ELPHK - Chapters 6-10

CHAPTER 6
TERMINATION OF EMPLOYMENT
Para. 1. Introduction .............................................................................................................................. 6.001 2. Modes of termination ............................................................................................................... 6.002 (a) Termination by mutual agreement .................................................................................... 6.004 (b) Expiry of a xed-term contract ......................................................................................... 6.010 (c) Frustration ......................................................................................................................... 6.018 (i) Imprisonment .......................................................................................................... 6.021 (ii) Illness or injury making the performance of the contract impossible ..................... 6.023 (d) Death of a party to the contract of employment ................................................................ 6.030 (e) Dissolution of the enterprise ............................................................................................. 6.034 (i) Winding up of corporate employer ......................................................................... 6.034 (ii) Appointment of receiver ......................................................................................... 6.035 (iii) Dissolution of a partnership .................................................................................... 6.036 (f) Change of ownership of a business ................................................................................... 6.037 (g) Upon notice by either party ............................................................................................... 6.040 (i) Duration of notice period ........................................................................................ 6.041 (ii) Form of notice ......................................................................................................... 6.054 (iii) Garden leave ............................................................................................................ 6.064 (iv) Payment in lieu of notice ......................................................................................... 6.067 (v) Reason for dismissal ............................................................................................... 6.083 (vi) Resignation of employee ......................................................................................... 6.096 (h) Without notice by either party ........................................................................................... 6.101 (i) Summary dismissal by employer ............................................................................ 6.101 (ii) Statutory grounds for summary dismissal .............................................................. 6.114 (iii) Constructive dismissal ............................................................................................ 6.129 (iv) Termination without notice under the Employment Ordinance .............................. 6.138 3. Disciplinary measures falling short of termination ................................................................. 6.144 4. Disciplinary procedures ........................................................................................................... 6.157
1. INTRODUCTION
Overview of chapter. A contract of employment can be lawfully terminated in a number of ways: by mutual agreement, by operation of law, or unilaterally by either party. Although the net result will be the same, that is the employment relationship will come to an end, classifying the mode of termination is important for determining the parties respective obligations, rights and entitlements upon termination. This chapter will explore the various statutory and common law means by which the employment relationship can be brought to an end, and the legal consequences that follow. It will then consider an employers power to impose disciplinary measures falling short of termination and the extent to which an employer may be bound to follow disciplinary procedures. Termination by breach of contract, giving rise to a claim for wrongful dismissal at common law and the statutory claims of wrongful, unreasonable, and unlawful dismissal are examined in the following chapter. 6.001
2. MODES OF TERMINATION
Termination brings contract of employment to an end. The effect of a termination of a contract of employment is to bring the employment relationship to an end. Certain contractual or common law obligations may survive the termination of the contract of employment, such as duties of condentiality or restrictive covenants. However, the extent to which an employer is able to enforce such obligations may depend upon the mode by which the employment has been terminated. Equally, the mode of termination may have an impact upon an employees ability to claim certain contractual and/or statutory rights and benets due upon termination. Modes of termination. An employment relationship may be terminated lawfully in a number of ways: (a) (b) (c) (d) (e) (f) (g) (h) Mutual agreement Expiration of a xed-term contract Frustration Death Dissolution of the enterprise Change of ownership of a business Upon notice by either party Without notice by either party 6.002
6.003
192
(a) Termination by mutual agreement 6.004 The parties may at any time during the period of a contract of employment terminate the contract by mutual agreement. A termination of the contract of employment by mutual agreement is an effective termination1 and has the effect of releasing both parties from any further obligations under the contract of employment.2 This has particular relevance to an employer when it comes to enforcing posttermination restraints, which are ordinarily unenforceable in the event of a termination by mutual agreement, unless expressly preserved either in the original contract of employment or in a release agreement. Termination by mutual agreement may have an adverse impact upon employees entitlement to termination benets. From an employees perspective, the concern of too readily reaching a mutual agreement to terminate the contract of employment is that it might have an adverse impact upon entitlement to statutory rights and benets. In the Court of Appeal case of Birch v University of Liverpool,3 two academics who took early voluntary retirement under a scheme adopted by their universities and union were held not to be entitled to claim statutory redundancy in addition to payments they had received under the scheme. Similarly, in Scott v Coalite Fuels & Chemicals Ltd,4 a decision of the English Employment Appeal Tribunal, employees who took voluntary early retirement while under a notice of dismissal for redundancy were held not to be entitled to claim statutory redundancy payments.5 In Hong Kong, a similar position exists, that is in order to be eligible for a statutory severance payment or a long service payment an employee must have been either dismissed by his employer, or have terminated the contract of employment in circumstances constituting a constructive dismissal.6 Accordingly, where an employee chooses to leave his employment on a voluntary basis following an employers announcement of impending redundancies or even in response to a call for resignations or early retirement, or before the expiry of a
6.005
1 2 3
4 5
Marriott v Oxford and District Co-operative Society Ltd (No. 2) [1970] 1 QB 186. SW Strange Ltd v Mann [1965] 1 WLR 629. [1985] ICR 470. See also AGCO Ltd v Massey Ferguson Works Pension Trust Ltd [2003] IRLR 783 and Lipton v Marlborough [1979] IRLR 179 where the employee faced with losing his job in a restructuring, and bound by a six-month notice period and restrictive covenants, negotiated an immediate release from his contract. His later claim for unfair dismissal failed on the basis that the termination had been based on mutual agreement. [1988] ICR 355. These English authorities were cases where there was no compulsion involved and the employer had offered nancial inducements in excess of what would have been payable under the statutory redundancy scheme. By contrast, once notice of termination by reason of redundancy has been served by an employer, where an employee elects to leave his employment prior to the expiry of such notice with the consent of his employer in order to secure alternative employment, the termination of employment will generally be regarded as a dismissal for purposes of entitlement to statutory rights and benets, as in McAlwane v Boughton Estates [1973] 2 All ER 299. The employer had given notice to the employee and subsequently agreed to let the employee leave earlier than the expiry of the notice period. When the employee made a claim for redundancy payments and unfair dismissal, the employer argued that there had been no dismissal but a mutual agreement to terminate the contract of employment. The employers argument failed. It was held that the agreement constituted an agreement to vary the notice period rather than a mutual agreement to terminate the contract. See also Lees v Arthur Greaves Ltd [1974] 2 All ER 393. EO ss.31B(1)(a) and 31D(1).
MODES OF TERMINATION
193
notice of termination, he should be aware that this may have an adverse impact upon his entitlement to statutory rights and benets on termination.7 Validity of settlement agreements. Some mutual agreements take the form of a settlement or release agreement between the employer and departing employee, usually purporting to be in full and nal settlement of all the employees claims against the employer.8 There is conicting authority as to whether or not the position of an employee who enters into an agreement of this nature in Hong Kong is protected by virtue of s.70 of the Employment Ordinance (EO), which provides that any term of a contract of employment which purports to extinguish or reduce any right, benet or protection conferred by the EO shall be void.9 While the wording of the section clearly refers to contracts of employment, this has been construed as including settlement agreements contained in a separate document made as a consequence of termination purporting to be in full and nal satisfaction of the employees claims.10 However, the section has also been construed so as to exclude settlement agreements which address how the parties will discharge rights that have already accrued to the employee.11 Settlement agreements should include statutory entitlements. From a practical perspective, when drafting the terms of any settlement agreement, an employer should in any event ensure that valuable consideration is provided by the employer. Given the current level of uncertainty in this area of law it may be prudent for an employer to take account of and expressly include any statutory benets or entitlements which an employee would otherwise be entitled to upon termination to ensure compliance with s.70. Applying this approach any nancial settlement would include, and by denition should at least equal, the amount of any minimum statutory nancial benets and entitlements which an employee would be entitled to upon termination.12 6.006
6.007
8 9
10
11
12
Section 31C(5) of the EO provides that an employee will become disentitled to a severance payment where he leaves his employment prior to the expiry of the notice period given by the employer unless it is with the consent of his employer, or he makes a payment in lieu of notice to the employer. This is common practice within certain industries, such as the nancial services industry. This principle is equally applicable to settlement or release agreements entered into by employees whose employment has been terminated unilaterally by their employer. As in Tsang Wai Sun v Beverly Fashion Ltd (unrep., HCLA 54/1992, [1994] HKEC 361), and Tam Moon Tong v Lucky Dragon Restaurant Ltd (unrep., DCCJ 1706/2001, [2001] HKEC 968) in which Deputy Judge Chow stated obiter: All of the Plaintiffs claims, including long service payments, annual leave, wages in lieu of notice and statutory holidays pay were benets conferred under the Ordinance and covered by section 70 of the Ordinance. If the settlement was contained in an employment agreement, it would clearly be void and unenforceable by virtue of section 70 of the Ordinance. If the court allows an employer to extinguish or reduce an employees rights under the Ordinance merely by use of a document separate from the employment agreement, all employee benet provisions in the Ordinance could be rendered a nullity. See also Law Ying Chung v Lo Chun Kie (unrep., CACV 28/2004, [2005] HKEC 359). As in Chiu Wing Hang v BG Lighting Co Ltd (unrep., HCLA 67/1999 [2000] HKEC 245) and Wong Yin Mui v Newport May (unrep., DCCJ 2477/2004, [2006] HKEC 1606). See also the Court of Appeal decision of Kao Lee & Yip v Lau Wing [2007] 3 HKLRD 365 in which Cheung J stated obiter (at p 380 para 59): Lastly, s.70 only strikes down [a]ny term of a contract of employment which seeks to do what is prohibited. An ad hoc agreement, arrived at by the employer and employee not at the beginning but only at the time when one of them wanted to terminate the contract of employment by an agreement for payment in lieu of notice which is a common enough situation, is not a contract of employment. It is a different and subsequent contract to terminate the prior contract of employment. Section 70 simply does not apply to invalidate such an agreement. Section 70 will not apply in a situation where the agreement exceeds the statutory minimum of employment benets, as was the nding of the court in the case of Wong Yin Mui v Newport May (fn 11).
194
6.008
Settlement agreements may override contractual terms relating to process of termination. Aside from the protection which may be conferred by s.70 of the EO there appears to be no reason, in accordance with ordinary contractual principles, why a mutual agreement to terminate a contract of employment may not override any terms contained in the original contract of employment regarding the process by or the manner in which termination is to be effected.13 Mutual agreement for termination of employment upon failure to return to work after extended leave. An agreement to have a contract of employment come to an end automatically upon an employees failure to return to work following an extended period of absence is not likely to be treated as a termination by mutual agreement. In Igbo v Johnson Matthey Chemicals Ltd,14 the employee was given a leave of absence after she had signed a contractual letter which stated that if she failed to return on a particular date following her leave of absence her contract of employment would automatically come to an end.15 She did not return to work on the agreed date and sent a medical certicate instead. The Court of Appeal refused to uphold the agreement contained in the letter.16 (b) Expiry of a xed-term contract
6.009
6.010
Employment terminates automatically upon expiry of a xed-term contract. A xed-term contract is a contract of employment which contains an agreement as to the time at which a contract will come to an end. The term of a contract may be xed by reference to a specic date, a period of time (e.g. two years from the date of commencement of employment), the performance of a specic task (e.g. the completion of a construction project) or the occurrence or non-occurrence of a particular event.17 Neither party is required to give notice of termination of a xed-term contract of employment; the contract terminates automatically upon expiry of the xed term. Deemed dismissal in event of non-renewal of xed-term contract. A xed-term contract of employment which terminates without being renewed will be treated as a dismissal for the purposes of determining statutory rights conferred by the EO, including entitlement to employment protection (i.e. the right to not be unreasonably dismissed) and to statutory entitlements upon termination such as a severance payment
6.011
13 14 15
16
17
As in Latchford Premier Cinema Ltd v Ennion [1931] 2 Ch 409. [1985] IRLR 189. Failure to return to work in these circumstances is likely to be treated as repudiatory conduct justifying dismissal, as in Tracey v Zest Equipment Co Ltd [1982] ICR 481. The Court of Appeal did so on the basis that the agreement fell foul of s.140 of the Employment Protection (Consolidation) Act 1978 (now s.203 of the Employment Rights Act 1996), which is a similar provision to that contained in the EO s.70. As in Yeung Wai Hon v Ho & Partners Architects Engineers and Development Consultants Ltd (unrep., HCLA 6/2000, [2002] HKLRD (Yrbk) 425, [2002] HKEC 659) in which a term referring to the substantial completion day of a project was held to be effective to terminate the contract of employment upon the substantial completion of the project. See also Brown v Knowsley BC [1986] IRLR 102 in which a contract expressed to be subject to continued external funding was held to terminate automatically when that funding ceased; and Chan Lok Mei v Sze Chi Sing (unrep., MEC App 9/1995, [1996] HKEC 29) in which the contract was held to have expired at the end of the school term. By contrast, in Wiltshire CC v National Association of Teachers in Further and Higher Education [1980] ICR 455, CA the Court of Appeal held that a contract terminable on the happening of a specied future event at some uncertain future time is not a xed-term contract.
195
on redundancy, or a long service payment.18 To have provided otherwise would have allowed an employer to avoid the employment protection conferred by statute simply by making the employees contract for a xed term. However, there does appear to be a gap in the legal protection afforded to an employee whose employer arranges his employment under a succession of xed-term contracts to ensure the period of each xed-term contract falls short of the qualifying periods for either a severance payment or long service payment. In such cases, each xed-term contract will be a new contract of employment for purposes of calculating continuity of service.19 Even a one-week break, amounting to working less than 18 hours within one week is sufcient to break the continuity of a contract of employment, unless the absence is due to sickness or injury,20 or an employee is able to show that the absence from work between the ending of one xed-term contract and the beginning of another was by mutual agreement or custom or trade practice, or in circumstances such that by law an employee is regarded as continuing in employment.21 Non-renewal of xed-term contract permissible. In Hong Kong it has been held that an employee is not entitled to treat the non-renewal of a xed-term contract of employment by itself as an unreasonable dismissal, as a breach of the implied term of good faith or as a breach of the implied term of trust and condence.22 Fixed-term contract may provide for termination prior to the expiry of xed term. While there appears to be an inherent contradiction between a statement that a contract is for a xed term and the inclusion of a provision for termination by notice, a xed-term contract may provide for earlier termination prior to the expiry of the xed term.23 Notice provisions of EO apply to contracts containing express provision for termination prior to expiry of xed term. Where a xed-term contract of employment contains an express provision for early termination by notice, the termination by notice provisions of the EO will apply.24 Accordingly, either party may make a payment in lieu of notice, whether or not the contract of employment contains an express provision to that effect.25 6.012
6.013
6.014
18 19
20 21
22
23 24 25
EO ss.31D(1)(b), 31T(1)(b) and 32B(1)(b). Compare the position in the UK under the Fixed Term Employees (Prevention of Less Favourable Treatment) Regulations, SI 2002/2034, which provides for an upper limit for successive xed-term contracts of four years, subject to modication by a collective agreement or workforce agreement (reg.8), and the position closer to home under the PRC Labour Contract Law 2008, which limits the number of successive xed-term contracts to two, by thereafter converting the contract of employment into an open-ended contract. See Chapter 7 paras 7.064 to 7.066. EO Sch.1 para 3(2)(a). EO Sch.1 para 3(2)(b). The wording of Sch.1 para 3(2)(b) has been construed to include the concept of a global contract under the common law in situations where a mutuality of obligation in respect of future engagement can be found to exist. See Wong Man Kwan v Chun Shing Holdings Ltd [2003] 3 HKLRD 403; Wong Man Sum v Wonderland Seafood Restauran [2007] 1 HKC 365; Lui Lin Kam v Nice Creation Development Ltd [2006] 3 HKLRD 655; and Anne Fong v Hong Kong Adventist Hospital (unrep., HCLA 33/2009, [2010] HKEC 985). See Lui Lin Kam v Nice Creation Development Ltd (fn 21); Wong Man Sum v Wonderland Seafood Restaurant (fn 21) and paras 171174 of the Judgment of Carlye Chu J in Ko Hon Yue v Liu Ching Leung (unrep., HCA 3494/2003, [2008] HKEC 1314). As in Dixon v British Broadcasting Corp [1979] QB 546. EO s.6(2)(c). EO s.7.
196
6.015
Where contract makes no provision for early termination, parties may agree upon termination date prior to expiry of xed term. Where there is no express provision for early termination of a xed-term contract of employment, the notice provisions of the EO do not apply.26 However, it is open to the parties to mutually agree upon an earlier termination date. Where contract makes no provision for early termination, no period of reasonable notice can be implied. Where a xed-term contract of employment does not provide for early termination, no provision as to earlier termination on reasonable notice can be implied.27 The court in Club Deluxe Ltd v Club Metropolitan Ltd28 and Club Deluxe Ltd v Club Metropolitan Ltd29 regarded this proposition as unimpeachable. Although the court ultimately held that a xed-term contract with no provision as to notice could have been lawfully terminated by the employee giving one months notice of termination, it did so on the basis of the plaintiffs pleaded case.30 Where contract makes no provision for early termination, termination prior to expiry of xed term will amount to wrongful termination. A party who terminates a xed-term contract of employment prior to the expiry of the term in circumstances where there is no provision for early termination will have wrongfully terminated the contract, allowing the innocent party to claim damages for the unexpired portion of the xed term.31 (c) Frustration
6.016
6.017
6.018
Common law doctrine of frustration. Under the common law doctrine of frustration, if an unforeseen change of law or circumstances is such as to render a contract impossible to perform, or if the performance of the contract obligation would produce a result radically different from that which was intended by the parties, the contract
26
27
28 29 30
31
Note that s.5(2) of the EO requires a xed-term contract to be evidenced in writing and signed by both parties. Failure to comply with these formalities results in the contract being treated as a contract renewable from month to month, and thereby terminable by either party giving not less than one months notice. AHK Air Hong Kong Ltd v Thomas Gilligan (unrep., HCA 7, 1040/1988, [1989] HKEC 7). Contrast the position taken by the authors of Butterworths Hong Kong Employment Handbook (see EO6.23 and Lexis Nexis Employment OrdinanceAnnotated Guide and Employment Handbook). (unrep., HCA 8339/1990, 28 July 1993). [1995] 2 HKLR 69. The employer pleaded failure by the employee to give adequate notice. The court held that the employer had therefore accepted that the contract was subject to an implied term that prior determination could be effected by notice. As in Horkulak v Cantor Fitzgerald International [2004] ICR 697. Contrast the approach taken by the court in Lee Cheuk Sun v Tradition (Asia) Ltd (unrep., HCA 2808/2006, 43/2007, [2008] HKEC 2194). The employee, who was found to have wrongfully terminated a xed-term employment contract prior to the expiry of the xed-term of two years, was required to pay only nominal damages to his employer. The employer argued that, in the absence of any other agreement as to notice of termination, the remainder of the xed term of the contract should be the agreed period of notice between the parties for the purposes of s.6(2)(c) of the EO. Sufad J rejected this argument on the grounds that s.6(2)(c) had no application to the case, there being as a matter of fact no agreed period of notice of termination in the employment agreement: To accede to that argument of the plaintiff would be effectively to hold the plaintiff to specic performance of the remainder of the xed term of the employment rather than a determination of damages for breach or for wrongful termination. That cannot be right. There is some merit in this approach, given that it is likely to be easier for an employer to hire a replacement than it is for an employee to nd another position.
197
will be frustrated.32 For an event or circumstance to frustrate a contract of employment, it must go to the root of the contract making it impossible, not merely difcult, to perform. Contract terminated automatically and immediately upon happening of a frustrating event. A contract of employment is terminated automatically and immediately upon the happening of a frustrating event. There is no requirement for either party to give notice of termination, or even indicate that it is their intention to regard it as terminated, since frustration terminates the contract by operation of law.33 Accordingly, if a contract is frustrated, its termination is not due to a dismissal for the purposes of statutory entitlements to either a long service payment, or a severance payment.34 As a consequence of automatic termination, all future obligations under the contract are discharged.35 For example, there is no right to be paid wages from the date of frustration of the contract of employment until any other date, such as the date on which the employer informs the employee that the contract has terminated.36 Burden of proof on party seeking to rely on frustration. It is for the party relying on frustration to prove it. For frustration to operate the frustrating event must not be the fault of either party.37 To this extent it is for the party seeking to rely on frustration to also prove that the outside event was not caused by any fault on his part.38 Conversely, an allegation of frustration can be rebutted by arguing that the frustrating event was self-induced.39 (i) Imprisonment Imprisonment capable of being a frustrating event. The imprisonment of an employee is capable of frustrating a contract of employment.40 It has been argued that imprisonment constitutes a self-induced event, and therefore cannot amount to frustration;41 it being understood that frustration must not be the fault of either party to the contract. However, in FC Shepherd & Co Ltd v Jerrom,42 the Court of Appeal made it clear that the rule against self-inducement in the context of imprisonment means that neither party can rely on its own default or misconduct to establish a defence of 6.021 6.019
6.020
32
33
34 35
36 37
38 39
40
41 42
Davis Contractors Ltd v Fareham UDC [1956] AC 696 cited in Jan Albert (HK) Ltd v Shu Kong Garment Factory Ltd [1990] 1 HKLR 317. Hirji Mulji v Cheong Yue Steamship Co Ltd [1926] AC 497; Egg Stores (Stamford Hill) Ltd v Leibovici [1977] ICR 260. EO ss.31D and 31T. Wages due up to the date of frustration are recoverable under sss.16 and 17 of the Law Amendment and Reform (Consolidation) Ordinance (Cap.23). Unger v Preston Corp [1942] 1 All ER 200. Davis Contractors Ltd v Fareham UDC (fn 32); Paal Wilson & Co A/S v Partenreederi Hannah Blumenthal (The Hannah Blumenthal) [1983] 1 AC 854. FC Sheperd & Co Ltd v Jerrom [1987] QB 301, per Lawton LJ at 319. If the other party to the contract wishes to dispute that the contract was frustrated, it is for that party to prove that it was induced by the party seeking to rely on frustration: Joseph Constantine Steamship Line Ltd v Imperial Smelting Corp Ltd [1942] AC 154. See FC Sheperd & Co Ltd v Jerrom (fn 38). Where an employee is imprisoned, there is nothing to prevent an employer from terminating the contract of employment on notice. Norris v Southampton City Council [1982] ICR 177. Fn 38.
198
frustration.43 Since the employer in this case was relying upon the employees fault, it could succeed in arguing that the contract had been frustrated. 6.022 Whether or not contract is frustrated by imprisonment will depend upon circumstances of case. Whether or not a contract is frustrated in circumstances of imprisonment is a question of fact and therefore will depend upon the circumstances of each case,44 including the length of the prison sentence45 and the status of the employee. Merely being placed on bail is unlikely to frustrate a contract of employment.46 (ii) Illness or injury making the performance of the contract impossible 6.023 Illness or injury capable of being a frustrating event. At common law a sufciently serious illness or injury suffered by an employee is capable of frustrating a contract of employment if it renders the contract of employment impossible to perform.47 Factors to be taken into account in determining whether contract is frustrated. In considering the question of whether or not a contract of employment is frustrated through the illness of an employee, the English courts have endeavoured to list by way of guideline the factors of which account should be taken,48 namely: (1) (2) (3) the terms of the contract, including any provisions as to sick pay; how long the employment was likely to last in the absence of sickness;49 the nature of the employment, in particular the need of the employer for the work to be done and the need for a replacement to do it; whether the
6.024
43 44
45
46
47 48
49
[1987] QB 301, per Lawton and Mustill LJJ. In Chakki v United Yeast Co Ltd [1982] 2 All ER 446, the Employment Appeal Tribunal held that a sentence of imprisonment was a potentially frustrating event rather than the cause of the immediate frustration of a contract of employment; that in order to ascertain whether in fact the contract was frustrated, it was essential to determine (i) precisely when it had become commercially necessary for the employee to decide whether or not to employ a replacement; (ii) what at that time a reasonable employer would have considered the probable duration of the employees absence; and (iii) to consider whether the employers had acted reasonably in employing a permanent rather than a temporary replacement. A contract of employment has been held to have been frustrated where an employee has received an immediate and substantial term of imprisonment: Hare v Murphy Bros Ltd [1974] 3 All ER 940; FC Shepherd & Co Ltd v Jerrom (fn 38). In Harrington v Kent CC [1980] IRLR 353, EAT the contract was found to have been frustrated even though the employees sentence was under appeal. The appeal process took three months but was ultimately successful. By contrast, in Chakki v United Yeast Co Ltd (fn 44) the contract was not frustrated in circumstances where the employee was sentenced to 11 months imprisonment but released on bail the following day pending an appeal against his sentence. The employers had already terminated his employment, believing that there was no prospect of his returning to work for some time. In fact, the employees appeal was determined one month later and was successful; he was placed on probation. Four Seasons Healthcare Ltd v Maughan [2005] IRLR 324 in which it was held that a condition of bail did not frustrate the contract, despite the fact that it prevented the employee from working. The employer did not dismiss the employee at the time of imposition of bail, and subsequently failed in its attempt to backdate the date of frustration once the employee had been convicted. Poussard v Spiers and Pond (187576) LR 1 QBD 410; Condor v Barron Knights Ltd [1966] 1 WLR 87. See the judgments of Sir John Donaldson P in Marshall v Harland & Wolff Ltd [1972] 1 WLR 899; Phillips J in Egg Stores (Stamford Hill) Ltd v Leibovici (fn 33); and Wood J in Williams v Watsons Luxury Coaches Ltd [1990] IRLR 164. A temporary or specic hiring is more likely to be frustrated: Poussard v Spiers and Pond (fn 47). By contrast in the case of Bettini v Gye (187576) LR 1 QBD 183 where a singers illness prevented her from attending rehearsals but not any of the performances, this was held not to be a frustration.
199
employee was in a key post which had to be lled on a permanent basis if his absence was prolonged, or whether it was such that it could be held open for a considerable period; (4) (5) the nature of the illness, how long it has continued and the prospects of recovery; the period of past employment.50
In cases of a long lingering illness, where the outcome is uncertain, the following further matters should be taken into account: (6) (7) (8) (9) the risk to the employer of incurring statutory obligations to an employee meant only to be a replacement; whether wages have to continue to be paid; the acts and statements of the employer in relation to the employment, in particular whether there has been a dismissal, or failure to dismiss; and whether in all the circumstances a reasonable employer could be expected to wait any longer.51 6.025
Contract frustrated in event of employees permanent incapacitation. Despite these guidelines, where it is clear to both parties that an employee has become incapacitated from ever performing his contract of employment again, the contract of employment will be frustrated. The potential harshness of the doctrine of frustration in cases of illness is illustrated by the case of Notcutt v Universal Equipment Co (London) Ltd,52 in which the English Court of Appeal considered its application in the context of a contract of employment which was determinable by notice. In that case an absence of eight months on sick leave, caused on account of a coronary suffered by the employee, was held to have frustrated the contract of employment of an employee with 27 years of service. The employee had accrued a statutory notice period of 12 weeks by virtue of his length of service; the argument of frustration was put forward by the employer in order to avoid payment of the statutory notice. While, on the one hand, mentioning the guidelines referred to in para 6.024, and stating that the defence of frustration in these circumstances should be treated carefully, the Court of Appeal nevertheless went on to hold that the doctrine of frustration could, in appropriate circumstances, be applied to such a contract so as to terminate it without notice.53
50 51 52 53
These ve factors were identied by Sir John Donaldson P in Marshall v Harland and Wolff Ltd (fn 48). These additional four factors were identied by Phillips J in Egg Stores (Stamford Hill) Ltd v Leibovici (fn 33). [1986] 1 WLR 641. The Court of Appeal held that in circumstances where it becomes apparent to both parties that an employee will not be able to work again there was such a change in the signicance of the mutual obligations of the parties that the contract, if performed, would be a different thing from that which the employer had contracted for. The application of the doctrine operated so as to terminate the contract before the employee had received notice of its termination and accordingly he was not entitled to be paid by his employer in respect of any period of notice under the provisions of the relevant statute (the Employment Protection (Consolidation) Act 1978).
200
6.026
Harshness of doctrine mitigated by provisions of EO relating to statutory sick leave. In Hong Kong, the harshness of the operation of the doctrine in cases involving serious illness is mitigated to an extent by various provisions in the EO.54 First of all, an employer is prohibited from terminating an employees contract of employment, other than in circumstances justifying a summary dismissal under s.9 of the EO, during any period taken as statutory sick leave.55 Another provision which protects against frustration is s.10(aa), which entitles an employee who has been continuously employed56 for not less than ve years to terminate his employment without notice or payment in lieu of notice on being certied as being permanently unt to undertake the kind of work performed under the contract of employment.57 An employee terminating in such circumstances is entitled to retain all accrued benets, including proportional end-of-year payment58 and entitlement to a long service payment.59 Private health coverage may protect against nding of frustrating event. Another nuance in this area is the tendency of modern day contracts of employment to contain benets such as private health insurance and contractual sick leave provisions in excess of statutory entitlements. If an employer has provided health coverage beyond an employees statutory entitlement, whether self-funded or under a private health insurance policy, in particular, which covers an employee in the event of being permanently unable to work, arguably, it can no longer be said that the incapacity was an unforeseen event, since the parties had contemplated the event at the time the contract of employment was entered into.60 In such circumstances an employer may not nd it easy to justify termination on the grounds of frustration. Accordingly, an employee who has a generous health insurance policy may nd that this confers the added benet of employment protection. Uncertainty with doctrine of frustration. Reliance on the doctrine of frustration is generally inadvisable given the level of uncertainty that could arise as to the date on which termination occurs and the difculties of proving frustration. It is far simpler for an employer to rely upon its right to terminate on notice or to make a payment in lieu of notice unless the circumstances justify summary dismissal, and for contracts of 24 months or more, to rely upon the grounds of misconduct or other reason of substance in the case of imprisonment, or incapability in the case of illness.61 Harshness of doctrine mitigated by provisions of EO where frustration caused by event affecting employer. Perhaps the most signicant protection conferred by the EO is that afforded in a redundancy situation. Section 31L62 of the Ordinance
6.027
6.028
6.029
54
55 56 57 58 59 60 61 62
In addition, statutory protection against dismissal is afforded to employees who are disabled within the meaning of the Disability Discrimination Ordinancesee Chapter 8. The UK has similar legislation protecting employees against disability discrimination. EO s.33(4B). See Chapter 2 para 2.043. EO s.10(aa). EO s.11F(1)(a). EO s.31R(1)(a)(ii). As in Villella v MFI Furniture Centres Ltd [1999] IRLR 468. These being valid reasons for termination under EO s.32K. Section 31L(1)(b) states: Where in accordance with any enactment or rule of law (b) any event affecting an employer (including, in the case of an individual, his death), operates so as to terminate a contract under which an employee is employed by him, that act or event shall for the purposes of this Part be treated as a termination of the contract by the employer, if apart from this subsection it would not constitute a termination of the contract by him.
201
provides that where a contract of employment is terminated by operation of law (which of course includes frustration), that termination will be treated as though it were a dismissal by an employer,63 provided that the termination was caused by an act on the part of, or an event affecting, the employer.64 An employee who is deemed to be dismissed in these circumstances will be entitled to a severance payment in the event of a redundancy situation.65 (d) Death of a party to the contract of employment Employment terminates upon death of a party to the contract. At common law, the death of either party to a contract of employment will bring the contract of employment to an end. In essence the contract will be frustrated. An employee is discharged from further performance on the death of the employer. The personal representatives of the employer are not bound to continue to engage an employee unless it is an express term of, or a term that can be implied into, the contract of employment.66 Employment Ordinance deems death of an employer dismissal for redundancy purposes. The common law position is qualied by the EO which deems the death of an employer as a dismissal by reason of redundancy for the purposes of an employees entitlement to a severance payment.67 An employee who is deemed to be dismissed in these circumstances will be entitled to a severance payment in a redundancy situation.68 However, an employee is not treated as having been dismissed by the deceased employer if his contract of employment is either renewed by a personal representative of the deceased employer, or he is re-engaged under a new contract of employment by the personal representative within four weeks of the death of the deceased employer, or he has unreasonably refused an offer of renewal or re-engagement on terms which either do not differ from his previous contract of employment or, if they do, are suitable in relation to that employee.69 Employment Ordinance deems death of an employee prior to expiry of notice period as dismissal for redundancy purposes. Similarly, where an employer has given notice of termination to an employee and the employee dies before the expiry of the notice period, the EO deems the termination by operation of law as a termination on notice by the employer and as a dismissal by reason of redundancy for the purposes of an employees entitlement to a severance payment in a redundancy situation.70 Where an employee who has been given notice by his employer to terminate his 6.030
6.031
6.032
63 64
65 66 67 68 69 70
The dismissal will be treated as a dismissal in accordance with EO s.31D. See Chan Wai Man v Kong Wing Fung [1985] 1 HKC 441 in which the employees claim for a severance payment was rejected on the grounds that the frustrating event happened after the employees employment terminated. In Gloria Weaving Knitting Factory Ltd v Lam Hau Yee [1992] 2 HKC 497, Deputy Judge J Chan noted that there was no statutory provision catering for events affecting an employee. Thus frustration by virtue of events like imprisonment of the employee or more innocent events like illness (which was outside s.10(aa)) would have discharged the contract leaving the employee with no claim at all; not even for long service payments which required a dismissal or particular types of termination as provided in ss.10(aa) and 31R(1)(b). As dened in EO s.31B(2). Farrow v Wilson (186869) LR 4 CP 744. EO s.31L(1)(b). As dened in EO s.31B(2). EO Sch.3 Pt I paras 3 and 4. EO Sch.3 Pt II para 11.
202
contract of employment and been offered re-employment dies before having either accepted or refused the offer, the requirement under s.31C of the EO to show that the employee has unreasonably refused the offer is substituted with the presumption that it would have been unreasonable on the part of the employee to refuse the offer.71 Accordingly, a severance payment will not be payable to the deceased employees personal representatives if the terms of the offer of re-employment are reasonable by reference to the facts and circumstances of the case. 6.033 Upon the death of an employee, any accrued cause of action continues to vest in the personal representatives of the deceased. Where a right to a severance payment arises after the death of an employee (i.e. before the expiry of the notice of termination), any right on the part of the employees personal representatives to receive a severance payment will be treated as if it had accrued before his death.72 (e) Dissolution of the enterprise (i) Winding up of corporate employer 6.034 Employment terminates upon compulsory winding up of corporate employer. A compulsory winding up order of the court generally operates as a dismissal of a companys employees.73 The effect of a voluntary winding up depends upon whether or not the business is to be continued; if it is then it will not operate as a dismissal.74 If there is no intention of carrying on the business, the company having elected a voluntary winding up procedure as a result of it being unable to pay its debts, it is likely to operate as a dismissal.75 A termination of the contract of employment under these circumstances is generally treated as a repudiatory breach of contract on the part of the employer, entitling an employee to bring a claim for wrongful dismissal.76 (ii) Appointment of receiver 6.035 Employment terminates upon appointment of receiver by the court. The appointment of a receiver by the court automatically terminates all contracts of employment between an employing company and its employees,77 but the appointment of a receiver out of court appointed by debenture holders as agent of the company may not terminate the contract of employment, at least for junior employees.78
71 72 73
74 75 76
77 78
EO Sch.3 para 12. EO Sch.3 Pt II para 15. Re General Rolling Stock Co (Chapmans Case) (186566) LR 1 LR Eq 346; Measure Bros Ltd v Measures [1910] 2 Ch 248. Midland Counties District Bank Ltd v Attwood [1905] 1 Ch 357. Reigate v Union Manufacturing Co (Ramsbottom) Ltd [1918] 1 KB 592. As was the case in Reigate v Union Manufacturing Co (Ramsbottom) Ltd (fn 75). In Fowler v Commercial Timber Co Ltd [1930] 2 KB 1 a managing director who agreed to the voluntary winding up of the company did not lose his right to claim damages for breach of the contract when his xed-term contract was terminated. Reid v Explosives Co Ltd (1887) LR 19 QBD 264. Re Mack Trucks (Britain) Ltd [1967] 1 All ER 977. Once a receiver sells the companys business (even to a subsidiary company), it operates to determine the employment of those employed in the business: Re Foster Clark Ltds Indenture Trusts [1966] 1 WLR 125.
203
(iii) Dissolution of a partnership Employment terminates upon dissolution of partnership. A partnership has no separate legal identity distinct from the partners as individuals. Accordingly, a contract of employment between an employee and a rm of partners is between the employee and all of the partners jointly and severally. Where a partner dies or retires and there is a consequent dissolution of the partnership, whether or not the contract of employment will be discharged is dependent upon the construction of the particular contract, the circumstances and the intent and acts of the parties.79 Dissolution of a partnership may operate as a wrongful dismissal80 at common law and will terminate the contract of employment if the obligations under the contract are sufciently related to the personal character, skill or conduct of the deceased or retired partner,81 or there is a major split in the partnership.82 On the other hand, if, upon a true construction of the contract, it was intended that the contract should be performed by the partnership as from time to time constituted, then a change in the rm will not automatically determine the contract or constitute a breach of it.83 (f ) Change of ownership of a business84 Employment terminates automatically upon transfer of business. At common law a contract of employment cannot be assigned without the consent of the parties.85 In the absence of a statutory scheme governing the automatic transfer of employment upon the transfer of an undertaking or a change of business ownership, akin to that which exists in the United Kingdom,86 the position in Hong Kong is that in the event of a change of ownership of a business contracts of employment cannot be transferred without the consent of the employees concerned. Where the business conducted by the employing entity is sold to another legal entity, the contracts of employment with the original employing entity will terminate automatically by operation of law.87 Where employees agree to work for a different employer, they will need to be engaged under new contracts.88 6.037 6.036
79 80
81
82
83 84 85
86 87 88
Briggs v Oates [1991] 1 All ER 407 at 412. A nding of wrongful dismissal may be of practical importance to an employee in these circumstances since it releases the employee from a restraint of trade clause: General Bill Posting Co v Atkinson [1909] AC 118; Briggs v Oates (fn 79). Compare the cases of Harvey v Tivoli (Manchester) Ltd (1907) 23 TLR 592 and Phillips v Alhambra Palace Co [1901] 1 QB 59. As in Tunstall v Condon [1980] ICR 786. In Brace v Calder [1895] 2 QB 253; although the Court of Appeal held that the change in partnership amounted to a wrongful dismissal, the plaintiff was only awarded nominal damages following his refusal of an offer of continued employment from the newly constituted partnership. Briggs v Oates (fn 79). This topic is dealt with in detail in Chapter 13. Nokes v Doncaster Amalgamated Colleries Ltd [1940] AC 1014; Woodhouse v Peter Brotherhood Ltd [1972] 2 QB 520. Transfer of Undertakings (Protection of Employment) Regulations (TUPE) 2006. As in Law Shu Fat v Ng Kwong Yui [2006] 3 HKLRD 118. Alternatively, employees may agree to a transfer of employment under a tripartite agreement between the employee, the transferor of the business and the transferee whereby the rights and obligations under the original contract are transferred to the new employer by novation: L & C Insurance Consultants Ltd v Liu Kam Shing (unrep., HCA 1966/1993, [1995] HKEC 349).
