File Ref.: EMBCR 2/2961/95

Information Paper for Legislative Council
Manpower Panel Meeting on 7 January 1999

Factories and Industrial Undertakings Ordinance
(Chapter 59)

Factories and Industrial Undertakings (Amendment) Bill 1999 and
Factories and Industrial Undertakings (Safety Management) Regulation INTRODUCTION

At the meeting of the Executive Council on 5 January 1999, the Council ADVISED and the Chief Executive ORDERED that -

1. the Factories and Industrial Undertakings (Amendment) Bill 1999 (the Bill), at Annex A, should be introduced into the Legislative Council, to provide for mandatory safety training for persons employed in the construction and container handling industries and to expand the Commissioner for Labour's power to make regulations; and

2. after the Bill has been passed into law, the Factories and Industrial Undertakings (Safety Management) Regulation, at Annex B, which introduces a safety management system in selected industrial undertakings, should be made by the Commissioner for Labour under section 7 of the Factories and Industrial Undertakings Ordinance, subject to the approval of the Legislative Council.

BACKGROUND AND ARGUMENT
Mandatory safety training

(A) Current Position

2. Despite some improvements in recent years, the industrial accident rates for Hong Kong have remained unsatisfactorily high, particularly for the construction industry. In 1997, the average annual accident rate for the construction industry, at 227.4 cases per 1,000 workers, was 3.8 times higher than that for all industries. The construction industry also accounted for 41 out of a total of 58 fatal industrial accidents in 1997. The container handling industry is also a high risk sector. Ten workers were killed in workplace accidents in the three years of 1995 to 1997 alone.

3. It is widely recognised that basic induction safety training for workers helps to enhance their safety awareness at work and consequently the prevention of accidents in the workplace. As an illustration, as part of the Administration's efforts to enhance site safety, the contractors of the Public Works Programme (PWP) and Housing Authority (HA) projects have been required, since 1995 and 1996 respectively, to provide induction safety training to their site workers as part of the contract conditions. Between 1995 and 1997, the average annual accident rates in public sector construction sites were 78% lower than the corresponding figures in the private sector sites, where no safety training requirement is in place. It is believed that the provision of safety training to workers (as well as the implementation of safety management system) in public sector work sites is a major contributing factor to their significantly better safety records.

4. Under the FIUO, proprietors and contractors already have a general duty, including the provision of relevant instruction and training for their workers, to ensure the safety and health at work of all persons employed in an industrial undertaking. In practice, however, since there is no specific clause on mandatory provision of safety training in the FIUO, few proprietors and contractors in the private sector actually provide such training to their workers.

5. In order to promote the provision of safety training for workers, the Administration proposes that the FIUO should be amended to make safety training mandatory and that, as a first step, the requirement should apply to the construction and container handling industries. Both industries support the implementation of mandatory safety training. Appropriate training providers are available to implement the proposal. The Construction Industry Training Authority (CITA) and the Vocational Training Council (VTC) are currently running safety training courses for workers of the construction and container handling industries respectively.

6. Of the estimated 80,000 workers in the construction industry in Hong Kong, some 35,000, who are mostly engaged in PWP and HA projects, have already received basic safety training by the CITA and have been issued with a certificate (popularly known as the "green card"). The "green card" is valid for three years and can be renewed upon its holder completing a refresher course and passing a test on safety at work. The CITA has the capacity to provide the training, in the form of a one-day course, for a maximum of 40,000 construction workers each year. The curriculum of the CITA course is at Annex C.

7. The proposed mandatory safety training requirement will also apply to professional engineers and technical staff working on construction sites. The C for L intends to provide them with the relevant certificate if their professional bodies confirm that their corporate members have already acquired the relevant training in the course of their studies. The Hong Kong Institute of Engineers supports this approach and the Labour Department is liaising with other professional bodies to make similar arrangements. As for those technical staff who are not qualified to obtain a certificate in this way, the CITA has prepared self-learning packages to enable them to get the relevant training and the certificate.

8. There are an estimated 16,000 workers in the container handling industry, of whom about 6,000 or 38% are employed by the four major container terminals in Hong Kong. The remaining 62% of the workers are employed in numerous small container storage yards and depots mainly located in the New Territories. The latter group is the primary target for safety training since employees in the major container terminals have been provided with training which will be recognisable for the purpose of the proposed training requirement. The VTC is currently running free one-day safety training courses for container handling workers, with the target of training 2,500 and 9,500 workers in 1998-99 and 1999-2000 respectively. Graduates from the VTC training courses also receive the "green card".

