PLC Paper No. CB(2) 795

Ref: CB2/BC/4/97

Paper for the House Committee meeting
on 2 January 1998

Report of the Bills Committee on the
Occupational Deafness (Compensation)
(Amendment) (No. 2) Bill 1997

Purpose

This paper reports on the deliberations of the Bills Committee on the Occupational Deafness (Compensation) (Amendment) (No. 2) Bill 1997.

Background

2.The Occupational Deafness (Compensation)(Amendment) Ordinance 1997 (the Amendment Ordinance), passed by the former Legislative Council on 26 June 1997 and enacted on 30 June 1997, revised the Occupational Deafness Compensation Scheme (the Scheme) by -

1. relaxing the disability requirement for compensation by lowering the minimum level of hearing loss from 50 dB to 40 dB; and

2. revising upwards the scale of degree of permanent incapacity by reference to noise-induced hearing loss.

The Bill

3.The Bill seeks to amend the Occupational Deafness (Compensation) Ordinance (Cap. 469) (the Ordinance) in order to -

1. implement several improvement measures that are considered to be desirable following a review by the Administration of the Ordinance as amended by the Amendment Ordinance on 30 June 1997; and

2. repeal the scale of permanent incapacity enacted by the Amendment Ordinance and substitute it by a scale which restores the original scale of permanent incapacity and provides for the corresponding percentages of permanent incapacity resulting from the lowering of the deafness threshold.

The Bills Committee

4.At the House Committee meeting held on 17 October 1997, Members agreed to form a Bills Committee to study the Bill. The Bills Committee first met on 24 October 1997 and Dr Hon TANG Siu-tong was elected Chairman. The membership list of the Bills Committee is at Appendix I.

5.The Bills Committee held three meetings, two of which were with the Administration. It met a deputation from the Hong Kong Occupational Deafness Association at the second meeting and also considered the views of three written submissions.

Deliberations of the Bills Committee

6.The main deliberations of the Bills Committee are set out in the following paragraphs.

The adoption of the improvement package under the Bill

7.Members have asked the Administration to explain why some of the recommendations of the Working Group on Review of the Occupational Deafness (Compensation) Ordinance (Cap. 469) (the Working Group) have not been included in the Bill. The Administration explains that when the Working Group drew up a series of proposed improvements to the Scheme, each item was discussed individually without assessing the financial implications. At its last meeting, the Working Group noted that there would be significant financial implications on the Occupational Deafness Compensation Board (the Board) if all the proposed improvements were implemented in full at one go and a majority of members considered it acceptable to prioritise the improvement items so that some items would be implemented later when resources permitted. On the basis of the majority view of the Working Group and having consulted the Board, the Administration decided to accord priority to proposals seeking to expand the coverage and streamline the operation of the Scheme.

8.Members consider that even though a priority order has been set, there should also be a timetable for the implementation of the rest of the recommendations. The Administration's response is that it will reconsider those proposals when it reviews the Scheme again two years after the improvement proposals under the Bill have come into operation.

The effect of the Bill on compensation

9.Members are concerned that the average amount of compensation per successful claim under the Bill will be reduced by around thirty to forty thousand dollars compared to that under the Amendment Ordinance. The Administration explains that by proposing a package of improvement measures including the inclusion of eight additional noisy occupations to the existing list of 17 specified occupations for which compensation is payable under the Scheme, the Bill primarily seeks to expand the coverage of the Scheme so that more victims of occupational deafness can be eligible for compensation.

Financing of the Scheme

10.Clauses 1(3), 21 and 22 provide for the increase of rate of levy on employees compensation premium by 0.8 percentage point from the existing 1.5% to 2.3% so as to enable the Board to pay compensation claims as they are due and to implement the improvement measures. Members note that the Scheme is a statutory Scheme established on the basis of collective liability and is funded by a levy on the premium of employees' compensation insurance. Some members share the view that it is unfair to ask all employers to pay for the cost of the Scheme. The Administration has pointed out that since noisy occupations may exist across industries, it is not easy to define an industry as a noisy one for the purpose of imposing a levy. It is equally difficult to shortlist establishments which should be held responsible for causing occupational deafness to their employees and therefore should pay a levy. Any disputes from employers on whether an industry or establishment is noisy would lead to difficulties in levy collection. An across-the-board levy in this case is therefore considered to be a simpler and more cost-effective means of collecting the levy. Under this arrangement, employers of noisy industries generally have to pay more as noisy industries are found mostly in industrial processes which are high-risk and are liable to higher premium rates of employees' compensation insurance.

Legislation on hearing conservation

11.Members have asked for further information, including legislation, on the hearing conservation programme and the estimated decrease in the number of employees suffering from occupational deafness as result of the implementation of such a programme. They note that under the proposed Factories and Industrial Undertakings (Medical Examinations) Regulation to be introduced in the 1998-99 legislative session, workers in hazardous occupations will be required to undergo specified medical examinations before employment and periodically during employment. This will apply to workers exposed to excessive noise, for whom the specified medical examinations will include auroscopic examinations and audiometric tests. Employers will be required to appoint medical practitioners to provide such medical examinations. This Regulation, together with the Factories and Industrial Undertakings (Noise at Work) Regulation, would provide an adequate legislative basis for the Labour Department to implement an effective hearing conservation programme, which is one of its priority areas in the next few years. The programme will include noise surveys, measures to reduce workers' noise exposure through noise control or administrative controls, provision of suitable noise protectors to workers and training and education to raise the awareness of workers on the importance of hearing conservation. The Administration anticipates that with the above programme in place, the number of employees suffering from occupational deafness will decrease. In view of the anticipated decrease in the number of qualified claimants, members have urged the Administration to re-estimate the financial implications of the Scheme in the light of administrative experience.