204
6.038
Transfer of business distinguishable from transfer of shares. A transfer of undertaking or change of ownership of a business should be distinguished from a transfer of shares in a business. In the latter situation while the shares of the employing entity are sold, so that ownership of the business can be said to have changed hands, the employing entity remains the same so that the contract of employment continues. This follows from the application of ordinary company law principles. On the other hand, a transfer of undertaking or change of ownership of a business occurs where the assets and goodwill of a business are sold as an ongoing concern. The question whether there has been a change in the ownership of a business is a question of fact.89 The sale of assets of a business by itself will not amount to the transfer of ownership of a business,90 neither will merely the transfer of premises of a business.91 The assessment turns on whether the effect of the transaction is to put the transferee in possession of a going concern, the activities of which he could carry on without interruption.92 Employment Ordinance regulates transfer of employment upon sale of a business. The EO contains provisions regulating the transfer of employment upon the sale of a business (as opposed to the sale of the shares of a business); in particular, it safeguards the continuity of employment of employees who are re-engaged by the new owners of the business so that the period of employment served with the former employing entity will count as a period of employment with the new employing entity.93 The EO contains a similar provision in the event of an employee being transferred within a group of companies.94 Where an employee unreasonably refuses an offer of employment by the new owner of a business on terms which are the same or substantially similar to the employees original contract of employment, the employee will lose his entitlement to a severance payment and a long service payment, or pro rata entitlements to such payments.95 (g) Upon notice by either party
6.039
6.040
Termination of employment must be on notice. In Hong Kong, either party to a contract of employment may only lawfully terminate the contract of employment upon giving notice to the other party, unless there are sufcient grounds to justify a summary dismissal. (i) Duration of notice period
6.041
Statutory minimum periods of notice determined by reference to the type of contract of employment. Contracts of employment generally contain a term setting out the period of notice to which the parties are entitled.96 The EO prescribes minimum periods of notice. Unlike the position in the United Kingdom, the prescribed minimum
89 90
91 92 93
94 95 96
Lloyd v Brossey [1969] 2 QB 98. Elson-Vernon Knitters Ltd v Sino-lndo-American Spinners Ltd [1972] HKLR 468; Man Yee v Chi Tao Enterprises Co Ltd [1986] HKLR 171. Lloyd v Brassey (fn 89). Kenmir Ltd v Frizzell [1968] 1 WLR 329 (per Widgery J at 335); Lloyd v Brossey (fn 89). In para 5 of Sch.1 to the EO ss.31J and 31Z preserve an employees right to a long service payment and severance payment, respectively. See Chan Wai Man v Kong Wing Fung (fn 64). EO s.31K(4) and ZA(3). EO ss.31C, 31J, 31S and 32C. EO s.44(1) requires an employer to inform each employee of the particulars of their employment prior to the commencement of employment, including the length of notice required to terminate the contract (s.44(1)(c)).
205
periods of notice are not linked with length of service.97 Rather, the minimum periods of notice are determined by reference to the type of contract it is deemed to be by virtue of s.5 of the EO. Section 5 of the Ordinance provides that contracts falling into the following categories will be deemed to be a contract for one month renewable from month to month: (1) (2) (3) a contract which is a continuous contract,98 in the absence of an express agreement to the contrary; 99 a contract which is in excess of one month, but not evidenced in writing and signed by both parties;100 and a contract entered into with a manual worker for a period of six months or more, or for a number of working days equivalent to six months or more.101
Section 6 of the EO provides that in the case of a contract which is deemed by virtue of s.5 to be a contract for one month renewable from month to month, where there is no agreed notice period, the minimum length of notice is one month;102 where there is an agreed period for the length of notice, the notice period will be the agreed period, as long as this is not less than seven days.103 In all other cases, where the parties have agreed the duration of the notice, whether as expressly provided for in the contract of employment, or otherwise, the notice period will be for the agreed period. However, in the case of an employee who is engaged under a continuous contract104 the agreed period must not be for less than seven days.105 Employment may be terminated without notice in the rst month of a probationary period. For contracts which are subject to a probation period, either party may terminate the contract of employment in the rst month of the probation period without giving notice of termination. This is the case even if the contract of employment expressly provides for a period of notice to be given by either party during a probation period.106 The rationale for this provision, which was an amendment to the EO introduced in 1984, is not clear and, in the authors view, is hard to justify.107 Employment may be terminated by not less than seven days notice after the rst month of an agreed probationary period. Following the rst month of employment, termination may be effected by giving the length of notice agreed upon by the parties 6.042
6.043
97 98 99 100 101 102 103 104 105 106 107
Section 86 of the Employment Rights Act 1996. See EO Sch.1 s.3. EO s.5(1). EO s.5(2). EO s.5(3). EO s.6(2)(a). EO s.6(2)(b). See Chapter 2 para 2.043. EO s.6(2)(c). EO s.6(3)(a), (3A)(a). Note the comments of Hunter J in Lai Foon Yung v Tin Sum Valley Public Primary School [1986] HKLR 128 who was prompted to observe: I read that Clause, when I rst saw it this morning, with considerable distaste. If, as has been suggested, the reason behind it is administrative convenience in the Labour Department, I read it with disgust. I can see no conceivable reason, at the moment, why parties who have expressly gone to the trouble of providing for a period of notice in a probationer contract, should be entitled in the course of the rst month to tear up that term. It seems to me a provision which is well calculated, if not bound, to lead to the gravest injustice.
206
by reference to the contract of employment, as long as this is not less than seven days; and where the contract of employment makes no provision for a notice period during the probation period, notice of not less than seven days is required.108 6.044 Calculation of month for determining duration of notice period or probationary period. Although the EO generally denes a period of a month as a calendar month, for the purposes of calculating notice periods and probationary periods the EO denes a period of a month in one of three possible ways: (1) commencing on the day when notice of termination of a contract is given or when the probationary employment begins, and ending at the end of the day before the corresponding date in the following month; commencing on the day when notice of termination of a contract is given or when the probationary employment begins, and ending where there is no corresponding date in the following month, at the end of the last day of the following month; commencing on the day when notice of termination of a contract is given or when the probationary employment begins, and ending where the commencing day is the last day of the month, at the end of the last day of the following month.109
(2)
(3)
6.045
Parties may agree to longer notice period. Subject to the minimum statutory notice periods referred to above, the parties are free to agree on the length of notice required by either party to terminate the contract of employment. The length of notice may differ as between employer and employee, but it is usual practice for a contract of employment to stipulate the same period of notice for both employer and employee. Parties not permitted to contract out of right to notice, but may waive such a right at the time notice is required. Given that the ability to terminate the contract of employment by notice is a right conferred by statute any contractual term purporting to restrict its exercise will be unenforceable.110 However, either party may waive its right to receive notice at the time notice is required to be given.111 No security of tenure where contract contains a notice period. The fact that a job is described to be either permanent or pensionable will not affect the parties right to terminate on notice. In Cheung Man Cheung v Cathay Pacic Airways Ltd,112 the Court held that a position which was described as permanent and pensionable did not preclude an employer from terminating the employees employment by giving the required notice stipulated in the contract of employment. In Ng Ai Kheng v Open University of Hong Kong,113 the Court of Appeal, upholding the judgment of Deputy Judge Carlson in the Court of First Instance, rejected the plaintiffs argument that
6.046
6.047
108 109 110 111 112 113
EO s.6(3A)(b), (3A)(b). EO s.6(4). EO s.70. EO s.8(a). (unrep., HCA 7308/1991, [1995] HKEC 354). [2006] 2 HKLRD 228.
207
because her employment was on superannuation terms she was entitled to security of tenure, pursuant to which her employment could only have been terminated for good cause. Whether or not the plaintiff had tenure depended upon the terms of her contract of employment, and there was no term in the contract that an employee on superannuation terms would be entitled to security of tenure. Periods of statutory annual leave and statutory maternity leave not to be taken into account when calculating notice period. In calculating the length of notice of termination an employee cannot be required to take statutory annual leave or maternity leave during any notice period.114 This effectively precludes an employer from giving notice of termination during any statutory annual leave or maternity leave period unless the notice period is expressed to run from the date upon which the employee returns from such leave.115 Equally, an employer is not permitted to deduct any period of annual leave from the period of statutory notice due to an employee.116 The restrictions which apply to giving notice during any statutory annual leave or statutory maternity leave period do not apply to any period of contractual annual or maternity leave in excess of the statutory minimum annual leave or maternity leave periods. Employee permitted to give notice during statutory leave period. On the other hand, an employee can give notice over a period which includes his accrued annual leave entitlement and thereby take part of his accrued annual leave during the notice period. In Kao Lee & Yip v Lau Wing,117 Mr Justice Ribeiro PJ, delivering the judgment of the Court of Final Appeal, considered the relationship between ss.6(2A) (which provides that annual leave shall not be included in the length of notice required to terminate a contract of employment) and 41AA(3) of the EO (which provides that annual leave is to be taken at times determined by the employer after consultation with the employee concerned) and held that s.41AA(3), while applying generally during the continuance of employment, did not apply to override the employees ability to utilise his leave entitlement during his notice period. Section 6(2A) was construed as being intended solely for the benet of employees.118 By analogy, the same must be true of s.6(2B) with regard to an employees right to give notice during a statutory maternity leave period. Accrued unused statutory leave to be paid within seven days of termination of employment. If an employee chooses to work out his full notice period, an employer is required within seven days of cessation of the employment to pay the full amount of any accrued unused statutory leave.119 Parties free to agree duration of notice period at common law. Employment contracts which are not subject to the notice provisions of the EO are governed by 6.048
6.049
6.050
6.051
114 115 116 117 118 119
EO ss.6(2A) and (2B). There is an express restriction pursuant to s.15 of the EO on terminating during any maternity leave period. Cheung Siu Ngon v Edge Design Communication Ltd (unrep., DCCJ 19251/2001, [2003] HKEC 269). (2008) 11 HKCFAR 576. (2008) 11 HKCFAR 576 at paras 3846. EO s.41D (1).
208
common law provisions on notice.120 At common law parties may agree upon the duration of any notice period. 6.052 Common law implied term as to reasonable notice where contract is silent on duration of notice period. Where there is no express agreement as to the length of notice, and where no term can be ascertained from custom or trade usage,121 the common law position is that there will be an implied term that the contract may be terminated upon reasonable notice.122 What will be deemed as reasonable notice will depend upon the facts of each case to be determined by reference to matters such as the role of the employee, the sphere of employment, the length of service of the employee and the employees professional standing and qualications.123 As a general rule, the more senior the employee is in terms of his position within the organisation, the longer the period of notice to which he is entitled. For example, for a junior employee two weeks of notice might be reasonable; for a professional employee up to three months of notice; while for a Managing Director or Chief Executive Ofcer what is reasonable may well be to up to one year of notice.124 Fixed-term contract containing no provision relating to notice not subject to implied term. Where a xed-term contract of employment does not provide for early termination, no provision as to earlier termination on reasonable notice can be implied. In AHK Air Hong Kong Ltd v Thomas Gilligan,125 where the employee was engaged under a xed-term contract of employment, the contract consisted of a pro forma document in which the clause relating to termination had been deleted and replaced with the hand-written words two years contract. The Court stated that where there is no specied period, in essence, the law will imply a term of reasonable notice, but went on to nd that the employer had lost its right to terminate on reasonable notice, the implied term having been ousted by the insertion of the words creating the xed term of two years.126 (ii) Form of notice 6.054 Notice may be served either orally or in writing. At common law there is no requirement for notice to be given in writing unless the parties have expressly agreed
6.053
120
121 122
123 124
125 126
Examples of such contracts are xed-term contracts which do not contain any provision for early termination and contracts under which an employee is engaged for less than 18 hours per week. George v Davies [1911] 2 KB 445. McClelland v Northern Ireland General Health Services Board [1957] 1 WLR 594; De Stempel v Dunkels [1938] 1 All ER 238. See Hill v CA Parsons & Co Ltd [1972] Ch 305. In Hill v CA Parsons & Co Ltd (fn 123), the Court of Appeal considered reasonable notice for a professional chartered engineer with 35 years service to be at least 6 months and possibly 12 months. In HW (Cabinets) Ltd v Brindle [1973] ICR 12, a three-month notice period was considered reasonable for a director and company secretary of a small furniture business. [1989] 2 HKC 189 see dicta of Saied DJ. Where there is no specied period, in essence the law will imply a term of reasonable notice. It is however, possible to displace the implied term by the use of an express term in an employment contract, one such express term being the one which xes the duration of the contract. per deputy Judge Saied. See also Club Deluxe Ltd v Club Metropolitan Ltd (unrep., HCA 8339/1990, 28 July 1993) and Club Deluxe Ltd v Club Metropolitan Ltd [1995] 2 HKLR 69. Although the court ultimately held that a xed-term contract with no provision as to notice could have been lawfully terminated by the employee giving one months notice of termination, it did so on the basis of the plaintiffs pleaded case.
209
to such a formality.127 The EO provides that either party to a contract of employment may, subject to certain restrictions,128 terminate the relationship at any time upon serving the requisite notice either orally or in writing.129 Accordingly, a provision in a contract stipulating that notice is required in writing does not negate the validity of a notice given orally,130 although it would be prudent for either party to deliver notice in the form required under the contract in order to avoid an unnecessary dispute on this issue. In any event, where a contract of employment contains a provision that notice must be given in writing the fact that no notice, or no written notice, is given will not prevent a termination from being effective, since a contract of employment may be terminated either in accordance with the terms of the contract, or by its breach.131 Notice of termination must be clear and unambiguous. Notice of termination must be clear and denite to be effective.132 A mere warning of an impending dismissal will not be sufcient to constitute notice. In Chau Chun Man v International Fur Co,133 two notices posted by an employer informing employees that it intended to close its factory were held not to amount to notice of termination. In Querubin Alona Ramos v Chung Shiu Wah,134 a letter of warning from the employer given to the employee was considered insufcient to amount to notice of termination. Conversely, an employer should be careful about the content of discussions with employees regarding termination or potential future redundancies, so as to ensure that an employee is not given the impression that he is being given notice of termination if this is in fact not what is intended.135 Notice of termination must be received by employee personally. Notice of termination must be received by the employee personally to be effective.136 A notice of termination given to an employees union but not to him personally has been held to be ineffective, despite the fact that most of the employees terms of employment were incorporated by reference to the unions collective agreement.137 Even where a notice is sent directly to the address of an employee, notice will not become effective until it has been received or read by the employee: McMaster v Manchester Airport Plc.138 In that case the Employment Appeal Tribunal found there to be no juridical 6.055
6.056
127 128 129
130 131
132 133 134 135 136
137 138
Latchford Premier Cinema Ltd v Ennion [1931] (fn 13). Restrictions upon termination are referred to at fn 187. EO s.6(1). Fixed-term contracts which do not contain any provision for early termination by notice are not covered by the notice provisions of the EO. Such a term is likely to run foul of the contracting out provisions contained in EO s.70. In Anne Fong v Hong Kong Adventist Hospital (fn 21) the plaintiff, who worked as a part-time dental hygienist, was called into meetings to discuss the re-organisation of the employers stafng resources. During the course of discussions which took place she was told that she could apply for a full-time position, and that she could work until a specied date. This was considered to be sufcient to have terminated her employment, despite the fact that the plaintiffs contract of employment provided for notice of termination in writing. Cheung Siu Ngon v Edge Design Communication Ltd (unrep., DCCJ 19251/2001, [2003] HKEC 269). [1981] HKC 333. (unrep., HCME 6/2004, 21 Sept 2004). As was the nding in Anne Fong v Hong Kong Adventist Hospital (fn 21). In a situation where an employee acts in bad faith by avoiding the opportunity to read a letter, it would be open to the employer to argue that the employees date of knowledge should not be determinative: Pacitti Jones v OBrien [2005] SLT 793. Morris v Bailey [1969]2 Lloyds Rep 215. [1998] IRLR 112. See also HKSAR v Govekar Kumuda Damadhar [2008] 5 HKC 123.
210
basis for importing court rules relating to service of documents into the private rights of parties to a contract of employment, thereby rejecting the application of the doctrine of constructive notice or presumed knowledge in this context. The court gave the following advice: If employers wished to know at what point the contract of employment had been terminated, they could best do so by communicating directly with the employee concerned so that they could be satised that the communication of dismissal had indeed been received. 6.057 Distinction can be drawn between employee giving notice of resignation and employer giving notice of termination. Where an employer gives notice of termination, the notice must be directly communicated to the employee; where an employee gives notice to a large company or organisation, the communication need not be to any named individual.139 Parties can agree upon method of service of notice. Alternatively, to achieve a measure of certainty, employers could include an express provision in the contract of employment relating to service of notice; for example, stating that the contract could be terminated by the employer sending a letter of dismissal by rst-class post and that such a letter could be deemed to have been received the next working day. Notice must clearly identify the date of termination. There is no general requirement relating to the form of notice or the words to be used, or the particular day on which notice can be given, although of course the parties may expressly agree upon such provisions. The notice must, however, specify when the termination is to occur, or at least, give sufcient information to allow the employee to infer the date of termination.140 Date from which period of notice starts to run. At common law, notice that has been given orally during a day on which work has been done does not include the day on which the notice is given. The period of notice should be calculated from the beginning of the day after that upon which the notice was given.141 Notice of termination brings contract of employment to an end on date notice expires. A valid notice of termination by either party will have the effect of bringing the contract of employment to an end on the date the notice expires.142 It is a unilateral act, requiring no acceptance by the receiving party.143 Equally, a party cannot refuse to accept a valid notice of termination, or at least such a refusal has no legal consequence. Notice of termination cannot be unilaterally withdrawn. Once made, notice of termination cannot be withdrawn without the mutual consent of the parties,144 save
6.058
6.059
6.060
6.061
6.062
139 140 141 142 143 144
See George v Luton LBC (unrep., Employment Appeal Tribunal, EAT/0311/03/RN, 16 Sept 2003). Morton Sundour Fabrics v Shaw [1967] 2 LTR 84. See also Burton Group Ltd v Smith [1977] IRLR 351. West v Kneels Ltd [1987] ICR 146. HW (Cabinets) Ltd v Brindle (fn 124). Riordan v War Ofce [1959] 1 WLR 1046. Harris & Russell Ltd v Slingsby [1973] ICR 454; Riordan v War Ofce (fn 143).
211
perhaps in circumstances where the words of dismissal are spoken in the heat of the moment and are retracted promptly.145 Contract may terminate prior to the expiry of the notice period. The giving of notice by an employee does not prevent an employer from summarily dismissing the employee during the period of notice (assuming that there are sufcient grounds to do so), thereby bringing the contract of employment to an end prior to the expiry of the notice period.146 Neither does it prevent an employee from claiming constructive dismissal justifying termination without notice.147 Arguably, and perhaps more controversially, there appears to be no reason why an employee may not resign after receiving notice of termination from his employer by exercising his statutory right to make a payment in lieu of the notice148 that he would otherwise be required to give, thereby bringing the contract of employment to an end prior to the expiry of the period of notice given by the employer.149 From a practical perspective, this enables an employee to leave his employer immediately without having to serve the rest of his notice period. (iii) Garden leave Employer permitted to require employee to stay away from workplace if contract contains garden leave clause. A contract of employment may contain a garden leave clause, namely a term permitting the employer to require the employee to remain at home, or at least not come to work, during the notice period.150 An employee who is placed on garden leave continues to be employed by the employer through the notice period in the normal way, and consequently will continue to be bound by his express and implied duties including the duties of good faith, delity and condentiality. Garden leave clauses are generally used by an employer to prevent employees from joining a competitor and at the same time to keep such employees away from the employers day to day operations with access to condential information. Absence of garden leave clause may entitle employee to continue working. At common law, in the absence of an express garden leave provision, an employer is not 6.064 6.063
6.065
145
146
147
148 149
150
In Martin v Yeoman Aggregates Ltd [1983] ICR 314, a retraction within ve minutes of an angry outburst was held sufcient to negate the dismissal despite the employees insistence that he had been dismissed. In Archer v Hong Kong Channel Ltd (unrep., CACV 155/1997, [1998] HKLRD (Yrbk) 350), the English Court of Appeal expressed doubt as to whether an employee could be summarily dismissed after the employees employment had already been terminated by the making of a payment in lieu of notice. See s.8(b) of the EO which expressly preserves the right of a party to terminate the contract without notice or payment in lieu of notice under ss.9, 10 or 11(2). A right conferred under s.7(IA) of the EO. In Pak Yuk Kay v Tsang Yuk Sim [1992] 1 HKC 381, the court regarded there to have been at least an arguable case of wrongful dismissal in circumstances where the employee had given a months notice but whose employment was terminated prior to the end of the notice period. The employee was simply told by her employer not to come back to work. The employers actions are likely to have been regarded differently if the employer had terminated the employment by making a payment in lieu of the one-month notice period. An employer can choose to place an employee on garden leave regardless of which party served notice of termination. Although see Seapower Resources International Ltd v Lau Pak Shing (unrep., HCA 10715/1993, [1993] HKLY 828) in which the court regarded enforced garden leave with reduction in pay to have been grounds for the employee to have claimed constructive dismissal.
212
permitted to place an employee on garden leave where the employees skills require frequent exercise for their enhancement and preservation.151 6.066 Garden leave provision may be circumvented by payment in lieu of notice. There have been a number of English cases in which the court has been willing to grant an injunction to an employer in order to prevent its employee joining a competitor during the period of a garden leave.152 However, in Hong Kong, the ability of an employer to keep an employee from joining a competitor through a garden leave clause is limited by the employees statutory right to buy out his notice period by making a payment in lieu of notice.153 (iv) Payment in lieu of notice 6.067 Contract may be terminated by payment in lieu of notice. The EO confers upon either party to a contract of employment the right to terminate the contract without notice by agreeing to pay to the other party a payment of wages154 in lieu of notice.155 The statutory right to buy out a notice period is available to either party, regardless of whether it is expressly provided for as a term of the contract. The statutory requirement to make, or the entitlement to receive, full payment of the wages which would have been earned during the relevant period is not subject to the common law rules of mitigation or proof of actual loss.156 Right to make a payment in lieu conferred on both employer and employee. Unlike the position in many other common law jurisdictions,157 in Hong Kong, an employee as well as an employer has a statutory right to make a payment in lieu of notice, thereby enabling him to resign with immediate effect. This can be useful to an employee who wishes to leave employment immediately upon communicating his resignation to his employer. In practice this is used most commonly by employees wishing to join a competing employer; an employee can inform his employer of his resignation one day and be employed by a competing enterprise the very next day.158 Parties not permitted to contract out of right to make payment in lieu, but may waive such a right at the time notice is required. Given that the ability to terminate the contract of employment by making a payment in lieu of notice is a right conferred by statute any contractual term purporting to restrict its exercise would be
6.068
6.069
151
152
153 154 155 156 157
158
In William Hill Organisation Ltd v Tucker [1998] IRLR 313, the English Court of Appeal held that the employer had a duty to provide the employee with work during his notice period. Whether such a duty exists in a contract of employment will depend upon the facts of each case. See also Provident Financial Group and Whitegate Estates Agency v Hayward [1989] 3 All ER 298. For example, Symbian Ltd v Christensen [2000] IRLR 77; Evening Standard Co Ltd v Henderson [1987] ICR 588. In practice, the cost of such payments is often borne by the employees new employer. As dened in EO s.2. EO s.7(1A). Yip Wan Chiu v Magnicent Industrial Ltd [1974] HKLR 183. In most common law jurisdictions the right to make a payment in lieu of notice is governed by the contract of employment and generally granted to the employer only. In HSBC Bank Plc v Wallace [2008] 1 HKLRD 613, an employees attempt to rely upon s.70 of the EO in order to displace an express term of the contract which required that he give six months notice to his employer was unsuccessful in light of the courts nding that his contract was governed by English law (which does not confer a statutory right to make a payment in lieu of notice), not the laws of Hong Kong.
213
unenforceable, falling foul of s.70 of the EO as operating to reduce or extinguish an employees statutory entitlements.159 However, either party may waive its right to receive a payment in lieu of notice, but this right may only be waived at the time the notice is required to be given.160 (a) Effect of payment in lieu of notice Payment in lieu of notice terminates contract with immediate effect. A payment in lieu of notice will have the effect of bringing the contract of employment to an end immediately. Payment in lieu of notice can be made unilaterally. This was not always a universally accepted view; there are a few decisions at District Court level which regarded payment in lieu of notice as requiring mutual agreement.161 However, the matter has been put to rest by the Court of Final Appeal in Kao Lee & Yip (a rm) v Lau Wing162 which construed the wording agreeing to pay to the other party163 as not requiring the consent or acceptance by the other party.164 A promise to pay is sufcient to terminate contract. Agreeing to pay the other party to the contract of employment a payment in lieu has also been construed as meaning that a promise to pay is sufcient, and that actual payment need not be accepted by the other party for termination to be effective.165 Where a promise to pay has been given but no payment or an insufcient payment has been made, the termination will still be effective, albeit not in accordance with s.7 of the EO. In such circumstances the dismissal, although effective to determine the contract, would have been wrongful, entitling the other party to compensation under s.8A of the EO.166 On a strict construction of the wording in s.8A, it is clearly anticipated that the other partys entitlement to be paid damages equal to that which they would have been entitled to as a payment in lieu for either the entire notice period, or any unexpired part thereof, arises after the contract has already been terminated.167 In other words, termination of the contract is not dependant upon the payment in lieu having actually been made or received. Payment in lieu due from employee can be lawfully deducted from moneys owed to employee. Where an employee defaults on making a payment in lieu the employer can lawfully deduct the amount that ought to have been paid in lieu of notice from any sum due to the employee.168 6.070
6.071
6.072
159 160 161 162 163 164 165
166 167 168
EO s.70. EO s.8(a). See Ng v Luk Siu Fun [1987] 1 HKC 427. For example, see judgment of McMillan J in Yip Wan Chiu v Magnicent Industrial Ltd (fn 156). (2008) 11 HKCFAR 576. Contained in EO s.7(1). See also Kao Lee & Yip v Lau Wing & Tsui Wai Yu [2007] 3 HKLRD 365. See ICAP (Hong Kong) Ltd v BGC Securities (Hong Kong) LLC [2005] 2 HKLRD 349. See also the judgment of Mr Justice Ribeiro PJ in Kao Lee & Yip (a rm) v Lau Wing (2008) 11 HKCFAR 576 in which he construed the words agreeing to pay as being apt to describe a termination brought about by either party promising or undertaking to pay without having to secure or wait for the cooperation of the other. See observations of Le Pichon J in Matilda & War Memorial Hospital v David Henderson [1997] HKLRD 356. See EO s.8A (1) and (2). EO s.25(3).
214
6.073
Relevant date of termination for purposes of statutory entitlements. It should be noted that for the purposes of ascertaining the relevant date of termination of employment under the EO (for example, for determining eligibility to long service leave or a severance payment) the termination of an employee is deemed to take effect on the date up to which wages in lieu of notice are calculated.169 Parties may make a part payment in lieu of notice. Once a party has given notice of termination in accordance with s.6 of the EO, it may any time thereafter terminate the agreement before the end of the notice period by agreeing to make a payment in lieu proportionate to the amount due in respect of the unexpired notice period.170 The wording of the Ordinance suggests that any election to make a part payment in this manner is only available to the party who has given notice. However, this does not preclude a party who has received notice of termination from making a payment in lieu of the full notice period which they are required to serve in order to terminate the employment prior to the expiry of the notice period served by the other party. By way of illustration, if an employer has given notice of termination, an employee may resign during the period of that notice by making a payment in lieu of the notice that he would otherwise be required to give. The result is that the employment relationship would come to an end by reason of resignation before the termination could be effected by reason of dismissal. This may be useful or important to an employee who prefers to characterise their termination as a resignation rather than a dismissal termination. Right to make a payment in lieu of notice at common law governed by terms of the contract. At common law the right to make a payment in lieu of notice only arises if it is an express or implied term of the contract, and any claim for damages will be compensatory in nature, requiring the party to prove loss occasioned by the termination and satisfy the requirement of mitigation. (b) Calculation of payment in lieu of notice
6.074
6.075
6.076
Commission to be included in calculation of statutory entitlements. Prior to the coming into force of the Employment (Amendment) Ordinance 2006 payments in lieu of notice were calculated by reference to the hypothetical amount of wages the employee would have earned during a relevant period of notice had the employment been terminated on notice. Given the broad denition of wages set out in the EO, there was some uncertainty as to whether certain payments were to be included in the denition of wages, in particular whether commission payments which an employee might have earned during a notice period should be included. Indeed, it was common practice among employers in Hong Kong to include only base salaries in calculating payments in lieu of notice. The matter came to a head in Lisbeth Enterprises Ltd v Mandy Luk171 in which the Court of Final Appeal, called upon to consider the question of whether commission payments fell within the statutory denition of wages for the purposes of calculating holiday pay and annual leave pay, held that commission payments were not to be included in the denition of wages for these purposes.
169 170 171
See Archer, Harold Dean v The Hong Kong Channel Ltd (199798) 1 HKCFAR 298. See EO s.7(2). (2006) 9 HKCFAR 131.
215
In response to widespread criticism of the decision, the Labour Department proposed a legislative amendment in the form of the Employment (Amendment) Ordinance 2006. As a result of the amendment, it is now clear that all components of wages, including contractual commission, should be included in the calculation of statutory entitlements. Calculation of payment in lieu of notice. The calculation of a payment in lieu of notice is prescribed by the EO in the following terms:172 where the length of notice required to terminate the contract under s.6 of the Ordinance is a period expressed in days or weeks, the sum is calculated by multiplying the number of days in the period for which wages would normally be payable to the employee by the daily average of the wages earned by the employee during either the period of 12 months immediately before the date on which the party terminating the contract gives notice of termination to the other party or, if the employee has been employed by the employer concerned for a period shorter than 12 months immediately before the date of notice of termination, the shorter period.173 Where the length of notice required to terminate the contract under s.6 is a period expressed in months, the sum is calculated by multiplying the number of months required by the monthly average of the wages earned by the employee during either the period of 12 months immediately before the date of the notice of termination or, if the employee has been employed by the employer concerned for a period shorter than 12 months immediately before the date of notice of termination, the shorter period.174 Calculation of payment in lieu of notice to exclude days on which employee not paid wages or wages in full. In calculating a daily or monthly average for these purposes, an employer must not take into account the following periods: any period for which an employee was not paid or not paid in full on account of being on maternity leave, a rest day, sickness day, holiday or annual leave day; any leave day taken with the agreement of his employer; any normal working day on which he was not provided with work by his employer; any absence form work due to temporary incapacity for which workers compensation is payable under s.10 of the Employees Compensation Ordinance. Any wages paid to an employee for those periods should be disregarded.175 Any day for which an employee was paid a fraction of his normal wage should also be disregarded.176 Calculation of payment in lieu of notice not conned to base salary. It is not sufcient to merely make a payment of an employees base salary as a payment in lieu of notice. Wages is dened in s.2 of the EO as including: All remuneration, earnings, allowances including traveling allowances and attendance allowances, attendance bonus, commission, overtime pay, tips and service charges, however designated or calculated, capable of being expressed in terms of money, payable to an employee in respect of work done or to be done under his contract of employment. 6.077
6.078
6.079
172
173 174 175 176
The method of calculation was introduced by the Employment (Amendment) Ordinance 2006 which came into effect on 13 July 2007, with the exception of s.16 which came into effect on 13 Jan 2008. EO s.7(1A)(a). EO s.7(1A)(b). EO s.7(1B). EO s.7 (1C).
216
6.080
Alternative method of calculation where impracticable to calculate daily or monthly average. If it is impracticable to calculate the daily average or monthly average of the wages as provided for in the section, the amount may be calculated by reference to the wages earned by a person who was employed at the same work by the same employer during the period of 12 months immediately before the date of notication or, if there is no such person, by a person who was employed in the same trade or occupation and at the same work in the same district during the period of 12 months immediately before the date of notication.177 Exclusion of certain categories of payment from denition of wages. Section 2 of the Ordinance expressly excludes from the denition of wages 11 categories of payment, including any commission or annual bonus which is of a gratuitous or discretionary nature, any attendance allowance or bonus which is of a gratuitous or discretionary nature, or any end-of-year payment or portion thereof which is payable under the EO.178 Overtime not included in calculation of payment in lieu, unless paid regularly or monthly average amounts to at least 20 per cent of monthly average wage. Wages is deemed not to include overtime pay unless it is overtime pay of a constant character or the monthly average of which over a period of 12 months (or if not applicable, such shorter period of employment) immediately preceding the date on which the termination takes effect is equivalent to or exceeds 20 per cent of the employees monthly average wages during the same period. (v) Reason for dismissal
6.081
6.082
6.083
No requirement for employer to provide employee with reason for termination. There is no common law or statutory duty requiring an employer to provide the employee with reasons for the dismissal at the time of termination.179 Reason for dismissal not relevant? Unless the reason for a dismissal can be shown to be for a prohibited reason under the EO or employment-related legislation,180 or based on prohibited grounds under one of the discrimination ordinances,181 or the employee
6.084
177 178 179 180
181
EO s.7 (1D). For a full list of the 11 categories of payment, see Chapter 4, para 4.013. Reda v Flag Ltd [2002] IRLR 747, applied in Sun Zhongguo v BOC Group Ltd [2003] 2 HKC 239. An employer is prohibited from terminating the following categories of employees: an employee who is pregnant or on statutory maternity leave (EO s.15); an employee on statutory paid sickness leave (EO s.33 (4B)); an employee who has suffered an injury and is entitled to workers compensation (Employees Compensation Ordinance (Cap.282) s.48); an employee engaging in trade union activities by reason of such engagement (EO s.21B(2)); an employee who has given evidence or information in proceedings or inquiries into a breach of the EO or a work-related accident or for a breach of safety regulations (EO s.72B and Factories and Industrial Undertakings Ordinance (Cap.59) s.6). These provisions are discussed in Chapter 7, s.1(e) paras 7.023 to 7.047. The Sex Discrimination Ordinance (Cap.481) prohibits discrimination on the grounds of sex, pregnancy and marital status; the Disability Discrimination Ordinance (Cap.487) prohibits discrimination on the grounds of disability; the Family Status Discrimination Ordinance (Cap.527) prohibits discrimination on the grounds of family status; and the Race Discrimination Ordinance (Cap 602) prohibits discrimination on the grounds of race, colour, descent or ethnic or national origin. In Yuen Wai Han v South Elderly Affairs Ltd [2005] 2 HKLRD 277 (Court of Appeal Judgment in ChineseEnglish translation of the Chinese headnote), the employer who had agreed to employ the plaintiff purported to terminate the contract one week before she was due to commence employment. The court found that the employer had terminated the employment contract after learning that the plaintiff was pregnant in contravention of the Sex Discrimination Ordinance. Further examples of dismissals falling foul of the provisions of these Ordinances are discussed in Chapter 8.
217
has been employed under a continuous contract of employment for a minimum period of 24 months, if the required notice or payment in lieu of notice under the EO is given then the contract is terminated lawfully it has been held to be irrelevant whether the employer has terminated the employment contract for a bad reason, or indeed no reason at all.182 However, it is safe to say that this is an area of law which is developing. In Tadjudin v Bank of America National Association183 the employee claimed that the timing of her dismissal had been orchestrated to avoid the payment to her of a discretionary bonus. Her pleaded case relied upon, inter alia, an implied term that the employer would not exercise its right to terminate her employment by giving one months notice in writing or by paying one months salary in lieu of notice in order to avoid her being eligible for the employers performance incentive programme. The Court of Appeal allowed the employees interlocutory appeal against a strike out application which was granted at rst instance on the grounds that there was no justication in allowing an implied term which could have the effect of cutting down the clear statutory right of termination without cause as provided for by ss.6 and 7 of the EO. The Court held that it was inappropriate where an emergent legal principle was at stake to have the matter decided favourably at an interlocutory stage without the benet of full legal argument based on the facts established at trial. Stone J rejected counsels submission on behalf of the employer that the EO represented the current high watermark of employee protection, beyond which courts should not venture, and in accepting the employees contention that the EO constituted no more than the lowest common denominator made the following observation: the statute represents that which, for want of a better term, constitutes an irreducible minimum in terms of employee protection, and I fail to see why its terms necessarily preclude development of the common law if ultimately thought appropriate, via implication of the protective implied terms contended for by the plaintiff. as a matter of public policy the statute itself neither could constitute nor be invoked as a barrier in excess of the protection afforded by the express terms of that Ordinance.184 Statutory requirement for employer to justify reason for dismissal if employee has been employed for at least 24 months. Where an employee has been employed under a continuous contract185 for a period of at least 24 months (the qualifying period), 6.085
182
183
184 185
In Sun Zhongguo v BOC Group Ltd (fn 179), the court held that the rights of the parties under ss.6 and 7 of the EO were statutory rights which could not be limited by any implied contractual term of the contract, including one relating to mutual trust and condence, nor could such rights be invalidated by an alleged ulterior ill motive on the part of the party exercising their statutory right. See also Cheung Chi Keung v Hospital Authority [2006] 2 HKLRD 46 in which Deputy Judge A. To held that the right to terminate on notice may be exercised unreasonably or even capriciously (at p 89 CD). [2010] 3 HKLRD 417, CA applying Takacs v Barclays Services Jersey Ltd [2006] IRLR 877 in which it was held that it was possible to imply into an employment contract a term to the effect that an employers express power to terminate or to dismiss must not be exercised in order to deprive an employee of a benet expressly conferred by the contract. See fn 183 at paras 1114 of the judgment. Dened in EO Sch.1 s.3.
218
there is an obligation upon an employer to justify the reason for dismissal. However, even if this qualifying period is met there is no statutory requirement to inform an employee of the reason for termination at the time of termination. 6.086 Presumption that employer has terminated contract in order to extinguish or reduce any right, benet or protection awardable under the EO, unless employer can show a valid reason. In cases where the qualifying period has been met, the employer is presumed to have terminated the employment186 in order to extinguish or reduce any right, benet or protection awardable under the EO, unless the employer can show a valid reason.187 Employer must show that termination or variation of contract was for one of ve valid reasons. Section 32K of the EO provides ve categories of valid reason for these purposes: (1) (2) (3) (4) the conduct of the employee; the capability or qualications of the employee for performing work of the kind which he was employed by the employer to do; the redundancy of the employee or other genuine operational requirements of the business of the employer; the fact that either the employee or the employer or both would be in contravention of the law if the employee were to continue in the employment of the employer; and any other reason of substance, which, in the opinion of the court or the Labour Tribunal, was sufcient cause to warrant the dismissal of the employee.
