The WIIS enables Chinese workers to claim no-fault based compensation from the Work-related Injury Insurance Fund and against their employers. Meanwhile, the WIIS also imposes obligations on all Chinese employers to pay the social insurance premium for their employees. This regulation came into force in 2004. In 2010, the National Congress Standing Committee further promulgated the Social Insurance Law (2010), which has confirmed the Work-related Injury Insurance regime. In 2011, the Work-related Injury Insurance Regulation was revised to widen the coverage of workers to protect precarious labour, in particular migrant workers from rural areas.
In terms of seafarers, especially “agency seafarers” or “freelancers”, the application of WIIS has been controversial for many years. Many maritime
82
manning companies and/or crew agencies have argued that agency seafarers and freelance seafarers should not be categorized as employees under WIIS. In 2007, the State Council promulgated the Regulation of Seamen (2007), stipulating that employers shall arrange social insurance, including Work- related Injury Insurance, for seafarers. But this Regulation failed to explicitly impose this obligation on manning companies and/or crew agencies towards the agency seafarers and freelancing seafarers serving on foreign ships. In 2011, the Chinese Ministry of Transport demanded that manning companies/crew agencies should ensure that seafarers they sent to serve on foreign vessel are protected by labour contracts in China. This means manning companies should make sure seafarers working abroad are covered by Chinese Work-related Injury Insurance30. According to this regulation, Chinese seafarers, whether working on Chinese ships or foreign ships should be covered by the Work-related Injury Insurance.
1. Scope of work-related injuries, compensation standards and sources of payment
According to the Work-related Injury Insurance Regulation (2011), in order to qualify for compensation, workers’ injuries must fulfil one of the following three conditions. Firstly, in principle, the injury should be relevant to work content, including pre-work preparations, post-work conclusions, and business trips. Secondly, the injury should happening at the workplace or death should occur within a limited period due to a sudden disease. Thirdly, the injury is caused by protecting the public interest or during military service31. The following situations are clearly excluded from the scope of
work-related injuries:
30 The Rules of Dispatching Chinese Seafarers to Foreign Vessels (2011), Article 24.
31 Art. 14 and Art. 15 of Work-related Injury Insurance Regulation (2011).
The scope of workplace injuries:
(1) 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
83
1) Those incurred while the employee is drunk or under the influence of illegal drugs.
2) Those incurred while the employee is knowingly committing a crime.
3) Cases in which the employee deliberately self-harms or commits suicide.32323232
The definition of work-related injuries in WIIR is a broad concept. Unless the injuries are caused by workers’ own illegal, criminal behaviour or purposeful self-harm, any injuries relevant to work and injuries occurring at the workplace or on the way to or from home qualify to be judged as work-related injuries under WIIR.
2. Compensation standards and sources of payment
(2) Accidental injuries suffered before or after formal work hours and within workplace, due to activity considered preparation for work or conclusion of work.
(3) 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.
(4) Injuries suffered while on the way to or from work due to an accident that was not worker’s fault.
(5) The onset of a sudden illness during work hours that leads to death
within 48 hours.
(6) 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.
(7) The relapse or recurrence of injuries sustained during military service, providing that a military injury certificate has been obtained by the soldier concerned.
84
Once a workplace accidents occurs, the employer should immediately report the accident to the local Social Insurance Administration for an official record. Within 30 days, the employer should submit a workplace injury recognition application to a local Social Insurance Administration. If the employer fails to apply, then the Social Insurance Administration will reject Work-related Injury Insurance claims from the employer. In this situation, injured workers have to apply for workplace injury recognition on their own. This should be done within one year of the workplace accident to be compensated by the Work-related Injury Insurance Fund (WIIF).