(B) The proposal

9. We propose to amend the FIUO to the effect that, subject to the provision of a grace period, all persons employed on construction sites and container handling depots, except those engaged in office administration and activities unconnected with the construction or container handling work activities, as the case may be, should be required to receive basic safety training. Safety training courses provided by the CITA and VTC for construction and container handling workers and the certificates issued to their graduates will be recognised by the Administration for the purpose of the new requirement. After the grace period, proprietors and contractors of construction work and container handling operations can only employ workers who are holders of a valid certificate. The workers concerned will also be required to carry the certificate with them while at work. The maximum penalties on the proprietors/contractors and workers for breaching the law are $50,000 and $10,000 fines respectively.

A Safety Management System

(A) Current Position

10. The Administration published in July 1995 a Consultation Paper on the Review of Industrial Safety in Hong Kong which, among other things, recommended that we should change our strategy on industrial safety from focusing on enforcement to promoting safety management. The review re-affirmed that the primary responsibility for safety at work rests with those who create the risks and those who work with such risks, i.e. the proprietors and the workers respectively. The ultimate goal is self-regulation by the proprietors and their workforce, which is the key to attaining long-term improvements in safety standards. This goal is best achieved by the Government providing a legislative framework requiring proprietors to adopt a safety management system at the workplace. Government will encourage the self-regulation approach through education, training, promotion of safety concepts and a better understanding of the full cost of accidents. The recommendation on a safety management system received general support during the public consultation period and was subsequently endorsed by the former Executive Council on 21 November 1995.

11. The Consultation Paper proposed that a safety management system for Hong Kong should cover six main areas, namely, company safety policy, safety plan, safety committee, safety audit or review, general safety training and special safety training. To facilitate implementation by proprietors and contractors, we have developed these six main areas of the safety management system into 14 process elements in the proposed Regulation. A brief description of these 14 process elements, which are subject to regular audits or review, are at Annex D. It is important to note that safety management system as a concept or as a matter of practice, is not entirely new to the local construction industry, the major utility companies and some large industrial undertakings. It has been a requirement for Airport Core Projects, HA and PWP contracts which record much better safety performance than the industry average. The Hong Kong and China Gas Company Ltd, the China Light and Power Company and the Mass Transit Railway Corporation, for example, already implement a safety management system covering all these elements.

(B) The proposal

12. We propose to introduce the Regulation to initially require contractors or proprietors in relation to construction sites, shipyards, factories and other designated industrial undertakings with 100 or more workers, as well as construction projects with contract value of $100 million or more, to adopt ten of the 14 process elements of the safety management system, i.e. elements (i) to (x) at Annex D, and to carry out safety audits of their safety management system. Designated industrial undertakings are those involved in the generation and transmission of electricity, town gas or liquefied petroleum gas and in the handling of containers. Construction sites and industrial undertakings employing 50 to 99 workers each will be required to adopt eight of the 14 process elements of the safety management system, i.e. elements (i) to (viii) at Annex D, and to carry out safety reviews, which are less stringent than safety audits. The estimated number of the above two categories of undertakings which will be required to implement the safety management system are 800 and 700 respectively. Industrial undertakings employing less than 50 workers will be exempted for the time being. A phased implementation of these process elements will allow the industries being affected to get accustomed to the new system and to prepare for the additional elements. This will also allow sufficient safety practitioners and medical professionals to be trained to take up the additional functions. This approach has the support of the Labour Advisory Board. We intend to review the implementation of the proposed safety management system one year after the Regulation has come into force to decide on the appropriate time to bring the remaining four elements into operations, as well as extending the requirement to industrial undertakings employing less than 50 workers.

(C) Power to make Regulations

13. We need to expand the C for L's regulation-making power under section 7 of the FIUO to provide for -

1. the registration of safety auditors who will undertake audits of safety management systems required to be implemented by proprietors or contractors under the Regulation; and

2. the specification of the quality and performance of safety auditors, the safety review officers and the person or body running the safety auditor training schemes.

Accordingly, we propose to amend section 7 of the FIUO to give new power to the C for L for making the relevant regulations. In accordance with this section, all new regulations to be made by the C for L under the section will be submitted to the Chief Executive and subject to the approval of the Legislative Council.

14. The introduction of a new legislation on mandatory safety training and safety management system into the Legislative Council in the current legislative session is among our Policy Commitments in 1997.

THE BILL

15. The main provisions of the Bill are -

1. clause 3 empower the C for L to recognise safety training courses for relevant industrial undertakings and requires mandatory safety training for construction workers and container handling workers; and

2. clause 5 expands the regulation-making power of the C for L to require proprietors or contractors to develop management systems that relate to the safety of personnel in their relevant industrial undertakings.