6.087
(5)
In practice, these reasons give an employer wide scope within which to justify a dismissal. 6.088 In the event that an employer is unable to show a valid reason, the termination or variation is deemed to be unreasonable. A tribunal or court has a wide discretion to determine whether or not a termination is or is not unreasonable. However, any termination that does not t into one of the ve categories referred to above will be regarded as not having been terminated for a valid reason, enabling the employee to make a claim for unreasonable dismissal.188 Court will consider predominant reason for dismissal. In Warham v Cathay Pacic Airways,189 Reyes J observed that in order to ascertain the true reason for an employees dismissal a court will need to embark upon an objective consideration
6.089
186 187 188 189
The section also applies to variations to the terms of the contract of employment. EO s.32A(1)(a). See Chapter 7 paras 7.053 to 7.075. (unrep., HCMP 4400/2001, HCA 2822/2002, 299, 1405/2006, 807/2007, [2009] HKEC 1848). The employer in Warham had attempted to rely on alleged misconduct on the part of the employees, including malingering and anti-social conduct. The court found no credible evidence of the allegations of misconduct and held that the employees had been dismissed predominantly, albeit not solely, for supporting the union.
219
of the relevant circumstances surrounding a dismissal. Where an employer acts from a variety of motives (including the conduct of an employee), the court must ascertain the predominant motive behind the employers decision to dismiss. If the employees conduct plays only an incidental role in the decision, or the conduct complained of is trivial, the conduct will not be sufcient to qualify as a valid reason within s.32 K of the EO. Statutory duty to have regard to all surrounding circumstances. A tribunal or court has a statutory duty to have regard to all the surrounding circumstances to determine whether or not the reason for the termination was valid,190 including the length of time that the employee has been employed under the contract of employment as compared to the length of qualifying service required for the right, benet or protection conferred by the EO which is capable of being extinguished or reduced by reason of the termination.191 If employer is able to prove valid reason for termination, statutory presumption is rebutted without additional discretionary consideration as to whether it was reasonable to have terminated the contract, or whether a fair process was followed. The correct approach to adopt when considering whether a reason for dismissal was a valid reason within the meaning of s.32K was considered in Thomas Vincent v South China Morning Post Publishers Ltd.192 The Court of Final Appeal compared the approach to the position under the employment legislation in the United Kingdom where, in determining whether a dismissal was fair or unfair, the tribunal had to have regard to whether an employer had acted reasonably or unreasonably in treating the reason for dismissal as a sufcient reason for dismissing the employee, and thereby had to refrain from substituting its own decision for that of the employer. Bokhary PJ, delivering the judgment of the Court of Final Appeal, rejected the trial judges adoption of the UK band of reasonable responses approach. Having considered the provisions of the EO to be materially different to the provisions of the UK Employment Rights Act, he went on to dene the correct approach to the Hong Kong provisions: rst, in order to come within s.32K of the EO a reason must be true. In other words, the reason must be really why the employee was dismissed.193 Where conduct is the reason given for dismissal, the conduct of the employee must not be triing; the less serious the conduct, the harder it will be for the employer to prove that it was the reason behind the dismissal rather than a pretext for the dismissal. Second, there is no discrete requirement with regard to process, namely there is no need to show that the process by which the decision had been arrived at was fair or reasonable. However, Bokhary PJ went on to register the following note of caution: Of course this does not mean that an employer can safely proceed in an arbitrary manner. If the manner of an employees dismissal was arbitrary then such 6.090
6.091
190 191 192 193
EO s.32L(1). EO s.32L(2). (2005) 8 HKCFAR 605. See Lam Yau Kuen v Easy (Hang Fung) Transportation Co Ltd (unrep., DCCJ 1/2006, [2006] HKEC 2218) in which the employers reason for dismissal (insubordination) was not accepted as being the real reason for the termination.
220
arbitrariness could make it more difcult for his employer to show a valid reason for the dismissal.194 6.092 Implied common law duty to maintain mutual trust and condence does not extend to dismissal. At common law, provided contractual or, in the absence of an express contractual notice period, reasonable notice is given, the contract is terminated lawfully regardless of the reason for termination.195 In Johnson v Unisys Ltd,196 the House of Lords held that the implied common law duty to maintain mutual trust and condence applied to ongoing employment relationships, but did not extend to a dismissal itself.197 The House of Lords held that it would be inappropriate for the judiciary to extend the common law in circumstances where Parliament had already provided a system for redress via the employment tribunal system. Semana Bachicha v Poon Shiu Man. As for the position in Hong Kong, in Semana Bachicha v Poon Shiu Man,198 a case involving a domestic helper who was badly treated by her employer and forced to leave her employment, the Court of Appeal held that the conduct of the employer amounted to both constructive dismissal and breach of the implied term that the employer will not engage in conduct likely to undermine the trust and condence integral to the employment relationship. It was further held that apart from damages for wrongful dismissal measured by one months salary in lieu of notice, the employee was also entitled to damages to the extent that she had suffered additional pecuniary loss that was not too remote as a result of the defendants breach of the implied trust and condence term. The claimant was awarded loss of a chance of earnings for a period in which she did not have the permission of the Immigration Department to seek alternative employment. Hong Kong law developing in line with Johnson v Unisys? Despite the Court of Appeals decision in Bachicha, it appears that Hong Kong law is developing in line with the Johnson v Unisys decision.199 In Ko Hon Yue v Liu Ching Leung,200 Carlye Chu J held that there were difculties in extending the implied duty of mutual trust and condence to dismissal. He considered the Bachicha case (which he noted was decided before the Johnson v Unisys case), and concluded that while it recognised the existence of an implied term of trust and condence in the context of an employment contract, it did not establish an implied duty on an employer to act in good faith towards his employee when exercising the power of dismissal or termination of the
6.093
6.094
194 195 196 197 198 199
200
At p 271 para D. Reda v Flag Ltd (fn 179). [2003] 1 AC 518. [2003] 1 AC 518. [2000] 2 HKLRD 833. See Lee Pik Shan v Healthy Children (Hong Kong) Fund Ltd (unrep., DCCJ 17054/2000, [2001] HKLRD (Yrbk) 211) in which the Bachicha case was considered to be a decision decided on its peculiar facts; Sun Zhongguo v BOC Group Ltd (fn 179); and Cheung Chi Keung v Hospital Authority (fn 182). However, note the recent Court of Appeal decision of Tadjudin v Bank of America National Association (fn 183) The court distinguished Johnson v Unisys (fn 196) on the grounds that the effect of the implied term in that case was different. In Tadjudin what was contended for was an implied term which protected against tactics on the part of an employer to avoid payment of a performance bonus, rather than an implied term which was protective of the employees interest in remaining employed, as was the case in Johnson v Unisys. (unrep., HCA 3494/2003, [2008] HKEC 1314).
221
employment. Echoing the rationale of the House of Lords in the Johnson v Unisys case, Carlye Chu J made the following observation: In Hong Kong, the protection against wrongful dismissal or termination is contained in the Employment Ordinance. The extent of the statutory protection is limited, as it is concerned only with the giving of due and proper notice for termination. There is no provision for awarding damages for the period after dismissal, except for any notice period that is required. As such the legislative intent is not to confer remedies for loss owing from the unfair manner in which an employee is dismissed. In my view, it will not be appropriate for the courts to develop the common law to provide remedy for unfair circumstances attending dismissal.201 A similar approach was taken by the court in the earlier case of Karchoud v Incorporated trustees of the Islamic Community Fund of Hong Kong202 in which Deputy Judge Lam held that a common law claim for a breach of the implied term could not succeed in the context of a dismissal having regard to remedies already provided by the legislature in the form of employment protection under the EO. Implied common law duty to maintain mutual trust and condence likely to apply to events leading up to dismissal. The implied duty is, in any event, likely to apply to the events and processes leading up to a dismissal. In the English House of Lords decisions of Eastwood v Magnox Electric Plc and McCabe v Cornwall CC,203 the claimants were able to bring a cause of action at common law (in addition to and distinct from their statutory claims for unfair dismissal) for breach of the implied term of mutual trust and condence based on events happening before their actual dismissal, namely lengthy and stressful disciplinary proceedings. In Ko Hon Yue,204 Carlye Chu J having considered the Eastwood case conceded that it was possible that an employee might have, before his employment was terminated, acquired an independent cause of action for breach of the implied term of trust and condence, from which pecuniary loss owed directly.205 In such a case, subject to the rule against double recovery, the employee could bring a claim for the loss.206 What in practice may prove difcult, and indeed this point was acknowledged by the House of Lords in Eastwood, 207 is the task of drawing the line between events leading up to dismissal and the dismissal itself. Another signicant and perhaps unfortunate outcome of following the Eastwood decision is that an employer could escape liability for damages for 6.095
201 202 203 204 205
206
207
At para 171 of the judgment. [2003] 4 HKC 79. [2005] 1 AC 503. Fn 200. See also Tadjudin v Bank of America National Association (fn 183) for an example of an implied term which was aimed at the tactics of the employer leading up to dismissal. Based on the facts of the case the employee was not found to have acquired an independent cause of action in relation to a breach of trust and condence prior to the dismissal. See the comments of Nicholls LJ.
222
breach of the implied term by simply acting expediently in dismissing the employee without recourse to any disciplinary hearing or other process of investigation.208 (vi) Resignation of employee 6.096 Employment may be terminated by resignation of employee. An employee terminating the employment relationship, whether summarily or on notice, or by payment in lieu of notice, is generally referred to as having resigned. A resignation may be express or implied. An express resignation can be given orally or in writing. An implied resignation may take effect by words or conduct of the employee, such as failing to return from leave, or abandoning his position. However, an employer should be certain of the intent of the employee to resign prior to taking further steps to terminate the employment relationship.209 From a practical perspective, it is good practice to require an employee to put a resignation into writing, and to ascertain and make a record of the reason for the resignation. Employee not required to provide employer with reason for resignation. There is no obligation upon an employee to give a reason for his resignation, but if there is a reason connected with the prior conduct of the employer, an employee may seek to claim constructive dismissal. Employee may include statutory leave period in notice period. As discussed above, an employee can give notice over a period which includes accrued statutory annual leave entitlement or maternity leave, or elect to include a period of statutory annual leave or maternity leave in the notice period.210 Employee may resign with immediate effect by making payment in lieu of notice. As discussed above, an employee may resign with immediate effect upon making a payment in lieu of notice to his employer.211 Such a method of resignation does not need to be made in agreement with the employer, and the termination will be effective regardless of whether the employer either accepts the resignation or the payment in lieu of notice.212 Employer may still be liable for severance or long service payment where employee is made to resign. Where an employer gives notice to an employee requiring the employee to resign or giving the option to resign or be dismissed, and the employee
6.097
6.098
6.099
6.100
208
209
210 211 212
See the comments of Lord Steyn at paras 3940 of the judgment of the House of Lords, citing the case of Gogay v Hertfordshire C C [2000] IRLR 703 which illustrates this point. Steel v Union of Post Ofce Workers [1978] 1 WLR 64. In Barclay v Glasgow City Council [1983] IRLR 313, the court refused to nd that the employee had resigned in circumstances where the employee was retarded and the words were said in the heat of the moment after an argument. By contrast, in Sovereign House Security Services Ltd v Savage [1989] IRLR 115, the employee, who was told he was being suspended pending police investigations into the theft of money from his employers ofces, told his superior that he was jacking it in. The Court of Appeal held that the employer was entitled to treat the words as amounting to a resignation. See para 6.049. See para 6.068. Note, however, the case of Chin Kwok Chung Tony v Hello Partner (International) Co Ltd (unrep., DCCJ 1389/2009, [2010] HKEC 1037) in which a letter of resignation which was tendered by the employee was unequivocally rejected by the employer. Although as a matter of employment law this must be open to doubt, the decision can be explained on other grounds, as the court also found that the employment had continued as a matter of fact. That is, both employer and employee continued to perform their obligations under the contract following the employers purported lack of acceptance.
223
tenders his resignation as a consequence, a court is likely to categorise the termination of employment as a constructive dismissal rather than a resignation.213 The situation would be different in circumstances where the employer wishes to give an employee the genuine option of being able to resign rather than be dismissed, for example, in order to save face or to represent to a future employer that the termination was as a result of his resignation rather than dismissal. In Chu Hei Man v Dynasty World Holdings Ltd,214 an employees resignation made after she had been given a choice between resigning and being given a reference, or being summarily dismissed without a reference, was found to have been made voluntarily. What appears to be the distinguishing feature of this case is the fact that the resignation was found to have been brought about, not by the threat of dismissal, but by other factors such as the offer of a reference and that it was regarded as being better for her to say to any prospective employer simply that she had resigned rather than she had been sacked.215 (h) Without notice by either party (i) Summary dismissal by employer Summary dismissal by employer. An employer is entitled to dismiss an employee summarily (i.e. without notice and with immediate effect) if the employee has committed a fundamental breach of the contract.216 Summary dismissal should be regarded as a strong and extreme measure, to be justied only in very exceptional cases.217 The onus of proof is on the employer to establish that the summary dismissal is justied.218 Is conduct sufciently grave to amount to a repudiation of the contract? In assessing whether or not any conduct on the part of the employee justies a summary dismissal, the question is whether the act or acts complained of are of a sufciently serious nature as to amount to a fundamental breach of the contract. Put another way, has the employee committed an act of gross misconduct? The acts of the employee must go to the root of the contract so as to indicate an unwillingness to be bound by the original terms of the contract.219 Serious misconduct capable of justifying summary dismissal. The most common ground for summary dismissal arises where the employee has committed an act of 6.101
6.102
6.103
213
214 215
216
217 218
219
Stephenson v London Joint Stock Bank Ltd (1903) 20 TLR 8; Penprase v Mander Bros Ltd [1973] IRLR 167; Scott v Formica Ltd [1975] IRLR 1404. Contrast the position where an employer hires and rehires the same employee under a succession of contracts, each of which is less than 24 months duration, so as to avoid liability for severance or long service payment: Wong Man Sum v Wonderland Seafood Restaurant (fn 21). (unrep., HCLA 58/1999, [2000] HKEC 33). See also Shefeld v Oxford Controls Co Ltd [1979] ICR 396: the English Employment Appeal Tribunal held that where an employee is threatened that if he did not resign he would be dismissed and the threat caused the resignation it amounted to a dismissal in law; but where the resignation is brought about not by the threat of dismissal but by other factors such as the offer of nancial benets, there is no dismissal. In that case the employee had agreed satisfactory terms upon which he was prepared to resign so that the threat of dismissal was not in fact found to be the cause of his resignation, and accordingly he was held to have not been dismissed. Laws v London Chronicle (Indicator Newspapers) Ltd [1959] 1 WLR 698 (see judgment of Lord Evershed MR); So Ching v Kwan Hang Ching [1987] 2 HKC 297. Yeung J in Sampayan v Ho Hang Sheung (unrep., HCME 6/1998, [1998] HKEC 215). London Transport Executive v Clarke [1981] ICR 355; Li Shuk Man v Ho Wai Ling (unrep., HCA 5446/1996, [2000] HKEC 591); Wong Yick Fook v Urbis (HK) Ltd (unrep., HCA 4107/2000, [2002] HKLRD (Yrbk) 434). Law Ying Chung v Lo Chun Kie (unrep., CACV 28/2004, [2005] HKEC 359).
224
gross misconduct.220 What amounts to gross misconduct is a question of fact, which will depend upon the circumstances of each case, the nature of the employment and the nature of the responsibilities and of the tasks being performed, the standards and norms of the industry or profession within which the employment takes place, the terms of the particular contract of employment, and the social conditions prevailing at the time of the contract.221 To this extent previous case law can give some guidance but is of limited precedent value. 6.104 Serious dishonesty capable of justifying summary dismissal. Cases involving serious dishonesty tend to justify summary dismissal.222 Vague, unfounded and undocumented allegations or complaints of a trivial nature are not enough to justify summary dismissal.223 The standard of proof in disciplinary proceedings is that which is applicable in civil cases, namely on a balance of probabilities.224 However, it should be noted that the more serious the allegation, the stronger should be the evidence before the court concludes that the allegation is proved.225 Act of dishonesty will not automatically justify summary dismissal. In Tse Ka Wo v Hong Kong Quality Assurance Agency,226 an employees deliberate falsication of a date for a clients audit at the clients request was held to be not sufcient to justify summary dismissal where the act was considered to be carried out for the sake of convenience, for no personal gain and no harm could come of it. The court considered there to be degrees of dishonesty and held that summary dismissal is only justied where the dishonest act complained of constitutes a repudiation of the contract of employment. Conviction of a crime may only justify summary dismissal if the criminal activity involved in the commission of the crime is inconsistent with the proper performance of the employees duties.227 Where it can be shown that the employees conduct has interfered with or prejudiced the safe and proper performance of the employers business, summary dismissal is more likely to be justied.228 In the case of Yau Luen Transportation Co Ltd v Kwok Fu,229 the fact that they intended to deceive their employer (albeit not for personal gain) and that future customers of the
6.105
220 221
222
223 224
225
226 227 228 229
See, for example, AHK Air Hong Kong Ltd v Gilligan (fn 27). Jupiter General Insurance Co Ltd v Schroff [1937] 3 All ER 67; Wilson v Racher [1974] ICR 428; Chung Man Chiu v Ad-Link Communications Ltd [2003] 1 HKC 217. See Sinclair v Neighbour [1967] 2 QB 279 where a betting shop manager took money from the till for his personal use; Ng Ai Kheng v Open University of Hong Kong [2006] 2 HKLRD 228, a case in which the employee had not performed monitoring of assignment marking for some courses but had implied in the course reports submitted to the Dean that the work had been done. See also Chan Kan Ip v Kone Elevators International (China) Ltd (unrep., HCA 19518/1999, [2002] HKEC 391) in which the employer was held to be justied in summarily dismissing employee who had submitted false expense claims. McGuire v AGW Holdings Ltd [2004] 2 HKLRD 869. See the judgment of Bokhary PJ in A Solicitor v The Law Society of Hong Kong [2008] 2 HKLRD 576 at p 623, para 116. Ng Ai Keng v Open University of Hong Kong [2006] 2 HKLRD 228; HKSAR v Lee Ming Tee and Securities and Futures Commission (Intervener) (2003) 6 HKCFAR 336. [2004] 1 HKLRD 899. Securicor Guarding Ltd v R [1994] IRLR 633. See Law Ying Chung v Lo Chun Kie (fn 219). (unrep., DCCJ 2/1974, 26 Mar 1974).
225
plaintiff company might not wish to do business with the employer was considered sufcient to justify summary dismissal.230 Breach of duty of good faith and delity on part of employee capable of justifying summary dismissal. Summary dismissal has been held to be justied where an employee acts in breach of his duties of good faith and delity by engaging in a side business in direct competition with his employer,231 or in breach of his duty of condence by disclosing trade secrets. Taking a secret commission or a bribe would also amount to gross misconduct.232 In Denco Ltd v Joinson,233 the English Employment Appeal Tribunal held that an employee who deliberately gains unauthorised access to his employers computer system is guilty of gross misconduct.234 Instances of internet or email abuse at work such as downloading pornography are likely to justify summary dismissal, particularly where the employer has a written and readily accessible internet and email policy prohibiting such behaviour.235 Negligent performance of duties. Habitual neglect of the performance of an employees duties,236 or a single act of negligence or incompetence of a serious nature,237 persistent lateness or unauthorised or unjustied absence,238 insubordination,239 or wilful disobedience of a lawful and reasonable order240 have all been grounds upon which employers have successfully justied summary dismissal. Negative workplace behaviour justifying summary dismissal. Negative behaviour in the workplace such as abusive language,241 violence or other unwelcome or non-consensual contact has been held to justify summary dismissal. In Chan Ching Man v Oriental Logistics Co Ltd,242 the court held that employers had a duty to provide a safe and decent working environment to their employees, which included a duty to ensure that employees are not subject to abuse or ill-treatment from fellow employees in the workplace. The employer in that case was found to have been justied in dismissing an employee who had made non-consensual and unwelcome physical contact with another employee who had hearing and speech disabilities. 6.106
6.107
6.108
230
231 232 233 234
235
236
237
238
239 240 241
242
The employees in that case had attempted to conceal the loss of 10 bags of sugar which had fallen overboard by stealing from other bags of sugar to make up the loss. Richarvey Ltd v Victor Fung [1980] HKLR 797; Royal Hong Kong Jockey Club v Tam Tak Man [1984] 1 HKC 187. Boston Deep Sea Fishing Co v Ansell (1888) LR 39 Ch D 339. [1991] 1 WLR 330. Although the court did recommend that employers make their rules clear and display such rules near computer terminals. See Thomas v Hillingdon London Borough Council (unrep., The Times, 4 Oct 2002) in which the employer was justied in summarily dismissing an employee who downloaded pornography at work. See Charming Development Ltd v Chair Wai Hong (unrep., HCLA 28/1994, [1994] HKEC 364) where failure to meet sales target was held not sufcient to amount to habitual neglect of duties. See Tong Cheng v Taylor Woodrow Paul [1965] HKDCLR 174 in which the court held that a single act of negligence, which could have led to serious consequences, could justify summary dismissal. See Ying Kee Safes and Furniture Ltd v Wong Yam Tak [1996] 1 HKC 307 in which the employees persistent lateness was held to amount to a series of unauthorised absences amounting to misconduct and a failure to comply with a lawful and reasonable order made by his employer. See also Oceanic Universal Garment Manufacturers Co Ltd v Keung Man Lan [1987] 1 HKC 27; So Ching v Kwan Hang Ching [1987] 2 HKC 297. Law Ngai Ming v Kowloon Club (unrep., HCLA 70/2002, [2003] HKEC 1485). Leung Yun v Incorporated Owners of Sun On Building [1989] 1 HKC 524. General Security (HK) Ltd v Lai Yiu Ching (unrep., HCLA 121/1994, [1995] HKLY 603). The employee who was employed as a night watchman was caught asleep on duty by his superior. In the scene that followed the employee used foul and course language which was held to be conduct justifying summary dismissal. (unrep., HCLA 99/2003, 16 Apr 2004).
226
6.109
Single act of misconduct unlikely to justify summary dismissal. A single act of misconduct, unless very serious, is unlikely to justify summary dismissal.243 In the case of Law Ying Chung v Lo Chun Kie,244 an isolated incidence of gambling in the workplace was not found to be sufciently serious to justify a summary dismissal. Yeung JA, delivering the judgment of the Court of Appeal, expressed the following view: Immediate dismissal of an employee by reason of one single act of misconduct, in my view can only be justied in very exceptional circumstance. Yeung JA gave some useful guidance on this issue, citing Lord Maugham in Jupiter General Insurance Co v Shroff :245 On the one hand, it can be in exceptional circumstances only that an employer is acting properly in summarily dismissing an employee on his committing a single act of negligence; on the other, their Lordships would be very loath to assent to the view that a single outbreak of bad temper, accompanied, it may be, with regrettable language, is a sufcient ground for dismissal. Sir John Beaumont, CJ, was stating a proposition of mere good sense when he observed that in such cases one must apply the standards of men, and not those of angels. Placing, however, all proper weight on these considerations, their Lordships have yet to determine whether the misconduct of the respondent was not such as to interfere with and to prejudice the safe and proper conduct of the business of the company, and therefore to justify immediate dismissal. It must be remembered that the test to be applied must vary with the nature of the business and the position held by the employee, and that decisions in other cases are of little value.246
6.110
The cumulative effect of a series of minor incidences may amount to sufcient grounds for summary dismissal. In Pepper v Webb,247 the English Court of Appeal referred to the nal act of the employee as the last straw justifying summary dismissal. The employee was a gardener with a history of inefciency and insolence. The event in question culminated in him telling his employer, I couldnt care less about your bloody greenhouse and your sodding garden. In the Hong Kong decision of Law Ngai Ming v Kowloon Club,248 the employee was summarily dismissed for taking a cigarette break. The court upheld the ndings of the labour tribunal which had taken into account the employees attitude when confronted by management and
243 244 245 246
247 248
Wilson v Racher (fn 221); Tsang Tak Chi v China Wall Ltd [1999] 1 HKC 366. Fn 219. [1937] 3 All ER 67 at 73. In Jupiter the Privy Council held that a single act of misconduct on the part of the employee which could have led to a considerable loss (and where repetition of that mistake could have led to disaster) justied summary dismissal. The employee was employed as a manager of the defendant companys life insurance department. The managing director of the defendant company had refused to accept a life insurance proposal. The employee, despite knowing of the refusal and the reasons behind it (which included an assessment that the risks were of an exceptional character), nevertheless recommended the issue of the life insurance policy. [1969] 1 WLR 514. (unrep., HCLA 70/2002, [2003] HKEC 1485).
227
the cumulative effect of other occasions of his past disobedience. Of particular note is that the court, applying the test of Edmund LJ in Wilson v Racher,249 found that the employee was resolved to continue disobeying his employer in this regard, behaviour which was regarded as following a line of conduct which made the continuation of the employment relationship impossible. In a similar vein, in Ying Kee Safes & Furniture Ltd v Wong Yam Tak250 an employees persistent lateness in the face of warnings was found to be conduct justifying summary dismissal. The court held that while an isolated incident of lateness might not warrant dismissal on the particular facts, persistent and repeated lateness assumed misconduct of a different character, particularly where the employee had been warned. Such disregard of lawful orders was regarded as a deliberate outing of the employers authority.251 Employer must not allow conduct complained of to continue for too long prior to summary dismissal. An employer should, however, be careful to ensure that the conduct complained of has not been tolerated in the past so as to amount to acquiescence of the behaviour. The longer the conduct has been tolerated, the less likely that a court will be prepared to accept it amounts to misconduct justifying summary dismissal.252 A common feature of those cases in which summary dismissal has been held to be unjustied is that the lapse of time has been accompanied with the employer overlooking or condoning the actions complained of.253 Accordingly, an employer should ensure that an employee be warned of the consequences of persisting in any conduct which it regards as unacceptable.254 Conduct tolerated in past may not preclude employer from summarily dismissing employee if conduct continues. Even if certain conduct has been tolerated in the past, this will not necessarily preclude an employer from summarily dismissing an employee who persists in certain conduct.255 However, it would be prudent in such circumstances for an employer to at least rst issue a warning to employees that such conduct will no longer be tolerated in the future.256 6.111
6.112
249 250 251
252
253
254
255
256
Fn 221. Fn 238. Compare the case of Law Ying Chung v Lo Chun-Kie (fn 219) in which the Court of Appeal held that occasional acts of negligence or mistakes of a long serving employee did not justify the employer summarily dismissing the employee. See WE Cox Toner (International) Ltd v Crook [1981] ICR 823 in which it was noted that delay is likely to be serious not in its own right but because any delay normally involves further performance of the contract by both parties. Acceptance by an employee of his next salary is likely to amount to afrmation of the contract: Saunders v Paladin Coachworks Ltd [1968] 3 ITR 51. See Madam Ho Yuk Ho v Kim Ming Industrial Co (unrep., HCLA 9/1973, 7 Sept 1973); Yeung Chee Kiu v Lam Chee [1996] HKCDLR 65. In Garlitz Investments Ltd v Hui Lai Ping (unrep., HCLA 79/1996, [1996] HKLY 739), the employer had summarily dismissed the employee after a series of acts which included the employees refusal to sign and acknowledge a letter transferring her to work in another shop in the vicinity, being late in reporting for work on three occasions, reading magazines while at work on two occasions, and what was referred to as her generally unacceptable attitude towards her superiors. Although the conduct had taken place over a period of three weeks, the employer had issued three warning letters during that period. The warning letters were held by the court as not being capable of being read so as to waive or condone the conduct complained of. So Ching v Kwan Hang Ching [1987] 2 HKC 297; Oceanic Universal Garment Manufacturers Co Ltd v Keung Man Lan (fn 238). See Ying Kee Safes & Furniture Ltd v Wong Yam Tak (fn 238); Lam Ping Wai v Lee Yuet Lau (unrep., HCLA 92/2003, [2004] HKEC 1180).
228
6.113
Employer can rely on reasons not disclosed at time of dismissal to justify summary dismissal. At common law an employer can rely on reasons in support of the dismissal even if they were not disclosed at the time of the dismissal, provided there is adequate factual basis to substantiate such reasons: Lee Hung Chiu Philip v Becton Dickinson Asia Ltd.257 An employer may even justify dismissal by reference to facts only discovered after the contract of employment has been terminated. This principle of law was established in the English case of Boston Deep Fishing Co v Ansell258 and has been followed in Hong Kong in Yeung Chee Kiu v Lam Chee259 in which the original ground relied upon by the employer was found to be without substance. The court held that this was immaterial provided that the employer had valid grounds to justify summary dismissal at the time of the dismissal. In other words, a court will look at the nature of the misconduct of the employee at the time of dismissal, and not the reason assigned to it at that time, to assess whether such conduct was grave enough to give rise to the employers right to summary dismissal. It appears that the employer must not have been aware of the conduct justifying summary dismissal at the time of dismissal, or at least not have condoned the conduct at the time it was taking place, in order to rely upon those grounds at a subsequent date.260 However, if the matter proceeds to litigation, an employer should be careful to plead the relevant grounds at an early stage.261 (ii) Statutory grounds for summary dismissal
6.114
Statutory grounds for summary dismissal. The EO gives statutory force to the position at common law by giving an employer the right to summarily dismiss an employee in circumstances where the misconduct of the employee is sufciently serious. Section 9 of the EO provides four specic grounds on which an employer may terminate a contract without notice or payment in lieu of notice, namely where in relation to his employment an employee: (1) (2) (3) (4) wilfully disobeys a lawful and reasonable order; misconducts himself in a manner in which the conduct is inconsistent with the due and faithful discharge of his duties; is guilty of fraud or dishonesty; or is habitually neglectful in his duties.262
257 258
259 260 261
262
(unrep., HCA 2830/2000, [2009] HKEC 560). Fn 232. The managing director of the employer company was summarily dismissed on inadequate grounds but was later found to have been taking bribes in breach of his duty of good faith, and amounting to a fundamental breach of his contract. [1966] HKDCLR 65. Boston Deep Fishing Co v Ansell (fn 232). See Dias Sandra Mary Elizabeth v Cathay Pacic Airways Ltd (unrep., HCA 2372/2002, [2005] HKEC 1888) in which a request for an amendment to the pleadings averring other allegations of misconduct two years after the dismissal was not allowed. EO s.9(1).
229
In addition, the EO has a catch-all fth ground which permits an employer to summarily dismiss an employee on any other ground on which he would be entitled to summarily dismiss the employee at common law.263 Employer not permitted to summarily dismiss an employee for taking part in a strike. The EO specically protects an employee taking part in a strike from being summarily dismissed for that reason.264 Mere act of failing to obey a lawful and reasonable order will not, in all circumstances, merit summary dismissal. In Wing Ming Garment Factory Ltd v Pun Yut Yin,265 Davies J held that the employer was not entitled to summarily dismiss employees who had failed to report to work on a Saturday afternoon when ordered to do so. The Judge regarded the misconduct as warranting a warning (preferably in writing) that any further instance would result in dismissal, but did not regard the single act of misconduct so gross as to justify summary dismissal. To constitute habitual neglect, neglect must be substantial and habitual. What constitutes habitually neglectful in the context of s.9(1) of the EO was considered in the case of Chow Yin Chun v Fang Brothers Knitting Ltd266 in which Duffy J held that the neglect must be substantial and it must be habitual. Thus the act of neglect must amount to more than a one-off incident.267 No statutory requirement that summary dismissal need take place immediately after conduct complained of. There is no requirement under the provisions of the Ordinance that the dismissal take place immediately after the conduct complained of.268 However, an employer is well advised to terminate the employees employment as soon as possible thereafter to avoid any challenge based on waiver or acquiescence of the misconduct. Employer may terminate employment summarily after notice of termination has been served. Where an employer has terminated the employment by giving notice to the employee, there is nothing which precludes the employer from subsequently terminating the employment summarily should circumstances justify such a dismissal.269 No warning required prior to summary dismissal. In general, there is no requirement to give either oral or written warnings as a disciplinary measure prior to proceeding to the summary dismissal of an employee. However, it is prudent to do so if there is any doubt as to whether the seriousness or nature of the incident warrants such a draconian response. Obviously, whether an employer feels able to continue to engage an employee after any given incident will depend upon the circumstances of each
6.115
6.116
6.117
6.118
6.119
6.120
6.121
263 264 265 266 267 268 269
EO s.9(2). EO s.9(2). [1980] HKDCLR 1. (unrep., HCLA 55/1987, 21 Apr 1988). See also Kwok Yan Man v Lau Cheung Kwong [1999] 3 HKC 386. Wyldbore v Bayubay [1987] 2 HKC 304. EO s.8(b).
230
case. If a warning is given, it should make clear to the employee that a repetition of the conduct complained of may lead to a summary dismissal. 6.122 No requirement to conduct a disciplinary hearing prior to summary dismissal. There is no common law or statutory requirement to have a disciplinary hearing prior to a summary dismissal of an employee.270 Depending upon the circumstances, in particular the position of the employee and the nature of the wrong committed, it might prove prudent to have a degree of transparency around the decision-making process in order to pre-empt allegations of unreasonable dismissal or discrimination. Disciplinary hearing must be conducted if provided for in the contract of employment. The position is different if the contract of employment provides for a disciplinary process which the employer has to follow prior to any such termination. Any failure to follow such a procedure will amount to a breach of the contract of employment and a wrongful dismissal.271 Employees of public bodies would in addition have open to them the remedy of judicial review where there exists some disciplinary or other body established under statute to which the employer or employee is entitled or required to refer disputes affecting their relationship. Examples of professions whose statutory bodies provide for a disciplinary process to be followed are the police272 and other civil servants.273 No requirement to give reason for summary dismissal. There is no requirement, unless the contract of employment stipulates otherwise, to give reasons for a summary dismissal. However, any termination for a reason not within those permitted or recognised by the EO would amount to a wrongful termination giving the employee grounds for a claim for wrongful dismissal. Accordingly, if the termination is challenged by the employee, the employer will, in any event, have to give reasons for the termination. It is advisable for the employer to either set out the reason(s) relied upon for the summary dismissal in any letter of dismissal or, at the very least, to communicate those reasons to the employee orally. This step avoids any speculation on the part of the employee as to the reason(s) relied upon by the employer, and forms a contemporaneous record of the reasons behind the decision. If conduct complained of not capable of justifying summary dismissal, the termination will be wrongful. Where a court regards the grounds given as inadequate to justify summary dismissal, the termination will be regarded as wrongful.274 Accordingly, it is advisable for employers to carry out some form of a disciplinary process involving, at the very least, an investigation into the incident or circumstances surrounding the dismissal, which includes giving the employees an opportunity to set out their version of events. This process ensures that the employer is armed with all the relevant facts upon which to base its allegations prior to making a decision, and
6.123
6.124
6.125
270
271
272 273 274
Note, however, the line of English authorities following Ridge v Baldwin [1964] AC 40, in which the rules of natural justice have been held to be applicable to the termination of ofce holders. Warham v Cathay Pacic Airways Ltd (unrep., HCMP 4400/2001, HCA 2822/2002, 299, 1405/2006, 807/2007, [2009] HKEC 1848) . See Lam Siu Po v Commissioner of Police [2009] 4 HKLRD 575. See Chapter 15, paras 15.065 to 15.075. A claim for wrongful termination would allow an employee to claim termination payments which would have been payable in the event of a termination on notice.
231
potentially undermines the veracity of any matter which is later raised by the employee for the rst time in the course of litigation. Contract of employment comes to an end immediately upon employee being given notication of dismissal. The contract of employment of an employee who has been summarily dismissed comes to an end immediately upon the employee being given notication of such dismissal. In the event where an employee cannot be found or makes himself unavailable, it has been held that the effective date of dismissal is the date on which the dismissal is made.275 Summary dismissal affects employees entitlement to termination payments. An employee who has been summarily dismissed will be entitled to any accrued benets such as wages owing to him up until the time of the dismissal, and any accrued untaken paid annual leave (namely untaken leave for the year prior to that in which the employee is dismissed),276 and accrued end-of-year payments. No further statutory payments, such as severance payment, long service payment, unaccrued pro rata annual leave payment (namely pro rata untaken annual leave accrued in the year in which the employee is dismissed),277 or unaccrued pro rata end-of-year payment are payable upon a summary dismissal. There is no entitlement to statutory compensation in the event that an employer suffers loss as a consequence of the employees misconduct. The statutory remedy lies solely in the right to summarily dismiss. However, this does not preclude an employer from claiming common law damages for any such loss. Employer has to make clear election to dismiss summarily. Where an employer waives the right to summarily dismiss an employee, electing instead to terminate the contract by giving notice or making a payment in lieu of notice, the employer will be required to make all other statutory payments that would have been payable if the termination had been on notice.278 Although this seems a little harsh on the employer who merely wants to take the nancial sting to the employee out of a summary dismissal, an employer is not allowed to mix and match the provisions of the ordinance in this way.279 If it is not the intention of the employer to treat the termination in all respects as a termination on notice, then the employer is advised to ensure that there is no advance notice of the dismissal given to the employee, and that any payment made is 6.126
6.127
6.128
275 276 277 278
279
Soulsby v Total Control Technology International Ltd (unrep., DCCJ 14943/2000, [2001] HKEC 203). EO s.41D(1). Leung Hung Cheung v Cheung Chung Wai [2010] 1 HKLRD 294. EO s.41D(2). Leung Hung Cheung v Cheung Chung Wai (fn 276). Allidem Mae G v Kwong Si Lin [2006] 1 HKC 252; Li Heung Sang v Compuware Asia Pacic Ltd [2004] 2 HKLRD 732. It seems to me that where the scheme of the legislation is to provide for distinct methods for the termination of a contract of employment the ordinance does not enable, in this case, the employer to mix and match his options. He must elect and bear the consequences of that election. If he goes for an outright summary dismissal he may well be forced to justify that course in a lengthy and hard fought application by the employee in the Tribunal. In such circumstances he may prefer to adopt the safer option of payment in lieu of notice together with any long service payment that may be due which, relatively speaking, he would not have much difculty in defending before the Tribunal. Per Deputy Judge Carlson in Allidem Mae G v Kwong Si Lin (fn 278).