a. Compensation for work-related injuries
Once workers’ injuries have been recognised as work-related injuries by the local Social Insurance Administration, the employer, employee or his/her close relatives need to file an application for work capacity assessment to the Work Capacity Assessment Committee (WCAC). Within 90 days, the WCAC comes to a conclusion about the work capacity loss from Grade 10, the least severe, to Grade 1, the most severe. According to the work capacity assessment conclusion, the worker is entitled to a certain amount of compensation, from both WIIF and the employer, including payments for medical treatment and rehabilitation. If the injury is assessed as a disability, according to the degree, a lump sum disability payment, monthly disability allowance and/or nursing allowance should be paid by WIIF. For disability Grades 5 – 10, if the worker requests to terminate the employment contract, or for Grades 7 – 10, if the employment contract expires, the worker is entitled to a medical subsidy from the WIIF and disability employment subsidy from the employer. For disability Grades 1 – 4, the Work-related Injury Insurance Regulation (2011) entitles workers to withdraw from the position, and receive 70% - 90% salary from the WIIF until the time of workers’ retirement. For disability Grades 5 – 6, employers are not allowed to terminate the employment relationship even if the fixed-term labour contract is expired. Under this circumstance, the employer is obliged to arrange another position for the injured worker. If the employer fails to arrange another position, the worker is still entitled to claim 60% - 70% salary from the employer every month. However, if the worker requests a termination of the employment
85
relationship, the worker has the right to claim a lump sum employment subsidy from the employer (see Tables 8 ~ 10).
Table 8: Payments for Medical Treatment and Rehabilitation
Costs Standard for Payment Calculation
Schedule of Payment
Source of Payment
Fees for hospital registration, hospitalization, medical treatment and medicine
Work-injury Insurance Diagnosis and Treatment Catalogue of Fees Reimbursed according to standard, as needed Work- injury Insurance Fund Transportation costs, including meals and housing
Same standard as cost reimbursements for
business trips
Employer Cost of meals while
hospitalized
Same standard as cost reimbursements for business trips Prosthetics, Rehabilitation equipment (such as wheelchair/crutches), rehabilitation fees National Regulations Reimbursed according to standard, as needed Work- injury Insurance Fund
Nursing during rehabilitation As needed As needed
Employer Wages while undergoing
treatment and rehabilitation
Workers’ original
wages and benefits Monthly
Source: China Labour Bulletin (2008) and the Work-related Injury Insurance Regulation (2011) Art. 30 to Art. 3
86
Table 9: Standards for Disability Payment
Source: China Labour Bulletin (2008) and the Work-related Injury Insurance Regulation (2010) Art. 34 to Art. 37
87
Table 10: Severance Payments for Employees
Source: China Labour Bulletin (2008) and the Work-related Injury Insurance Regulation (2011) Art. 38
Apart from the above payments for treatment, payments for rehabilitation, and disability payments, a worker who suffers a work-related injury is also entitled to a period of suspension of work but a continuation of salary for a maximum of 12 months, which should be paid by the worker’s employer.
In addition to paying the Work-related Injury Insurance premium (0.5%-2% of workers’ salary), Chinese employers also have to contribute to workers’ medical treatment, rehabilitation cost, disability payments and severance payments to some extent. Therefore, Chinese employers, even having purchased the Work-related Injury Insurance, will still be reluctant to help their employees to claim social insurance compensation.
88
b. Compensation for work-related death
If an employee dies at work or from a work-related injury, his/her close relatives or dependants33 can apply for a funeral subsidy, pension for dependants and death compensation (see Table 11). This compensation scheme also applies to the situation where a worker disappears due to an accident occurring during his/her business trip or when dealing with an emergency or natural disaster. Three months after the accident, his/her close relatives can apply for compensation according to the work-related death compensation scheme.
Table 11: Payments to close relative dependants of deceased workers in work-related accidents
Source: China Labour Bulletin (2011 - 2014) and WIIR (2011) Art. 39 to 41
Work-related Injury Insurance Regulation (2014) provides specified and practical work-related injuries recognition requirements, compensation
33 Referring to Chinese Civil Procedures (2012) and Administrative
Procedures (2014), close relative dependants refers to spouse, parents, children, siblings, grandparents, grandsons and other persons who has established civil support relationship with the deceased person.
89
standards, and claim approaches for victims of work-related accidents. If employers failed to arrange Work-related Injury Insurance for employees, employees are entitled to claim equivalent compensation amounts from employers. Furthermore, the Social Insurance Law (2010) stipulates that in situations when employers fail to arrange employees’ work-related insurance and refuse to make the compensation payments, employees are entitled to apply to WIIF to make payments in advance. Then the WIIF has a right to claim the payment from the employer concerned34.
