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Employee Compensation vs Group Medical Insurance for Employees in Hong Kong

In the ever-evolving business landscape of Hong Kong, it is extremely important to take care of employees to retain them in the business. One of the most significant steps to looking after your employees is buying insurance for them. If you are an employer in Hong Kong then you must have an insurance policy for your employees. The insurance policy doesn’t depend on the type of employees (temporary, part-time, or full-time) you have. If you have an employee, then you must have an insurance policy. 

There are two types of insurance policies for employees in Hong Kong, namely Employee Compensation Insurance (ECI) and Group Medical Insurance (GMI). Both insurance policies are explained in detail further in this article. In this article, we are going to learn about Employee Compensation Insurance and its need in Hong Kong. Furthermore, we will be learning about Group Medical Insurance and its benefits. Lastly, there is a comparative analysis of both insurance policies. 

Employee Compensation vs Group Medical Insurance

Employee Compensation Insurance (ECI)

Let’s dive into a detailed discussion about Employee Compensation Insurance.

What is Employee Compensation Insurance?

Employee Compensation Insurance is a type of insurance that is mandatory for all employers in Hong Kong. To comply with the laws of Hong Kong, employers should take out Employee Compensation Insurance (ECI). The Employee Compensation Insurance doesn’t depend upon the length of service of the employee in your company and covers all employees. Whether the employees are full-time workers, part-time workers, apprentices, or any type of employee, you must have Employee Compensation Insurance for your employees. 

Employee Compensation Insurance covers all employees regardless of their length of service in the company. It covers diseases and deaths caused during the time of service and covers work injuries. If the employer fails to comply with the laws of Hong Kong and doesn’t buy Employee Compensation Insurance for its employees, then the employer can be penalized for a maximum of 2 years imprisonment and a fine of HK$ 100,000.

Why should an employer take out employees’ compensation insurance (ECI)?

The law in Hong Kong states that an employer should employ a person only after he has taken out employee compensation insurance. Otherwise, he might have to face legal charges and penalties. Section 40 of the Employees’ Compensation Ordinance and Chapter 282 of the Laws of Hong Kong state that no employer can employ an employee until there is an insurance policy for the employees to cover their liabilities under the laws (including common rules). 

If employers fail to comply with the laws of Hong Kong, they shall be committing an offense. The employer is liable to pay a maximum fine of HK$ 100,000 and spend 2 years imprisonment. According to Section 36A of the Employees Compensation Assistance Ordinance and Chapter 365 of the Laws of Hong Kong, if employers fail to secure an ECI cover, they are liable to pay a surcharge to the Employees Compensation Assistance Fund Board. Moreover, if the employee sustains an injury or dies during the course or due to the service or suffers from an occupational disease, the employer is still liable to pay the compensation under the Employees’ Compensation Ordinance.

Group Medical Insurance (GMI)

This portion of the article is going to cover all the aspects related to Group Medical Insurance.

What is Group Medical Insurance?

The Private Healthcare System in Hong Kong is the second most expensive private healthcare system in the world after the United States. Hence, it becomes extremely important for employees to have medical insurance in Hong Kong. Group Medical Insurance can be the perfect solution for employers to cover the medical expenses of the employees. Rather than having individual healthcare policies for every individual, Group Medical Insurance protects a group of people within a company. 

A large number of employees are interested in Group Medical Insurance as it provides them with a cushion and secures their medical expenses. Another reason why employees are interested in Group Medical Insurance is that it covers conditions that are not related to the work. Although employers don’t need to provide their employees with Group Medical Insurance in Hong Kong, many employers still offer their employees insurance to retain their employees in the company. This insurance also helps employers attract talented individuals to their company and compete in Hong Kong’s competitive market.

Who is covered by Group Health Insurance?

Group Health Insurance covers a defined group of individuals of a company or organization. The employees who share a common trait or have a commonality are generally part of the same group and are covered under the same policy. Employers provide Group Health Insurance to their employees. It is up to employers whether they want to cover only full-time employees, part-time employees, or their dependents. Many employers facilitate the employees to extend the coverage to their family members. Family members may include spouses, children, and parents of the employees. The employer has the right to decide whether they want to include the parents of the employees in the coverage. Moreover, some employers also provide group health insurance to retirees as a part of the post-retirement plan.

What are the benefits of group health insurance?

Group Health Insurance is a highly beneficial insurance policy for employees and members of organizations. Group Health Insurance provides numerous employee benefits in Hong Kong and helps them cover the high medical expenses in Hong Kong. The benefits of Group Health Insurance are provided below:

Cost Effectiveness
  • Cost-effective insurance policy as it covers several people under the policy.

  • This makes it more affordable for employers and employees than individual health insurance.
  • Costly insurance policy for employers due to its individuality.

  • Deals with individuals, making it costly for the employers.
  • Comprehensive CoverageOffers comprehensive coverage, including outpatient services, hospitalization, prescription drugs, preventive care, and dental and vision coverage.
  • Covers medical expenses, including doctor's fees, hospitalization, and rehabilitation costs.

  • It also covers the lost wages that may have been lost during the injury.
  • Recruitment & RetentionBeneficial in attracting talented individuals to your company and a vital role in retaining them for a long period. This makes a strong employee base for your company.
  • Deals with individual employees, but it covers only work-related incidents.

  • Reduces employee retention and weakens the employee base.
  • Coverage For Dependents
  • Coverage for the employees and their dependents.

  • It is up to the employer whether they want to cover the dependents under the policy.
  • Doesn't cover the dependents of the employee.
    Improved ProductivityLikely to seek regular medical attention, thus reducing the number of absentees in the company.When employees get injured outside the company's jurisdiction, they must seek medical attention independently. This makes them more likely to be absent, reducing overall productivity.
    Financial ProtectionHelps protect employees and their family members during unexpected medical conditions. It protects them financially and covers a considerable portion of their medical bills. Less likely to help the employees and their family members in difficult times as it covers only work-related incidents and only for the employees, not for their dependents.

    ECI vs GMI: A Comparative Analysis

    Employee Compensation Insurance vs Group Medical Insurance is a constant topic for debate. Employee Compensation Insurance and Group Medical Insurance serve completely different purposes for employee benefits in Hong Kong. Employee Compensation Insurance focuses on the diseases and injuries caused during the course or due to the service while Group Medical Insurance covers a broader spectrum. 


    • ECI – It is required for all employers in Hong Kong to have Employee Compensation Insurance for their employees. Failing to comply with laws may result in legal charges and fines.
    • GMI – Employers have full authority to decide whether they want to provide Group Medical Insurance to their employees or not. It is not compulsory to provide Group Medical Insurance to employees in Hong Kong.


    • ECI – Employee Compensation Insurance is applicable to injuries or diseases that occur at the workplace or due to the work.
    • GMI – Group Medical Insurance is not limited to workplace difficulties and applies to the general healthcare needs of the employees. 

    Coverage Scope

    • ECI – It mainly covers work-related illnesses, diseases, and injuries which include medical expenses, rehabilitation costs, and disability benefits.
    • GMI – It covers a wide range of expenses, including hospital stays, doctor visits, preventive care, prescription medication, and other medical expenses. 

    Want Expert Assistance in Managing Your Hong Kong Company? 

    Employee Compensation Insurance vs Group Medical Insurance is a highly debatable topic and can be discussed for a long period. The benefits of Group Medical Insurance, the coverage scope of both policies and their requirements are discussed in detail above. Moreover, the punishments for not complying with the Employee Compensation Ordinance in Hong Kong are also mentioned above in the article. 

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