232
not purported to be paid in lieu of notice but rather characterised as a discretionary ex gratia payment.280 (iii) Constructive dismissal 6.129 Employee may terminate contract of employment in event of constructive dismissal. An employee may terminate his contract of employment without notice or payment in lieu of notice in circumstances where his employers conduct amounts to a repudiation or fundamental breach going to the root of the contract or shows an intention no longer to be bound by one or more of the essential terms of the employment contract. Although it is the employee who resigns in these circumstances, the dismissal is referred to as constructive dismissal because the law construes the employees resignation as a dismissal by the employer. For there to be a constructive dismissal, it is not enough simply to point to an act on the part of the employer amounting to a signicant breach of the contract of employment; there must also be a reaction on the part of the employee amounting to acceptance of the breach or repudiation of the contract, thereby bringing the contract to an end. The employee must leave his employment soon after the conduct complained of otherwise he will lose his right to treat himself as dismissed and will be regarded as having elected to afrm the contract. 281 Circumstances amounting to constructive dismissal. There is no rule of law for determining whether a particular set of facts constitutes a repudiatory breach sufcient to allow an employee to treat himself as constructively dismissed.282 What amounts to a fundamental breach will depend upon the circumstances of each case with reference to what is permitted conduct under the terms of the contract of employment and by law. Circumstances which have been found sufciently serious to warrant the employee terminating the employment and claiming constructive dismissal are: failure to provide a reasonable amount of work;283 failure to pay statutory entitlements; failure to pay wages and other benets;284 a unilateral change or variation in the terms and conditions of employment;285 substantial reduction in working hours;286 a reduction in wages;287 a transfer without the consent of the employee;288 demotion of the employee;289 a
6.130
280
281 282 283 284 285 286 287
288
289
Note, however, the case of Sin Bik Yin v Carat Jewellery Ltd (unrep., HCLA 49/2004, [2005] HKEC 801) in which a dismissal was still treated as a summary dismissal and no terminal benets were payable to the employee despite the fact that the employer had paid one months salary in lieu of notice. The decision runs contrary to the Allidem line of cases and can be distinguished as a decision based on its facts given that Yam J characterised the employers generosity in paying the one months salary as a misconception of the law which was apparent even to the employee. Perhaps inuencing Yam Js decision was the fact that the employer had not received any legal advice, and that the employees claim for sick leave was only submitted after she was summarily dismissed. See Judgment of Lord Denning MR in Western Excavating (ECC) Ltd v Sharp [1978] QB 761. Woods v WM Car Services (Peterborough) Ltd [1982] IRLR 413. Shell Electric Manufacturing Co Ltd v Lau Shu Cheung [1980] HKDCLR 9. Law Shiu Kai v Dynasty International Hotel Corp [2004] 2 HKLRD 524. Hong Kong and China Gas Co Ltd v Wong Yuen Kwong [1987] 3 HKC 508. Kam Hung Industries Co Ltd v Lam Ming Sun (unrep., HCLA 61/1986, [1987] HKEC 339). Shell Electric Manufacturing Co Ltd v Lau Shu Cheung (fn 283); Globe Silver Ltd v Wong Chun Pong (unrep., DCCJ 5876/2003, [2005] HKEC 40). Hong Nin Security Co Ltd v Tsang Min [1992] 1 HKC 338; Preen v Industries Polytex Ltd (unrep., HCLA 171/1995, [1996] HKLY 711). Ng Chung Man v Rever Expression Salon Ltd [2005] 2 HKLRD 193.
233
unilateral change in the employees duties;290 or a failure to provide a safe and decent environment at work.291 Conduct on the part of the employer which undermines the trust and condence of the employment relationship would entitle an employee to treat himself as constructively dismissed.292 Discriminatory conduct capable of amounting to constructive dismissal. An employee may be justied in treating himself as constructively dismissed if he has been subjected to conduct by his employer which amounts to discrimination or victimisation under one of the four discrimination ordinances.293 Similarly, an employee may be justied in treating himself as constructively dismissed if he has been subjected to conduct by his employer which amounts to harassment under the Sex Discrimination Ordinance, the Disability Discrimination Ordinance or the Race Discrimination Ordinance, or hate speech amounting to vilication under either of the Disability Discrimination Ordinance or the Race Discrimination Ordinance if he can show that the conduct complained about was either initiated, encouraged or tolerated by his employer In Chang Ying Kwan v Wyeth,294 the employee who had served notice of her pregnancy was shortly thereafter refused a salary increase and was subject to pressure at work, as a result of which she felt compelled to resign. The court held that her treatment at the hands of senior employees in the company entitled her to treat herself as constructively dismissed, and upheld her claim for pregnancy discrimination and victimisation.295 The employer was held vicariously liable for the acts of its senior employees, pursuant to s.46 of the Sex Discrimination Ordinance. Unilateral change of employees working hours capable of amounting to constructive dismissal. An employers unilateral change of an employees working hours may amount to a constructive dismissal, but this depends upon whether working hours were an essential term or condition of a contract of employment, and whether there was an express or implied contractual power to unilaterally vary the hours. The answer to these questions depends on all the circumstances of the case, including the specic agreement (if any) between the parties, the nature of the employers business and the job, the agreed working hours and the respective circumstances of the employer 6.131
6.132
290
291
292
293
294 295
Yam Mei Ching v Tele-Art Ltd (unrep., HCLA 38/1993, [1994] HKLY 545); Fan Man Yiu v General Locks & Metalwares Factory Ltd [1984] HKC 486. Chan Ching Man v Oriental Logistics Co Ltd (unrep., HCLA 99/2003, 16 Apr 2004). See also Chang Ying Kwan v Wyeth [2001] 2 HKC 129. Sae Jung Jongthai v Ho Wai Ling (unrep., HCLA 36/1993, [1993] HKLY 518). In Ng Chung Man v Rever Expression Salon Ltd [2005] 2 HKLRD 193, the court considered that a wrongful accusation of theft leading to an employee being arrested and charged could amount to a constructive dismissal. Sex Discrimination Ordinance (Cap.480), Disability Discrimination Ordinance (Cap.487), Family Status Discrimination Ordinance (Cap.527) or the Race Discrimination Ordinance (Cap.602). See Chapter 8 for examples of conduct amounting to discrimination, victimisation, harassment and vilication in these contexts. Fn 291. See also Chan Choi Yin Janice v Toppan Forms (HK) Ltd [2006] 3 HKC 143, a pregnancy discrimination case where the employee claimed to have been subjected to an orchestrated course of conduct which included being removed from key accounts and duties, being subjected to disparaging and derogatory remarks and being marginalised and isolated, making her work environment difcult and unfavourable for her. Although the employees contract of employment was eventually terminated, in the authors view, the conduct to which she was subjected would have entitled her to claim constructive dismissal.
234
and employee.296 In Wong Yuen Kwong v Hong Kong & China Gas C Ltd,297 the court considered a change of shift pattern in the context of a claim for entitlement to a severance payment, and held that when a semi-shift tter was transferred to non-shift work, in the absence of an express term enabling such a transfer, he was constructively dismissed by reason of redundancy because work of a particular kind had ceased to be available to him within the meaning of s.31B of the EO. However, the approach taken in the case of Woods v WM Car Services (Peterborough) Ltd298 suggests that an element of adaptability is required on the part of the employee. In that case Watkins LJ held that employers should not be put in a position where, through the wrongful refusal of their employees to accept changes, they are prevented from introducing improved business methods in furtherance of the success of the company. 6.133 Unilateral variation of terms of contract capable of amounting to constructive dismissal. Where an employer seeks to unilaterally vary the terms of the original contract, the variation must cause such a substantial change in the nature of the job as to constitute a repudiatory breach in order for the employee to succeed in arguing that the variation amounts to a constructive dismissal. By way of an example, an employee who is required to work in a different location by his employer may not be able to claim constructive dismissal in circumstances where the contract of employment expressly enables the employer to require an employee to work in a different location (commonly referred to as a mobility clause).299 Exercise of power to transfer employee to different location capable of amounting to constructive dismissal. There is no implied duty that an employer must act reasonably in exercising its discretion to redeploy an employee to a different work location. However, in the case of Wong Yin Fong v ISS Hong Kong Services Ltd300 the court held that there was an implied duty to act rationally in deciding how an employee is to be redeployed.301 Lam J cited as an example of irrationality the case of United Bank Ltd v Akhtar,302 a decision of the English Employment Appeal Tribunal, in which the employer was held to be in breach of the contractual mobility clause in requiring an employee to transfer to a different city within England at short notice and without nancial assistance. The court considered that the mobility clause had to be interpreted as including an implied requirement that reasonable notice of transfer would be given and that the employer was bound to exercise its discretion under a
6.134
296 297
298 299 300 301
302
Lee Lai Ming v Kam Ming EP Engineering Co Ltd (unrep., HCLA 105/2002, [2003] HKEC 535). [1987] 3 HKC 508. See also Yam Mei Ching v Tele-Art Ltd (unrep., HCLA 38/1993, [1994] HKLY 545). Compare the case of Fong Mung Yan v ISS Hong Kong Services Ltd [2008] 1 HKLRD 63 where a redeployment to different locations for longer hours was held on a proper construction of the contract not to have amounted to constructive dismissal. Fn 282. As in Parry v Holst & Co Ltd [1968] ITR 317. [2005] 2 HKLRD. See also Wong Yuk Ling v East East Food Products (unrep., HCLA 95/2002, [2003] HKEC 1062), in which Deputy Judge Cheung upheld the Tribunals nding that the express power on the part of the employers to transfer an employee to another place of work if there is a need to do so did not permit them to transfer the employee from their Kowloon to their Aberdeen branch (a move which would have cost them HK$1,000 per month in additional travel expenses out of a salary of only HK$2,300). The tribunal construed the word need to mean a genuine business, administrative or operational need of the employers. [1989] IRLR 507.
235
discretionary relocation allowance clause in such a way as to render it possible for the employee to move, noting that: Employers should not, without reasonable and proper cause, conduct themselves in a manner likely to destroy or seriously damage the relationship of condence and trust between employer and employee, even where a literal interpretation of the terms of the contract might appear to permit such a course. Employer not entitled to transfer employee to different location unless express power to do so contained in contract. In the absence of an express mobility clause, there is no general implied term entitling an employer to transfer an employee from his original place of work. Accordingly, a decision to transfer an employees job to a different location without his consent may amount to constructive dismissal, but this depends on the circumstances of the case. Moreover, in order to give a contract of employment business efcacy, a court or tribunal will imply a term which the parties, if acting reasonably, would probably have agreed to if they had directed their minds to the problem.303 Some guidance may be found as to what this means in practice in the judgment in Ng Chi Leung v Globe Dyeing Factory Ltd; Ng Chiu But v Globe Dyeing Factory Ltd304 where the court held that a term requiring an employee to work in a different place could not be implied into the contract unless the new place of employment was within daily or reasonable travelling distance of the employees homes. Conduct on the part of the employer which undermines the trust and condence of the employment relationship capable of amounting to constructive dismissal. It is an implied term of a contract of employment that an employer will not, without reasonable and proper cause, conduct itself in a manner calculated or likely to destroy or seriously damage the relationship of condence and trust between employer and employee.305 Whether there has been a breach of the implied duty of trust and condence is to be judged objectively. That is, an employee must point to conduct by an employer which, objectively considered, is likely to seriously undermine the necessary trust and condence in the employment relationship. Lord Nicholls in Malik v Bank of Credit and Commerce International SA306 stated that the conduct relied on as constituting the breach must: Impinge on the relationship in the sense that, looked at objectively, it is likely to destroy or seriously damage the degree of trust and condence the employee is reasonably entitled to have in his employer.307 The use of foul or abusive language towards an employee may amount to conduct which breaches the implied duty of trust and condence, but whether it will do so is 6.135
6.136
303
304 305 306 307
Courtaulds Northern Spinning Ltd v Sibson [1988] ICR 451; Jones Associated Tunnelling Co Ltd [1981] IRLR 477; Yan Kwok Tung v Napoleon Restaurant Ltd [1993] 2 HKLR 1. [1989] 1 HKLR 184. Malik v Bank of Credit and Commerce International SA [1998] AC 20. Fn 305. Page 35 at para C.
236
a question of fact, which must be determined by reference to the nature of the words themselves, and the context and surrounding circumstances.308 Failing to protect an employee from harassment from fellow workers309 or failing to properly investigate allegations of sexual harassment or treating a complaint with sufcient seriousness have been held to amount to a breach of the implied duty of trust and condence.310 6.137 Forced resignation capable of amounting to constructive dismissal. Where an employee is put into the position of being forced to resign or else be summarily dismissed, the termination is likely to be considered a constructive dismissal.311 However, where there is some advantage to the employee resigning rather than being dismissed, the resignation will be regarded as voluntary.312 (iv) Termination without notice under the Employment Ordinance 6.138 Statutory right of employee to summarily terminate contract of employment. The EO permits an employee to terminate his contract without notice or payment in lieu of notice for any reason which would be recognised at common law.313 In addition, the Ordinance expressly provides for three situations in which an employee may terminate his contract of employment without notice or payment in lieu of notice, namely: (1) (2) if he reasonably fears physical danger or violence or disease that was not contemplated, whether expressly or impliedly, by his contract of employment; if he has been employed for at least ve years and has been medically certied by a registered medical practitioner or registered Chinese medicine practitioner as being permanently unt for the particular type of work which he is engaged to perform under the contract of employment; and if he is subjected to ill-treatment by the employer.314
6.139
(3)
308
309 310 311 312 313 314
In Chang King Leung v Better Hong Kong Movement [2010] HKLRD 710 the employee had alleged that he had been constructively dismissed following a quarrel with a representative of his employer, during which he was told he should piss off . The employer denied ring the employee and asserted that what was said to him was I am pissed off at you .... You ... can do better. The Labour Tribunal held that the words piss off could not amount to abusive language, but in any event accepted the employers version of events. On the employees appeal, he argued that use of the words pissed off amounted to constructive dismissal by breaching the root of the employment contract; and also the implied term of relationship of trust and condence. At rst instance Lam J rejected the employees argument and held that, when viewed objectively, the employers representative did not intend to swear at the employee, and that the words were not a direction to the employee to leave, but rather an expression of anger or disappointment. By contrast, in King v Webbs Poultry Products (Bradford) Ltd [1975] IRLR 135 use of the words piss off and fuck off were held to amount to an unfair dismissal. However, the Courts reasoning was based on the employers insistence that the employee should go, as reected by those words, rather than the abusive nature of those words. See also Palmanor Ltd v Cedron [1978] IRLR 303, and Horkulak v Cantor Fitzgerald International (fn 31). Wigan Borough Council v Davies [1979] IRLR 127. Bracebridge Engineering Ltd v Darby [1990] IRLR 3. Scott v Formica Ltd [1975] IRLR 104. Chu Hei Man v Dynasty World Holdings Ltd (unrep., HCLA 58/1999, [2000] HKEC 33). EO s.10(c). EO s.10(a), (aa) and (b).
237
Employee entitled to retain all contractual and statutory entitlements upon termination. An employee who lawfully terminates his contract of employment, in accordance with s.10 of the EO, in response to his employers repudiatory conduct retains all contractual and statutory entitlements, including outstanding wages,315 a long service payment,316 severance payment,317 proportional end-of-year payment,318 annual leave pay,319 proportional annual leave pay,320 holiday pay,321 maternity leave pay322 and sickness allowance.323 There is no statutory compensation for loss suffered as a result of the constructive dismissal,324 but an employee is able to bring a common law claim for damages for any loss suffered as a result of the constructive dismissal.325 The employee has to be able to prove actual loss and any common law claim would also be subject to the employees duty to mitigate his loss. If circumstances complained of not capable of amounting to constructive dismissal, the termination will be wrongful. An employee who terminates his employment in circumstances which are not sufciently serious to amount to a constructive dismissal will be regarded as having wrongfully terminated the employment, and will be liable to pay the employer compensation calculated by reference to what would have been payable had the contract been terminated in accordance with s.7 of the EO, namely by a payment in lieu of notice. Employee may treat non-payment of wages as constructive dismissal. Section 10A of the EO gives statutory recognition to the right of employees to treat themselves as constructively dismissed on the grounds of outstanding wages for the period of one month or more from the date when such wages were due. The section deems the contract to be terminated by the employer in accordance with s.7 of the EO, namely by the making of a payment in lieu of notice calculated in accordance with the provisions of that section. An employee is also entitled to all statutory entitlements such as severance payment or long service leave payment and pro rata entitlements to annual leave and end-of-year payments. Employee may treat suspension of employment as constructive dismissal. Section 11(2) of the EO gives an employee who has been suspended for one of the permitted reasons under the section the right to terminate without notice or payment in lieu of notice. In the event of termination under this section, the employee will be able to claim all accrued statutory entitlements. Whether or not an employee would be
6.140
6.141
6.142
6.143
315 316 317 318 319 320 321 322 323 324
325
EO s.25(1). EO s.31T(1)(c). EO s.31D(1)(c). EO s.11F(1)(2). EO s.41D(1). EO s.41D(2). EO s.40A. EO s.15(2), (3). EO s.33(4B). An employee is not entitled to wages in lieu of notice under EO s.8A, since the provisions of s.8A only require the party who wrongfully terminates the contract to pay damages. Where an employee has been constructively dismissed, the employee rightfully terminates the contract. See General Security (HK) Ltd v Lai Yiu Ching (unrep., HCLA 121/1994, [1995] HKLY 603) , and Ying Cheong Shoe MFY v Yam Yuk Bing [1987] 2 HKC 310. The employer is liable to pay unliquidated damages according to ordinary common law principles for breach of contract: Precieux Garment Factory Ltd v Lam Kin Chung (unrep., HCLA 5/1997, [1997] HKEC 442).
238
entitled to a severance or long service payment will depend upon the circumstances. A severance payment is only likely to be payable if the termination is considered a layoff. A long service leave payment is only likely to be payable where the employment is terminated as a result of a wrongful suspension.
3. DISCIPLINARY MEASURES FALLING SHORT OF TERMINATION

6.144 Employer can impose range of disciplinary measures in response to a breach of contract or improper conduct on part of employee. If an employee behaves in a manner which is either expressly not permitted under the terms of his contract of employment or his employers policies and procedures or not acceptable or desired, and the behaviour complained of is not serious enough to warrant a dismissal, an employer may nevertheless impose a disciplinary sanction falling short of termination. The imposition of a disciplinary measure serves a two-fold purpose: rst, it can demonstrate to the employees the nature of their transgression with the aim of seeking an improvement or change of behaviour. Second, it can provide evidence of the misconduct and thereby support a later decision to impose a more serious disciplinary measure or to dismiss an employee. Disciplinary measures falling short of termination are generally imposed in cases involving misconduct, poor performance or capability. Some of the more common disciplinary measures are admonishment, informal warning, formal warning, demotion, loss of seniority or loss of pay, and suspension of employment. Level of sanction should be proportionate to offence. The level of any disciplinary sanction imposed should be commensurate with the circumstances of the case. Where this is not the case, an employer runs the risk of the affected employee claiming constructive dismissal326 or breach of contract, such as breach of the implied duty of trust and condence or the implied duty of good faith.327 In cases of poor performance in order to mitigate the risk of such a claim being raised, and as a matter of good practice, an employer should consider a process of performance management prior to considering the imposition of any disciplinary measure. Such a process allows the employee to be made aware of the failings in his performance and gives him a fair opportunity to improve.328 If an employee does not respond to the process or shows insufcient improvement, a disciplinary sanction can then be considered. Disciplinary measures affecting an employees remuneration. At common law any disciplinary measure which impacts upon the payment of wages to an employee will rarely be justied, and is likely to amount to a breach of contract on the part of the
6.145
6.146
326 327
328
Keung Ah Pan v Hong Kong Macau Water Proof Engineering Co Ltd (unrep., HCLA 77/1994, [1995] HKLY 574). In Stanley Cole (Waineet ) Ltd v Sheridan [2003] ICR 297, the imposition of a nal written warning for leaving the workplace for one hour was regarded as a disproportionate penalty justifying the employee treating herself as constructively dismissed. See also BBC v Beckett [1983] IRLR 43; Cawley v South Wales Electricity Board [1985] IRLR 89. In Ng Yin San v Wong Pak Shing (unrep.,HCLA 60/1998, [1999] HKEC 334), the court considered that a warning letter may be required before summary dismissal in a case involving misconduct arising from lateness at work.
DISCIPLINARY MEASURES FALLING SHORT OF TERMINATION
239
employer.329 The ability of an employer to make a deduction in pay from wages330 that have already accrued is in any event limited by the EO which prohibits deductions being made by an employer from an employees wages unless it falls within the category of permitted deductions set out in the Ordinance.331 This protection applies to all employees covered by the EO regardless of the number of hours worked. Circumstances in which employer allowed to make deduction from employees wages. Where the misconduct on the part of the employee involves loss or damage to goods, equipment or property belonging to or within the possession or control of the employer, or expressly entrusted to the employee, or loss of money for which the employer is required to account, an employer is permitted to make a deduction from an employees wages. However, any such loss or damage must be directly attributable to the fault or neglect of the employee. The total amount of a deduction in any one case may not exceed the value of the damage or loss suffered by the employer, or HK$300 (whichever is less), and the total deduction in any one wage period cannot exceed one quarter of the employees wages payable to the employee in that wage period.332 Employer permitted to make deduction in respect of unauthorised absences from work. An employer is also allowed to make a deduction in respect of absences from work, provided that no deductions are made to offset the employers cost of holiday pay or sickness allowance which the employer has paid or may become liable to pay to the employee. Where an employees wages are calculated on a time basis, deductions are not permitted to be disproportionate to the duration of the employees absence.333 Employer not allowed to impose nancial penalty through a deduction of wages. It is important to remember that the employer is not permitted to add a punitive element to any deduction from wages. Further, if an employer makes a deduction which falls outside one of the permitted categories, the employer is guilty of an offence334 and may face a civil action for unlawful deductions. An offence is still committed if the employee consents to a deduction not permitted by the Ordinance, since any agreement between the employer and employee to that effect will be void by virtue of s.70 of the EO. Failure to award salary increase. An alternative disciplinary measure is to not award or reduce a discretionary salary increase.335 There is no implied duty on the part of an 6.147
6.148
6.149
6.150
329 330 331 332 333
334 335
Industrial Rubber Products v Gillon [1977] IRLR 389. Wages is dened in EO s.2. EO Pt VI s.32. EO s.32(2). EO s.32(1). See Wong Yin Fong v ISS Hong Kong Services Ltd [2005] 2 HKLRD 648 in which the court considered whether an employers refusal to pay its employees a good attendance allowance when they took annual leave was permitted by the provisions of s.32(2)(a), and concluded that it was not. The attendance allowance was considered to be part of the employees wages as it was not of a gratuitous or discretionary nature, but Judge Lam held that the fact that it was a xed monthly sum, not calculated on the basis of time meant that the employers condition for payment of attendance allowance was not void by reason of the provisions of ss.32 and 70 of the EO. The contractual provision entitling the employers to make such a deduction was nevertheless declared void by virtue of the combined provisions of ss.41C and 70 of the EO. Contrast the approach of Stone J in Kwan Siu Wa Becky v Cathay Pacic Airways Ltd (unrep., HCLA 3, 4, 5, 7, 8, 9/2009, [2009] HKEC 1816). This is a strict liability offence, liable to a ne at Level 6 and imprisonment for one year. A failure to increase pay in line with a contractual entitlement can amount to a repudiatory breach on the part of the employer: Pepper & Hope v Daish [1980] IRLR 13.
240
employer to award an annual increase in pay.336 Accordingly, an employer may exercise its discretion not to make a salary increase. It should be noted, however, that there is an implied term in contracts of employment that the employer must not treat employees arbitrarily, capriciously or inequitably in matters of remuneration, and so any decision of this nature should be based on sufcient grounds.337 6.151 Failure to award or negative adjustment to discretionary bonus. The power of an employer to make a discretionary bonus award is often expressly linked to the employees performance, effectively making the grant of a discretionary bonus award conditional upon satisfactory performance of the employee.338 As long as a payment is of a gratuitous nature or only payable at the discretion of the employer, a reduction may be made as a disciplinary measure. However, an employer has a duty to act rationally in the exercise of its discretion.339 Accordingly, any reduction should be commensurate with the circumstances of the case.340 Suspension of employment. The EO confers upon an employer a statutory right to suspend an employee without notice or payment in lieu of notice in three circumstances.341 First, as a disciplinary measure for any reason for which the employer could have summarily dismissed the employee. Accordingly, the misconduct complained of must be serious enough to justify summary dismissal. Second, pending a decision by the employer as to whether or not to exercise his right to terminate the contract summarily; and third, pending the outcome of any criminal proceedings against the employee arising out of or connected with his employment.342 Employee may not be suspended for more than 14 days. The duration of the suspension must not exceed 14 days. This period may be extended only in cases where an employee is the subject of criminal proceedings, in which case the suspension can continue until the conclusion of the criminal proceedings.343 Any term of a contract of employment which purports to give an employer a right to suspend for a longer period than 14 days (or until the conclusion of criminal proceedings) will be void.344 Employee may be required to take a paid leave of absence. The Ordinance does not state whether an employer may suspend the employment of an employee with or without pay. Moreover, the Ordinance does not state whether the period of 14 days
6.152
6.153
6.154
336 337 338
339
340
341
342 343 344
Murco Petroleum Ltd v Forge [1987] ICR 282. FC Gardner Ltd v Beresford [1978] IRLR 63. In Zhang Jian He v Citic 21 CN Co Ltd (unrep., HCA 1968/2006, [2009] HKEC 1008), CFI the employer had attempted to make a grant of an option to subscribe for shares in the employer company conditional upon satisfactory performance of the employee. Deputy Judge Thomas Au held that the condition was not a term of the contract on a proper construction of the clause. In Horkulak v Cantor Fitzgerald International (fn 31), CA the English Court of Appeal held that discretion to award an annual discretionary bonus which is prima facie of an unlimited nature will be regarded as subject to an implied term that it will be exercised genuinely and rationally. See also Clark v Nomura International Plc [2000] IRLR 766 and Clark v BET Plc [1997] IRLR 348. The imposition of a disciplinary punishment which is out of proportion to the offence committed may constitute a breach of the employers duty of good faith. See fn 247. At common law an employer may suspend the employment of an employee where the contract of employment contains an express power to do so: as in McLory v Post Ofce [1993] 1 All ER 457 where the employer had the power to suspend pending the outcome of investigations into allegations of misconduct. EO s.11(1)(a)(c). EO s.11(1)(c). This is due to the operation of s.70 of the EO.
DISCIPLINARY PROCEDURES
241
is applicable only to periods of suspension without pay or is equally applicable to periods of suspension on full pay. Accordingly, a conservative approach is advised since an employee who is suspended for longer than the 14 days permitted by the Ordinance may claim constructive dismissal. The wording of the Ordinance suggests that an employer is not permitted to suspend an employee during the course of an investigation unless it takes the form of criminal proceedings.345 In circumstances where the employee is under investigation by an employer, if it is considered necessary to have the employee away from the workplace and/or away from duties pending the outcome of an investigation or for a period longer than 14 days, then an employer can request the employee to take a paid leave of absence. However, even in these circumstances an employer should ensure that the period of any leave of absence reects an expedient handling of the investigation so as avoid a claim of constructive dismissal or breach of contract.346 An employee who has been suspended in certain circumstances may terminate contract of employment without notice or payment in lieu of notice. Section 11(2) of the EO gives an employee who has been suspended for one of the permitted reasons under the Ordinance the right to terminate without notice or payment in lieu of notice during the period of suspension. An employee terminating the contract of employment in these circumstances is entitled to all statutory entitlements other than a long service payment or a severance payment.347 No right to suspend employment at common law. At common law, there is no ability on the part of the employer to suspend an employee without pay in the absence of an express contractual right to do so.348 6.155
6.156
4. DISCIPLINARY PROCEDURES
No statutory requirement to follow disciplinary procedure. In Hong Kong there is no statutory procedure which must be followed before an employer may take disciplinary action against an employee, nor is there a statutory requirement that a fair process be conducted prior to a dismissal save in the case of employees of the government or public bodies.349 The extent to which an employer is able to take disciplinary measures against an employee will accordingly depend upon the terms of the contract of employment. 6.157
345
346
347 348 349
In Keung Ah Pan v Hong Kong Macau Water Proof Engineering Co Ltd (unrep., HCLA 77/1994, [1995] HKLY 574), the court held that there was no justication for the employer to prevent the employee from returning to work while an investigation was conducted into the employees sick leave claims. The employer had attempted to rely on s.11(1)(a) of the EO to justify his failure to provide work to the employee. Rogers J rejected this argument and held that the failure to provide work to the employee amounted to a termination of the contract. For instance, an employee may be able to claim that the employer is depriving him of the right to work, as in Keung Ah Pan v Hong Kong Macau Water Proof Engineering Co Ltd (fn 326). These payments require that there be a dismissal of the employee: ss.31D and T of the EO. Hanley v Pease & Partners Ltd [1915] 1 KB 698. See Chapter 15 para 15.076. Compare the situation in the UK which introduced Statutory Dismissal and Disciplinary Procedures and Statutory Grievance Procedures (the Statutory Procedures) in Oct 2004 applied to both public and private sector employees. These proved difcult to implement in practice and have since been repealed. The new Arbitration, Conciliation and Advisory Service (ACAS) Code of Practice on Disciplinary and Grievance Procedures and accompanying guidance came into effect on 6 Apr 2009.
242
6.158
Adoption of disciplinary procedure may fetter employers right to terminate contract of employment. Where an employer has adopted a disciplinary procedure, a failure to follow the procedure may amount to constructive dismissal.350 Moreover, the incorporation of a disciplinary procedure into the contract of employment may fetter the employers right to terminate an employees contract of employment simply upon the giving of notice or payment in lieu of notice. For example, if a disciplinary procedure requires a disciplinary hearing for cases of misconduct, an employer may not be able to give notice of termination until the outcome of such a hearing has been determined.351 However, there are conicting authorities on this issue. Conicting approaches on question of whether contractual disciplinary procedure can be by-passed by contractual right to terminate on notice. In Cheung Chi Keung v Hospital Authority,352 Deputy Judge To held that the employers contractual right to terminate by giving notice was not subject to the employers disciplinary code. The disciplinary code relied on by the employee had, as a matter of construction, not been incorporated into the employees contract of employment.353 However, in Judge Tos view the parties contractual right to terminate was a separate and distinct right which could not be undermined by a disciplinary procedure even if it had been incorporated into a contract of employment.354 Warham v Cathay Pacic Airways Ltd. The Court of First Instance in Warham v Cathay Pacic Airways Ltd355 declined to follow the reasoning in the Cheung decision. The question before it was whether an airline could bypass its own disciplinary procedure where the underlying reason was alleged misconduct and simply terminate the employment of aircrew ofcers by the giving of notice. The disciplinary procedure in this case was contained in an Appendix to the contract of employment and thereby incorporated into the contract of employment. Mr Justice Reyes, expressly declining to follow the judgment in Cheung as authority, held that if the dismissal was due to misconduct on the part of an employee the contractual disciplinary process could not be bypassed by the contractual right to terminate on notice. To allow otherwise, in his view, would have allowed the employer always to bypass the contractual disciplinary process by simply giving no ofcial reason for termination. Mr Justice Reyes cited the House of Lords decision in Johnson v Unisys Ltd in support of the rationale for his decision:
6.159
6.160
350 351 352 353
354
355
Post Ofce v Strange [1981] IRLR 515. Gunton v Richmond-upon-Thames London Borough Council [1981] Ch 448. [2006] 2 HKLRD 46. The regulations relied upon by the employee, which had contained a disciplinary code, were not referred to in his letter of appointment and had only came into existence nine months after the date of his appointment. [2006] 2 HKLRD 46, at 73 para GI. Note the consideration which Judge To gave to the decision of Gunton v Richmond-upon-Thames London Borough Council (fn 351): the ratio decidendi of that case is that where a disciplinary code has been incorporated into a contract of employment, the employer is not entitled to dismiss the employee on a disciplinary ground until the disciplinary proceedings have been completed. However, the Court also held unanimously, albeit obiter, that an employer could nevertheless dismiss the employee by notice without specifying any grounds or without specifying any disciplinary grounds. This obiter view has the support of the House of Lords decision in Johnson v Unisys Ltd. (unrep., HCMP 4400/2001, HCA 2822/2002, 299, 1405/2006, 807/2007, [2009] HKEC 1848).
243
[Citing Lord Hoffman] over the last 30 years or so, the nature of the contract of employment has been transformed. It has been recognised that a persons employment is usually one of the most important things in his or her life. It gives not only a livelihood but an occupation, an identity and a sense of self esteem. The law has changed to recognise this social reality. Lord Hoffmann was referring to employment in the UK. But his remarks must be no less applicable to Hong Kong, where a persons employment has come to be regarded as an important source of ones identity, self-esteem and well-being. Just as in the UK, the Courts here have to be cognisant of that social reality and construe employment contracts in its context. Thus, if (for example) parties have agreed specic provisions giving an employee certain rights before an employer can dismiss him, the Court must be careful in construing the employment contract not inadvertently to undermine or negate such provisions. 356 Approach of Warham to be preferred. Insofar as there is any conict in the approaches taken by the two courts referred to above,357 the approach of the court in Warham is to be preferred for the following reasons: to allow an employer to bypass a contractual disciplinary process begs the question as to why the procedure is incorporated as a term of the contract in the rst place. For many employees the incorporation of a disciplinary procedure represents an important safeguard to their employment, and for that reason employers will often incorporate a disciplinary procedure into a contract of employment rather than as a stand alone document of policy, not intended to have contractual effect.358 Second, it would allow an employer to elect in each case whether or not to give an employee the benet of a disciplinary hearing, introducing an element of arbitrary discretion, the very thing a disciplinary procedure is designed to avoid. If an employer wants to retain such discretion, then the options appear to be to have no written disciplinary procedure at all, or to keep any disciplinary procedure as a stand alone policy document containing clear language that any procedure outlined therein is a suggested guideline for proceeding in cases involving misconduct and will not necessarily be applied in every case. Right to terminate can be exercised upon completion of disciplinary process. Once a contractual disciplinary process has been carried out and a nal decision reached, regardless of the outcome of the proceedings, there is nothing to prevent an employer from proceeding to terminate the contract of employment upon notice or payment in lieu of notice.359 6.161
6.162
356 357
358
359
See fn 355 at paras 4446 of the judgment. Judge Reyes regarded the decision in Cheung as a case decided on its own facts which did not bind future courts to read other contracts in the same way: Every contract must be construed on its own terms and within its peculiar factual matrix. The parties are free to decide whether or not to incorporate a disciplinary procedure into the contract of employment. Arguably employers are generally in a stronger bargaining position than employees and so once a disciplinary procedure is incorporated as a term of the contract there seems no justiable reason why an employer should be able to bypass such a term. If a disciplinary procedure exonerates an employee, the employee can still be dismissed without cause upon notice or payment in lieu of notice. On the other hand, if the procedure results in ndings adverse to the employee, the employer can dismiss the employee for misconduct: Gunton v Richmond-upon-Thames London Borough Council (fn 351); Warham v Cathay Pacic Airways Ltd (fn 355).
244
6.163
Constitutional protection afforded to ofce holders. In Lam Siu Po v Commissioner of Police,360 the Court of Final Appeal held that art.10 of the Hong Kong Bill of Rights applied to disciplinary proceedings which determine the right of a person to remain in a profession, service or occupation. The application of art.10 requires disciplinary proceedings conducted by a governmental or public tribunal to be conducted fairly and in accordance with principles of natural justice.361 Right to a fair hearing conferred by art.10 of the Hong Kong Bill of Rights. Article 10 of the Hong Kong Bill of Rights, which confers upon Hong Kong residents the right to a fair hearing, states as follows: All persons shall be equal before the courts and tribunals. In the determination of any criminal charge against him, or of his rights and obligations in a suit at law, everyone shall be entitled to a fair and public hearing by a competent, independent and impartial tribunal established by law. The press and the public may be excluded from all or part of a trial for reasons of morals, public order (ordre public) or national security in a democratic society, or when the interest of the private lives of the parties so requires, or to the extent strictly necessary in the opinion of the court in special circumstances where publicity would prejudice the interests of justice; but any judgment rendered in a criminal case or in a suit at law shall be made public except where the interest of juvenile persons otherwise requires or the proceedings concern matrimonial disputes or the guardianship of children. 362
6.164
6.165
Right to legal representation in disciplinary proceedings. In Lam Siu Po the Court of Final Appeal considered the meaning of the phrase rights and obligations in a suit at law in art.10 (underlined in the passage above). In that case, the employee, a police constable who had been adjudged bankrupt, was convicted of a disciplinary charge relating to serious pecuniary embarrassment stemming from nancial imprudence. Following police disciplinary proceedings he was compulsorily retired with deferred benets. The employee argued that a provision in the Police (Discipline) Regulations363 which prohibited legal representation, and to which the proceedings were subject, was unconstitutional as being contrary to art.10 of the Hong Kong Bill of Rights. The Commissioner of Police refuted the suggestion, arguing that art.10 was incompatible with the internal hearings of a disciplined service, which should be dealt with expeditiously and with a minimum of formality. The Court of Final Appeal, rejecting the Commissioners argument, held that disciplinary proceedingswhether in respect of professions, disciplined services or occupationsare determinations of rights and obligations in suits at law within the meaning of art.10, and should therefore be conducted in accordance with the safeguards granted by art.10 save where it is shown that the protection has been expressly excluded by law and that such exclusion is justied on objective grounds related to the effective functioning of the State or some other public necessity which justies removal of the articles protection. The position
360 361
362 363
[2009] 4 HKLRD 575. See also Chow Shun Yung v Wei Pih (2003) 6 HKCFAR 299; Tse Wai Chun v Solicitors Disciplinary Tribunal [2002] 3 HKLRD 712; Medical Council of Hong Kong v Helen Chan [2010] 3 HKLRD 667. See also Chapter 15 paras 15.09615.104. Article 39 of the Basic Law gives constitutional force to art.10. Cap.232A, Sub.Leg.