3. Seafarers’ rights under Work-related Injury Insurance System
Chinese Work-related Injury Insurance is criticised as “ornamental”, implying the regime does not adequately help workers suffering work-related injuries (Sun and Liu, 2014). In this research, the empirical data also shows that the protective capability of Work-related Injury Insurance is limited for Chinese seafarers in terms of insurance coverage, compensation standards, and enforcement of compensation payments.
Firstly, the Work-related Injury Insurance coverage rate is low among seafarers. 58.45% seafarers are not covered by Work-related Injury Insurance (Chen et al. 2015, Wu 2008). In the context of fragmented employment relationships, i.e. employment through crew agencies/manning companies, the Work-related Injury Insurance is not compulsory for shipowners. Shipowners of non-Chinese vessels can argue that they are not the “employers” as defined by Work-related Injury Insurance Regulation (2003 and 2011). The manning companies/crew agencies, as the parties who employ/send seafarers to serve shipowners, should arrange Work-related Injury Insurance35.
34 There was a survey one year after the Social Insurance Law (2010) was
introduced that showed the vast majority of local governments were refusing to issue advance payments.http://www.clb.org.hk/.../local-governments-refuse...
90
Work-related Injury Insurance (premium rate 0.5% - 2% of the wage) cannot be purchased separately, and must be purchased together with pension scheme, medical insurance, maternity insurance, and unemployment insurance, which means the company must pay an extra 30% - 40% of the employees’ wages as a social insurance premium. In this research, some companies expressed great unwillingness to arrange Work-related Injury Insurance for seafarers and would only pay the social insurance premium based at the lowest level, which is 60% of the average local income (see 5.1.1).
Secondly, the inaccessibility and low compensation standards discourage seafarers’ incentives to claim from the social insurance scheme. The Work- related Injury Insurance Funds are managed/coordinated at the city. That is the city of the domicile of the manning company, which usually is different from the seafarers’ cities of domicile. This regulatory approach to social insurance funds has increased the difficulties for seafarers to claim benefits (see 7.2.2).
The disability payment and subsidies are calculated according to average local salary, not according to seafarers’ actual wages (see Table 8, Table 9 and Table 10). As mentioned above, manning companies tend to pay the social insurance premiums based at the lowest level, which is 60% of the average local income, so the final compensation for seafarers from public funds is restricted. Taking a Second Engineer (SF_QZ_W) as an example, he lost his right thumb and index finger, which was assessed as a Grade 8 disability (30% work capacity loss). Based on the company’s contribution for the insurance, he was entitled to claim about CNY 25,000 in disability payment from the public fund. At the time of his injury, in 2012, his monthly salary was USD 6600 (about CNY42, 240), which is much higher than the lump sum disability payment awarded by the WIIF. Had the company paid the social insurance premium according to the WIIR, at 300% of local average income (about CNY 11,516) for this Second Engineer (see Table 9), the disability payment awarded to this seafarer would be CNY 126,676, about five times of the disability payment he actually got paid, and equivalent to his wages of three months on board. Therefore, seafarers’ income renders the
91
compensation standards set by the regulation insufficient to compensate seafarers for actual earnings loss. Furthermore, the manning company’s underpayment of social insurance premiums makes the benefits available from public funds lower still.
Thirdly, the time bar of Work-related Injury Insurance claims is short. The regulation provides only a one-year time bar counting from the second day of the workplace accident, and this period cannot be extended for any reason. For seafarers who have been injured abroad, the time bar is tight, considering the repatriation, and further medical treatment in China. For some seafarers, when their situations become stable and they start to claim compensation, they just realise their claims are time-barred (see 7.3.2). The short time-bar regime makes seafarers’ claims for Work-related Injury Insurance compensation even more challenging and encourages manning companies to use delaying strategies to escape their obligations. With the one-year time bar regime, the workers’ compensation institution is also able to reject seafarers’ compensation claims and reduce their payment liabilities.