THE REGULATION

16. The main sections of the Regulation provide for:-

1. the registration of persons who may conduct safety audits and of persons who may operate schemes to train persons to be safety auditors etc. (sections 3 to 7);

2. the imposition of duties on proprietors and contractors to develop, implement and maintain a safety management system; to prepare written safety policy; and to establish safety committee in respect of their relevant industrial undertakings etc. (sections 8 to 12);

3. the appointment of registered safety auditors or safety review officers; the conduct of audits or reviews and the submission of audit or review reports; and action to be taken by proprietors and contractors on the audit or review reports etc. (sections 13 to 24);

4. the disciplining (including the suspension or cancellation of registration) of registered safety auditors and registered scheme operators by a disciplinary board etc. (sections 25 to 29);

5. appeals to the Administrative Appeals Board by persons aggrieved by certain decisions of the C for L or the disciplinary board (sections 30 and 31); and

6. the power of the C for L to inspect the conduct of safety audits and safety reviews; and the offences against the Regulation etc. (sections 32 to 37).

IMPLEMENTATION

17. Taking into account the training capacity available and to allow all workers in the construction and cargo handling industries to undertake safety training, we propose that there should be a grace period of 14 months before the mandatory safety training requirement comes into effect. The other parts of the Bill, including those empowering the C for L to make regulations, will come into effect immediately upon enactment.

18. As regards the safety management system, we propose to provide a grace period of 12 months before the Regulation, upon enactment, comes into effect. This will allow time for the Administration to launch education and promotion campaigns on the safety management system, for the affected proprietors and contractors to understand the new legislation and for them, as well as the training bodies for the construction industry, to make the necessary preparation. The Administration will provide the necessary guidance and advice on compliance with the new requirements.

LEGISLATIVE TIMETABLE

19. The Bill will be gazetted on 15 January 1999 and introduced into the Legislative Council for First Reading on 27 January 1999.

HUMAN RIGHTS IMPLICATIONS

20. The Department of Justice advises that the Bill and the Regulation are consistent with the human rights provisions of the Basic Law.

FINANCIAL AND STAFFING IMPLICATIONS

21. There are no financial or staffing implications for Government. The additional workload arising from the introduction of the Regulation will be absorbed within Labour Department's existing resources.

ECONOMIC IMPLICATIONS

22. For existing PWP and HA construction projects, their contractors already have contractual duty to provide safety training to workers engaged on their sites, which account for roughly half of the total local construction workforce. Tenderers for new public works contracts effective after the enactment of the Bill are expected to reflect the costs for providing the safety training in their bids, but those are not expected to have a significant impact on the overall contract costs. For the private sector, the contractors and, in some cases, the workers themselves would bear the cost of $100 per person in attending the safety training course run by the CITA. Since the VTC is running the safety training course for container handling workers free of charge, the cost implications on the container handling industry should be minimal.

23. As regards the implementation of a safety management system, the additional cost burden on large employers in the industrial and construction sectors is mainly the cost of hiring new safety staff for the system. Assuming that, on average, each affected employer has to hire one additional safety officer to perform the required duties, the additional staff cost involved will amount to around 0.2% and 0.1% of the annual operating cost of the affected firms in the industrial and construction sectors respectively.

24. On the other hand, the proposed mandatory safety training and safety management system will be beneficial to the industries concerned and the community at large through fewer deaths and injuries from industrial accidents, less stoppages of and disruptions to work, savings in medical costs and compensation payments, as well as lower insurance premium and civil claims.

PUBLIC CONSULTATION

25. The Labour Advisory Board (LAB) and its Committee on Occupational Safety and Health (COSH) have been consulted and supported the proposal on mandatory safety training. The Hong Kong Construction Association (HKCA) and the Hong Kong Construction Industry Employees General Union have also been consulted. Both lent their support in principle on the understanding that providing training and co-operating with the employer in attending training is a shared responsibility between employers and employees, who are equally liable under the general duties provision in the FIUO. The container handling industry has also been consulted. Representatives of the four major container terminals, the Container Depot and Repair Association (an association of smaller container depot operators), and the Container Transportation Employees General Union generally supported the proposal.

26. The introduction of a safety management system in Hong Kong was widely supported during the public consultation exercise on the Consultation Paper in 1995. The LAB and COSH have also been consulted on the proposed provisions of the Regulation and both supported the implementation of a safety management system to enhance industrial safety. In a number of seminars and briefings on many occasions since 1996, affected contractors and proprietors have been briefed on the 14 process elements in the proposed safety management system.

PUBLICITY

27. A press release will be issued when the Bill is gazetted on 15 January 1999 and a spokesman will be available to handle media enquiries.

Education and Manpower Bureau
5 January 1998