245
is no different where legal representation is not requested by the employee facing disciplinary proceedings.364 Requirements of a fair hearing under art.10. On the facts of the Lam Siu Po case, art.10 had been engaged since the employee had faced a determination of his civil right to remain in employment, and the disciplinary proceedings in question had a direct and highly adverse impact upon his livelihood and pension.365 In addition, the Commissioner had not shown a sufcient objective justication for excluding art.10 protection.366 The decision is in line with recent developments in European and UK Law and indicates an increasing willingness on the part of the courts to regard employment rights as worthy of public law protection.367 The constitutional standard is one of fairness; accordingly an employer may satisfy the requirements of art.10 by applying common law principles of procedural fairness.368 What amounts to procedural fairness will differ depending upon the context of the hearing.369 Moreover, it does not require 6.166
364 365
366
367
368
369
Lam Chi Pan v Commissioner of Police (unrep., CACV 193/2008, [2009] HKEC 2049). After the Court of Final Appeals decision in Lam Siu Po there followed a signicant number of applications for leave to apply for judicial review instigated by police ofcers seeking to challenge the fairness of disciplinary proceedings on similar grounds to those raised in Lam Siu Po. Many of these cases sought to challenge decisions which were made in disciplinary proceedings dating back many years, requiring an extension of the three month time limit within which to being an application for leave. However, in Tsui Kin Kwok Johnnie v Commissioner of Police (unrep., HCMP 641/2010, [2010] HKEC 1007) the Court of Appeal held that a change in the circumstances of the law cannot by itself justify an extension of time, save in exceptional circumstances. In the Court of Appeal decision of Lam Chi Wai v Commissioner of Police (unrep., HCMP 311/2010 [2010] HKEC 1036) Kwan JA expressed concern over the strain placed on the resources of the police, the Legal Aid Department and the Judiciary by these belated applications and held that even if the applicant had shown good reason for an extension of time he would have exercised his discretion against him on the grounds that it would be detrimental to good administration. See also Wong Chi Keung v Commissioner of Police (unrep., HCAL 1, 20, 21/2010, [2010] HKEC 809) and Li Kin Wah v Commissioner of Police (unrep., HCAL 126 2009 6/2010 [2010] HKEC 694). In Lam Siu Po the employee succeeded in satisfying the court that he ought to have been allowed to have had legal representation at the disciplinary hearings. However, the Court of Final Appeal did not suggest that legal representation should be made available to an employee in all cases; rather that police disciplinary tribunals ought to have discretion to permit an ofcer to be legally represented where fairness required it. To this extent the protection conferred by art.10 is no greater than that conferred at common law. The common law position is that there is no absolute right to legal representation before an administrative tribunal, but there is a discretion to authorise such representation if fairness dictates: Stock Exchange of Hong Kong Ltd v New World Development Co Ltd (2006) 9 HKCFAR 234; Rowse v Secretary for Civil Service [2008] 5 HKLRD 217. The Court of Final Appeals interpretation of the wording of art.10 of the Hong Kong Bill of Rights in Lam Siu Po followed the European Court of Human Rights interpretation of art.6(1) of the European Convention on Human Rights (which closely resembles the wording of art.10 of the Hong Kong Bill of Rights) in Eskelinen v Finland (2007) 45 EHRR 43. See also Kulkarni v Milton Keynes NHS Trust [2009] IRLR 829, in which Lady Justice Smith held, obiter, that legal representation should be available to public sector employees in cases where dismissal would lead to mandatory reporting to an external body making it difcult if not impossible for the person to work in their chosen eld again. Given the potential impact on internal disciplinary proceedings for public sector employees, permission to appeal to the Supreme Court has been granted on the ground that this is a point of law of public importance. Rowse v Secretary for Civil Service (fn 366) per Hartmann J at 433, para 134; Lam Siu Po v Commissioner for Police (fn 360) per Mr Justice Ribeiro PJ at 623, para 137 and 625, para 145. R v Home Secretary, Ex p Doody [1994] 1 AC 531 (per Lord Mustill at 560). In Medical Council of Hong Kong v Helen Chan (fn 361) the Court of Final Appeal considered whether the presence of legal counsel at the Medical Councils private deliberations at a disciplinary hearing, and counsels preparation of a draft decision had deprived the respondent of procedural fairness at the hearing. The Court held that the answer to this question depended on whether such conduct had rendered the Medical Council less than competent, independent and impartial as a tribunal. In this case it had not, but Bokhary PJ cautioned that it was it was desirable for legal advisers to make a full and accurate statement to all parties of the practice to be followed at the hearing, and that it was generally important for legal advisers to disciplinary tribunals to be make impartiality manifest at all times (see Bokhary PJs judgment at paras 6566).
246
every element of the protections conferred by art.10 to be present at every stage of the determination of an employees rights and obligations, but only that: Such protections should be effective when the determination is viewed as an entire process, including as part of that process such appeals or judicial review as may be available.370 6.167 Labour Departments Guide to Good People Management Practices. As a matter of good practice, it is in any event recommended that an employer adopt a fair and consistent process when conducting disciplinary hearings. There are no formal Codes of Practice governing disciplinary or grievance procedures in Hong Kong, but some general guidance may be found in the Labour Departments Guide to Good People Management Practices (hereinafter referred to as the GPM Guide)371 which recommends that in order to make sure that staff grievances and disciplinary cases are handled fairly and carefully employers should:
lay down the companys rules of conduct and the grievance and disciplinary procedures; ensure that such rules and procedures are simple and clear, logical and fair, and known to all staff; handle all staff grievances and disciplinary cases according to the established rules and procedures; undertake the same investigation process in every case without discrimination; communicate the result of an investigation to the employee concerned in a language he understands and in a speedy manner; and ensure that disciplinary rules and penalties are not contrary to provisions of the EO.372
While none of the recommendations set out in the GPM Guide has the force of law, it is suggested that an employer who has followed such guidance is likely to be regarded more favourably by a tribunal or court than an employer who has not,373 and is likely to be in a better position to defend any claim that the employee might have arising out of the manner in which a disciplinary, grievance or termination was handled by the employer, such as a claim of discrimination, victimisation, or breach of the implied duty of trust and condence.
370 371
372 373
Lam Sui Po v Commissioner for Police (fn 360) per Mr Justice Ribeiro PJ at 614, para 109. Available in PDF format on the Hong Kong Labour Departments website: http://www.labour.gov.hk/eng/public/ wcp/practice.pdf. At para 23. Compare the force of the UKs new ACAS Code of Practice on Discipline & Grievance and accompanying guidance which came into effect on 6 Apr 2009. A dismissal will not be automatically unfair if an employer does not comply with the Code, but a failure to follow the Code will be a factor for Employment Tribunals to consider in determining whether a dismissal was unfair and if an employer or employee unreasonably fails to abide by the principles of the Code, Employment Tribunals may increase or decrease an employees compensation by up to 25%.
CHAPTER 7
EMPLOYMENT PROTECTION, REMEDIES AND ENTITLEMENTS UPON TERMINATION

Para. 1. Introduction .............................................................................................................................. 7.001 2. Employment protection and remedies for wrongful termination ............................................. 7.002 (a) Wrongful dismissal at common law .................................................................................. 7.002 (b) Common law damages for wrongful dismissal ................................................................. 7.003 (c) Wrongful termination under the Employment Ordinance ................................................ 7.012 (d) Statutory compensation for wrongful termination ............................................................ 7.013 (e) Unlawful dismissal ............................................................................................................ 7.022 (i) Where a female employee who is employed under a continuous contract of employment has served notice of her pregnancy on her employer ....................... 7.023 (ii) During an employees absence on sick leave, on any sickness day in respect of which he is entitled to statutory sickness allowance ............................... 7.031 (iii) Where an employee gives evidence or has agreed to give evidence in enforcement proceedings under the Employment Ordinance or the Factories and Industrial Undertakings Ordinance .................................................... 7.036 (iv) Where an employee is entitled to compensation under the Employees Compensation Ordinance ......................................................................................... 7.041 (v) Where an employee is involved in trade union activity .......................................... 7.043 (vi) Where an employee has a spent conviction, or fails to disclose a spent conviction ........................................................................... 7.048 (vii) Where an employee is performing or due to perform jury service ......................... 7.050 (f ) Additional remedies for unlawful dismissal ..................................................................... 7.052 (g) Unreasonable dismissal ..................................................................................................... 7.053 (h) Remedies for unreasonable dismissal ............................................................................... 7.067 (i) Exclusions ................................................................................................................ 7.068 (ii) Order for reinstatement ............................................................................................ 7.070 (iii) Order for re-engagement ......................................................................................... 7.072 (iv) Award of terminal payments ................................................................................... 7.075 (i) Compensation award for dismissal which is both an unreasonable and an unlawful dismissal ............................................................................................................. 7.076 ( j) Damages for non-pecuniary loss ....................................................................................... 7.078 (k) Equitable remedies ............................................................................................................ 7.089 3. Redundancy and lay-offs .......................................................................................................... 7.093 (a) Introduction ....................................................................................................................... 7.093 (b) Entitlement to statutory severance payment ..................................................................... 7.095 (c) Eligibility for severance payment in a redundancy situation ............................................ 7.096
248
EMPLOYMENT PROTECTION, REMEDIES AND ENTITLEMENTS (d) Circumstances not treated as a dismissal for redundancy purposes .............................. 7.098 (e) Termination by reason of redundancy ............................................................................... 7.104 (i) The employer has ceased, or intends to cease, to carry on the business for the purpose of which the employee was employed by him ............................................ 7.107 (ii) The employer has ceased, or intends to cease, to carry on business in the place where the employee was employed .......................................................................... 7.110 (iii) The requirements of the business for employees to carry out work of a particular kind (either generally or in the place where the employee was employed) have ceased, diminished or are expected to cease or diminish ................................. 7.117 (f ) Exclusion of right to severance payment .......................................................................... 7.122 (i) Employee terminated without notice or payment in lieu of notice in circumstances justifying summary dismissal ............................................................7.123 (ii) Employee unreasonably refuses an offer of renewal or re-engagement from employer ................................................................................................................... 7.125 (iii) Employee unreasonably refuses offer of renewal or re-engagement made by employer on terms which are no less favourable than under previous contract ...................................................................................................... 7.126 (iv) Employee leaves his employment prior to expiry of the notice period given by the employer .............................................................................................. 7.130 (g) Eligibility for severance payment in a lay-off situation .................................................... 7.131 (h) Excluded employees .......................................................................................................... 7.137 (i) Amount of severance payment .......................................................................................... 7.138 (j) Timing and notication of claim for severance payment .................................................. 7.144 4. Long service payments ............................................................................................................. 7.157 (a) Entitlement to long service payment ................................................................................. 7.157 (b) Exclusion of right to long service payment ...................................................................... 7.165 (i) Employee terminated without notice or payment in lieu of notice in circumstances justifying summary dismissal ........................................................... 7.166 (ii) Employee leaves his employment prior to expiry of the notice period given by the employer ............................................................................................... 7.168 (iii) Employee engaged under xed-term contract unreasonably refuses an offer of renewal or re-enagagement from employer ................................................. 7.169 (iv) Employee engaged under xed-term contract unreasonably refuses offer of renewal or re-engagement made by employer on terms which are no less favourable than under previous contract ............................ 7.170 (c) Excluded employees .......................................................................................................... 7.175 (d) Amount of long service payment ...................................................................................... 7.176 (e) Timing and method of long service payment .................................................................... 7.182 5. Post-termination considerations ............................................................................................... 7.187 (a) Payments due to employee upon termination ................................................................... 7.187 (b) Employment references ..................................................................................................... 7.191 (c) Notication of termination of employment to third parties .............................................. 7.193 (d) Post-termination obligations of employee ......................................................................... 7.196
1. INTRODUCTION
Overview of chapter. This chapter will rst consider the extent to which Hong Kong law protects an employee against dismissal through the common law action for wrongful dismissal and the various statutory remedies available to an employee for wrongful, unlawful and unreasonable termination. The second part of this chapter concerns the topic of redundancies and lay-offs as distinct forms of termination of employment subject to statutory regulation imposed by the Employment Ordinance (EO). This chapter concludes with a look at entitlement to long service payments and some post-termination considerations which an employer should have regard to once a decision to terminate a contract of employment has been made. 7.001
2. EMPLOYMENT PROTECTION AND REMEDIES FOR WRONGFUL TERMINATION

(a) Wrongful dismissal at common law Contract terminable upon notice. Contracts of employment are generally drafted with no xed period of duration. At common law, provided that the contract of employment is terminated by either party serving the requisite notice of termination provided for in the contract itself or, if the contract is silent as to notice, by either party giving reasonable notice, the contract is terminated lawfully, regardless of the reason for dismissal.1 The employment relationship comes to an end, and in the absence of special circumstances, the employee is not in a position to sue for continuing wages, or to otherwise continue in employment.2 (b) Common law damages for wrongful dismissal Wrongful dismissal. Where an employer terminates a contract of employment without serving the requisite notice or payment in lieu of notice, in circumstances where a summary dismissal is not justied, the termination will be deemed to be a wrongful repudiation of the contract,3 entitling the employee to bring a common law action for wrongful dismissal. Equally, where an employee terminates an employment contract without serving the requisite notice or payment in lieu of notice, in circumstances where he is not justied in treating himself as constructively dismissed, the termination will 7.003 7.002
1 2
De Stempel v Dunkels [1938] 1 All ER 238. See Chapter 6 paras 6.83 to 6.84. In Hill v CA Parsons & Co Ltd [1972] Ch 305, the English Court of Appeal was prepared to enforce the contract employment through the grant of an interim injunction on the grounds of the continued existence of mutual condence between the parties. This case has been restrictively construed in subsequent cases and has been regarded as a rare case on its facts. The employee was dismissed with one months notice after 35 years of service as a chartered engineer for refusing to join a union which had negotiated a closed shop with his employer. He had only two years to go until his retirement so that the dismissal would have affected his pension rights, and the unfair dismissal legislation was due to come into force in England within six months of his dismissal. The employee sued for wrongful dismissal and was successful in his claim for an interim injunction restraining his employers from treating the notice of dismissal as terminating his employment. In these circumstances an employee is generally faced with no option but to accept the repudiation and bring a claim for damages for breach of contract.
250
EMPLOYMENT PROTECTION, REMEDIES AND ENTITLEMENTS
be deemed to be a wrongful repudiation of the contract of employment4 entitling an employer to bring a common law action for wrongful dismissal.5 7.004 Damages for wrongful dismissal. Since an employee is able to be lawfully dismissed upon proper notice or payment in lieu of notice, in an action for wrongful dismissal an employers liability is generally limited to a sum of money covering what the employee would have received by way of net remuneration (including wages, allowances, commission, bonuses,6 and other benets) during the period between the date on which the contract was wrongfully terminated and the date on which the contract could lawfully have been terminated had proper notice been given. Damages limited to date on which employer could have properly terminated contract. In the English Court of Appeal case of Gunton v Richmond-upon-Thames London Borough Council 7 the employee challenged the validity of a dismissal which had failed to observe a contractual disciplinary procedure, claiming that he had never accepted the repudiation of the contract by the employer. Whilst the employee succeeded in his argument, the court held that because the employer could have lawfully terminated the contract by going through the disciplinary procedure, the employee was only entitled to his wages until the date on which a proper dismissal could have been achieved after the time it would have taken to exhaust the disciplinary procedure.8 The court held that the date when the contract would have come to an end must be ascertained on the assumption that the employer would have exercised any power that he may have had to bring the contract to an end in the manner most benecial to himself, i.e. at the earliest date he could. A court or tribunal cannot go further to speculate on the chances of the employee having been retained if the disciplinary process had been determined in his favour.9 The approach to the assessment of damages for wrongful dismissal in Gunton has since been followed in Hong Kong by Hunter J in the case of Lai Foon Yung v Tin Sum Valley Public Primary School.10 Damages generally conned to pecuniary loss. The normal measure of damages for wrongful dismissal of an employee is generally conned to pecuniary loss,11 and is usually loss of earnings, being the amount the employee would have received in wages and benets for the period until the contract of employment could have been terminated validly, less the amount he could reasonably be expected to earn in other employment.12 In most cases, this will be limited to the period of statutory or contractual notice (whichever is the greater), but, as in the Gunton case discussed
7.005
7.006
7 8 9 10 11
12
An employer will normally have no option but to accept the repudiation since a contract of employment is not specically enforceable. An employer must be able to prove actual loss. This is in contrast to the position where an employer brings a claim for wrongful termination under s.8A of the EO: see para 7.013. Contractual bonus payments are recoverable. For a discussion as to whether or not discretionary bonus payments are recoverable upon termination see para 7.189 and Chapter 4 paras 4.1234.130. [1980] ICR 755. See also Boyo v Lambeth Borough Council [1994] ICR 727. See Focsa Services (UK) Ltd v Birkett [1996] IRLR 325 and Janciuk v Winerite Ltd [1998] IRLR 63. [1986] HKLR 128. Addis v Gramophone Co Ltd [1909] AC 488. See paras 7.078 to 7.083 for a discussion of whether damages for non-pecuniary loss are recoverable in a claim for wrongful dismissal. Semana Bachicha v Poon Shiu Man [2000] 2 HKLRD 833. See also Radford v De Froberville [1977] 1 WLR 1262; Shove v Downs Surgical Plc[1984] ICR 532 regarding fringe benets and Silvey v Pendragon Plc [2001] EWCA Civ 784 for the loss of pension rights.
EMPLOYMENT PROTECTION AND REMEDIES FOR WRONGFUL TERMINATION
251
above, could also include a period for the determination of a contractually binding disciplinary process.13 Damages for wrongful termination of a xed-term contract. Although the measure of damages for wrongful dismissal is generally relatively limited, where a contract of employment is for a xed term, not terminable by notice, damages are recoverable for the amount which the employee would have earned for the remainder of the unexpired term of the xed-term contract.14 Liquidated damages clause. A clause which provides for a pre-determined amount payable on wrongful termination of the contract will be enforceable provided that it represents a genuine pre-estimate of the loss and is not a penalty clause.15 Employee under duty to mitigate loss. Under general common law principles, actual loss must be proved, and the party claiming damages has a duty to mitigate its loss.16 In an employment context, the duty to mitigate will oblige an employee to seek and accept any reasonable alternative employment.17 If alternative employment is found, any earnings will be set off against any damages recoverable for the wrongful dismissal.18 If an employee fails to take other employment when he ought reasonably to have done so, damages will be assessed on the basis of the difference between the wages under the broken contract, and what he would have received from the substituted employment.19 A deduction is also generally made on account of the accelerated receipt 7.007
7.008
7.009
13
14
15
16
17
18
19
As in Chin Ah Chai v Koffman Securities Ltd (unrep., HCA 11835/1999, [2001] HKEC 520) where the court awarded common law damages equal to the salary that the employee would have earned had the contract not been wrongfully terminated (the parties agreed as an express term in the contract that upon notice being given prior to the end of the xed term, a payment for the unexpired period of the term would be paid as full and nal settlement to rescind the contract) in addition to three months wages as a payment in lieu of notice under s.8A of the EO. Langton v Carleton (187374) LR 9 Ex 57; Nelson v James Nelson & Sons Ltd [1914] 2 KB 770. See the case of Co Minh v Ming Hing Gem Co Ltd (unrep., CACV 180/1993, [1994] HKEC 196), in which the court rejected the employees claim for three years salary on the grounds that the xed term contract of three years had never been signed by both parties. See also Law Shiu Kai v Andrew v Dynasty International Hotel Corp [2004] 2 HKLRD 524. In Leatra Co Ltd v Lee Kwok Wing [1978] HKDCLR 61 the court found that a provision in a three year xed term contract which provided for the payment of an aggregated sum upon early termination of the contract gave more than just liquidated damages. The court held that it was not a provision for genuinely estimating future loss but a penalty clause and thus unenforceable. See also the case of Lee Pik Shan v Healthy Children (Hong Kong) Fund Ltd (unrep., DCCJ 17054/2001, [2001] HKLRD (Yrbk) 469) in which the District Court awarded loss of earnings beyond the one month notice period on the grounds that the parties had agreed that damages for premature wrongful termination were not limited to payment in lieu of notice, but also included general and special damages that might follow from wrongful dismissal. On this basis the court held that the employee was entitled to recover damages by way of loss of earnings for the remainder of the duration of the one year contract in addition to payment in lieu of notice. Yip Wan Chiu v Magnicent Industrial Ltd [1974] HKLR 183; Kao Lee & Yip v Lau Wing (2008) 11 HKCFAR 576. It is perhaps misleading to talk of a duty to mitigate since an employer has no right to bring a claim for breach of such a duty. In Sotiros Shipping Inc v Sameiet Solholt (The Solholt) [1983] 1 Lloyds Rep 605 Sir John Donaldson (at p 608) put the matter this way: A plaintiff is under no duty to mitigate his loss, despite the habitual use by lawyers of the phrase duty to mitigate. He is completely free to act as he judged to be in his best interests. On the other hand, a defendant is not liable for all loss suffered by the plaintiff in consequence of his so acting. A defendant is only liable for such part of the plaintiffs loss as is properly caused by the defendants breach of duty. A reasonable offer of alternative employment may come from the former employer: Sweetlove v Redbridge & Waltham Forest AHA [1979] IRLR 195. British Westinghouse Electric & Engineering Co Ltd v Underground Electric Railways Co of London Ltd (No. 2) [1912] AC 673. As in Brace v Calder [1895] 2 QB 253 where only nominal damages were awarded in circumstances where the employee had refused to serve two remaining partners following a split in the partnership.
252
of damages for loss of future earnings.20 Any wages earned from new employment will be deducted from wages due under the period of notice from the former employer. 7.010 What constitutes reasonable steps to mitigate will be a question of fact in each case. An employee is only required to act reasonably.21 If an employee has made no attempt to nd another position or has unreasonably refused alternative employment his damages will be reduced to take this into account. On the other hand, what amounts to reasonableness will depend upon the individual circumstances of an employee. A court will have regard to practical considerations such as the status, position and remuneration of the employee in his former role so that he would not be expected to take the rst opportunity that comes along, regardless of what it would convey upon him in terms of status, position or remuneration.22 General principles of mitigation. Some judicial guidance can be gleaned from the English Court of Appeal judgment of Potter LJ in Wilding v BT Plc23 which sets out general principles of mitigation in the employment context: (i) it is the duty of the employee to act in mitigation of his loss as a reasonable man unaffected by the hope of compensation from his former employer; (ii) the onus is on the employer as the wrongdoer to show that the employee has failed in his duty to mitigate his loss by unreasonably refusing the offer of re-employment; (iii) the test of unreasonableness is an objective one based on the totality of the evidence; (iv) in applying that test, the circumstances in which the offer was made and refused, the attitude of his former employer, the way in which the employee had been treated and all the surrounding circumstances should be taken into account, including the state of mind of the employee; and (v) the court or tribunal deciding the issue must not be too stringent in its expectations of the injured party. (c) Wrongful termination under the Employment Ordinance 7.012 Wrongful termination under the EO. If a party to the contract of employment terminates the contract in a manner that is inconsistent with the provisions of the EO it will be a wrongful termination. Instances of wrongful termination include the following: (1) the contract of employment is terminated by either party without giving the minimum period of notice prescribed under the EO, or payment in lieu of notice, or insufcient notice or payment in lieu of notice is given, otherwise than in accordance with ss.6 and 7 of the EO; an employer summarily dismisses an employee without sufcient grounds to do so, otherwise than in accordance with s.9 of the EO;
7.011
(2)
20
21 22
23
Lavarack v Woods of Colchester [1967] 1 QB 278 where a deduction of 1% was made, and Shove v Downs Surgical Plc [1984] IRLR 17 where a deduction of 7% was made. Banco du Portugal v Waterlow & Sons Ltd [1932] AC 452. See for example Yetton v Eastwoods Froy Ltd [1967] 1 WLR 104 in which an employee was held to have acted reasonably in refusing to accept a job with lower status. [2002] EWCA Civ 349.
253
(3)
an employee terminates the contract of employment summarily on the grounds of constructive dismissal without sufcient grounds to do so, otherwise than in accordance with s.10 of the EO; the contract of employment is terminated by either party including in the notice period any period being taken as statutory annual leave, otherwise than in accordance with s.6(2A) of the EO; the contract of employment is terminated by either party including in the notice period any period being taken as statutory maternity leave, otherwise than in accordance with s.6(2B) of the EO. (d) Statutory compensation for wrongful termination
(4)
(5)
Statutory right to compensation for wrongful termination of a contract of employment. Section 8A of the EO provides that where a contract is terminated otherwise than by notice or a payment in lieu of notice in accordance with s.6 or 7 of the Ordinance, the party terminating the contract must pay to the other party a sum equal to that which would have been payable had the contract been terminated by the making of a payment in lieu of notice under s.7 of the Ordinance. Section 8A compensation not payable in certain circumstances. No award of compensation under s.8A of the EO is payable in the following circumstances: where an employee terminates the contract of employment summarily either on the grounds of constructive dismissal under s.10 of the EO,24 or in response to a suspension of employment under s.11(2) of the EO; or where an employer terminates on the grounds of summary dismissal under s.9 of the EO. In these cases the termination is not considered wrongful for the purposes of s.8A of the EO since the party is terminating the contract under permissible circumstances. The party who has not been served with any or any adequate notice or payment in lieu of notice in these circumstances is of course able to make a common law claim for wrongful dismissal and/or breach of contract, but must prove their actual loss in accordance with general common law contractual principles.25 No requirement to prove loss and no duty to mitigate loss. The compensation payable under s.8A of the EO is not linked to actual loss; the party claiming such compensation does not have to prove actual loss and there is no duty to mitigate.26 Accordingly, in the case of an employee claiming compensation for wrongful termination under s.8A of
7.013
7.014
7.015
24
25
26
Ying Cheong Shoe MFY v Yam Yuk Bing [1987] 2 HKC 310,. Although see the decision of Law Shiu Kai v Andrew Dynasty International Hotel Corp [2004] 2 HKLRD 524 , CFI a case where the contract of employment was terminated by constructive dismissal in which the court made an award equivalent to one months salary under s.8A of the EO rather than making an award of common law damages. See Chapter 6, para 6.141, and Ying Cheong Shoe MFY v Yam Yuk Bing [1987] 2 HKC 310 and De Nicholas, Nenita Cientos v Lee Fung Lan (unrep., HCLA 15/1997, [1997] HKEC 444). See Chan Wai Man v Kong Wing Fung (unrep., HCLA 34/1985, [1985] HKEC 368). For a background of the legislative intent relating to this section of the EO, see Mr Justice Ribeiros judgment in Kao Lee & Yip v Lau Wing (2008) 11 HKCFAR 576 .
254
the EO, the full amount will be payable even if the employee commences alternative employment immediately.27 7.016 Employers right of set off. Where an employee wrongfully terminates the contract of employment, an employer has a statutory right to set off any payment owed to an employee against statutory damages awardable to the employer under s.8A of the EO.28 Inconsistent approach to the assessment of statutory compensation. However, the courts have not been consistent when it comes to the assessment of statutory compensation for a wrongful dismissal. In Club Deluxe Ltd v Club Metropolitan Ltd,29 a different approach was taken in the case of a claim made by an employer; the court held that an employee who had given only 14 days notice instead of one month was liable to pay the employer one months payment in lieu of notice, giving no credit for the 14 days notice that had been given, referring to the payment of a months salary by the employee in lieu of notice as a form of liquidated damages. This failure to give credit was noted as being generous to the employer by the Court of Appeal in Club Deluxe Ltd v Club Metropolitan Ltd, but was not expressly disapproved of.30 Section 8A can be pursued in addition to common law claims. Section 8A of the EO does not preclude an employee or employer from claiming damages under common law for wrongful dismissal, subject to the rule against double recovery.31 Although the innocent party has to prove their loss and has a duty to mitigate such loss, a common law claim for damages is not strictly limited to the amount of wages that would have accrued to the innocent employee during the requisite notice period.32 Moreover, neither a common law damages claim for wrongful dismissal, nor a claim for statutory compensation for wrongful termination under s.8A of the EO, will preclude an entitlement to damages for separate breaches of the employment contract arising from the same set of facts, subject again to the rule against double recovery.33 For example, the facts leading up to a wrongful dismissal may enable the employee to also claim breach of the implied term of trust and condence. The latter claim, in
7.017
7.018
27
28 29 30 31
32
33
It should be noted that a different approach was applied in a case where employees continued to work for their employer after the wrongful termination. In Chan Yin Ping v Pome Ltd (unrep., HCLA 18/1989, [1989] HKLY 524) the applicants, who were given only seven days notice of termination, had all agreed to work beyond this period until certain work was completed. They were awarded damages for one months salary for wrongful dismissal pursuant to s.8A(1) of the EO, the contracts having been terminated other than by one months notice in accordance with s.6(2) of the Ordinance. However, the presiding ofcer set off against the damages the amount of the wages paid during the one-month period which would have comprised the correct notice. The applicants appeal was dismissed by Ryan J on the grounds that the intention of s.8A(1) of the EO was to ensure that the employee was not deprived of any wages that would have been earned but for the early termination of the contract, and that the intention of the legislation was to ensure that an employee recovered one months wages either by wages for work done or in lieu thereof. Section 25(3) of the EO. (unrep., HCA 8339/1990). [1995] 2 HKLR 69. Under this rule a party would not be able to claim the equivalent of one months payment in lieu of notice under s.8A of the Ordinance in addition to common law damages for wages he would have received during the same one month period. For example, see Gunton v Richmond-upon-Thames London Borough Council (fn 7) and Boyo v London Borough of Lambeth (fn 8) in which the employees were awarded damages covering a reasonable period for carrying out appropriate disciplinary procedures in addition to their contractual notice period. See Semana Bachicha v Poon Shiu Man (fn 12).
255
contrast to a claim for wrongful dismissal, would enable the employee to seek damages based on continuing nancial loss.34 Semana Bachicha v Poon Shiu Man Henry. A case which illustrates the operation of this principle in practice is Semana Bachicha v Poon Shiu Man35 in which the employee had been subjected to an oppressive work regime, denied proper rest days, regularly pressed to obey work instructions which were neither reasonable nor lawful and subjected to physical and psychological abuse of what was termed a degrading and frightening nature. After six months (out of a two-year xed-term contract) she was forced to resign on account of conduct justifying constructive dismissal, but her employers accused her of walking out of her job. The Court of Appeal held that the conduct of the employer was in breach of the implied term in employment contracts that the employer would not engage in conduct likely to undermine the trust and condence required for the employment relationship, and that the circumstances in which the employment had terminated, namely under the employers accusation that the employee had abandoned her job, had deprived the employee of a signicant and not merely speculative chance of securing alternative employment with the permission of the Immigration Department.36 The Court of Appeal held that the employees remedy in damages for breach of a contract of employment was not restricted to damages for wrongful dismissal. The employee was awarded damages to reect the loss of a chance of securing anticipated earnings up to the time when she was granted permission to seek alternative employment in Hong Kong. Damages were calculated by reference to her monthly wages, discounted by 50 per cent to reect the chance that she would have in any event have been refused permission by the Immigration Department of securing alternative employment. Extent of damages recoverable under s.8A. Whether or not an award made pursuant to s.8A of the EO is limited to a claim for liquidated damages has been the subject of judicial comment, but remains unclear. In the case of Kao Lee & Yip v Lau Wing37 Yuen JA in the Court of Appeal expressed the view that s.8A conned the employees remedy in the case of a wrongful termination to liquidated damages for lost wages that would have accrued to the employee during the requisite notice period, removing any right to damages for any other fringe benets falling outside of the statutory denition of wages. The point was not argued before the Court of Final Appeal and accordingly 7.019
7.020
34
35 36
37
Semana Bachicha v Poon Shiu Man (fn 12), (referred to by the Court of Final Appeal in Kao Yee & Lipsee para 7.020). Fn 12. The decision in Semana Bachicha must now be treated with some caution to the extent that it purports to extend a common law claim for breach of the implied duty of trust and condence to the decision to dismiss itself (as distinct from the circumstances leading up to a dismissal). In Lee Pik Shan v Healthy Children (Hong Kong) Fund Ltd [2001] 3 HKLRD L12 the Semana Bachicha case was considered to be a decision decided on its peculiar facts. See also, Karchoud v Incorporated trustees of the Islamic Community Fund of Hong Kong [2003] 4 HKC 79; Sun Zhongguo v BOC Group Ltd [2003] 2 HKC 239; and Cheung Chi Keung v Hospital Authority [2006] 2 HKLRD 46; Ko Hon Yue v Liu Ching Leung (unrep., HCA 3494/2003, [2008] HKEC 1314). However, note the Court of Appeal decision in Tadjudin v Bank of America National Association [2010] 3 HKLRD 417 which acknowledged the developing nature of the law in this area, and allowed an employees appeal against a strike out application based on an implied term that the employer would not exercise its right to terminate her employment by giving one months notice in writing or by paying one months salary in lieu of notice in order to avoid her being eligible for the employers performance incentive programme. See also Chapter 6 paras 6.084 and 6.093 to 6.096 for further discussion of this issue. [2007] 3 HKLRD 365 at 376 paras AC.
256
the court maintained the view that it was not called upon to decide whether Yuen JAs views were correct. However, Mr Justice Ribeiro, delivering the unanimous judgment of the court, expressly left the question open,38 commenting upon the matter in the following terms: [I]t is in principle clear, as held by the House of Lords in Malik v Bank of Credit and Commerce International (SA) [1998] AC 20 and applied by the Court of Appeal in Hong Kong in Semana Bachicha v Poon Shiu Man [2000] 3 HKC 452, CA, that where an employer terminates an employees contract, whether lawfully or unlawfully, any distinct breach of contract (such as a breach of the implied obligation of trust and condence) remains available to the employee as a separate cause of action. Thus, where breach of such an independent obligation occurs alongside a breach involving a wrongful termination, both causes of action are maintainable and the employees remedy is not conned to a claim for lost wages under section 8A. The question I would leave open is whether an employee who suffers loss beyond loss of wages (as dened in the Ordinance) by reason of a single breach involving the wrongful termination of the contract is conned by section 8A to a remedy for lost wages or whether, on the contrary, a common law claim for unliquidated damages in respect of the additional loss is maintainable.39 7.021 Employees statutory entitlements not adversely affected. In addition to a payment under s.8A an employee is also entitled to claim outstanding wages,40 long service payments,41 severance payments,42 maternity pay,43 sickness pay,44 holiday pay,45 annual leave,46 end of year payments47 and any other payment arising under the terms of the employment contract. (e) Unlawful dismissal 7.022 Circumstances amounting to unlawful dismissal. The termination of a contract of employment is expressly prohibited by statute in the following circumstances: (i) Where a female employee who is employed under a continuous contract of employment has served notice of her pregnancy on her employer 7.023 Protection afforded to pregnant employees. A female employee who has served notice of her pregnancy is protected from dismissal, other than in circumstances
38
39 40 41 42 43 44 45 46 47
See also Archer v The Hong Kong Channel Ltd [1998] 1 HKLRD 829 in which Litton PJ contemplated the possibility that a claim for wrongful termination in respect of losses going beyond loss of wages may be sustainable notwithstanding s.8A. Kao Lee & Yip v Lau Wing (2008) 11 HKCFAR 576, Mr. Justice Ribeiro PJ at para 29. Section 25 of the EO. Section 31T of the EO. Section 31D of the EO. Section 15(2) of the EO. Section 33(4B) of the EO. Section 40A of the EO. Section 41D of the EO. Section 11E(2) of the EO.
257
justifying a summary dismissal under s.9 of the EO, during the period from the date on which her pregnancy is conrmed by a medical certicate to the date on which she is due to return to work after her maternity leave or the date of the cessation of the pregnancy other than by reason of giving birth (i.e. by miscarriage or abortion).48 In Hong Kong Ming Wah Shipping Co Ltd v Sun Min49 the employee who had served a medical certicate and a notice on her employer of her pregnancy was informed that she was to be transferred back to the mainland to work for a mainland subsidiary a month later. She was unwilling to accept the transfer and in the event did not report to work on the mainland and led a claim. The Labour Tribunal initially dismissed her claim on the grounds that her transfer was merely an internal arrangement which did not constitute a termination of her employment. The Court of Final Appeal (upholding the decisions of Deputy Judge Poon and the Court of Appeal) held that she had been dismissed for the purposes of s.15(1)(a) of the EO. Protection commences upon employee serving notice of pregnancy. Where an employee serves notice of her pregnancy immediately after she has been given notice of the termination of her employment (other than in cases of summary dismissal under s.9 of the EO), the employer must withdraw the notice of termination.50 Duration of prohibition on termination limited to the period of statutory maternity leave. The prohibition on termination only applies to the statutory maternity leave period of 10 weeks, so an employer may serve notice of termination during a period of contractual maternity leave which exceeds the statutory period. However, an employer should ensure that a termination during any period of pregnancy or maternity leave can be fully justied on objective grounds since gender and pregnancy are protected categories under the Sex Discrimination Ordinance (SDO) (Cap.480) and marital status is protected under the Family Status Discrimination Ordinance (FSDO) (Cap.527). Under these Ordinances it is unlawful to terminate an employees contract of employment on the grounds of one of the protected categories. Presumption of wrongful termination. Where an employer dismisses an employee in circumstances prohibited by s.15(1) of the EO, there is a presumption of wrongful termination, namely that the employer dismissed the employee otherwise in accordance with s.9 of the EO.51 In criminal proceedings it is a defence for the employer to show that at the time of the termination the employer purported to summarily dismiss the employee and that he believed he had a ground to do so.52 Criminal liability. An employer who contravenes the prohibition will be guilty of an offence and liable on conviction to a ne at level 6.53 Compensation payable to employee. In addition an employer who is found to have contravened the prohibition will be liable to pay the employee statutory compensation 7.024
7.025
7.026
7.027 7.028
48 49 50 51
52 53
Section 15(1)(a) of the EO. Se also s.6(2B) of the EO. (2006) 9 HKCFAR 49. Section 15(1)(b) of the EO. See Hong Kong Ming Wah Shipping Co Ltd v Sun Min (fn 49). Section 15(1B) of the EO. The onus is on the employer to prove that the termination was in accordance with s.9 of the EO (namely a reason justifying summary dismissal). Section 15(1B) and (1C) of the EO. Section 15(4) of the EOa level 6 ne is currently HK$100,000.
258
amounting to a sum equivalent to a payment in lieu of notice (to the extent that such payment has not been made), an additional one months wages, and the amount of statutory maternity leave pay which she would have been entitled to but for the dismissal.54 7.029 Loss of protection against termination in event of miscarriage or abortion. As noted at para 7.023 above, an employee loses the protection conferred by the EO immediately upon her pregnancy coming to an end by reason of a miscarriage or abortion. Termination during rst 12 weeks of probation period permissible. An employer may dismiss a female employee who has given notice of her pregnancy during the rst 12 weeks of any probationary period for any reason other than her pregnancy.55 (ii) During an employees absence on sick leave, on any sickness day in respect of which he is entitled to statutory sickness allowance 7.031 Protection afforded to employees on statutory sick leave. An employer is prohibited from terminating an employees contract of employment, other than in circumstances justifying a summary dismissal under s.9 of the EO,56 during any period taken as paid statutory sick leave. The statutory sickness scheme provides that an employee is entitled to a statutory sickness allowance if the employee takes four or more consecutive sickness days. No sickness allowance is payable where an employee is absent as result of sickness for less than four consecutive days, unless the absence is on account of a miscarriage or attendance for a medical examination or treatment in relation to pregnancy or maternity.57 Termination permissible on paid or unpaid non-statutory sick leave days. It is common practice for employers in Hong Kong to continue to pay the salary of an employee taking less than four consecutive days off as sickness leave, but under the provisions of the Ordinance there is no obligation to do so. In the absence of an employer electing to continue to pay an employee during such periods, the time off must be taken as unpaid leave. However, the prohibition against termination only applies to statutory sickness leave periods. Accordingly, an unfortunate consequence of these provisions is that an employer who terminates a contract of employment during the rst three days of a sickness leave absence by making a payment in lieu of notice will not fall foul of the prohibition against the termination of an employee on sickness leave. An employer may also serve notice of termination during a period of contractual sick leave which exceeds the statutory period.58 In either instance, an employer should ensure that a termination during any period of sickness absence can be fully justied on objective grounds since
7.030
7.032
54 55 56
57 58
Section 15(2) of the EO. Section 15(1A) of the EO. The onus is on the employer to prove that the termination was in accordance with s.9 of the EO (namely a reason justifying summary dismissal). Section 33(3A), (3B) and (3C) of the EO. Statutory sickness accrues from time to time at the rate of two paid sickness days for each completed month of the employees employment during the rst 12 months of a continuous employment, and 4 paid sickness days thereafter. The total number of paid sickness days an employee may accumulate is capped at 120 days: s.33(2) of the EO.