The requirement of a minimum of 10 years service in noisy occupations

12. The Working Group has recommended to relax the service requirement from 10 to five years for employees engaged in four very noisy occupations with daily noise exposure level exceeding 100 dB(A) or peak sound pressure level of 140 dB or above. Members query why this recommendation has not been included in the Bill and have asked the Administration to consider an amendment to relax the service requirement. On review, the Administration has informed members that it does not consider it appropriate to take on this proposal at this stage on the following grounds -

1. it is necessary to maintain an employment requirement based on a sufficiently long service period so as to establish the causal link between hearing loss and employment for the purpose of compensation, as other causes such as ageing and disease may also have been contributing factors;

2. the Administration requires more time to collect more data on the hearing loss and length of exposure to high noise levels in the four very noisy occupations so as to make a realistic assessment as to whether to adopt this proposal in the next review of the Scheme;

3. as the proposal will enable eligible claimants in the four very noisy occupations to apply for compensations earlier rather than enabling more claimants to become eligible, it should be accorded lower priority than those seeking to expand the coverage of the Scheme; and

4. even with an increase in the rate of levy by 0.8 percentage point, it was estimated that the additional compensation liability arising from the proposal would deplete the funds of the Board at the end of the fourth year.

13.A number of members share the view that the verification of a 10-year employment history is in general difficult in Hong Kong and often involves a long processing time. Therefore the imposition of a minimum service requirement is not fair to claimants suffering a certain degree of hearing loss but not having 10 years' service in the noisy occupation concerned. Some of the victims may have difficulties in producing evidence to support past employment while others may not stay in the occupation for 10 years. They also note that other occupational diseases such as lead poisoning are also chronic in nature but the grant of compensation to claimants suffering from those occupational diseases is based on the results of clinical assessment without any requirement of 10 years' service. Moreover, they note that the Administration has not provided any statistics to support its estimate in paragraph 12(d) above. Since the number of claimants is expected to decrease in the future, a majority of members support an amendment to the Bill to relax the service requirement in respect of the four very noisy occupations.

Percentage of permanent incapacity for compensation purpose

14.Members note that for compensation purpose, the permanent incapacity of persons suffering from total deafness due to long service in a noisy occupation is set at 60% under the Bill while that for total deafness resulting from a work related accident is 100% under the Employees' Compensation Ordinance (Cap. 202). In response to members' questions regarding the reasons for the substantial difference in the two percentages, the Administration has pointed out that unlike total deafness resulting from a work-related incident, occupational deafness of a person normally develops over a long period of time and the impact is therefore not as acute or traumatic as that caused by a work-related accident. When compared with persons suffering from total blindness or severe pneumoconiosis, a person suffering from noise-induced deafness is more likely to be able to continue working and may not suffer total loss of earning capacity. The Administration has also informed the Bills Committee that it was for this reason that the Working Group concluded that the current discrepancy in maximum permanent incapacity for total deafness between the Employees' Compensation Ordinance and the Occupational Deafness (Compensation) Ordinance was acceptable. The Administration. has also pointed out that the maximum degree of 60% of permanent incapacity in Hong Kong is generally on a par with the degree of permanent incapacity for total deafness in Singapore, Australia and USA which ranges from 35% to 75%.

15.The Bills Committee has also asked the Administration to consider an amendment to raise the maximum degree of permanent incapacity by reference to hearing loss from the current 60% to 100%. After examining the proposal, the Administration has informed members that it will give rise to an increase in the average compensation amount per case by about 60% and it is estimated that there will be an annual increase of $35 million in compensation. As a result, even with an increase of 0.8 percentage point in the levy rate, the proposal will deplete the fund at the end of the first year. In view of the reasons provided the Administration, members accept its decision not to adopt the proposal.

Committee Stage Amendments (CSAs)

16.A copy of the CSA to be moved by Dr Hon TANG Siu-tong, Chairman, on behalf of the Bills Committee is at Appendix II. The Administration will move a number of technical amendments to clauses 1, 21 and 22 to the effect that the new levy rate and the resultant apportionment of the net resources of the Employees' Compensation Insurance Levies Management Board would take effect from 1 April 1998. The draft CSAs are at Appendix III.

Recommendation

17.The Bills Committee recommends the resumption of the Second Reading debate on the Bill.

Advice Sought

18.Members are invited to support -

1. the recommendation of the Bills Committee in paragraph 17 above; and

2. the CSA to be moved by Dr Hon TANG Siu-tong, Chairman, on behalf of the Bills Committee.

Provisional Legislative Council Secretariat
29 December 1997

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Appendix I

Bills Committee on Occupational Deafness (Compensation) (Amendment) (No.2) Bill 1997

Provisional Legislative Council Secretariat
24 October 1997