Fourthly, when involved in legal disputes over workers’ compensation, judicial opinions regarding the nature of seafarers’ employment agreements and manning companies’ obligations are vague and obscure, making seafarers’ claims unlikely to be fully supported by the courts. Unlike other labour disputes under the jurisdiction of the Labour Arbitration Tribunals, seafarers’ disputes are subject to the exclusive jurisdiction of Chinese Maritime Courts. Thus the opinions from judicial authorities can determine whether seafarers’ claims are established. When disputes between seafarers and manning companies regarding Work-related Injury Insurance contribution and compensation enter into judicial review, due to the variety and flexibility of seafarers’ recruitment approaches (Zhao and Amante, 2005, Wu, 2008, Wu and Beaverstock, 2013), the status of Chinese seafarers in Chinese law has been controversial. According to the Work-related Injury Insurance Regulation (2003), enterprises must purchase work-related injury insurance
92
for all their employees or hired labourers36. The employees refer to those who have entered into labour contracts or who are in an actual labour relationship with enterprises, companies or other organisations. However, regarding seafarers employed by manning companies/crewing agencies, their services on board are usually regulated by dual contractual relationships: one is the contract relationship with manning companies/crewing agencies, and the other is the voyage contract/agreement with shipowners/bareboat charterers37.
Under the contractual relationship with shipowners/bareboat charterers, shipowners/bareboat charterers are not recognised as employers according to the Chinese law, who are obligated to contribute or pay Work-related Injury Insurance for seafarers. Regarding the contractual relationship with crew agencies/manning companies, the Ministry of Transport has made some efforts to define this contractual relationship as a labour contract relationship, which means imposing the obligation of arranging social insurance for seafarers on manning companies/crew agencies38. Nevertheless, in the industrial practice, many seafarers serving on vessels through ‘recommendation’ by crew agencies/manning companies are not entered into any labour contract, and not covered by Work-related Injury Insurance.
The issue of whether the labour contract relationship can be established or recognised between seafarers and manning companies/crew agencies has been debated extensively in judicial practice. For example, in 2011, the Supreme People’s Court provided a judicial reply to Tianjin Maritime Court’s query on the nature of the contract between a bosun and a Beijing manning
36 Art.2 of Work-related Injury Insurance Regulation (2003)
37 Bareboat charterer is a party hiring unmanned ship from the shipowner within an agreed period, and the charterer needs to employ/hire seafarers on its own.
38 According to The Rules of Dispatching Chinese Seafarers to Foreign Vessels (2011) by Ministry of Transport and Communication stipulates that the licensed manning companies/crewing agencies to export seafarers on foreign vessels must ensure the seafarers sent to work on foreign vessels having labour contract with one of the following institutions: (1) the licensed manning company/crewing agency; (2) foreign shipowner; (3) Chinese shipping companies or other similar enterprises.
93
company. In this case, the bosun was sent to work on a vessel owned by an Israeli shipping company, and the bosun argued that the Beijing manning company should purchase his social insurance, but the Beijing manning company denied being the responsible employer and refused to pay the bosun social insurance premium. This dispute was firstly filed to Tianjin Maritime Court, and the Tribunal regarded the relationship between the bosun and the manning company as a factual labour relationship. In which case the manning company would be obliged to arrange social insurance for the bosun. However, the Supreme People’s Court later overruled this decision and decided that the contract be subject to the freedom contract39. Accordingly,
there was no such clause stipulating the crew agencies’ obligations to contribute to the seafarer’s social security schemes, so the manning company was not liable to compensate the bosun.
At the administrative regulation level, the Ministry of Transport has made efforts to oblige manning companies/crew agencies to arrange social insurance for seafarers themselves or through other shipping companies. However, in the judicial review process, the Supreme People’s Court’s reply dismisses the obligation of manning companies/crew agencies as employers defined in Chinese labour law. As a consequence, the judicial opinion undermined protection from administrative regulations. Thus seafarers’ rights as stipulated by the administrative rules are not enforceable in court proceedings.
This questionable legal status of Chinese seafarers is peculiar compared with other Chinese workers. In terms of land-based workers in the situation of agency employment, the Labour Contract Law stipulates that in cases of work-related injuries, agencies are jointly liable for compensation. If agencies and principal employers fail to sign written labour contracts and arrange