Do you have another plugin which is preventing damage? Something that provides god mode or similar, maybe? What's broken, exactly, and what version of Factions are you using? It worked perfectly the last I checked. Currently, none, though Factions has the integration hooks available to make it possible. EssentialsChat will have full support when v2.5 of Essentials is released, but it doesn't in the current v2.4.x release.