Compensation for work-related injury and illness

21 February 2008

Determining how much an employee should get paid for a work-related injury or occupational illness, and who should pay, can be an incredibly complicated process in China. The basic procedures are quite straightforward on paper and in cases where the medical facts are not in dispute, the employment relationship is clear and all social insurance contributions have been made, the payment of benefits can be reasonably efficient and equitable. However, restrictive and arbitrary legal requirements, objections from employers and local government intransigence can all delay proceedings indefinitely or even derail the process entirely.

There are four basic steps in the compensation process for injured workers in China: 1. Diagnosis by an official health authority; 2. Verification by the local labour and social security authorities that the diagnosed injury/illness is actually work-related; 3. Assessment of the worker’s degree of disability as a result of the injury/illness; and 4. Calculation by the social security authorities of the benefits to be paid.

These four steps can multiply rapidly however if at any stage the employer or employee challenges the medical evidence or the assessments and rulings by the local labour and social security authorities. And even once the authorities have made a ruling on the level of compensation to be paid, the employer can still appeal the ruling or simply refuse to pay, forcing the employee into a long and costly legal battle.

Simply getting a diagnosis of illness or injury can problematic and time-consuming for some workers. Very often employers can exert pressure on or simply buy-off doctors and medical staff at designated hospitals to provide a diagnosis favourable to the employer, in other words a diagnosis of injury or illness that is less serious than it really is. For example, gemstone factories in Guangdong have been known to collude with hospitals in diagnosing lung disease in their employees. Results for workers with early stage pneumoconiosis would officially come back as negative but the factory would then sack those workers in a bid to escape liability for compensation when the disease worsened in the future.

Migrant workers, in particular, have problems getting a proper diagnosis because the local authorities will usually only accept a diagnosis from an official hospital in the same jurisdiction as the employer. If they have already left that jurisdiction, they have to pay out of their own pocket for transport and lodgings and try to get seen at an often unsympathetic medical establishment on the employer’s home turf.

For more details on this specific issue, including several case studies, please see CLB’s 2010 research report The Hard Road: Seeking justice for the victims of pneumoconiosis in China

Deciding what is and what is not classified as a work-related injury is the job of the local social security department, and is based primarily on the Work-related Injury Insurance Regulations (工伤保险条例), revised in 2010. The most fundamental requirement for the employee is to prove they have or had a labour relationship with the employer at the time of the accident or onset of illness. This is of course a perfectly reasonable stipulation except for the fact that even after the implementation of the Labour Contract Law in 2008, millions of migrant workers in particular still do not have proper employment contracts or they have contracts with employment agencies rather than their actual employer, further complicating the compensation process.

The basic definition of what is a work-related injury is spelled out in the Work-related Injury Insurance Regulations: “Accidental injuries suffered, due to work activity, during work hours and within the workplace.”

Other key definitions include:

  • The contraction of an illness as a direct result of the employee’s working conditions. By far the most common occupational disease is pneumoconiosis, caused by breathing in mineral dust in mines, quarries and stone processing factories. Pneumoconiosis accounts for between 80 and 90 percent of all occupational disease cases in China.
  • Injuries suffered during work hours and within the workplace, when the worker is the victim of violence or suffers an unexpected injury whilst carrying out their duties. For example: When hospital employees or transportation workers are attacked by patients, passengers or other members of the public.
  • Accidental injuries suffered before or after formal work hours and within workplace, due to activity considered preparation for work or conclusion of work. For example: Any injuries resulting from an accident in the staff canteen.
  • Injuries suffered in an accident when the employee is on a business trip or assigned to work outside of the work place, including cases where the body cannot be found. For example, if during a business trip, the employee was on a bus that went over the side of a cliff.

In addition, the regulations include some definitions of work-related injury that are not necessarily caused by work; neither do they necessarily occur within work hours or in the workplace:

  • Injuries suffered while on the way to or from work due to an accident that was not worker’s fault. For example: Injures sustained while riding on a bus that crashes on the way to work.
  • The onset of a sudden illness such as a heart attack or stroke during work hours that leads to death within 48 hours.
  • Injuries sustained while doing emergency or relief work, such as preparing for a flood or a storm, and injuries sustained while protecting the interests of the public or the country. It is not clear however what is considered to be the public or national interest in this case.
  • The relapse or recurrence of injuries sustained during military service, providing that a military injury certificate has been obtained by the soldier concerned.

Conversely, injuries that are specifically excluded by the regulations include:

  • Those incurred while the employee is drunk or under the influence of illegal drugs.
  • Those incurred while the employee is knowingly committing a crime.
  • Cases in which the employee deliberately self-harms or commits suicide.
  • Cases where an employee does not die within 48 hours of the onset of sudden illness whilst at work. One of the most infamous cases in which this particular regulation was cited occurred in the north-eastern city of Harbin in early 2012. The local authorities refused to certify the debilitating injuries sustained by a 49-year-old street cleaner as work-related because she did not actually die after from suffering a stroke while at work.