259
termination on the grounds of illness, disease or loss of bodily parts or functions is unlawful under the Disability Discrimination Ordinance (DDO) (Cap.487). Presumption of wrongful termination. Where an employer dismisses an employee on a statutory sick leave day (i.e. a day on which an employee is entitled to be paid statutory sickness allowance), there is a presumption of wrongful termination, namely that the employer dismissed the employee otherwise in accordance with s.9 of the EO.59 In criminal proceedings it is a defence for the employer to show that at the time of the termination the employer purported to summarily dismiss the employee and that he believed he had a ground to do so.60 Criminal liability. If the employer is found to have wrongfully dismissed the employee he is guilty of an offence and liable on conviction to a ne at level 6.61 Compensation payable to employee. In addition, an employer who is found to have contravened the prohibition will be liable to pay the employee statutory compensation in the form of a sum equivalent to a payment in lieu of notice, an additional seven days wages, and the amount of statutory sickness allowance which the employee would have been entitled to but for the dismissal.62 (iii) Where an employee gives evidence or has agreed to give evidence in enforcement proceedings under the Employment Ordinance or the Factories and Industrial Undertakings Ordinance Protection afforded to employees giving evidence in health and safety related proceedings. An employer is not permitted to terminate or threaten to terminate the employment of, or discriminate against, any employee who has given or agreed to give evidence in any proceedings, or information to a public ofcer in any inquiry, relating to (a) the enforcement of either the EO or the Factories and Industrial Undertakings Ordinance (FIUO)63 or (b) relating to an accident to an employee arising out of and in the course of his employment or (c) for the breach of a statutory duty in relation to the safety of persons at work.64 Criminal liability. An employer who dismisses an employee in contravention of the provisions of the EO will be guilty of an offence and will be liable upon conviction to a ne at level 6.65 Compensation payable to employee. In addition to any ne which may be imposed upon an employer found guilty of the offence, a court or magistrate may order the employer to pay compensation to the employee who was the victim of the offence. The 7.036 7.033
7.034 7.035
7.037
7.038
59
60 61 62 63 64 65
Section 33(4BAA) of the EO. The onus is on the employer to prove that the termination was in accordance with s.9 of the EO (that is,for a reason justifying summary dismissal). Section 33(4BAA) and (4BAB) of the EO. Section 33(4BB) of the EOa level 6 ne is currently HK$100,000. Section 33(4BA) and (4C) of the EO. Section 6 of the FIUO (Cap.59) . Sections 63A(5) and 72B of the EO. Section 63A(5) of the EO. The offence is one of strict liability and can therefore be committed without the requisite knowledge on the part of an employer.
260
amount of compensation is left to the discretion of the court or magistrate to set as they consider appropriate having regard to the circumstances of the case.66 7.039 7.040 Criminal liability. An employer who dismisses an employee in contravention of the provisions of the FIUO will be liable upon conviction to a ne of HK$50,000.67 Commissioner for Labours consent required for prosecution. The offences under the EO and FIUO referred to above may not be prosecuted by an authorised ofcer of the Labour Department without the written consent of the Commissioner for Labour.68 The Commissioner for Labour, in turn, may not give his consent to a prosecution before giving the employer an opportunity of being heard.69 (iv) Where an employee is entitled to compensation under the Employees Compensation Ordinance 7.041 Protection afforded to employees entitled to compensation for work related injury. An employer is prohibited from terminating, without the consent of the Commissioner for Labour, the employment of an employee who has suffered a work related injury entitling him to compensation under the Employees Compensation Ordinance (ECO), or from giving notice of termination prior to the determination of a compensation claim under the Employees Compensation Ordinance.70 An employer is also prohibited from terminating the employment of an employee who has suffered temporary incapacity for a period not exceeding three days in circumstances which entitle him to claim employees compensation, or from giving notice of termination before the period of temporary incapacity has expired and compensation relating to the incapacity has been paid.71 Criminal liability. An employee who terminates or gives notice of termination of employment in contravention of the provisions of the Employees Compensation Ordinance will be guilty of an offence and liable upon conviction to a ne at level 6.72 (v) Where an employee is involved in trade union activity 7.043 Protection afforded to employees engaged in trade union activity. An employer is prohibited from terminating a contract of employment by reason of an employee exercising his rights in respect of membership of a registered trade union, participation in trade union activities or the right of association conferred by the EO.73
7.042
66 67 68
69
70 71 72 73
Section 72B(2) of the EO. Section 10(4) of the FIUO . Sections 64(1) and (2) of the EO and s.17(1) and (2) of the FIUO. The requirement of the consent of the Commissioner does not apply to a case in which the Attorney-General intends to bring a prosecution in relation to the same offence: s.64(4) of the EO; s.17(3) of the FIUO; and s.14B of the Criminal Procedure Ordinance (Cap.221). In HKSAR v Kamfaith Industrial Ltd (unrep., HCMA 580/2005, [2005] HKEC 1470), Nguyen J regarded a conciliation meeting which took place at the Labour Department and in which representatives from both sides were in attendance as sufcient for these purposes. Section 48(1) of the ECO (Cap.282). Section 48(1A) of the ECO. Section 48(2) of the ECO. Section 21B of the EO.
261
Criminal liability. Any employer who dismisses an employee in contravention of this provision will be guilty of an offence and liable on conviction to a ne at level 6.74 Strike action not protected. Protection is only afforded for participation in trade union activities which take place at any appropriate time.75 Appropriate time is dened as either outside of working hours or a time within working hours at which it is permissible, that is a time at which the employer has either agreed to or given its consent for such activities to take place.76 Accordingly, participation in strike action is not a protected activity. Moreover, the fact that s.9(2) of the EO expressly provides that an employer is not entitled to terminate the employment of an employee who takes part in strike action on any of the grounds permitted for a summary dismissal under s.9(1) of the EO leaves open the question of whether an employer may be able to terminate an employees contract of employment by notice in cases where the employee takes part in strike action, and indeed by its very presence suggests that a termination on notice is permissible in such circumstances. Scope of activities protected. To what extent are other trade union activities which could amount to a breach of the contract of employment protected? The EO does not dene trade union activities, but it is probably safe to assume that activities permitted under the Trade Unions Ordinance (TUO)77 would fall within its scope. The TUO permits peaceful picketing and provides protection against a civil suit in respect of any act done in furtherance of a trade dispute, but does not elaborate on what types of act fall within that description. Warham v Cathay Pacic Airways Ltd. Warham v Cathay Pacic Airways Ltd78 concerned a claim arising out of the dismissal of 49 Cathay Pacic Airline pilots who were dismissed en masse in 2001 following a contract compliance campaign instigated by the pilots union, which entailed pilots working to rule in strict compliance with the airlines operation manuals. All of the 49ers (as they came to be called) were members of the union, some more active than others. The airline denied that the pilots had been dismissed by reason of their trade union activities, and claimed that the dismissals were for a valid reason within s.32K of the EO, relying alternatively on the conduct of the employees and any other reason of substance.79 This was rejected by Reyes J, who having made an objective consideration of all relevant circumstances surrounding the dismissals, held that the predominant reason for the pilots sackings was their active support of and engagement in the activities of the union, which were protected under s.21B.80
7.044 7.045
7.046
7.047
74 75 76 77 78 79
80
Section 21B(2) of the EO. Section 21B(1)(b) of the EO. Section 21B(3) of the EO. Cap.332. (unrep., HCMP 4400/2001, HCA 2822/2002, 299, 1405/2006, 807/2007, [2009] HKEC 1848). The airline cited in support of these grounds the selected pilots unusually high rate of calling in sick on reserve days, and their perceived negative attitude towards the airline. the 49ers (including the Plaintiffs) were principally dismissed because management was unable to make headway in last minute negotiations with the union. Cathays intention was to show union members that management was prepared to take tough action against pilots who participated in MSS [Maximum Safety Strategythe contract compliance campaign]. Per Reyes J, at para 69 of the judgment.
262
(vi) Where an employee has a spent conviction, or fails to disclose a spent conviction 7.048 Protection afforded to employees with spent convictions. An employer is not permitted to dismiss an employee with a spent conviction by reason of the conviction, or any failure to disclose it.81 A spent conviction is one where (a) the employee has been convicted for a rst time offence for which he was sentenced to no more than three months imprisonment or a ne not exceeding HK$10,000 and where he has not been convicted for a further offence for a period of at least three years, or (b) where the employee was convicted for an offence related to membership of a triad society for which he was sentenced to no more than three months imprisonment or a ne not exceeding HK$10,000, where he has not been convicted for a further offence for a period of at least three years and where he has renounced his association with the triad society.82 No criminal or civil liability. The Rehabilitation of Offenders Ordinance does not provide for any criminal or civil sanction against an employer who contravenes the prohibition against dismissal, but provides that: It shall not be a lawful or proper ground for dismissing or excluding that individual from any ofce, profession, occupation or employment or for prejudicing him in any way in that ofce, profession, occupation or employment. Accordingly, an employer who dismisses an employee in these circumstances is unlikely to be able to satisfy a court or tribunal that the reason for the dismissal was a valid reason for purposes of defending a claim of unreasonable dismissal. (vii) Where an employee is performing or due to perform jury service 7.050 7.051 Protection afforded to employees performing jury service. An employee who is performing jury service is protected from dismissal.83 Criminal liability. An employer who terminates, or threatens to terminate the employment of or discriminate against an employee who has served, is serving or has been summoned to perform jury service in court or in a coroners inquest will be guilty of an offence and liable on conviction to a ne of HK$25,000 and to imprisonment for up to three months.84 (f ) Additional remedies for unlawful dismissal 7.052 Additional remedies under Part VIA of the EO. In addition to the criminal penalties and civil remedies referred to above, an employee who has been unlawfully dismissed in contravention of one of the prohibited circumstances of termination set out in the EO,
7.049
81
82 83 84
Rehabilitation of Offenders Ordinance (Cap.297). Note, however that there are a number of exceptions to the general rule in relation to certain proceedings, and in respect of certain ofce holders, including in respect of disciplinary proceedings relating to barristers, solicitors or accountants: see ss.3, 4 and 5 of the Ordinance. Sections 2(1) and 2(1A) of the Rehabilitation of Offenders Ordinance (Cap.297). Sections 33(1) and (2) of the Jury Ordinance (Cap.3). Sections 33(1) and (2) of the Jury Ordinance (Cap.3).
263
the ECO or the FIUO85 without a valid reason86 will be entitled to be granted remedies against his employer under Pt VIA of the EO.87 These are discussed below.88 (g) Unreasonable dismissal Circumstances amounting to unreasonable dismissal. Part VIA, s.32A of the EO confers upon an employee who has been dismissed by his employer and who has been employed under a continuous contract for not less than 24 months the right to claim one of three remedies for unreasonable dismissal in the following circumstances: (i) Where he is dismissed by the employer because the employer intends to extinguish or reduce any right or benet conferred by the EO; (ii) Where the employer unilaterally varies the terms of his contract of employment because the employer intends to extinguish or reduce any right or benet conferred by the EO; (iii) Where he is dismissed by the employer other than for a valid reason and in contravention of one of the prohibited circumstances of termination set out in the EO, the ECO or the FIUO.89 Presumption of intention to reduce or extinguish right benet or protection under the EO. With regard to (i) and (ii) above, there is a presumption that the employer has an intention to extinguish or reduce a right benet or protection that the employee has under the EO unless the employer is able to show one of ve valid reasons for the dismissal.90 Denition of dismissal. A dismissal for these purposes includes termination by an employer with or without notice in circumstances which do not justify a summary dismissal, non-renewal of a xed-term contract, or constructive dismissal on the part of the employee by reason of the employers conduct.91 Valid reasons for dismissal. Section 32K of the EO sets out ve circumstances in which a dismissal, or the variation of a contract of employment, for an employee who has been employed under a continuous contract of employment for 24 months or more may be regarded as valid: (i) the conduct of the employee; (ii) the capability or qualications of the employee for performing work of a kind which he was employed by the employer to do;92 7.054 7.053
7.055
7.056
85 86 87 88 89 90 91 92
Namely, the circumstances listed at (i) to (v) set out in paras 7.0237.047. Namely, for one of the ve reasons set out in s.32K of the EO. Section 32A(c) of the EO. At paras 7.0767.077. Namely, the circumstances listed at (i) to (v) set out in paras 7.0237.047. Section 32(A)(2) and (3) of the EO. Section 32B of the EO. An employer is not able to impose additional qualications or capability requirements for a position that an employee was originally capable or qualied to perform at the time he was employed.
264
(iii) the redundancy of the employee or other genuine operational requirements of the business of the employer; (iv) the fact that the employee and/or employer would be in breach of the law if the employment were to continue, or were to continue without a variation of the terms of that contract of employment; (v) any other reason of substance which, in the opinion of the court or the labour tribunal, was sufcient cause to warrant the dismissal of the employee or the variation of the terms of that contract of employment. 7.057 Court to have regard to all the circumstances of the claim. There is broad scope within these ve set of circumstances for an employer to justify a dismissal. A degree of balance to this is perhaps found in s.32L of the EO, which confers upon a court or labour tribunal a statutory duty to have regard to all the circumstances of the claim, including but not limited to, the length of time that the employee has been employed by the employer compared to the length of qualifying service required for the right, benet or protection conferred by the Ordinance which is capable of being extinguished or reduced by the dismissal or variation of the terms of the contract of employment. In practice, however, it is easy for an employer to satisfy the requirement of having a valid reason for termination. No requirement to show dismissal is fair or reasonable. In order for an employer to show that his intention in dismissing the employee was not an intention to extinguish or reduce any right, benet or protection conferred or to be conferred on the employee under the Ordinance, an employer only has to be able to establish that the dismissal or variation in the terms of the contract of employment was carried out for one of the ve valid reasons. In contrast to the position under the statutory unfair dismissal regime in the United Kingdom, there is no further requirement under Pt VIA of the EO to show that the dismissal or variation was reasonable or fair or was carried out in a manner that was either reasonable or fair. No requirement to show dismissal is within a range of reasonable responses. This issue was considered at length in the case of Thomas Vincent v South China Morning Post Publishers Ltd 93 which concerned an employee whose employment as a journalist with the South China Morning Post newspaper was terminated on notice on the grounds of plagiarism one month prior to his fth year of continuous employment, and one month before qualifying for a long service payment. The employee commenced an action for unreasonable dismissal against his employer,94 claiming that he was dismissed in order to deprive him of his entitlement to a long service payment. The trial judge found that the employees conduct amounted to serious professional misconduct for a journalist but, following the two-stage approach adopted in the United Kingdom, went on to hold that for a reason for dismissal to be valid under s.32K of the EO, the dismissal must fall within the band of reasonable responses which a reasonable employer might have adopted, and that the employers
7.058
7.059
93 94
(2005) 8 HKCFAR 605. Under s.32A(1)(a) of the EO.
265
response in this case did not fall within that band.95 This approach was rejected by the Court of Appeal, whose decision was upheld by the Court of Final Appeal. Difference of approach between the United Kingdom and Hong Kong. Mr Justice Bokhary PJ in the Court of Final Appeal set out what he considered to be the material differences in approach between the statutory scheme of the United Kingdom compared to that of Hong Kong:96 Under United Kingdom employment legislation, the issue is whether the dismissal was fair or unfair. And that issue turns on whether the employer had acted reasonably or unreasonably in treating the reason for dismissal as a sufcient reason for dismissing the employee. So the band of reasonable responses approach springs from reasonableness being the touchstone and the industrial tribunal having to refrain from substituting its own decision for that of the employer. Our employment legislation is materially different from that of the United Kingdom. The issue under s.32A(2) and 32K is whether the employers intention in dismissing the employee was to extinguish or reduce any right, benet or protection conferred or to be conferred on the employee under the Ordinance. On this issue, an employee who is dismissed after at least 24 months continuous service is assisted by s.32A(2). As we have seen, s.32A(2) provides that the employer is taken to have so intended unless he shows a valid reason for dismissal within the meaning of s.32K. No requirement to show process was reasonable or fair. The Court of Final Appeal in Vincent rejected on similar grounds the employees submission that the process by which he was dismissed was unfair. It is clear therefore that the English authorities relating to unfair dismissal are of little practical use in Hong Kong cases of unreasonable dismissal. Employer cannot act in an arbitrary manner. Despite setting the stage for a very different approach to the issue of unreasonable dismissal in Hong Kong, the Court of Final Appeal has made it clear that an employer may not proceed in an arbitrary manner. If the manner of an employees dismissal is arbitrary, then it will be more difcult for his employer to show a valid reason (in accordance with the requirement of s.32K of the EO) for the dismissal.97 Conduct must be serious enough to justify termination. Where the reason put forward by the employer is the conduct of the employee, the conduct complained of must be of substance and relevant to the question of whether or not to dismiss the employee. If the employees conduct is deemed to be triing, then such conduct is likely to be ignored by the court or tribunal under the de minimis principle. As a general principle, the less serious the conduct, the harder it will be for the employer to prove that it was the reason, rather than a pretext, for the dismissal.98 7.061 7.060
7.062
7.063
95
96 97 98
It was also common ground between counsel appearing for the parties at rst instance that the band of reasonableness approach was in fact the correct approach. Thomas Vincent v South China Morning Post Publishers Ltd (fn 93) at pp 269270 para G-A. See fn 93 at p 271 para AF. See fn 93 at p 270 para GI.
266
7.064
Employer permitted to dismiss and rehire employees in order to break continuity of employment. Beyond the example cited in the paragraph above, what the Hong Kong courts will be prepared to regard as arbitrary in this context remains uncertain. However, if the approach taken by the Court of Appeal in the case of Lui Lin Kam v Nice Creation Development Ltd99 is any indication, then it is likely to be construed restrictively and in favour of the employer. Lui was concerned with an arrangement of successive contracts of 18 months duration with a two week break in between in order to avoid liabilities for severance payment or long service payment. Deputy Judge Lam took the view that it was clearly a case caught by s.32A(1)(a) of the EO read together with s.32B(1)(b), namely that the employer intended to extinguish or reduce the Claimants rights to severance payments or long service payments. He regarded an agreement to break the continuity of the contract to extinguish the right of the Claimants to severance payment or long service payment, as contrary to Pt VIA and void under s.70 of the EO.100 Concept of global contracts rejected by Court of Appeal. Deputy Judge Lams approach was rejected by the Court of Appeal which, somewhat remarkably, did not consider such agreements to be caught by the anti-avoidance provisions of s.70 of the EO. The Court of Appeal rejected what it termed the articial device of the concept of global or umbrella contracts pursuant to which a series of contracts are treated as a single contract even if the employee is required to take a break between each contract. For a global contract to exist there needed to be an irreducible mutuality of obligations;101 that is, something said or done by the employer to show that the parties regarded the employment relationship as continuing despite the termination of the contract of employment. A settled expectation, or virtual certainty on the part of the employee was considered insufcient in the absence of mutual obligations. Tang JA, delivering the unanimous decision of the Court of Appeal stated: 102 It is quite obvious from the evidence that the defendant had adopted the practice of entering into employment contracts of 18 months only with its employees, with the view to avoid liability to pay, for example, severance pay. Insofar as the right to such payment depended on a continuous contract for 24 months, the defendant was acting perfectly within its legal right not to employ a worker for a continuous period of 24 months. I am concerned with the legal rights of the parties and not with the morality of such a practice. No doubt many employers will be guided by their self interest and they would wish to employ their employees on a long term basis for the sake of good morale and loyalty. But provided an employer was acting within the law, he is also entitled to the full measure of the law.
7.065
99
100 101 102
[2006] 3 HKLRD 655. See also Wong Man Sum v Wonderland Seafood Restaurant (unrep., CACV 241/2005, [2006] HKEC 1930). Lui Lin Kam v Nice Creation Development Ltd (unrep., HCLA 106/2002, [2003] HKEC 855). Per Tang JA at 665B. Lui Lin Kim v Nice Creation Development Ltd [2006] 3 HKLRD 655 at p 673 para EH.
267
Unsatisfactory state of Hong Kong Law. The Court of Appeals decision appears to run contrary to the spirit of the employment protection conferred by Pt VIA, and in particular the language of s.32L of the EO.103 This approach also runs contrary to the development of the law in other common law jurisdictions, such as the United Kingdom,104 and the position under P.R.C. law.105 In Wong Man Sum v Wonderland Seafood Restaurant106 the Court of Appeal were bound to follow the decision in Liu Lin Kam, but the unsatisfactory state of the law prompted Cheung JA to deliver the following remarks: The Employment Ordinance is clearly in the nature of a social legislation. Its aim is to provide some minimum benets to workers who, more often than not, do not have equal bargaining powers as their employers. This disparity is even more intense in Hong Kong when there is no system of collective bargaining between employers and workers unions. The situation is clearly unsatisfactory when employers are able to adopt devices which relieve them of their obligation towards their employees. The consequence is that a large sector of the labour force is being deprived of the entitlement intended by the legislature for their benet. This is not conducive towards social harmony.107 (h) Remedies for unreasonable dismissal Three possible alternative remedies. There is an option of one of three remedies potentially available to an employee who has been unreasonably dismissed by his employer in circumstances where the employer is deemed to have intended to extinguish or reduce a right, benet or protection conferred upon the employee by the EO: an order for reinstatement, an order for re-engagement or an award of terminal payments.108
7.066
7.067
103
104
105
106 107
108
Section 32L of the EO states: (1) On a claim for remedies under this Part, in determining whether or not an employer has shown that he has a valid reason for the dismissal of an employee or for the variation of the terms of the contract of employment with an employee within the meaning of s.32K, the court or the Labour Tribunal shall take into consideration the circumstances of the claim. (2) Without affecting the generality of subs.(1), the circumstances of a claim include the length of time that the employee has been employed under that contract of employment with the employer as compared to the length of qualifying service required for the right, benet or protection conferred or to be conferred upon the employee by this Ordinance which is capable of being extinguished or reduced by means of the dismissal or the variation of the terms of the contract of employment. The Fixed Term Employees (Prevention of Less Favourable Treatment) Regulations 2002 SI 2002/2034, which implemented the European Union Directive on Fixed Term Work (1999/70/EC), places an upper limit of four years on the length of time that an employer can keep an employee on successive xed term contracts subject to modication by a collective agreement or workforce agreement. The P.R.Cs Labour Contract Law 2008 limits the number of successive xed-term contracts to two, by thereafter converting the contract of employment into an open-ended contract. See fn 99. Wong Man Sum v Wonderland Seafood Restaurant (fn 99) per Cheung JA at paras 5 and 6. Cheung JA went on to recommend that changes be introduced along the lines of the UK Fixed-term Employees (Prevention of Less Favourable Treatment) Regulations 2002 (referred to at fn 104), with appropriate account to be taken of local conditions in Hong Kong. It remains to be seen whether his recommendation will be heeded. See also Chapter 6, paras 6.0116.012. Section 32M of the EO.
268
(i) Exclusions 7.068 No remedy available where employer offers to renew contract or re-engage employee prior to the date of termination. Even in the event of an unreasonable dismissal, an employee will not be entitled to any of the remedies available under Pt VIA of the EO if, not less than seven days before the relevant date,109 the employer has offered to renew his contract of employment or re-engage him under terms which do not differ from the corresponding terms of the employees original contract of employment, where the renewal of employment is to take place on or before the date of termination, and the employee unreasonably refuses such an offer.110 The same is true of the situation where an employee unreasonably refuses an employers written offer to renew or re-engage the employee on terms which differ from the original contract, but nonetheless constitutes an offer of suitable employment which is no less favourable to the employee than his original contract of employment.111 No remedy available where employee terminates contract of employment prior to the date of termination. Where an employee has been unreasonably dismissed, he will not be entitled to any of the remedies available under Pt VIA of the EO if, following receipt of notice of termination from his employer, he leaves his employment prior to the expiration of such notice, unless he does so with either the consent of his employer, or by the making of a payment in lieu of notice to the employer.112 (ii) Order for reinstatement 7.070 Order for reinstatement. An order for reinstatement requires an employer to restore the dismissed employee to his previous position under the same terms and conditions of employment, and to treat the employee as if he had not been dismissed. All rights and privileges, including seniority and pension rights have to be restored to the employee, and for purposes of continuity of employment the employees period of service is to be regarded as unbroken.113 Order for reinstatement has to be considered rst. A court or labour tribunal has a statutory duty to consider the making of an order of reinstatement prior to giving consideration to an order for re-engagement.114 (iii) Order for re-engagement 7.072 Order for re-engagement. An order for re-engagement requires that an employee be re-employed by either the original employer, or by a successor of the employer or an associated company,115 in a position on terms comparable to his original contract of employment, or in other suitable employment.
7.069
7.071
109 110 111 112 113 114 115
Relevant date is dened in s.2 of the EO. Section 32C(1) of the EO. Section 32C(2) of the EO. Section 32C(4) of the EO. Section 32N of the EO. Section 32N(2) of the EO. These terms are dened in s.32N(8) and 32E of the EO.
269
Agreement of the parties required for order of reinstatement or re-engagement. Prior to the making of such an order the court or labour tribunal has to seek the agreement of both parties.116 As a consequence, these remedies are of limited value in the armoury of an employee; by the time most employment cases get to the stage of a court or labour tribunal hearing the relationship of trust and condence has generally broken down to an irretrievable extent so that, in practice, such orders are very rare. Award of arrears of pay and statutory entitlements at discretion of the court. In addition to either an order for reinstatement or an order for re-engagement a court or tribunal has the power if it considers it just and appropriate in the circumstances to order an employer to compensate an employee for any arrears of pay and statutory entitlements which the employee might have reasonably expected during the period between his dismissal and the date of reinstatement. Equally, a court or labour tribunal may order an employee to repay to the employer any statutory entitlements that the employer has paid pursuant to the Ordinance that the employee should not have received in light of the reinstatement.117 (iv) Award of terminal payments Award of terminal payments. If neither an order of reinstatement nor re-engagement is agreed upon by the parties and thereafter ordered, as an alternative, a court or labour tribunal may make an award of terminal payments by the employer to the employee as it considers just and appropriate in all the circumstances.118 No agreement of the parties is required for such an award to be made. However, there is no compensatory element to an award of terminal payments; it simply represents the statutory and contractual payments to which the employee was in any event entitled to upon termination, or that he might reasonably be expected to have been entitled to had he been allowed to continue in his employment to attain the minimum qualifying length of service required for the entitlements under the Ordinance. (i) Compensation award for dismissal which is both an unreasonable and an unlawful dismissal Compensation award for dismissal which is unreasonable and unlawful. In addition to one of the above three remedies, a court or labour tribunal may make a compensation award under s.32P in circumstances where the unreasonable dismissal is also an unlawful termination in contravention of the provisions of the EO, the ECO or the FIUO.119 In order for an employee to qualify for such an award, it is not necessary for the employer to have been convicted of the offence relating to the unlawful dismissal.120 Where an employer unlawfully terminates an employees contract of
7.073
7.074
7.075
7.076
116
117 118 119 120
This is different to the position under the Employment Rights Act 1996 (s.116) in the UK where only the consent of the employee is required. With regard to the position of the employer, a UK tribunal need only consider whether it is practicable for the employer to comply with the order. If an employer fails to comply with an order for reinstatement or re-engagement a UK tribunal has the power to make an additional award of compensation. Section 32N(5) and (7) of the EO. Section 32O of the EO. See para 7.187 for a list of elements that may comprise a terminal payment. See paras 7.0237.047. Section 32P(1)(b) of the EO.
270
employment an employees right to claim a remedy is not adversely affected in the event of the employee refusing a reasonable offer of re-employment.121 7.077 Court required to consider all the circumstances of the claim when determining amount of award. Section 32P of the EO empowers a court or labour tribunal to make an award of compensation as it considers just and appropriate taking into account the circumstances of the claim.122 The circumstances of the claim may include (a) the circumstances of the employer and the employee; (b) the length of employment; (c) the manner in which the dismissal took place; (d) any loss sustained by the employee which is attributable to the dismissal; (e) the possibility of the employee obtaining new employment; (f) any contributory fault on the part of the employee; (g) any terminal payments or other payments the employee is entitled to receive under the EO, including any award of terminal payments under s.32O.123 The amount of an award under this provision will be such amount as the court or Labour Tribunal considers just and appropriate, but may not exceed an amount of HK$150,000.124 ( j) Damages for non-pecuniary loss 7.078 Damages for non-pecuniary loss at common law. Whether or not an employee is able to claim damages for non-pecuniary loss in an employment context has been the subject of much litigation in the United Kingdom. The question of whether or not damages for non-pecuniary loss could be recovered in an action for wrongful dismissal for injured feelings, mental distress or damage to reputation arising out of the manner of the dismissal was answered in the negative by the House of Lords in the landmark decision of Addis v Gramophone Co Ltd..125 Injury to reputation and future employment prospects. However, 90 years later, in Malik v Bank of Credit and Commerce International SA,126 the House of Lords upheld the employees claim for damages in respect of injury to their reputation and future employment prospects within the nancial services industry caused by their employers very public collapse, steeped as it was in allegations of dishonesty and corruption. But, this was not in fact a claim based on either wrongful or unfair dismissal; the House of Lords upheld the employees claim on the grounds that the conduct of the employer in operating a corrupt and dishonest business amounted to a serious breach of the implied term of trust and respect. House of Lords decision in Johnson v Unisys Ltd. In Johnson v Unisys Ltd127 the House of Lords held that damages for injury to feelings or reputation are likely to be conned to cases where an employee sues the employer for breach of contract during
7.079
7.080
121 122 123
124
125 126 127
Section 32C(5) of the EO. Section 32P(1) of the EO. Section 32P(3)(a)(g) of the EO which sets out a non-exhaustive list of circumstances. See the judgment of Ngan Yu Chiu v New World First Bus Services Ltd (unrep., HCLA 29/2008, [2009] HKEC 1525), in which Poon J considered the correct approach to be adopted when applying these factors in determining an award under s.32P. Section 32P(4) of the EO. The Commissioner for Labour may amend this amount s by notice in the Gazette: s.32P(5) of the EO. [1909] AC 488. [1998] AC 20. [2001] 2 WLR 1076.
271
employment, rather than upon termination such as a wrongful dismissal claim. The court justied their decision on two grounds: rst, the implied term of trust and respect (which was the basis upon which the House of Lords reached their decision in Malik) was aimed at keeping the contract alive and so was not applicable on termination, and secondly, that the common law was not to be used to side-step statutory employment law, in particular, the unfair dismissal regime128 which had in-built limitations relating to the time within which a claim could be brought and a statutory cap on the amount of damages that could be recovered. Power to award damages for non-pecuniary loss inconsistent with legislative scheme. The position in England was conrmed in the case of Dunnachie v Kingston Upon Hull City Council129 in which the House of Lords, allowing the employers appeal against an award of 10,000 awarded for distress and injury to the employees feelings arising from the manner of dismissal, held that the plain meaning of the word loss in s.123 of the Employment rights Act 1996 excluded non-economic loss, and that compensation for non-economic loss could not be awarded as part of the discretion conferred upon the tribunal by the statute to award such amount as the tribunal considers just and equitable in all the circumstances. The House of Lords considered that a power to award compensation for non-economic loss would be inconsistent with the level of compensation available to an employee who was awarded either reinstatement or re-engagement, which was limited to arrears of wages and benets for the period of unemployment; such an anomaly would introduce an inconsistency into the scheme of the legislation, since it would mean that no award for non-pecuniary loss would be awarded to a person who is re-employed, but that such an award could be made to a person who only received compensation. Karchoud v Incorporated Trustees of the Islamic Community Fund of Hong Kong. In Hong Kong, in the case of Karchoud v Incorporated Trustees of the Islamic Community Fund of Hong Kong130 Deputy Judge Lam considered a reference to Malik made by counsel on behalf of the employee in the context of an unreasonable dismissal claim: Mr Wong also referred to Malik v Bank of Credit and Commerce International [1998] AC 20 in his written submissions of 2 June 2003. This is misconceived. In the rst place, the Claimant did not advance any claim for Malik damages in the Tribunal. If such a claim were advanced, it would probably be outside the jurisdiction of the Tribunal. Lastly, in view of Johnson v Unisys Ltd [2001] 2 WLR 1076, such a claim cannot succeed having regard to remedies already provided by the legislature in the context of employment protection under Part VI A of the Employment Ordinance.131 Hong Kong Courts likely to follow UK approach. Although not forming part of the ratio of the case, Deputy Judge Lams statement indicates that Hong Kong courts are set to follow the UK approach, namely that any common law claim for non-pecuniary 7.083 7.081
7.082
128 129 130 131
The legislation referred to is the Employment Rights Act 1996. [2005] 1 AC 226, at p 252 paras AC of the judgment. [2003] 4 HKC 79. See fn 130 at para 53 of the judgment.
272
loss will not be entertained on the grounds that it would undermine the compensatory regime of the EO, with particular regard to the limitations on recovery in the form of the statutory cap on damages,132 and the time limit within which to bring a claim. That being said, the same objection does not appear to hold true for contracts of employment falling outside the protection conferred by this part of the EO. There seems to be no reason in principle why common law damages of this nature could not be awarded to employees who are not entitled to the statutory remedies available for unreasonable dismissal under Pt VIA of the EO. 7.084 Damages for non-pecuniary loss under the EO. As to the question of whether or not compensation for non-pecuniary loss can be awarded as part of a statutory compensation claim under the EO, an examination of the language used in the Ordinance suggests that it will not be awarded in a case where the only claim is for unreasonable dismissal, but arguably may be awarded in a case where the claim is for damages for an unreasonable dismissal which is also an unlawful dismissal. Section 32O(1) of the EO. With regard to unreasonable dismissals, the wording of s.32O(1) of the Ordinance (dealing with remedies available for unreasonable dismissal claims) is narrowly drafted. It permits a labour tribunal to make an award of terminal payments, rather than damages for loss, which is the wording used in s.123 of the Employment Rights Act 1996 (dealing with remedies for unfair dismissal in England). Terminal payments133 are by their very nature elements of pecuniary loss, namely contractual and statutory entitlements which the employee would have received or should have received upon termination. Accordingly, non-pecuniary losses are not recoverable under s.32O(1) of the EO. Section 32P of the EO. By contrast, the wording of s.32P of the EO, which deals with remedies for dismissals which are both unreasonable and unlawful, is drafted in broader terms when compared to the language of the comparable provision in the UK legislation.134 Section 32P requires a court to take into account the circumstances of the claim.135 Any loss sustained by the employee which is attributable to the dismissal (the operative wording of s.123 of the Employment Rights Act) is just one of a number of factors which a court or tribunal may take into account; most notably the manner of the dismissal (which is not referred to in s.123 of the Employment Rights Act) is another. Accordingly, the wording of the section gives a court or tribunal scope for awarding damages beyond the pecuniary measure. The difference in approach to damages is easily explained by the very fact that s.32P is not applicable to all claims of unreasonable dismissal, but limited to those which are also unlawful as being in contravention of either the provisions of the EO, the ECO or the FIUO.136
7.085
7.086
132 133 134
135 136
Currently set at HK$150,000. Dened in s.32O(2) of the EO. Namely, s.123 of the Employment Rights Act 1996, referred to in para 7.085, which provides: the amount of the compensatory award shall be such amount as the tribunal considers just and equitable in all the circumstances having regard to the loss sustained by the complainant in consequence of the dismissal in so far as that loss is attributable to action taken by the employer. See para 7.077. Breach of the relevant provisions constitutes a criminal offence.
273
Limitations on statutory award of damages. In any event, there are two limitations imposed by statute on a compensation award for dismissal which is both unreasonable and unlawful. First, a compensatory award pursuant to s.32P of the EO cannot be made if an order for reinstatement or re-engagement has been made.137 Secondly, there is a cap on the amount of compensation which can be awarded under s.32P, which is currently set at the relatively low level of HK$150,000.138 Time within which to bring a claim for statutory remedies. An employee will not be entitled to any of the remedies available under Pt VIA of the EO unless he has made a claim directly against his employer by notice in writing within three months of the relevant date;139 or he has led a claim with the labour tribunal within nine months of the relevant date. Relevant date for these purposes is variously dened depending upon the mode of termination.140 (k) Equitable remedies Equitable relief. The common law has been historically reluctant to afford parties to a contract of employment equitable relief to enable the enforcement of the contract either directly in the form of an order for specic performance, or indirectly in the form of an injunction.141 In part, this can be explained by the general contract rule that injunctive relief should not be granted where damages offer an adequate remedy. However, arguably, in an employment context this does not always hold true. Perhaps more compelling a justication is the fact that the employment relationship, requiring as it does a personal relationship of mutual trust and condence, would be very difcult to enforce against the will of one of the parties to the contract. In addition, from an employees perspective, any attempt to enforce a contract goes against notions of basic human rights. After all, an injunction which forced an employee to continue working for his employer against his will would in effect be an infringement on a persons liberty. General rule against grant of equitable relief. Accordingly, outside of the statutory remedies of reinstatement and re-engagement (both of which of course require the consent of both the employee and employer) a court or tribunal will not generally grant an employer equitable relief to enforce a contract of employment, the exception being where employers are seeking injunctive relief to enforce negative restraints, such
7.087
7.088
7.089
7.090
137 138
139
140
141
Section 32P(1)(a) of the EO. Compare the statutory cap applicable to unfair dismissal claims under s.124 of the Employment Rights Act 1996 in England, which is currently set at 65,300. The statutory cap on damages in UK is now indexed linked (up or down) by reference to the Retail Price Index for September in each yearsee Employment Relations Act 1999 ss.34(1)(c) & 36(1)(a) and Sch.9. This time limit may be extended with the permission of the Commissioner for Labour up to a maximum period of six months: s.32I of the EO. The denition of relevant date in relation to the termination of employment for these purposes is set out in s.2 of the EO. In De Francesco v Barnum (1890) LR 45 Ch D 430 at 438 Fry LJ stated that the courts should be very unwilling to extend decisions the effect of which is to compel persons who are not desirous of maintaining personal relations with one another to continue those personal relation. I think the courts are bound to be jealous lest they should turn contracts of service into contracts of slavery; and should lean against the extension of the doctrine of specic performance and injunction in such a manner.
