The Overpayment of Periodical Payment to the Injured Employee
Introduction
When an employee sustains personal injury by accident arising out of and in the course of employment, his employer shall be liable to pay compensation in accordance with the Employees’ Compensation Ordinance, Cap.282 (“the Ordinance”). If the injury results in temporary incapacity, the employee is entitled to claim under section 10 of the Ordinance.
Section 10 of the Ordinance provides that during the period of temporary incapacity, the employer shall pay the Injured employee periodical payment at the rate of four-fifths of the difference between the employee’s monthly earning at the time of the accident and the employee’s monthly earnings during the period of temporary incapacity, if any. A period of absence from duty (i.e. sick leave) certified to be necessary by a registered medical practitioner, a registered Chinese medical practitioner, a registered dentist (“the treating doctors”) or an Employees’ Compensation Assessment Board is deemed to be a period of temporary incapacity.
This article aims to discuss briefly how overpayment of periodical payment comes about, whether set-off of overpayment is possible, and whether avoiding overpayment is possible.
How Overpayment of Periodical Payment Comes About
Section 10 of the Ordinance provides that periodical payments by way of monthly payments shall be payable on the same day as wages would have been payable to the injured employee. The duration of the periodical payment is up to 24 months after the accident or for a further 12 months if the Court allows. When the injured employee produces a sick leave certificate issued by the treating doctors, the employer is obliged to pay the injured employee monthly periodical payment for the period of the certified sick leave up to 24 months after the accident, even if the compensation proceedings has not yet been formally commenced.
It has been held in an appeal case that the presumption of a period of absence from duty certified to be necessary by the treating doctors as a period of temporary incapacity is rebuttable. Therefore, when the Court assesses the employees’ compensation, the Court may accept the medical expert’s opinion on the period of reasonable sick leave resulting from the work injury rather than the sick leave period given by the treating doctors. If such reasonable sick leave endorsed by the medical expert is shorter than the certified sick leave period given by the treating doctors for which the employer had already made the monthly periodical payments to the employee, the periodical payments already paid by the employer will exceed the amount of compensation assessed by the Court under section 10 of the Ordinance.
Is Set-off of Overpayment Possible?
In Kan Wai Ming v Hong Kong Airport Services Limited CACV 240/2010, the employee was given sick leave by the treating doctors in excess of 600 days. Before the trial, the employer had already paid to the employee a total sum of HK$161,410.49 comprising periodical payment of HK$156,370.49 under section 10 of the Ordinance and medical expenses of HK$5,040.00 under section 10A of the Ordinance. The Court below accepted the medical expert’s opinion and assessed the period of temporary incapacity at 355 days. The compensation under section 10 was assessed at HK$92,673.65. Adding the compensation under section 9 assessed at HK$3,524.21 and the compensation under section 10A assessed at HK$3,820.00, the total compensation was assessed at HK$100,017.86, which is less than the sum of HK$161,410.49 already received by the employee.
The issue before the appeal Court is whether the sum of HK$156,370.49 already paid by the employer to the employee by way of periodical payment falls within the phrase “periodical or lump sum payments paid or payable” under section 10(4) of the Ordinance so that they cannot be deducted from or set off against the assessed compensation of HK$3,524.21 under section 9.
Section 10(4) of the Ordinance provides:-
“In the event of death or permanent incapacity following a period of temporary incapacity whether total or partial, no periodical or lump sum payments paid or payable under this section shall be deducted from any amount of compensation payable under section 6, 7, 8 or 9”.
The appeal Court held that the proper construction of section 10(4) precludes the deduction from any amount of compensation payable under sections 6, 7, 8 or 9 of any periodical payment paid or payable under this section. The intention of the legislature in enacting section 10(4) is so that an employee’s compensation for temporary incapacity under section 9 should be kept separate and distinct, and that in case an employee is entitled to both, they cannot be set off against each other. Therefore, the appeal Court held that the employer still has to pay the section 9 compensation assessed at HK$3,524.21 to the employee even though the periodical payment already paid to the employee exceeds the total amount of the employees’ compensation assessed by the Court.
In Wong Kai Yung v Chief Construction Company Limited & Another DCEC 498/2016, a recent case where the employer filed an Answer to the employee’s Application, it made a counterclaim against the employee. The employer pleaded that the employee is required to give credit for the excess of periodical payments made beyond 24 months. The counterclaim is in essence seeking a set-off or deduction from the amount of compensation payable under section 9 of any periodical payment paid or payable under section 10. One of the issues before the Court is whether the statutory framework of the employees’ compensation proceedings (“EC Proceedings”) provides for the institution of a cross-claim by way of a counterclaim.
In examining the Employees’ Compensation (Rules of Court) Rules, Cap.282B (“the Rules”), the Court found that the Rules do not cater for the lodging of a counterclaim. The Court also examined Practice Direction 18.2 (“PD 18.2”) issued for the guidance of legal practitioners and/or litigants involved in employees’ compensation matters. It found that paragraph 40 of PD 18.2 directs that pleadings consist of only (a) an application, (b) an answer, and (c) written reply and/or subsequent pleading filed and/or served with the leave of the Court. Based on the analysis of the Rules and PD18.2, the Court concluded that a counterclaim has no place in EC proceedings.
Is Avoiding Overpayment Possible?
In the above cases, the Courts suggested the following ways to avoid overpayment.
- An employer can exercise his right under section 16 of the Ordinance to require the employee in receipt of periodical payment to undergo medical examination from time to time so as to obtain evidence to rebut the presumption of temporary incapacity arising from the sick leave certificates given by the treating doctors. If the employee refuses to do so, his right to periodical payment is suspended until the examination takes place.
- An employer may make periodical payment by way of interim payment under Order 29 of the Rules of the District Court and such interim payment could later be adjusted in final assessment.
- An employer may institute proceedings under the Ordinance to assess compensation and thereby seek a determination from the Court of the period for which periodical payments would fall to be made by obtaining a final assessment under section 10.
- An employer may make an application under section 19 of the Ordinance to ask the court to end or diminish the payment of periodical payment to the employee.
Conclusion
There is a risk of overpayment of the periodical payment because the employer may be required to make periodical payment for a longer period than the period ultimately assessed by the Court as the period of temporary incapacity. The employer should exercise caution to deal with demands for periodical payment because it will be very difficult to recover overpayment afterwards.
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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.