The assessment of a worker’s degree of disability is primarily covered by the Standard for determining the Seriousness of Work-related Injuries and Occupational Diseases (职工工伤与职工病致残程度鉴定) issued in 1996 by the then Ministry of Labour and Social Security. The regulations list ten basic grades of disability, with Grade 1 being the most serious. Grades 1 to 4 indicate that the employee no longer has any ability to work; grades 5 and 6 signify that an employee has lost most of their ability to work, while workers with grade 7 to 10 injuries are classified as partially disabled. In more detail:

Grade 1: Loss of an organ or complete or irreplaceable loss of organ function; requiring special medical care and support; complete loss or serious loss of the ability to care for oneself, e.g. severe damage to cognitive functions and intelligence, loss of sight in both eyes.

Grade 2: Severe damage to or deformity of an organ; serious functional deficiencies or complications; requiring special medical care and support; complete loss or serious loss of ability to care for oneself, e.g. serious damage to cognitive intelligence; loss of sight in one eye and less than or equal to eight percent of normal vision in the other.

Grade 3: Severe damage to or deformity of an organ; serious functional deficiencies or complications; requiring special medical care and support; partial loss of ability to care for oneself, e.g. loss of a hand, dangerous and impulsive behaviour caused by psychotic disorders; serious disfiguration on the face.

Grade 4: Severe damage to or deformity of an organ; serious functional deficiencies or complications; requiring special medical care and support but capable of self-care, e.g. psychotic diseases leading to social skills deficiencies; medium level of facial disfiguration and scars over 70 percent or more of the body.

Grade 5: Major damage to or deformity of an organ; major functional deficiencies or complications; requiring general medical care but capable of self care, e.g. complete loss of speech; complete loss of ability to read and write; moderate facial disfiguration, loss of thumb.

Grade 6: Major damage to or deformity of an organ; moderate level of functional deficiencies or complications; requiring general medical care but capable of self care, e.g. incomplete loss of speech, serious colourization or dis-colourization on the face.

Grade 7: Partial damage to or deformity of an organ; moderate functional deficiencies or complications; requiring general medical care but capable of self care, e.g. partial damage to thumb; loss of toes, except the big toe; removal of half the small intestine.

Grade 8: Partial damage to or deformity of an organ; moderate functional deficiencies; requiring moderate medical care but capable of self care, e.g. change of personality due to psychotic disorders; speech difficulties.

Grade 9: Partial damage to or deformity of an organ; moderate functional deficiencies that do not require medical care, e.g. damage to the skull with an area of less than 25 cm2.

Grade 10: Partial damage to or deformity of an organ; no functional deficiencies; not requiring medical care, and capable of self-care, e.g. damage to the skull with an area of less than 9.24 cm2.

The compensation to be paid for the various levels of work-related injury and the responsibility for paying it are largely determined by the 2011 Social Insurance Law (社会保险法), the Work-related Injury Insurance Regulations and the 2002 Law on the Prevention and Treatment of Occupational Diseases (职业病防治法). However, local implementing regulations and selective enforcement of certain provisions means that the actual payout varies considerably from region to region. Moreover, disputes between the employer and employee and the local authorities over the level of compensation and who should pay are an increasingly regular occurrence.

To give an example of how benefits are supposed to be calculated, when they should be paid and who should pay them, CLB has translated a guide to injury benefits for workers in the Sichuan city of Leshan, with some additional information gleaned from national-level regulations. (Each section of the guide can be viewed below as a separate PDF, while the Chinese language original can be viewed as Baidu document 2011年乐山市工伤事故赔偿标准全明细).

The guide covers the reimbursement for medical treatment and rehabilitation expenses, payments for disability, compensation for the termination of employment of those workers who are still able to work after their injury but choose not to, the benefits to be paid to the relatives of workers killed in a work-related accident, and the benefits to be paid to injured workers who were employed illegally, such as child workers or those employed in an unlicensed or unregistered business. In cases of illegal employment, the state accepts no liability and all benefits have to be paid by the employer, assuming they can be forced to pay. In all other cases, it is assumed that the employer has contributed all the legally mandated payments to the local government’s work-related injury insurance fund.

It is important to note that the benefits for the city of Leshan will not necessarily be the same elsewhere in China, or even within the province of Sichuan. However, death benefits at least are now relatively standard across China following the issuance in July 2010 of the State Council’s Notice on Gradually Strengthening Enterprise Production Safety (国务院关于进一步加强企业安全生产工作的通知). The notice specified that the basic one-time compensation payment for the family of those killed at work should be 20 times the national average per capita urban income over the previous year. In 2010, that number stood at just over 19,100 yuan, bringing the due payment to about 382,000 yuan. When pension payments and funeral expenses are included, the total compensation package should in most cases be in excess of 650,000 yuan.

In addition The Measures on the Lump Sum Compensation for the Death and Injury of Illegally Employed Workers (非法用工单位伤亡人员一次性赔偿办法), issued by Ministry of Human Resources and Social Security in 2011, specify additional compensation and a funeral subsidy equivalent to ten times the previous year’s national average per capita urban income, for those who died while illegally employed. There is of course absolutely no guarantee that the employer can be compelled to pay these additional penalties.

Tables showing benefits for injured workers in the city of Leshan, Sichuan.

Payments for Medical Treatment and Rehabilitation
Payments for Disability
Severance Payments for Employees
Payments to Relatives of Employees Killed in a Work-related Accident
Payments for Workers Injured while Employed Illegally

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