274
as those contained in restrictive covenants or condentiality clauses or agreements, which are in any event usually the subject matter of post-termination obligations.142 7.091 Injunctive relief granted to enforce employers positive contractual obligations. Courts have been more willing to grant injunctive relief to employees in order to enforce an employers positive contractual obligations, even though the result in some cases has been to halt the dismissal of an employee and in effect enforce the continuance of the employment relationship against the will of the employer.143 The principle that emerges from the case law in this area is that such relief will generally be granted where the relationship of trust and condence has not been lost.144 In Irani v Southampton and South-West Hampshire Health Authority,145 Warner J noted that although the employer wanted to be rid of the employee, the fact remained that the employer continued to have perfect faith in the honesty, integrity and loyalty of the employee. Warham v Cathay Pacic Airways Ltd. In Hong Kong, the decision of Warham v Cathay Pacic Airways Ltd,146 which held that a contractual disciplinary process could not be by-passed by the contractual right to terminate on notice, lends support to the prospect of Hong Kong courts granting injunctive relief to enforce an employers positive contractual obligations, or at the very least to prevent an employer from dismissing an employee prior to the determination of a contractually incorporated disciplinary procedure.
7.092
3. REDUNDANCY AND LAY-OFFS

(a) Introduction 7.093 Termination by reason of redundancy. An employer faced with the need to make changes to its business as a result of economic, nancial or competitive pressures may need to restructure its operations, necessitating reductions to its workforce. Provided an employer terminates a contract of employment by giving the requisite notice or by making a payment in lieu of notice a contract of employment may be terminated lawfully, unless the employee falls within one of the protected categories referred to at paras 7.0237.047 above. Unlike the position in the United Kingdom, the statutory regulation of redundancies in Hong Kong is limited to an employees entitlement to receive a statutory severance payment. Hong Kong law requires no further investigation
142 143
144
145
146
However, see the case of Hill v CA Parsons Co Ltd (fn 2). In Jones v Lee [1980] ICR 310, the Court of Appeal granted an injunction preventing the employer from dismissing an employee until it had complied with a contractually incorporated disciplinary procedure. See also Irani v Southampton & South West Hampshire HA [1985] ICR 590. See the judgment of Megarry J in Chappel v Times Newspapers Ltd [1975] 1 WLR 482. Although compare the cases of Wadcock v Brent LBC [1990] IRLR 223 and Robb v Hammersmith & Fulham LBC [1991] ICR 514 in which the test of whether trust and condence still existed was disregarded in favour of an approach which focused on whether or not the injunction was workable in the circumstances. Fn 143. See also Powell v London Borough of Brent [1987] IRLR 466; Alexander v Standard Telephones & Cables Ltd (No. 1) [1990] ICR 291. (unrep., HCMP 4400/2001, HCA. 2822/2002, 299, 1405/2006, 807/2007, [2009] HKEC 1848)see Chapter 6 paras 6.160 to 6.161.
REDUNDANCY AND LAY-OFFS
275
into the fairness or otherwise of the redundancy selection process, nor does it require an employer to give prior warning to or consult with employees.147 Termination by reason of lay-off. An employer may seek to postpone a decision to make redundancies by temporarily suspending operations. Unless the contract of employment confers upon the employer an express power to lay off employees it will amount to a fundamental breach of the contract of employment, entitling employees to treat themselves as constructively dismissed.148 Even where the contract of employment confers upon an employer the power to make lay-offs, such power is limited in duration by the provisions of the EO, entitling affected employees to terminate their employment and claim a severance payment.149 (b) Entitlement to statutory severance payment Entitlement to severance payment. Where an employees contract of employment has been terminated by reason of redundancy150 or lay-off151 the EO confers upon eligible employees who have been dismissed by reason of redundancy, or who have been laid off, a statutory entitlement to a severance payment.152 Where an employee is entitled to a severance payment, no long service award is payable.153 (c) Eligibility for severance payment in a redundancy situation Employee must have served under continuous period of employment, and there must have been a dismissal. In order to be eligible for a statutory severance payment an employee must have been employed under a continuous contract for not less than 18 hours per week for a period of not less than 24 months154 and there must have been a dismissal. A situation of redundancy does not, by itself, trigger a right to severance payment on the part of the employee. Unless and until the employer dismisses an employee, there is no right to severance payment.155 Meaning of dismissal for purposes of entitlement to severance payment. The dismissal must fall within one of the three forms of termination which give rise to a dismissal under s.31D of the EO, namely: (i) where the employer has terminated the contract with or without notice or payment in lieu of notice, other than for a 7.096 7.095 7.094
7.097
147
148
149 150 151 152 153 154
155
Compare the position under ss.105, 98A(2) of the UK Employment Rights Act 1996. Although there is generally no requirement for an employer to give reasons for a dismissal, s.32K of the EO cites redundancy of the employee or other genuine operational requirements of the business of the employer as a valid reason for the purposes of justifying a dismissal for employees who have served under a continuous contract of employment for not less than 24 months. Ying Cheong Shoe MFY v Yam Yuk Bing [1987] 2 HKC 310; Precieux Garment Factory Ltd v Lam Kin Chung (unrep., HCLA 5/1997, [1997] HKEC 442). Section 31E of the EO. As dened in s.31D of the EO. As dened in s.31E of the EO. Section 31B of the EO. Section 31R(1)(a)(i) of the EO. Continuous contract is dened by reference to s.3 and Sch.1 to the EO. Note, the application of special provisions where an employee is re-employed by the personal representatives of a deceased employer: para 7 of Sch.1 to the EO. Wong Yin Fong v ISS Hong Kong Services Ltd [2005] 2 HKLRD 648.
276
reason justifying summary dismissal; or (ii) where a xed-term contract has expired without being renewed; or (iii) where an employee has terminated the contract of employment with or without notice or payment in lieu of notice in response to the employers repudiatory conduct. In the rst two cases, the reason for the termination on notice or the non-renewal of a xed-term contract must be wholly or mainly by reason of redundancy.156 Although the third type of dismissal does not generally arise in a redundancy situation, the EO nevertheless confers upon an employee in these circumstances the right to a statutory severance payment. (d) Circumstances not treated as a dismissal for redundancy purposes 7.098 Resignation of employee not treated as a dismissal. An employee will not be regarded as having been dismissed for these purposes if he resigns on a voluntary basis.157 A resignation is distinguishable from a case in which the employee volunteers for a redundancy package being offered by his employer, the latter qualifying an employee for a severance payment upon the termination of employment.158 Renewal of contract or re-engagement under new contract by same employer not treated as a dismissal. An employee will not be regarded as having been dismissed in the event that his contract of employment is renewed by the same employer, or he is re-engaged under a new contract of employment by the same employer.159 If the employee accepts the new contract of employment, he will not be considered to have been dismissed for purposes of entitlement to a severance payment. It is not necessary for the terms of the new contract to be the same or substantially similar to the previous contract. Re-engagement or renewal of contract by new owner in the case of change of ownership of a business treated as if re-engagement or renewal by same employer. There are two exceptions to the requirement that the re-engagement has to be by the same employer. First, an employee who has been re-engaged by a new owner in the case of a change of business ownership, or whose original contract of employment has been renewed by the new owner (substituting the new owner of the business for the old employer), will not be entitled to a severance payment.160 The employee must agree to the renewal or re-engagement and the original employer must have terminated the employees contract of employment by notice or payment in lieu of notice in accordance with s.6 or 7 of the EO immediately prior to the change of ownership.161 For purposes of continuity of employment, the period of employment served with the former employer will count as a period of employment with the new owner of the business.162
7.099
7.100
156 157 158
159 160 161 162
Section 31B(2) of the EO. Choi Cheng v Fai Kee Frozen Co Ltd (unrep., HCLA 60/1999, 27 August 2009). Note the distinction between a voluntary redundancy and early retirement in redundancy situations. See Chapter 6, para 6.005. Section 31D(2) of the EO. Section 31J of the EO. Section 31J(2) of the EO. Section 31 J and para 5 of Sch.1 to the EO.
277
Re-engagement or renewal of contract by associated company of employer treated as if re-engagement or renewal by same employer. Secondly, an employee who is re-employed by an associated company163 of his original employer will be treated as if he has been re-employed by the same employer.164 This allows an employer to transfer an employees employment to a related company without incurring any liability to make a severance payment.165 Any such inter-group transfer will not break the continuity of the period of employment so as to affect the employees continuity of service.166 Where there is a change of ownership of the business and the new employer is also an associated company of the previous employer, the provisions of s.31J of the EO will apply. Renewal or re-engagement must take effect immediately. For the employer to avoid liability to make a severance payment, any such renewal or re-engagement must take place immediately after the ending of the employment under the previous contract.167 If the previous contract ended on a rest day or a holiday, this requirement will be satised if the renewal or re-engagement takes place on the day after the rest day or holiday.168 Renewal or re-engagement by personal representative of deceased employer not treated as a dismissal. An employee is not treated as having been dismissed by a deceased employer if his contract of employment is renewed by a personal representative of the deceased employer, or he is re-engaged under a new contract of employment by the personal representative within four weeks of the death of the deceased employer.169 (e) Termination by reason of redundancy Termination must have been wholly or mainly by reason of redundancy. An employee who has been dismissed within one of the three forms of termination set out in s.31D of the EO will be entitled to a redundancy payment if the termination was wholly or mainly by reason of redundancy.170 Presumption of redundancy. There is a presumption of redundancy created under s.31Q of the EO (applicable in all cases of dismissal). The onus of proving the contrary is accordingly upon the employer.171
7.101
7.102
7.103
7.104
7.105
163
164 165
166 167 168 169 170 171
A company is treated as an associated company if one is a subsidiary of the other, or both are subsidiaries of a third company. Subsidiary has the meaning assigned to it by the Companies Ordinance (Cap.32): s.31K(5) and (6) of the EO. See Flying Goose Garment Factory Ltd v Cheung Chun Chu [1989] 2 HKC 388 where two separate employers owned and operated by the same proprietor were held not to be associated employers for these purposes. Section 31K(1) of the EO. Note, however, s.31K(3) which provides that a severance payment will still be payable in cicrucmstances where an employee is dismissed by one company employer in order to create an opening for an employee being transferred from an associated employer. Section 31K(4) of the EO. Gloria Weaving and Knitting Factory Ltd v Lam Hau Ye [1992] 2 HKC 497. Section 31D(3) of the EO. Section 31M and Pt I, para 3 of Sch.3 to the EO. Section 31B(2) of the EO. In Star Fair Electronics Ltd v Wong Tak Cheung [1985] 2 HKC 92, where a summary dismissal was found to have been wrongful, there was a presumption that the termination was by reason of redundancy in the absence of proof to the contrary.
278
7.106
Redundancy dened in one of three ways. The EO denes redundancy for the purposes of entitlement to a statutory severance payment in one of three ways:172 (i) The employer has ceased, or intends to cease, to carry on the business for the purpose of which the employee was employed by him
7.107
Redundancy situation arises where an employer closes his business or part of a business. A redundancy situation exists where an employer ceases to operate its business,173 and has been held to exist in the situation where an employer closes only part of its business.174 The closure of a business, or part of a business on the part of a person to whom the power to dispose of the business has passed in consequence of an act or event that has terminated the employment contract by operation of law (for example, a receiver upon the winding up of a company) will also operate as a redundancy.175 Meaning of business. A business is dened as including a trade or profession and any like activity carried on by a person.176 Private household employing domestic helpers regarded as carrying on a business for purposes of entitlement to severance payment. For a domestic helper employed in a private household, the maintenance of the private household is regarded as the carrying on of a business by the employer for the purposes of the domestic helpers right to claim a statutory severance payment.177 (ii) The employer has ceased, or intends to cease, to carry on business in the place where the employee was employed
7.108 7.109
7.110
Redundancy situation arises where an employer ceases to carry on business in the place at which the employee was employed. A redundancy situation arises where an employer ceases to carry on business in the place at which the employee was employed.178 If there is a closure of one of a number of locations operated by the business of an employer, an employee who is dismissed as a result of the closure will be dismissed by reason of redundancy even if the employer continues to operate in other locations.179 The issue is straightforward where an employee has only ever worked in one location and his contract of employment contains neither an express nor implied term requiring him to move to another location (commonly referred to as a mobility clause).
172 173 174
175 176 177 178 179
Note, that redundancy of an employee is not dened in s.32K for the purposes of Pt VIA. Section 31B(2)(a)(i) of the EO. See Yan Kwok Tung v Napoleon Restaurant Ltd [1993] 2 HKLR 1 in which the employees were entitled to a severance payment after their employer closed down its operation at Ocean Park, even though it continued to run outlets in other parts of Hong Kong. On the facts of the case the employer was found to have dismissed the employees rather than to have transferred their employment. See also Hong Kong & China Gas Co Ltd v Wong Yuen Kwong [1987] 3 HKC 508 where a redundancy situation arose from the employer closing down its night operations. Section 31L(3) of the EO. Section 2 of the EO. Section 31B(3) of the EO. Section 31B(2)(a)(ii) of the EO. See Yan Kwok Tung v Napoleon Restaurant Ltd (fn 174).
279
Meaning of place at which the employee was employed. In a contract of employment which contains a mobility clause, the place where the employee was employed may extend beyond the factual question of the geographical place at which the employee worked, to the contractual place where the employee is required to work. In OBrien v Associated Fire Alarms180 electricians who had worked from one of their employers ofces which closed due to lack of business were told that they would have to work from another ofce located 120 miles away. The employees work generally involved them travelling to various jobs. The Court of Appeal held that there was an implied term in the employees contracts of employment that they should travel, but that such a term only required them to travel to places within reasonable distance of their homes.181 In the circumstances, their positions were redundant. Express mobility clause not determinative. In High Table Ltd v Horst182 the Court of Appeal approached this issue in a slightly different way. The employer, a catering services rm which had engaged the employees as waitresses to work at a particular client location, had terminated their employment on the grounds of redundancy following reduction in the catering service requirement of the client. The employees relied upon an express mobility clause in their contracts to argue that this required their employer to deploy them elsewhere and prevented a redundancy situation from arising. The Court of Appeal held that the question of where the employee was employed by the employer was to be answered primarily by a consideration of the factual circumstances which obtained until the dismissal. Applying this factual test, rather than a contractual test, the Court held that if the employee had only ever worked in one location under the contract of employment for the purposes of the employers business, it would def [y] common sense to suggest that the place where the employee was so employed183 included other locations merely because of the existence of a mobility clause. The situation may be different if during the period of employment the nature of the work required the employee to go from place to place. In that scenario, the contract of employment might be of assistance in determining the extent of the place where the employee was employed to work.184 Factual test preferred in Hong Kong. In Yan Kwok Tung v Napoleon Restaurant Ltd185 the appellants had been employed as catering staff in restaurants at Ocean Park on Hong Kong Island. The catering contract between Ocean Park and the company owning the restaurants was terminated and the employees were given one months notice and an option (which was expressed not to be legally binding on the company) to accept a transfer to positions in the companys other restaurants in Kowloon and
7.111
7.112
7.113
180 181
182 183 184
185
[1968] 1 WLR 1916. In Yan Kwok Tung v Napoleon Restaurant Ltd (fn 174) this implied term was referred to by Keith J but did not form part of the judgment. [1998] ICR 409. The language used in s.139(1)(a)(ii) of the Employment Rights Act 1996. See the judgment of Peter Gibson J at p 419 paras EH, in which he made the following observation: The refusal by the employee to obey a lawful requirement under the contract of employment for the employee to move may constitute a valid reason for dismissal, but the issues of dismissal, redundancy and reasonableness in the actions of an employer should be kept distinct. It would be unfortunate if the law were to encourage the inclusion of mobility clauses in contracts of employment to defeat genuine redundancy claims. Fn 174.
280
the New Territories. They were told that if they failed to accept the offer it would be taken to mean they no longer wished to work for the company. They declined the offer and claimed severance payments on the grounds that they had been dismissed by reason of redundancy. The employer argued that although the employers business no longer required the Claimants to carry out their work in Ocean Park, the words in the place where the employee was so employed in s.31B(2)(c) of the EO referred not to the geographical location in which the employees actually worked, but rather to the place or places where by their contracts they could be required to work. Keith J rejected this argument and in so doing declined to follow a number of earlier English decisions which had espoused the contractual test. In his view to construe the words the place where he was so employed as the place where under his contract he could be required to work was open to serious criticism.186 7.114 Wong Yuk Ling v East East Food Products Ltd. In Wong Yuk Ling v East East Food Products Ltd187 the tribunal construed a clause containing an express power on the part of the employer to transfer employees to another place of work if there was a need to do so, to mean a genuine business, administrative or operational need of the employer, and made a nding that such need did not arise on the facts. On appeal the employer attempted to argue that there was nevertheless a contractual right on the part of the employer to insist upon the transfers which would have required the employees to work from Aberdeen instead of Lok Fu. The Court rejected that approach and held that the proposed transfers constituted a breach of the contracts of employment, in that the employees were left with no alternative but to either expend about HK$1,000.00 per month on transportation expenses (out of their monthly salary of HK$2,300.00) to attend work at Aberdeen or to quit. It is clear from the judgment in that case that courts will not readily permit an employer to use the power to transfer an employee to a different location conferred by a mobility clause as a means of forcing the employee to resign. Deputy Judge Cheung considered that a power to transfer the employment of an employee to a different location must be used reasonably.188 Wong Yin Fong v ISS Hong Kong Services Ltd. In Wong Yin Fong v ISS Hong Kong Services Ltd189 the court considered an express mobility clause in the contracts of cleaning operatives which permitted their employer to exercise the power of reasonable re-deployment in circumstances of need. The employees disputed the right of their employer to re-deploy them rather than dismiss them by reason of redundancy in circumstances where there was no work for them in alternative locations. They also claimed that their employer had acted in bad faith by re-deploying them to avoid its
7.115
186
187 188
189
Although note that this decision was made based on the old language of the section which used to read: 32B(2)(b) his employer has moved or intends to move, the place in which the employee was or is so employed (i) from the Island of Hong Kong to Kowloon or the New Territories; or (ii) from Kowloon or the New Territories to the Island of Hong Kong . (unrep., HCLA 95/2002, [2003] HKEC 1062). I am satised that the Defendants were using the transfers to force the claimants to leave their employments so that no compensation for long service was necessary. They have a power under Cl.4 but such power must be used reasonably for honest purpose. I am fully satised that the Defendants abused such power and for illegitimate purpose. This action amounted to misconduct of the employer that could be regarded as constructive dismissal. I hold that all 3 claimants were constructively dismissed by the Defendants and that it was for redundancy purpose per Deputy Judge Cheung at para 12. [2005] 2 HKLRD 648.
281
immediate obligation to pay severance payments for dismissal in the hope that they would resign in order to take up offers of alternative employment. The court, rejecting the employees claim for entitlement to severance payments, held that even if there were no immediate need for the employees to work at a different workplace, the employer still had a need to post them there. In applying the factual test, Lam J took into account the size of the employers operation, the nature of the cleaning industry and the high mobility of the cleaning workforce, the fact that the mobility clauses were clearly intended to provide the employer with a degree of exibility in the deployment of its workers which was essential to its business. Moreover, the re-deployment was held to be reasonable taking into account the nature of the cleaning industry and the fact that the employees were to be paid the same salaries and additional travelling expenses, and their duties were to be no more onerous than in their previous roles. Lam J rejected the idea that the exercise of a power to transfer employees to a different location must be exercised reasonably, referring instead to an implied duty to act rationally, and held that it was within an employers rational exercise of its power of re-deployment to do so in order to avoid an immediate obligation to pay severance payments.190 Factors to consider where employer carries on business in different locations. Applying the principles which can be gleaned from the above cases, where an employer carries on business in different locations the question of whether or not a redundancy arises should be looked at carefully by reference not simply to the question of whether the employer has ceased to carry on business in the location which the employee worked, and whether the employee could have been required to work in other locations, but also whether, in fact, during the course of employment the employee was either required or, having regard to all the circumstances, should be required to work in alternative locations. (iii) The requirements of the business for employees to carry out work of a particular kind (either generally or in the place where the employee was employed) have ceased, diminished or are expected to cease or diminish Redundancy situation arises where an employers requirement to carry out work of a particular kind has diminished. If the requirements of a business for employees to carry out work of a particular kind have diminished, and a dismissal is attributable wholly or mainly to that state of affairs, it will be a dismissal by reason of a redundancy.191 This covers the situation where a business continues to exist but work of a particular kind has ceased or diminished or is scheduled to do so, for example, where work has fallen off due to a decrease in customer orders, requiring fewer employees to undertake the work which remains. It is also able to cover a reorganisation or restructuring of the workforce or a reallocation of responsibilities and functions between a group of workers where an employer decides that the same amount of work must (for example, for economic reasons) or can (for example, improved efciencies or advanced technology) be performed by fewer people.192 7.117 7.116
190
191 192
See p 663C-J of the judgment for Lam Js analysis of the application of a rationality test rather than a reasonableness test. Section 31B((2)(b) of the EO. See Association of University Teachers v University of Newcastle-Upon-Tyne [1987] ICR 317.
282
7.118
Is there an excess of labour? The key element in this type of redundancy situation is often an excess of labour rather than a reduction in work. In any event, whether such a redundancy situation arises will be a question of fact in each case: if an employee has been dismissed and replaced by another doing only the work of the former employee there is no redundancy; if the replacement is undertaking the work of the former employee in addition to his own responsibilities then the dismissal is by reason of redundancy as there has been a reduction in the number of employees required to do the same amount of work.193 Where an employee is replaced by another employee with fewer responsibilities and on a lower salary this may also amount to a redundancy situation.194 Re-deployment in circumstances where former holder of position dismissed. Where an employer re-deploys an employee to an alternative position as an alternative to redundancy and then terminates the employment of the former holder of the position, the employee replaced in this manner (often referred to as bumping) is dismissed by reason of redundancy. Although the replaced employees position still remains albeit being carried out by someone else, the dismissal is wholly or mainly due to a reduction in the requirements of the business.195 The EO provides that a severance payment is still payable in circumstances where an employee is dismissed by one company employer in order to create an opening for an employee who is being transferred from an associated employer.196 Meaning of work of a particular kind. In Hong Kong China Gas Co Ltd v Wong Yuen Kwong197 when an employee, who had been employed as a semi-shift tter with entitlement to a 17.5 per cent shift allowance was transferred to non-shift work with no shift allowance he was held to have been constructively dismissed by reason of redundancy because work of a particular kind had ceased to be available to him within the meaning of s.31B(2)(b) of the EO.198 Change of terms and conditions not determinative. However, the mere fact that an employer proposes a change in the terms and conditions of employment as a result of a re-organisation of its business may not of itself prove that a redundancy situation exists, even if this entails a substantial reduction in pay for the employee.199 Although
7.119
7.120
7.121
193
194
195
196 197 198
199
See judgment of Gibson LJ in McCrea v Cullen & Davison [1988] IRLR 30 Northern Ireland Court of Appeal commenting on the s.11(2)(b) of the Contracts of Employment and Redundancy Payments Act (Northern Ireland) which is substantively the same as s.31B(2)(b). See Wong See Yee v Fung Hang Musical Co Ltd (unrep., HCLA 79/1986) in which an employee who had been responsible for the book-keeping relating to two shops was replaced by an employee who was paid a lower salary for the book-keeping relating to only one shop. See Safeway v Burrell [1997] ICR 523 and the test espoused by Lord Irvine in Murray v Foyle Meats Ltd [1999] ICR 827. Section 31K(3) of the EO. [1987] 3 HKC 508. See also MacFisheries v Findlay [1985] ICR 160. The position is likely to be otherwise where the change involves differences in daytime hours. See the case of Johnson v Nottinghamshire Combined Police Authority [1974] 1 WLR 358 in which the employees were required to change from a ve-day work to a six-day week. They were held not to be entitled to a redundancy payment upon their dismissal, after having refused to work the changed daytime hours. A substantial reduction in pay as a result of a change of shifts will not by itself necessarily amount to a redundancy: see Lesney Products v Nolan [1977] ICR 235.
283
of course in such a situation the employee may have other claims against his employer, such as a claim for constructive dismissal under s.10 of the EO or a claim for breach of contract. (f ) Exclusion of right to severance payment Exclusion of right to severance payment. An employee regarded as having been dismissed by reason of redundancy, will not be entitled to a severance payment in the following circumstances. (i) Employee terminated without notice or payment in lieu of notice in circumstances justifying summary dismissal No liability to make severance payment where employee summarily dismissed. An employee who is summarily dismissed in accordance with s.9 of the EO is not entitled to a severance payment.200 Although an employee who has been summarily dismissed for taking part in a strike201 is still entitled to a severance payment.202 An employer must have sufcient grounds for summarily terminating an employee. Accordingly, an employee whose employment is wrongfully terminated by being summarily dismissed by an employer without sufcient grounds will be entitled to a severance payment, provided a redundancy situation exists. Manner of dismissal must be consistent with summary dismissal. An employer should ensure that an employee whom he intends to summarily dismiss is terminated in a manner consistent with such a dismissal. If an employer elects to give notice or to make a payment to the employee in lieu of notice this is likely to trigger entitlement to a severance payment.203 (ii) Employee unreasonably refuses an offer of renewal or re-engagement from employer204 No liability to make severance payment where employee unreasonably refuses an offer of renewal or re-engagement. In order for an employee to lose his entitlement to a severance payment in these circumstances the provisions of the offer as to the capacity and place in which he would be employed, and other terms and conditions of the contract of employment, must not differ from the terms and conditions contained 7.125 7.123 7.122
7.124
200 201
202
203
204
Section 31C(1) of the EO. Section 2 of the TUO denes strike as: the cessation of work by a body of persons employed acting in combination, or a concerted refusal, or a refusal under a common understanding, of any number of persons employed, to continue to work for an employer in consequence of a dispute, done as a means of compelling their employer or the employer of any other person or body of persons, or any person or body of persons employed, to accept or not to accept terms or conditions of or affecting employment. Section 9(2) of the EO provides that such activity on the part of an employee does not entitle an employer to summarily dismiss the employees contract of employment under s.9(1) of the Ordinance. Allidem Mae G v Kwong Si Lin [2006] 1 HKC 252; Li Heung Sang v Compuware Asia Pacic Ltd [2004] 2 HKLRD 732; Chak Chong Chi v Maxims Caterers Ltd (unrep., HCLA 25/1992, [1992] HKLY 478). Compare Sin Bik Yin v Carat Jewellery Ltd (unrep., HCLA 49/2004, [2005] HKEC 801). See further discussion of this point at Chapter .6, para 6.128. Sections 31J and K of the EO apply to this provision, so as to produce a similar result if the offer is made by an associated company or the new owner upon a transfer of business.
284
in his previous contract of employment.205 The employer must make the offer within seven days prior to the relevant date. This is the date on which the contract of employment is due to terminate by reason of the expiry of the notice period or the expiry of a xed-term contract of employment, or in the case of a payment in lieu of notice, the date up to which the payment in lieu is calculated.206 The employer must also ensure that the renewal or re-engagement takes place on or before the date of termination of the previous contract.207 (iii) Employee unreasonably refuses offer of renewal or re-engagement made by employer208 on terms which are no less favourable than under previous contract 7.126 Unreasonable refusal of an offer of renewal or re-engagement on terms no less favourable than under previous contract. In order for the employee to lose his entitlement to a severance payment in these circumstances the provisions of the offer as to the capacity and place in which he would be employed, and other terms and conditions of the contract of employment can differ from the terms and conditions contained in his previous contract of employment, but the new offer must be capable of constituting an offer of suitable employment in relation to the employee209 and one which is no less favourable to the employee. The employer must make the offer within seven days prior to the relevant date.210 The employer must also ensure that the renewal or re-engagement takes place on or before the date of termination of the previous contract. What amounts to an unreasonable refusal will depend upon facts of the case. The EO does not provide guidance as to how to assess the reasonableness or otherwise of a refusal. What amounts to an unreasonable refusal on the part of an employee will therefore likely depend upon the circumstances of the case. It is suggested that an assessment of the reasonableness of the refusal would include at the very least an assessment of the employees personal circumstances. What amounts to suitable or no less favourable employment will depend upon facts of the case. Similarly, the EO provides no guidance as to what might be considered a suitable or no less favourable offer of employment. Whether or not an offer of re-employment is to be regarded as being suitable or no less favourable than the previous contract is a matter likely to be determined by reference to the circumstances of the case, although the assessment is likely to involve an inquiry
7.127
7.128
205 206 207 208
209
210
Section 31C(2) of the EO. Such an offer must be made within seven days before the relevant date, i.e. termination. Relevant date is dened in s.2 of the EO. Section 31C(2) of the EO. Sections 31J and K of the EO apply to this provision, so as to produce a similar result if the written offer is made by an associated company or the new owner upon a transfer of business. Note also para 4 of Sch.3 to the EO which treats an offer of re-employment by a personal representative of an employer that dies, as an offer by that employer. In order to benet from this provision in the EO an employer must promise or make an offer which is capable of being accepted. In Fong Anne v Hong Kong Adventist Hospital (unrep., HCLA 33/2009, [2010] HKEC 985) To J considered the employers invitation to the employee to apply for a position as constituting neither an offer nor a promise for these purposes. Dened in s.2 of the EO.
285
into the objective characteristics of the terms being offered as compared to the terms governing the previous contract of employment. It is unlikely that an employees refusal of an offer of employment would be regarded as unreasonable where relations between the parties have broken down, for example where the circumstances surrounding the termination have led to a breakdown of mutual condence and trust.211 Courts will consider status and level of skill required. Given that the question of whether an offer of suitable or no less favourable employment has been unreasonably turned down is a question of fact to be determined by reference to the circumstances of each case, there is limited precedent value in cases which examine these questions. That being said, it is worth referencing a couple of English decisions which indicate that courts are prepared to look beyond simply the nancial terms of an alternative offer of employment to the status and level of skill an employee is able to exercise upon the acceptance of such an offer.212 In Taylor v Kent CC 213 a headmaster who was offered alternative employment as one of a pool of mobile teachers sent out to different schools as their needs required, albeit at the same rate of pay as his previous position, was entitled to refuse the offer on the grounds that the alternative position involved a drop in status and responsibility. In a similar vein, in Standard Telephones & Cables v Yates214 the Employment Appeal tribunal considered an offer of less skilled assembly work unsuitable for a skilled card wirer. (iv) Employee leaves his employment prior to expiry of the notice period given by the employer Employee not entitled to severance payment if he leaves employment prior to the expiry of the notice period given by his employer. An employee who leaves his employment prior to the expiry of the notice period wrongfully terminates the contract of employment, and would not be considered dismissed by reason of redundancy for the purposes of qualifying for a severance payment. However, if an employee brings the employment relationship to an end prior to the expiry of the notice period served by his employer with the employers consent or by making a payment in lieu of the unexpired period of notice his entitlement to a severance payment is preserved.215 (g) Eligibility for severance payment in a lay-off situation Meaning of lay-off. The EO denes a lay-off by reference to an employees remuneration being dependent upon work the kind of which he is employed to do being provided to him by his employer and such work not being provided for a certain period of time.216 7.131 7.130 7.129
211 212
213 214 215
216
Mok Li Yun v DUrban Distributors (Hong Kong) Ltd (unrep., HCLA 17/1994, [1996] HKEC 361). Note that the comparable provision in the Employment Rights Act 1996 (s.141(3)(b)) refers only to suitable alternative offer of employment; there is no provision requiring that the offer constitute an offer be no less favourable to the employee than the previous employment. [1969] 2 QB 560. [1981] IRLR 21. Section 31C(5) of the EO. Note, a payment in lieu of notice by an employee will only preserve entitlement to a severance payment when such payment is made in response to the employers notice of termination. Section 31E of the EO.
286
7.132
Entitlement to a severance payment dependent upon duration of lay-off. An employee becomes entitled to a severance payment where such work is not provided for a period which exceeds half of the total normal working days in any period of four consecutive weeks or one-third of the total number of normal working days in any period of 26 weeks, and he is not remunerated for those periods.217 Lock-outs, rest days, statutory holidays and annual leave not to be taken into account. Any period during which an employee is not provided with work because of a lock-out218 by his employer, or as a result of a rest day, a statutory holiday or a day of annual leave should not to be taken into account as a normal working day for the purpose of determining whether an employee has been laid off.219 Substantial reduction of work to piece-rated workers may trigger severance payment entitlement. A substantial reduction of work may amount to a lay-off entitling piece-rated employees to be paid a severance payment.220 Employer can avoid liability for severance pay by paying employee during period of lay-off. An employer may however avoid liability for severance payments by paying an affected employee a sum equivalent to the wages he would have earned if work had been provided.221 In order to avoid liability to make a severance payment the employer must make a payment in lieu of what the employee could have expected to receive during an equivalent period where work was provided. For these purposes a retainer amounting to a nominal amount of remuneration will not sufce.222 Continuity of service preserved where no severance payment is made. An employees continuity of service is not treated as broken in a lay-off situation in which no severance payment has been made.223
7.133
7.134
7.135
7.136
217 218 219
220
221 222
223
Section 31E(1) of the EO. Dened in s.2 of the TUO (Cap.332). Section 31E(1A) of the EO. In Fashion Art Garment Factory Ltd v Yeung Mau Ching [1989] 2 HKC 467 the court rejected the employers argument that the four consecutive weeks period should have been extended by the number of holidays that fell during the period, and held that the section merely excluded holidays in the calculation of the period of lay-off, and did not apply to the period of four consecutive weeks. See Fashion Art Garment Factory Ltd v Yeung Mau Ching (fn 219); Precieux Garment Factory Ltd v Lam Kin Chung (see fn 148). Compare Wing Ming Garment Factory Ltd v Pun Yut Kit [1980] HKDCLR 1 in which His Honour Judge Davis regarded as awless the employers argument that there is no need for any employer to dismiss a piece-rated worker on the basis of redundancy given that he is only paid for the work he does. The logic in this argument appears to have been followed in Ying Cheong Shoe MFY v Yam Yuk Bing (fn 148) in which the court held that s.31E(1) applied to piece-rated employees were entitled to a severance payment in circumstances where the employer had agreed to make some sort of guaranteed payments or to pay a basic wage to those on piece-rates. However, these decisions were made at a time when original wording of the relevant part of s.31E(1) read as follows: Where an employee is employed under a contract on such terms and conditions that his remuneration thereunder depends on his being provided by the employer with work of the kind he is employed to do, he shall for the purposes of s. 31B(I) be taken to be laid off where the employer does not provide such work for him on at least a total of 12 normal working days in any period of 4 consecutive weeks and whereby he is not entitled to any remuneration under the contract for such period. Section 31E(1) of the EO. See Cheung Sau Ching v Fashion Garment Manufactory Ltd [1989] 2 HKLR 136. In Yick Fun Garment Factory Ltd v Chan Mei Ying [1987] 2 HKC 392, an employers agreement to pay employees a retainer of $50 per day in which work was not being offered was not able to prevent a lay-off situation from arising. Section 31E(2) of the EO.
287
(h) Excluded employees Categories of employees expressly excluded from eligibility for severance payments. Severance payments are not payable to the following classes of employees: (a) (b) (c) where the employer is the husband or wife of the employee; to any outworker;224 to any person employed by a government other than the Hong Kong Government who is a subject or citizen of the state under whose government he is employed; to any person employed as a domestic servant or in connection with a private household where the employer is the father, mother, grandfather, grandmother, stepfather, stepmother, son, daughter, grandson, granddaughter, stepson, stepdaughter, brother, sister, half-brother, or half-sister of the employee.225 (i) Amount of severance payment Calculation of severance payment. The amount of severance payable is calculated by reference to a statutory formula which incorporates length of service and the employees wages, subject to a cap. For employees paid on a monthly basis the formula is two-thirds of an employees last full months wages or two-thirds of HK$22,500,226 whichever amount is less, multiplied by the number of years of continuous service. For an employee who is not monthly rated, the amount is calculated by reference to two-thirds of any 18 days wages selected by an employee which occurred during his last 30 normal working days, or two-thirds of HK$22,500, whichever is less, multiplied by the number of years of continuous service. Alternatively, an employee may elect to have his severance payment calculated by reference to his last 12 months average earnings, subject to the same cap on the amount of monthly wages.227 An employee is entitled to a pro rata payment for an incomplete year of service. Statutory cap of HK$390,000. The total amount of a severance payment is subject to a statutory limit of HK$390,000.228 Wages not conned to base salary. In calculating a severance payment, an employer must take into account all remuneration earned by the employee, not simply his base salary. Section 2 of the EO denes wages in very broad terms so as to as include 7.138 7.137
(d)
7.139 7.140
224
225 226
227 228
Dened in s.2 of the EO as a person to whom articles or materials are, for payment or reward, given out to be made up, cleaned, washed, altered, ornamented, nished or repaired, or adapted for sale, in his or own home or on other premises not under the control or management of the person who gave out the articles or materials. Section 31F of the EO. Section 31G(1)(a) of the EO. The wage ceiling imposed under this section may be changed by a resolution of the Legislative Council published in the Hong Kong Government Gazette, pursuant to s.67A of the EO. Section 31G(2) of the EO. Section 31G(1) and Table A of Sch.7 to the EO.
