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Employers who have not made periodical payments not entitled to request injured employees to attend medical examination

2021-04-30

Background

In our previous newsletter issued in June 2019, we discussed the serious consequences where employees who sustained injuries at work fail to undergo medical examinations as requested by the employer. Recently, in the judgment in Hui Po Chi v Trade Travel (Hong Kong) Limited (unrep., DCEC 406/2017, 9 September 2020), the Court reviewed the relevant provisions in the Employees' Compensation Ordinance (Cap. 282, the “ECO”) governing such medical examinations.

Employers who have not made periodical payments not entitled to request injured employees to attend medical examination


The facts

The applicant (“Hui”) was a bus-captain hired by the respondent (the “1st Employer”) and subsequently by a sister company of the 1st Employer (the “2nd Employer”). In April 2015, she sustained injuries at work while being employed by the 1st Employer (the “1st Accident”). Soon after, she received three sick leave allowance payments in April, May and June 2015 pursuant to section 33 of the Employment Ordinance (Cap. 57, the “EO”) from the 1st Employer for the injuries she sustained in the 1st Accident. However, Hui did not inform the 1st Employer of the 1st Accident until over a year after it took place. When the 45 days of Hui’s total accumulated sick leave calculated under the EO ended on 6 June 2015, the 1st Employer stopped making any sick leave allowance payments to Hui although she had produced sick leave certificates beyond that date.

In November 2015, Hui started a new job with the 2nd Employer, and later on sustained another injury at work in April 2016 (the “2nd Accident”). The 2nd Employer made various periodical payments under section 10 of the ECO from April to November 2016.

In November 2016, the loss adjuster of the employees’ compensation insurer of both employers wrote to Hui, requesting her to attend a medical examination in December 2016 in relation to her injuries in both the 1st and 2nd Accidents pursuant to section 16 of the ECO. Hui’s former solicitors replied that Hui would not be attending the medical examination since her medical condition had not yet stabilized. Despite the loss adjuster’s continued requests, Hui did not attend any medical examination.


Procedural history

In view of the injuries sustained in the 1st Accident, Hui commenced an employees’ compensation claim against the 1st Employer pursuant to the ECO. The 1st Employer opposed the Applicant’s claim on the ground that she failed to undergo a medical examination pursuant to section 16 of the ECO, and subsequently took out a summons to strike out the Applicant’s claim for the same reason. This issue then became hotly contested and the Court ordered for a trial of the preliminary issue of whether no compensation under the ECO shall be payable to Hui for such failure to undergo a medical examination.


The Court’s ruling

The Court refused to strike out Hui’s claim. The Court first recited that the key requirement for an employer to request an employee to undergo a medical examination is to make the periodical payments under section 10 of the ECO. Hui’s case is that the 1st Employer was not so entitled since it failed to make any periodical payment – it only made sick leave allowance payments instead.

1st Argument: “Sick leave allowance payments
could be used or treated as periodical payment”

The 1st Employer first advanced the argument that the sick leave allowance payments could be used or treated as periodical payment for the purpose of section 10 of the ECO. In particular, the 1st Employer’s counsel alleged that label did not matter and the sick leave allowance payments could well have been periodical payments too, particularly if one looked at the common features of these two kinds of payments: frequency of payment (being paid monthly) and amount of payment (being four-fifths of Hui’s monthly earnings).

The Court rejected this argument and held that sick leave allowance payments and periodical payments are two different regimes under two different legislations (being the EO and the ECO). Whilst both payments concern absence from work for the reason of the employee being ‘unfit for work’, their fundamentals in terms of payment entitlement and calculation method are different.

More importantly, the Court pointed out that 1st Employer had no knowledge of the 1st Accident when effecting the sick leave allowance payments. It therefore could not have intended them to be periodical payments in substance. 

2nd Argument: “The periodical payment obligation
can be met by making only one payment”

The 1st Employer’s counsel proceeded to make an argument on the construction of the wording of the section governing employers’ rights to request an injured employee to undergo medical examinations. In particular, it was argued that the wording of “is in receipt of a periodical payment” in section 16(1A) of the ECO merely pointed towards “a state of affairs that has already “arisen”, for otherwise the legislation would have been in the form of present continuous tense instead. In other words, there is no continuous obligation of making periodical payment, even if the subsequent payments are in arrears. This construction of section 16(1A) of the ECO would then allow employers to satisfy the payment requirement in the section on the basis of making just one single periodical payment.

The Court however also rejected this argument and held that the relevant wording in fact referred to the characteristics of an injured employee (1) whose injury continues over time, and (2) who is entitled to receive periodical payments at the time when the employer requests him or her to undergo medical examination. This is particularly so when considering the phrase of “from time to time” in section 16(1A) of the ECO. It is also well-established that employers’ right to demand an injured employee to undergo medical examinations under section 16 only arises if the employee is being paid periodical payments.

As such, being in arrears of the periodical payments owed to Hui for the 1st Accident, the 1st Employer has not fulfilled the pre-condition in section 16(1A) of the ECO. It is thus not entitled to request Hui to undergo any medical examination.

3rd Argument: “It is double recovery if the 1st Employer
must also make periodical payments”

The final argument made by the 1st Employer’s counsel was concerned with preventing the risks of double recovery of periodical payments by Hui. In particular, once the 2nd Employer had made a periodical payment at the relevant time, the 1st Employer needed not make any more periodical payment to Hui in addition to the periodical payments already made by the 2nd Employer. Otherwise, it would fall foul of the principle against double recovery.

The Court also rejected this argument and held that the obligation to make periodical payments under section 10 of the ECO is a personal one. In particular, section 10 of the ECO imposes an automatic obligation on employers to make periodical payments to an injured employee for a period of 24 months. Also, section 10(10) of the ECO imposes criminal sanction in the event of a failure of an employer to comply this payment obligation.

As a result, all the arguments made by the 1st Employer failed. The Court made it clear that while section 16(1A) is a statutory protective mechanism provided to employers, all the requirements therein should not be cut down, but rather should be strictly complied with before employers can invoke this provision to exercise the statutory right.


Takeaways

Going forward, employers must comply with the periodical payment requirements in section 10 of the ECO to become entitled to request injured employees to undergo medical examinations. The Court will take a strict approach to ensure that these requirements are complied with when being asked to strike out an employees’ compensation claim.




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Important: The law and procedure on this subject are very specialised and complicated. This article is just a very general outline for reference and cannot be relied upon as legal advice in any individual case. If any advice or assistance is needed, please contact our solicitors.

Published by ONC Lawyers © 2021


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