier penalties for employers found to be violating occupational safety and health standards.

Under the amended ordinance on occupational safety and health, employers, proprietors and occupiers of premises found breaching their general duties can face a maximum fine of $10m (US$1.28m) and two years’ imprisonment for such offences on conviction on indictment.

Offences under the general duty (GD) provision have also become triable as indictable offences.

“Extremely serious health and safety breaches can be tried at a higher level of court,” Tess Lumsdaine, partner and Head of Baker McKenzie’s Employment & Compensation Practice in Hong Kong, told Hong Kong Business.

In the event that an employer is convicted on indictment, Lumsdaine said the court must consider “the turnover of the employer’s business and other financial information given by the employer in assessing the appropriate fine.”

The maximum penalty that an employer can face if found guilty in a lower court without a jury, of breaching their general duty under Section 6A of the Factories and Industrial Undertakings Ordinance (FIUO) and Section 6 of the Occupational Safety and Health Ordinance (OSHO), is $3m (US385,000).

If the employer was found contravening such general duty “willfully and without reasonable excuse,” the penalty on summary conviction could be up to $3m and six months imprisonment.

Maximum fines for other summary offences have also been adjusted.

Depending on the severity of the offence, fines can range from $25,000 to $400,000 (US$3,200-US$51,300). Previously, the range of fines was $10,000-$200,000 (US$1,280-US$25,600).

Meanwhile, the amended ordinance also extends the time limit for prosecution of summary offences from six months to nine months, allowing the Labour Department more time to gather evidence to press summary offence charges.

Industries affected by the ordinance
“The FIUO covers industrial undertakings, for example, factories and construction sites whereas the OSHO also covers non-industrial work premises such as offices and stores. All sectors are therefore impacted by the changes to the legislation,” Lumsdaine said.

The construction, manufacturing, and waste management industries are more likely to feel the impact of the changes due to the nature of the work performed and the number of workplace accidents associated with these industries.

“When introducing the proposed changes, the Labour and Welfare Bureau noted that the number of fatal industrial accidents had been hovering at around 20 cases per year for the past decade, with no sign of reducing,” Lumsdaine said.

In addition, the maximum penalties under the FIUO and OSHO had not been reviewed for more than two decades and the overall amount of fines is still on the low side.

“By way of example, they referred to the average fine for summonses relating to fatal cases in 2020 being only about $30,500 (US$3,900),” Lumsdaine continued.

The changes introduced therefore seek to enhance the deterrent effect of OSH offences under both ordinances by significantly increasing penalties.

 “The amendments increase the penalties under OSH legislation for the first time in almost 20 years. While the effect of the increase in penalties will unlikely be seen immediately, it is hoped that this will further enhance occupational safety and health performance in Hong Kong in the long run,” May Ng, Partner at DLA Piper in Hong Kong, said.

The Labour Department will be responsible for the enforcement of this ordinance. It is expected to adopt a three-pronged approach to OSH matters through inspection and enforcement, publicity and promotion, as well as education and training.

“We anticipate an increase in the Labour Department's activity [in] each of these areas to accompany the introduction of the enhanced penalties,” Lumsdaine said.

Complying with standards
In addition to acknowledging the introduced changes to the ordinance, employers, proprietors, and occupiers of premises must “provide adequate safety training to staff and supervisors and tie in non-compliance with health and safety obligations as an internal disciplinary offence,” Lumsdaine said.

Complying with relevant industry codes of practices issued by the government, such as the Code of Practice on Safety Management for industrial undertakings should also be imperative.

Lumsdaine also noted that “regularly conducting safety management audits to identify any potential exposure that needs to be addressed” and the “review [of] insurance policies covering workplace accidents” must be considered at all times.

Lastly, Lumsdaine said that “ensuring a clear delineation of responsibility and liability is made in agreements with subcontractors when work is subcontracted out” is crucial for the accomplishment of the OSH objective.