Hong Kong construction contractors face significant increase in health and safety fines

Out-Law News | 18 Mar 2019 | 1:50 pm | 2 min. read

The Hong Kong government is proposing to hike the penalties imposed for violations of Occupational Safety and Health (OSH) laws in a bid to improve standards and bring the jurisdiction in line with its international peers.

The Hong Kong Labour Department has begun a consultation (26 page / 837KB PDF) on increasing the fines for both summary and serious violations of OSH legislation. It proposes that when violations cause serious injury or death the financial penalty will be tied to a company’s turnover.

It said the average fine for OSH offences was currently around HK$10,500 (£1,000), while the average fine for fatal industrial accidents in the construction industry was HK$27,500.

The labour department said that while there had been a significant drop in workplace accidents between 1998 and 2017, the improvement trend had slowed recently, with no sign of any drop in the number of fatal industrial accidents.

As a deterrent, the government is proposing to increase the maximum fine for summary offences to HK$3 million from current levels of either HK$200,000 or HK$500,000, depending on the case.

It said it would amend the general duty provisions of Hong Kong labour law so that cases involving “extremely high culpability or serious negligence and leading to serious consequences” can be invoked as indictable offences.

The maximum fine for these would be set at either 10% of a company’s turnover, or HK$6m, whichever was the greater.

Construction law expert Alvin Ho of Pinsent Masons, the law firm behind Out-Law.com, said the proposals represented a “huge increase in the risk exposure of contractors”.

“To put this into context the total value of work executed by all contractors in the Hong Kong construction industry was over HK$200 billion for 2018 and the turnovers of major contractors are each in the billions,” Ho said. “This is a very drastic change when compared to the current average fine of about HK$10,000 for each summons for construction related health and safety offences.”

Ho said construction contractors with large operating incomes would be hit hardest by the changes.

“This is especially the case as under the existing legislation main contractors in their capacity as the site proprietor are already held vicariously responsible for each and every breach of their subcontractors, regardless of whether or not there was any improper act or omission by the main contractors,” Ho said.

The labour department said it would not increase the maximum imprisonment terms for violations of Hong Kong’s OSH laws across the board, as there had been only a few cases of suspended imprisonment and none of immediate imprisonment.

However it said it was recommending an increase in the maximum imprisonment term for violations of general duty provisions from six months to two years. The maximum sentence for indictable offences would be set at three years.

The labour department said increasing both fines and maximum sentences would bring Hong Kong’s OSH penalties in line with those handed out by other advanced jurisdictions such as Australia, Singapore and the UK.

The announcement follows a move last December by the labour department to publish the details of building contractors convicted of health and safety offences, including details of the offence and the penalty handed down.