288
earnings, allowances, including travelling allowances and attendance allowances, attendance bonus,229 commission, overtime pay, tips and service charges. 7.141 Non-recurrent overtime allowances generally not counted as wages. Overtime allowances which are non-recurrent are not taken into account for the purpose of determining an employees severance payment entitlement. However, overtime payments of a constant character or non-recurrent overtime payments which equal or exceed 20 per cent of an employees total average monthly remuneration package must be included.230 Periods of employment where employee was unpaid or on reduced pay to be disregarded. Where an employee has not been paid or has been paid at a reduced rate by reason of being on any leave taken in accordance with the EO or the ECO or with the agreement of his employer, or by reason of his not being provided with any work on a normal working day, any shortfall in wages must be disregarded, and the severance payment must be calculated as if the employee had been paid his full wages for the relevant period.231 Set off for gratuities and occupational retirement scheme benets. An employer is entitled to set off against its liability to make a severance payment any contractual gratuity based on length of service, any retirement scheme contributions that it has made in relation to the employee, or any accrued mandatory provident fund contributions232 it has made in respect of the employee to the extent that any such payments relate to the years of service for which the severance payment is payable.233 It is hard to see the rationale behind this provision, particularly with regard to the set off an employer can make against mandatory provident fund contributions. An employer is effectively permitted to erode the value of an employees mandatory provident fund account, a fund which is designed as a forced savings and investment plan for retirement purposes,234 in order to subsidise its obligation of making a severance payment, a payment which is designed to alleviate immediate nancial hardship in the wake of loss of employment caused by the employers need to reduce its workforce.235
7.142
7.143
229
230 231
232
233
234
235
In Wong Ping Kong v Tai Hing Cotton Mill Ltd (unrep., HCLA 19/1993, [1993] HKLY 517), the High Court held that attendance bonuses amounting to up to 30% of an employees basic wage were to be considered wages for the purpose of calculating severance payments. Section 2(2) of the EO. Section 2(3) of the EO. Contrast the position taken by the court in Ip Pui Wai v Siu Kwok Keung (unrep., HCLA 37/1993, [1994] HKEC 363) where the court disregarded a period where the employee had left the employers service but had returned two months later on the understanding that his previous period of service would be recognized for purposes of length of service. Any employee contributions made to a retirement scheme or mandatory provident fund are not deductible for these purposes. Section 31I of the EO. See also s.70A of the Occupational Retirement Schemes Ordinance (Cap.426) and s.12A of the Mandatory Provident Fund Schemes Ordinance (Cap.485). Indeed, it is difcult for an employee to withdraw money during the course of his active working life for this very reason. See MPF a op for workers and a rip-off by employers, South China Morning Post, 7 March 2010. According to the author of the article, government gures released to the Legislative Council reveal that companies have dipped into the MPF fund to the tune of HK$12.07 billion in the last decade to help pay for long-service and severance payments required by law.
289
( j) Timing and notication of claim for severance payment Employee must apply for severance payment within three months of termination. In order to be entitled to claim a severance payment an employee must make an application within three months of the relevant date,236 which is generally the date of the termination of employment.237 The period of time can be extended by the Commissioner for Labour.238 Application to be made by notice in writing. An employee makes an application for a severance payment by serving his employer with written notice of his claim. No written notice need be served where, prior to the expiry of the three month period, a question relating to the employees right to a severance payment or the amount of the severance payment has been led with the Minor Employment Claims Adjudication Board or the Labour Tribunal.239 Severance payment to be paid within two months of an employees application. Once an employee has made a request the employer must make a severance payment not later than two months from the date on which notice of a claim for severance payment was received. The position is different where, prior to the expiry of the two-month period either the employer or the employee has led a claim relating to the severance payment with the Minor Employment Claims Adjudication Board or the Labour Tribunal.240 Where a claim has been led with one of those bodies the time within which an employer has to make a severance payment will be that which is ordered by the relevant tribunal or, in the absence of an order specifying the time within which a severance payment should be made, 14 days.241 Failure to pay within the time limit constitutes an offence. An employer who fails to make a severance payment, without reasonable excuse, within the time specied by the EO, or the Minor Employment Claims Adjudication Board or the Labour Tribunal in a case where the matter has been referred to one of those bodies, will be guilty of an offence and liable on conviction to a ne at level 5.242 Payment must be made in legal tender. A severance payment must be made in cash unless the employee consents to the payment being made either by cheque, money order or postal order, or into a bank account in his name, or to an appointed agent.243 7.144
7.145
7.146
7.147
7.148
236
237
238
239 240 241 242 243
Relevant date is dened in s.2 of the EO. In Archer v Hong Kong Channel Ltd (199798) 1 HKCFAR 298 the relevant date was held to be not the date of termination but the date up to which wages were calculated. Section 31N of the EO. Where an employee dies within one month of termination the period of three months is extended to six months in cases where a deceased employees personal representative makes a claim: Para 13 of Sch.3 to the EO. This power can be delegated to any public ofcer: s.4A of the EO. In practice the power will be exercised by a labour department ofcial rather than the Commissioner. Section 31N(b) and (c). Section 31O(1) of the EO. Section 31O(1A). Currently HK$50,000, Sch.8 of the Criminal Procedure Ordinance (Cap.221). Section 31O(2) of the EO.
290
7.149
Failure to pay employee in manner specied constitutes an offence. An employer who, without reasonable excuse, contravenes this provision of the EO will be guilty of an offence and liable on conviction to a ne at level 3.244 Employer must provide employee with written particulars of severance payment calculation. On making a severance payment the employer is obliged to provide the employee with a written statement which sets out how the amount of the severance payment was calculated.245 Failure to provide employee with written particulars constitutes an offence. An employer who fails to provide an employee with written particulars of how the severance payment was calculated, without reasonable excuse, will be guilty of an offence and liable on conviction to a ne at level 3.246 Termination by operation of law. An employee whose contract of employment has terminated by operation of law on account of an act of his employer or by an event affecting his employer will be eligible to claim entitlement to a severance payment.247 Section 31L of the EO provides that where a contract of employment is terminated by operation of law provided that the termination was caused by an act on the part of, or an event affecting, the employer (such as death,248 frustration or illegality), the termination will be treated as though it were a dismissal by an employer in accordance with s.31D of the EO. Generally, an employee dismissed under these circumstances who has been re-engaged or whose employment has been renewed by a new owner immediately after the earlier contract has terminated will not be entitled to a severance payment.249 Employee may be entitled to additional severance payment and/or benets arising from contract of employment. An employee may, in addition to his entitlement to a statutory severance payment and other terminal benets, be entitled to a payment upon termination or other benets conferred by the express terms of his contract of employment. An express contractual term conferring termination payments or benets may be contained in the employees individual contract of employment or in other documents, such as company policies, manuals or handbooks. Entitlement to a contractual severance payment or benets upon termination may be incorporated by an express term of the contract by custom and practice. The fact that a document states that it is for information only or does not form part of the employees contract of employment does not preclude the policy from becoming
7.150
7.151
7.152
7.153
7.154
244 245 246 247
248
249
Currently HK$10,000, Sch.8 of the Criminal Procedure Ordinance (Cap.221). Section 31P of the EO. Currently HK$10,000, Sch.8 of the Criminal Procedure Ordinance (Cap.221). Subject to the statutory provisions regarding exclusion of such a right in the event of a renewal or re-engagement by the employer, or a party treated as an employer by virtue of s.31J and K of the EO. Section 31M of the EO. Special provisions apply to the death of an employee who dies after having been given notice of termination and an offer of renewal or re-engagement, but prior to having accepted such an offer: see Pt II of Sch.3 to the EO. Sections 31L(2),(3), and (4) of the EO.
291
a contractual entitlement.250 If a policy which has been drawn to the attention of employees has been followed without exception for a substantial period of time it may become incorporated into an employees contract of employment by custom and practice.251 The questions for an employee to consider are (i) whether or not the period for which the policy has been in place, together with all the circumstances of the case, are sufcient to draw an inference that the policy has the status of a contractual term; and (ii) whether or not the circumstances in which the policy has been communicated to employees is sufcient to draw the inference that the employer intended to be contractually bound by the policy.252 Best practice in redundancy terminations. There are no formal Codes of Practice governing disciplinary procedures in Hong Kong, but the Labour Departments Guide to Good People Management Practices253 makes the following recommendations with regard to terminations: Employers should treat employees equally when their employment is terminated. In situations of dismissal and redundancy, employers should: 7.155
comply with the provisions of the Employment Ordinance relating to termination and compensation packages and be as generous as possible with ex gratia payments as a support to the affected employees; set out clear and objective criteria and procedures in the process; ensure that the compensation packages are applied on equal terms to all employees in the same or similar circumstances; and ensure that any decision made is on the basis of the need for the job to be eliminated and the performance of an individual employee rather than for reasons of the employees sex, marital status, pregnancy, disability, age or family status. 7.156
Due diligence relating to protected categories of employees. An employer is prohibited from treating an employee less favourably in relation to employment by reason of their belonging to a protected category, namely on the grounds of an employees sex, marital status, pregnancy,254 disability,255 family status,256 or race.257 Thus part of any due diligence exercise conducted prior to termination should involve
250
251 252 253 254 255 256 257
In Chong Cheng Lin Courtney v Cathay Pacic Airways Ltd (unrep., HCA 898/2007, [2009] HKEC 2073) the court rejected the employers attempt to rely upon an introduction in the Staff Services Booklet which stated that the booklet was intended as a guide only. On the facts of the case the court held that the policy relating to retirement benets contained in the booklet was intended to have contractual effect. Albion Automotive Ltd v Walker [2002] EWCA Civ 946; Duke v Reliance Systems [1982] ICR 449. Chong Cheng Lin Courtney v Cathay Pacic Airways Ltd (fn 250). Available in PDF format on the Hong Kong Labour Departments website. Sex Discrimination Ordinance (Cap.480). Disability Discrimination Ordinance (Cap.487). Family Status Discrimination Ordinance (Cap.527). Race Discrimination Ordinance (Cap.602).
292
an assessment of risk relating to anti-discrimination legislation.258 This is particularly so in cases of mass redundancies where an employer should ensure that decisions to terminate are being made on objective grounds. Where redundancies are shown to disproportionately affect a population in a protected category it will be harder for an employer to rebut the presumption that the terminations were effected by reason of their belonging to the protected category.
4. LONG SERVICE PAYMENTS

(a) Entitlement to long service payment 7.157 Employees employed for more than ve years who are not eligible for severance payment may qualify for long service payment. An employee who has been employed under a continuous contract for not less than ve years prior to the relevant date (generally the date of termination)259 is entitled to a long service payment in the following circumstances: (i) where he is dismissed by his employer in circumstances where the employer is not liable to make a severance payment; (ii) where the employee terminates his employment under s.10(aa) of the EO as a result of a permanent disability which prevents him from undertaking work of the type he was employed to perform; (iii) where the employee retires after the age of 65. (i) Dismissal by employer. For the purposes of qualifying for a long service payment, an employee is taken to have been dismissed by his employer if his contract of employment was terminated in one of the following ways: the employer terminates the employment either with or without notice or payment in lieu, other than a summary dismissal; the expiry of a xed-term contract without renewal; where the employee terminates the employment with or without notice or payment in lieu in response to the employers repudiatory conduct, such that he is entitled to regard himself as having been constructively dismissed. (ii) Termination of employment as a result of permanent disability. In order to qualify for a long service payment on these grounds the employee must be certified as medically unfit. If an employee terminates his employment and makes a long service claim on these grounds an employer is entitled to ask the employee to undergo a medical examination (at the employers expense) and to seek a second medical opinion on the question of whether or not the employee is permanently unfit for the type of work in question.260 The medical examination must be conducted by a registered medical practitioner or registered Chinese medical practitioner.261
7.158
7.159
258
259 260 261
Employers should note that employees may also have the protection of anti-discrimination legislation of another jurisdictions (for example if they are in Hong Kong on secondment) or by virtue of their nationality. Fn 140. Section 31R(3) of the EO. Section 31R(3A) of the EO.
LONG SERVICE PAYMENTS
293
Employer forfeits right to challenge employees tness for work unless medical examination arranged within 14 days of receipt of original certicate and employee given 48 hours notice in writing. An employer forfeits this right to challenge the employees claim unless the arrangements are made for the medical examination to take place within 14 days of receipt of the certicate submitted by the employee, and the employee is given not less than 48 hours notice in writing setting out the details of the appointment before the examination is due to take place.262 Employee forfeits his right to long service payment in event of unreasonable refusal to submit to medical examination. An employee who unreasonably refuses to submit to a medical examination at the request of his employer will forfeit his right to a long service payment. What amounts to a reasonable excuse for these purposes is not specied in the Ordinance. The question of whether or not an employees refusal is unreasonable will therefore likely be a matter for a court to decide having regard to all the circumstances of the case. In event of second medical opinion certifying employee t for work employer must submit the matter to the Commmissioner for Labour. In the event that the second medical opinion comes to the opposite conclusion from the original medical certicate submitted by the employee, the employer is required to submit the original certicate and the second medical opinion to the Commissioner who must then consult with the experts in order to determine whether or not an employee is entitled to a long service payment.263 (iii) Retirement at the age of 65 or over. An employee who is not less than 65 years of age and has been continuously employed for not less than ve years is eligible for a long service payment if he resigns in order to retire.264 Long service payment payable in event of employees death. In the event of an employees death a long service payment is payable to the deceased employees spouse. Where the deceased employee has no spouse the payment is payable to the deceaseds children. If the deceased employee had no children the payment is payable to a parent. If the deceased employee has no surviving parent the payment is payable to the personal representative.265 A person claiming entitlement to a long service payment under these circumstances must make a claim within 30 days of the employees death, although this period may be extended by the Commissioner for Labour.266 An employer may set off any contractual gratuity, occupational retirement scheme benet or mandatory fund scheme benet payable to another person on the death of the employee against any long service payment payable to that person.267 (b) Exclusion of right to long service payment Exclusion of right to long service payment. An employee dismissed by his employer will not be entitled to a long service payment in the following circumstances.
7.160
7.161
7.162
7.163
7.164
7.165
262 263 264 265 266 267
Section 31R(4) of the EO. Section 31R(6) of the EO. Section 31R(1)(b) of the EO. Section 31RA(1) of the EO. Section 31RA(2) of the EO. Section 31YA of the EO.
294
(i) Employee terminated without notice or payment in lieu of notice in circumstances justifying summary dismissal 7.166 An employee must have been summarily dismissed. An employee who is summarily dismissed in accordance with s.9 of the EO is not entitled to a long service payment.268 Although an employee who has been summarily dismissed for taking part in a strike269 is still entitled to a long service payment.270 An employee whose employment is wrongfully terminated by being summarily dismissed by an employer without sufcient grounds will be entitled to a long service payment. Manner of dismissal. An employer who is entitled to dismiss an employee summarily must in fact do so in order to avoid liability for a long service payment.271 An employer should ensure that an employee whom he intends to summarily dismiss is terminated in a manner consistent with such a dismissal. If an employer elects to give notice or to make a payment to the employee in lieu of notice this is likely to trigger entitlement to a severance payment. (ii) Employee leaves his employment prior to expiry of the notice period given by the employer 7.168 Employee not entitled to severance payment if he leaves employment prior to the expiry of the notice period given by his employer. An employee who leaves his employment prior to the expiry of the notice period will not be entitled to a long service payment.272 However, an employee will still be entitled to a long service payment if in response to such notice he terminates the employment prior to the expiry of the notice period given by his employer either with the employers consent or by making a payment in lieu for the remainder of the notice period.273 (iii) Employee engaged under xed-term contract unreasonably refuses an offer of renewal or re-enagagement from employer274 7.169 Unreasonable refusal of an offer of renewal or re-engagement. An employee employed under a xed-term contract will not be entitled to a long service payment if not less than seven days before the relevant date the employer has made an offer in writing to renew his contract or re-engage him under a new contract. In order for the
7.167
268 269
270
271
272 273 274
Section 31S(1) of the EO. Section 2 of the TUO denes strike as: the cessation of work by a body of persons employed acting in combination, or a concerted refusal, or a refusal under a common understanding, of any number of persons employed, to continue to work for an employer in consequence of a dispute, done as a means of compelling their employer or the employer of any other person or body of persons, or any person or body of persons employed, to accept or not to accept terms or conditions of or affecting employment. Section 9(2) of the EO provides that such activity on the part of an employee does not entitle an employer to summarily dismiss the employees contract of employment under s.9(1) of the Ordinance. In Chak Chong Chi v Maxims Caterers Ltd (unrep., HCLA 25/1992, [1992] HKLY 478) the employer who had dismissed the employee by giving one months notice was liable to make a long service payment despite its argument that it had grounds which could have justied a summary dismissal. The court held that the provisions of ss.31S and T of the EO applied only to employees who had in fact been dismissed. Section 31S(2) of the EO. Section 31S(2)(a) and (b) of the EO. Sections 31J and K apply to this provision, so as to produce a similar result if the offer is made by an associated company or the new owner upon a transfer of business.
295
employee to lose his entitlement to a long service payment in these circumstances the provisions of the offer as to the capacity and place in which he would be employed, and other terms and conditions of the contract of employment must not differ from the terms and conditions contained in his previous contract of employment The employer must make the offer within seven days prior to the relevant date. This is the date on which the contract of employment is due to terminate by reason of the expiry of the notice period or the expiry of a xed-term contract of employment, or in the case of a payment in lieu of notice, the date up to which the payment in lieu is calculated. The employer must also ensure that the renewal or re-engagement takes place on or before the date of termination of the previous contract.275 (iv) Employee engaged under xed-term contract unreasonably refuses offer of renewal or re-engagement made by employer276 on terms which are no less favourable than under previous contract Unreasonable refusal of an offer of renewal or re-engagement on terms no less favourable than under previous contract. An employee employed under a xed-term contract will not be entitled to a long service payment if not less than seven days before the relevant date the employer has made an offer in writing to renew his contract or re-engage him under a new contract. The provisions of the offer as to the capacity and place in which he would be employed, and other terms and conditions of the contract of employment can differ from the terms and conditions contained in his previous contract of employment, but the new offer must be capable of constituting an offer of suitable employment in relation to the employee and one which is no less favourable to the employee. The employer must make the offer within seven days prior to the relevant date. This is the date on which the contract of employment is due to terminate by reason of the expiry of the notice period or the expiry of a xed-term contract of employment, or in the case of a payment in lieu of notice, the date up to which the payment in lieu is calculated. The employer must also ensure that the renewal or re-engagement takes place on or before the date of termination of the previous contract. Unreasonable refusal. The EO does not provide guidance as to how to assess the reasonableness or otherwise of a refusal. What amounts to an unreasonable refusal on the part of an employee will therefore likely depend upon the circumstances of the case. An assessment of the reasonableness of the refusal would seem to suggest that this would include at the very least an assessment of the employees personal circumstances. Employees engaged under a non-xed-term contract remain entitled to a long service payment in the event of unreasonably refusing a reasonable offer of renewal or re-engagement. In Globe Dyeing Factory Ltd v Ng Chi Leung277 the court upheld the Labour tribunals award of a long service payment to employees who were 7.170
7.171
7.172
275 276
277
Section 31S(3) of the EO. Sections 31J and K apply to this provision, so as to produce a similar result if the written offer is made by an associated company or the new owner upon a transfer of business. Note also para 4 of Sch.3 to the EO which treats an offer of re-employment by a personal representative of an employer that dies, as an offer by that employer. [1989] 1 HKLR 184.
296
required to relocate from Tsuen Wan to Ping Sham. The court, rejecting the employers argument that the employees had unreasonably refused an offer of re-employment, held that as there was no equivalent provision relating to long service payments to the test of reasonableness in relation to severance payments, the question of whether or not employees had unreasonably refused an offer of re-employment was not relevant to the issue of their entitlement to a long service payment. 7.173 Suitable or no less favourable employment. The EO provides no guidance as to what might be considered a suitable or no less favourable offer of employment. Accordingly, whether or not an offer of re-employment is to be regarded as being suitable or no less favourable than the previous contract is a matter likely to be determined by reference to the circumstances of the case.278 Refusal of re-employment permitted where employee retires or is certied as permanently unt for his employment. An employee employed under a xed-term contract will not forfeit his entitlement to a long service payment if upon the expiry of the xed-term he refuses an offer of re-employment on one of the following grounds (i) the employee intends to retire (having reached the age of 65 or more after not less than ve years of continuous service); or (ii) the employee is certied as permanently unt to carry out work of the kind which he was employed to do.279 (c) Excluded employees 7.175 Categories of employees expressly excluded from eligibility for long service payments. Long service payments are not payable to the following classes of employees: (1) (2) (3) where the employer is the husband or wife of the employee; to any outworker;280 to any person employed by a government other than the Hong Kong Government who is a subject or citizen of the state under whose government he is employed; to any person employed as a domestic servant or in connection with a private household where the employer is the father, mother, grandfather, grandmother, stepfather, stepmother, son, daughter, grandson, granddaughter, stepson, stepdaughter, brother, sister, half-brother, or half-sister of the employee.281 (d) Amount of long service payment 7.176 Calculation of long service payment. The amount of a long service payment is calculated by reference to a statutory formula which incorporates length of service and the employees wages, subject to a cap. For employees paid on a monthly basis the formula
7.174
(4)
278 279 280 281
See paras 7.126 and 7.129. Section 31S(6) of the EO. Dened in s.2 of the EO. Section 31U of the EO.
297
is two-thirds of an employees last full months wages or two-thirds of HK$22,500,282 whichever amount is less, multiplied by the number of years of continuous service. For an employee who is not monthly rated, the amount is calculated by reference to two-thirds of any 18 days wages selected by an employee which occurred during his last 30 normal working days, or two-thirds of HK$22,500, whichever is less, multiplied by the number of years of continuous service.283 Alternatively, an employee may elect to have his long service payment calculated by reference to his last 12 months average earnings, subject to the same cap on the amount of monthly wages.284 An employee is entitled to a pro rata payment for an incomplete year of service.285 Statutory cap of HK$390,000. The total amount of a long service payment is subject to a statutory limit of HK$390,000.286 Wages not conned to base salary. In calculating a long service payment, an employer must take into account all remuneration earned by the employee, not simply his base salary. Section 2 of the EO denes wages in very broad terms so as to as include earnings, allowances, including travelling allowances and attendance allowances, attendance bonus,287 commission, overtime pay, tips and service charges. Non-recurrent overtime allowances generally not counted as wages. Overtime allowances which are non-recurrent are not taken into account for the purpose of determining an employees long service payment entitlement. However, overtime payments of a constant character or non-recurrent overtime payments which equal or exceed 20 per cent of an employees total average monthly remuneration package must be included.288 Periods of employment where employee was unpaid or on reduced pay to be disregarded. Where an employee has not been paid or has been paid at a reduced rate by reason of being on any leave taken in accordance with the EO or the ECO or with the agreement of his employer, or by reason of his not being provided with any work on a normal working day, any shortfall in wages must be disregarded, and the long service payment must be calculated as if the employee had been paid his full wages for the relevant period.289 Set off for gratuities and occupational retirement scheme benets. An employer is entitled to set off against its liability to make a long service payment any contractual gratuity based on length of service, any retirement scheme contributions that it has made in relation to the employee, or any accrued mandatory provident fund 7.177 7.178
7.179
7.180
7.181
282
283 284 285 286 287
288 289
Section 31V(1)(a) of the EO. The wage ceiling imposed under this section may be changed by a resolution of the Legislative Council published in the Hong Kong Government Gazette, pursuant to s.67A of the EO. Section 31V(1)(b) of the EO. Section 31V(1A) of the EO. Section 31(v)(1) of the EO. Section 31V(1) and Table A of Sch.7 to the EO. In Wong Ping Kong v Tai Hing Cotton Mill Ltd (unrep., HCLA 19/1993, [1993] HKLY 517) , the High Court held that attendance bonuses amounting to up to 30% of an employees basic wage were to be considered wages for the purpose of calculating severance payments. Section 2(2) of the EO. Section 2(3) of the EO. Contrast the position taken by the court in Ip Pui Wai v Siu Kwok Keung (unrep., HCLA 37/1993, [1994] HKEC 363) where the court disregarded a period where the employee had left the employers service but had returned two months later on the understanding that his previous period of service would be recognized for purposes of length of service.
298
contributions it has made in respect of the employee to the extent that any such payments relate to the years of service for which the severance payment is payable.290 Any employee contributions made to a retirement scheme or mandatory provident fund are not deductible for these purposes.291 This provision allows an employer to dip into an employees mandatory provident fund account in order to subsidise its obligation of making a long service payment. It is difcult to identify the rationale for this provision, which seems inherently unfair.292 (e) Timing and method of long service payment 7.182 Employer must make a long service payment not later than seven days following the termination of employment. By contrast to the position regarding severance payments, an employee need not make an application for a long service payment. An employer has a statutory obligation to make a long service payment within seven days following the date of termination.293 Payment must be made in legal tender. A long service payment must be made in cash unless the employee consents to the payment being made either by cheque, money order or postal order, or into a bank account in his name, or to an appointed agent.294 Failure to pay employee in manner specied constitutes an offence. An employer who, without reasonable excuse, contravenes this provision of the EO will be guilty of an offence and liable on conviction to a ne at level 3.295 Employer must provide employee with written particulars of long service payment calculation. On making a long service payment the employer is obliged to provide the employee with a written statement which sets out how the amount of the long service payment was calculated.296 Failure to provide employee with written particulars constitutes an offence. An employer who fails to provide an employee with written particulars of how the severance payment was calculated, without reasonable excuse, will be guilty of an offence and liable on conviction to a ne at level 3.297
7.183
7.184
7.185
7.186
5. POST-TERMINATION CONSIDERATIONS
(a) Payments due to employee upon termination 7.187 Terminal Payments. Once the employment relationship comes to an end the employer must ensure that all terminal payments payable under the EO are made to the employee
290
291 292 293 294 295 296 297
Section 31Y of the EO. See also s.70A of the Occupational Retirement Schemes Ordinance (Cap.426) and s.12A of the Mandatory Provident Fund Schemes Ordinance (Cap.485). Section 31YAA(3) of the EO. See MPF a op for workers and a rip-off by employers (fn 235). See also para 7.143. Section 25(1) of the EO. Section 31ZD(1) of the EO. Currently HK$10,000 (Sch.8 of the Criminal Procedure Ordinance (Cap.221). Section 31ZE(1) of the EO. Currently HK$10,000 (Sch.8 of the Criminal Procedure Ordinance (Cap.221).
POST-TERMINATION CONSIDERATIONS
299
not later than seven days following the date of termination.298 Depending on the circumstances surrounding the dismissal, some of the following statutory payments will need to be made to an employee: (1) accrued wages for work performed up to the date of termination; (2) any payment in lieu of notice where a dismissal has been made without due notice; (3) accrued end of year payment;299 (4) accrued pro rata end of year payment (where the employee leaves employment completing only part of a bonus year provided that the employee has worked from more than three months in the payment period, excluding any probationary period);300 (5) accrued outstanding holiday pay;301 (6) accrued but untaken annual leave pay (annual leave which has been accrued in a completed annual leave year, or accrued under common leave year, but which the employee has not taken);302 (7) pro rata unaccrued annual leave pay (annual leave which relates to the uncompleted current leave year in which the employees employment is terminated and for which annual leave has not yet accrued provided that the employee has worked for more than three months in the leave year);303 (8) any sickness allowance due to the employee;304 (9) seven days wages as compensation for termination while on sickness leave;305 (10) any maternity leave pay due to the employee;306 (11) one months wages as compensation for termination while on maternity leave;307 (12) severance payment;308 (13) long service payment.309
298 299 300 301 302 303 304 305 306 307 308 309
Section 25 of the EO. Section 11E(2) of the EO. Section 11F(1) of the EO. Section 40A(2) of the EO. Sections 41AB(3) and D(1) of the EO. Section 41D(2) of the EO. Section 33(4C) of the EO. Section 33(4BA)(b) of the EO. Section 15(2)(c) of the EO. Section 15(2)(b) of the EO. Section 31B of the EO. Section 31R of the EO.
300
7.188
Contractual payments due to employee on termination. In addition to any statutory payments which may be due to an employee an employer should ensure that any contractual payments payable upon termination are also paid to the employee. Contractual payments could include a performance-related bonus or bonus payable upon expiry of xed-term contract, equity or stock option entitlements due upon termination, or payments due to enforce restrictive covenants. Discretionary bonus award may be payable to employee upon termination. Many employers remunerate their employees by a combination of the payment of a base salary and a discretionary bonus. Generally discretionary bonus schemes will entitle an employee to be considered for a discretionary bonus only upon completion of a specied period of serviceusually 12 months (the qualifying period). In the event of the termination of employment at any time prior to the qualifying period of service, an employee will not be entitled to a pro rata bonus for any period of service falling short of the qualifying period. The EO offers no assistance to employees in this position, since it does not include discretionary bonus payments in the denition of wages.310 However, if an employee who has either been served notice of termination or has resigned but remains employed through any qualifying period, so that the employee qualies to be considered for a discretionary bonus, an employer should ensure that in exercising its discretion it does so in good faith and not in an arbitrary, irrational or perverse manner, by for example, awarding a nil or derisory bonus that cannot be justied by reference to the employees performance.311 In these cases the courts have been willing to construe a discretionary bonus clause as conferring a contractual benet to the employee; they have typically concerned employment contracts in a high earning and competitive activity in which the discretionary bonus forms a signicant part of the remuneration structure.312 Test for irrationality is subjective. The test as to whether an employers exercise of its discretion has been exercised perversely or irrationally is subjective. Where there is a discretion whether or not to pay a bonus and the amount of such bonus, a court will look for evidence which suggests that the discretion has been exercised in a perverse or irrational manner; the question the court will then be concerned with is whether a reasonable employer would have exercised its discretion in that way.313 (b) Employment references
7.189
7.190
7.191
Employee references. There is generally no legal obligation upon an employer to provide an employee with a reference following the end of the employment relationship.314 However, if a reference is given, an employer is under a duty to exercise
310 311
312 313 314
Section 2 of the EO. See Clarke v Nomura International Plc [2000] IRLR 766; Post v Nomura International (Hong Kong) Ltd (unrep., HCA 7259/1997, [2001] HKEC 600); Wood v Jardine Fleming Holdings Ltd [2001] 2 HKC 735. See Horkulak v Cantor Fitzgerald International [2004] IRLR 942. Wood v Jardine Fleming Holdings Ltd [2001] 2 HKC 735. Lord Slynn in Spring v Guardian Assurance Plc [1994] IRLR 460, was of the view that there was at least a moral obligation on the employer to give a reference given that in many cases an employee will not stand a chance of getting a job without one (at p 335 C).
POST-TERMINATION CONSIDERATIONS
301
skill and care in its preparation and in verifying the facts on which it is based.315 In Spring v Guardian Assurance316 the House of Lords allowed an employees claim for economic loss arising from his employers negligent misstatement contained in a reference. Lords Goff, Slynn and Lord Woolf held that there was also an implied term in the contract of employment which places upon an employer a duty to take reasonable care in the compiling and giving of a reference.317 Statements concerning employees reputation. Aside from statements made in the formal context of a reference employers need to exercise caution regarding any public statements made regarding an employees conduct which may affect the employees professional reputation or ability to obtain future employment.318 In Warham v Cathay Pacic a number of employees who were among a group of 49 pilots collectively dismissed by Cathay Pacic were successful in an action for defamation arising out of a press statement made by their employer justifying the terminations. The press statement accused the employees of being unprofessional, bad employees and not caring for the best interests of their employer or of Hong Kong. In the words of Judge Reyes: By any reckoning such statement would lower the pilot in the esteem of right-thinking members of the public. The statement would, if false, be defamatory.319 (c) Notication of termination of employment to third parties Employer under obligation to notify employees Mandatory Provident Fund. An employer is required to notify the trustee of the Mandatory Provident Fund (MPF) within 10 days after the last day of the calendar month in which an employee has ceased to be employed by the employer. Employer under obligation to notify Inland Revenue Department. An employer is required to notify the Inland Revenue Department (IRD) one month before the date of termination of employment in a case where notice has been given by either employer or employee. Notication needs to be in writing through the ling of Form I.R.56F, or Form I.R.56G where an employee intends to leave Hong Kong following termination.320 Employer under obligation to notify Immigration Department. Where an employee holds an employment visa an employer must notify the Immigration Department of the employees termination of employment prior to the date of termination where termination is upon notice, or the day following termination in cases where no notice 7.193 7.192
7.194
7.195
315 316 317 318
319
320
Spring v Guardian Assurance Plc (fn 314). See fn 314. At pp 320 A-B, 340 B-C, 354 A-B. See also Cox v Sun Alliance Life Ltd [2001] IRLR 448. Warham v Cathay Pacic Airways Ltd (unrep., HCMP 4400/2001, HCA 2822/2002, 299 and 1405/2006, 807/2007, [2009] HKEC 348); Chu Siu Kuk Yuen v Apple Daily Ltd [2002] 1 HKLRD 1. At para 141 of the judgment. Reyes J awarded each of the plaintiff s except one general damages of HK$3 million and aggravated damages of HK$300,000. Additional notications are required where the employee is intending to leave Hong Kong following the termination of employment.
302
is given. Notication needs to be in writing, and a copy of any termination notice issued by either employer or employee must be sent to the Immigration Department within seven days of being issued. (d) Post-termination obligations of employee 7.196 Employees continuing obligations to employer. Upon the cessation of the employment relationship the parties are no longer bound by the terms of the contract of employment, save where the employee has agreed to be bound (whether in the original contract of employment or in a settlement agreement) by either a continuing obligation of condentiality regarding the employers condential information, and/or restrictive covenants, which generally take the form of a non-solicitation and/or non-competition clause. Such clauses are permitted only insofar as they do not operate as a restraint of trade. Thus an employer is not entitled to restrain a former employee from deploying his own skills and knowledge for the benet of himself and his new employer.321 Common law duty of condentiality. Regardless of the existence of an express post-termination condentiality provision in the contract of employment or settlement agreement, the common law imposes an implied duty of condentiality upon an employee regarding certain types of information. However, post-termination relief against an employee is generally conned to restraining misuse or disclosure only of trade secrets and condential information of an equivalent status. Condential information of lesser signicance is generally not subject to such protection.322
7.197
321
322
See PCCW-HKT Telephone Ltd v Aitken (2009) 12 HKCFAR 114. The extent to which an employer is entitled to rely upon clauses which may operate as restraints of trade is discussed more fully in Chapter 3. See the Court of Final Appeals decision in PCCW-HKT Telephone Ltd v Aitken (fn 322), applying Faccenda Chicken Ltd v Fowler [1987] Ch 117. See also Chapter 3, paras 3.0353.038.
CHAPTER 8
DISCRIMINATION LAW
PARA. 1. Overview .................................................................................................................................. 8.001 2. Background and context .......................................................................................................... 8.003 (a) The development of discrimination law in Hong Kong .................................................... 8.003 (b) Inuence of human rights and constitutional jurisprudence ............................................. 8.008 3. Forms and denitions of discrimination .................................................................................. 8.019 (a) Direct discrimination ........................................................................................................ 8.020 (i) Denition of direct discrimination ......................................................................... 8.020 (ii) Proving direct discrimination ................................................................................. 8.023 (iii) Direct sex discrimination claims ............................................................................ 8.039 (iv) Direct disability discrimination claims ................................................................... 8.041 (v) Direct pregnancy discrimination claims and maternity leave ................................. 8.047 (vi) Direct family status and marital status discrimination claims ................................ 8.054 (vii) Direct race discrimination ...................................................................................... 8.057 (viii) Equal pay for work of equal value .......................................................................... 8.058 (b) Indirect discrimination ...................................................................................................... 8.059 (c) Harassment ........................................................................................................................ 8.072 (i) Sexual harassment .................................................................................................. 8.073 (ii) Disability harassment ............................................................................................. 8.080 (iii) Racial harassment ................................................................................................... 8.083 (iv) Scope of the harassment provisions ........................................................................ 8.084 (d) Victimisation ..................................................................................................................... 8.086 (e) Vilication, serious vilication, instructions and pressure to discriminate ...................... 8.089 4. Prohibited grounds of discrimination ...................................................................................... 8.092 (a) Sex, marital status and pregnancy ..................................................................................... 8.094 (b) Disability ........................................................................................................................... 8.097 (c) Family status ..................................................................................................................... 8.102 (d) Race ................................................................................................................................... 8.103 (e) Anti-union discrimination and participating in a strike .................................................... 8.109 (f ) Taking sick leave, work-related injuries and whistle-blowing .......................................... 8.111 (g) Multiple grounds ............................................................................................................... 8.112 5. The scope of application of the employment provisions .......................................................... 8.113 6. Exceptions and defenses .......................................................................................................... 8.139 (a) Genuine occupational qualications ................................................................................. 8.140 (i) SDO ........................................................................................................................ 8.141 (ii) DDO ....................................................................................................................... 8.151 (iii) RDO ........................................................................................................................ 8.154 (b) Other exceptions under the DDO ...................................................................................... 8.158 (c) Other exceptions ............................................................................................................... 8.162
304
DISCRIMINATION LAW 7. Enforcement and remedies ....................................................................................................... 8.170 (a) The Equal Opportunities Commission .............................................................................. 8.170 (b) Remedies ........................................................................................................................... 8.173 8. Conclusion ............................................................................................................................... 8.180
1. OVERVIEW
Overview of chapter. Hong Kong has four anti-discrimination ordinancesthe Sex Discrimination Ordinance (SDO),1 Disability Discrimination Ordinance (DDO),2 Family Status Discrimination Ordinance (FSDO),3 and Race Discrimination Ordinance (RDO).4 These statutes are broad in scope and together prohibit direct and indirect discrimination on the grounds of sex, marital status, pregnancy, disability, family status, race, colour, descent and national or ethnic origin in employment and employment-related activities, among other elds. They also provide protection from sexual harassment, racial harassment, disability harassment, discrimination by way of victimisation and vilication and serious vilication on the grounds of disability and race. This chapter reviews the four anti-discrimination ordinances and their application to the eld of employment and also considers discrimination related to pregnancy and trade union activities covered by the Employment Ordinance (EO).5 Anti-discrimination law in Hong Kong. This chapter begins with a review of the background and context in which the anti-discrimination legislation was enactedand has since been developed and interpretedincluding the relevance of human rights standards applicable to Hong Kong. It examines the denition of discrimination, including direct and indirect discrimination, harassment, victimisation, vilication and serious vilication as well as the appropriate test for establishing direct discrimination, the difculties associated with identifying a comparator and determining the cause of discrimination, the possibility of justifying indirect discrimination and the concept of equal pay for equal work or work of equal value. The chapter also considers exceptions including the genuine occupational qualication defenses and exceptions for special measures. It concludes with a review of enforcement mechanisms including the role of the courts and the Equal Opportunities Commission (EOC), the statutory body tasked with overseeing the implementation of the legislation, encouraging conciliation of claims and promoting equal opportunities, and the available remedies for unlawful acts of discrimination in employment. 8.001
8.002
2. BACKGROUND AND CONTEXT

(a) The development of discrimination law in Hong Kong The legislative framework. Hong Kongs rst two anti-discrimination statutes, the SDO and the DDO, were enacted in 1995 and came into force in December 1996. The third, the FSDO, has been in force since November 1997. The RDO was enacted more than a decade later in July 2008 and came fully into force on 10 July 2009. This legislative framework, along with the relevant case law, forms a limited but expanding body of anti-discrimination law in Hong Kong which prohibits discrimination, harassment and vilication on a range of grounds in several elds including employment. In addition 8.003
1 2 3 4 5
Cap.480. Cap.487. Cap.527. Cap.602. Cap.57.
306
DISCRIMINATION LAW
to these statutes, the EO provides protection from pregnancy and trade union-related discrimination and the Basic Law and Bill of Rights provide for a constitutional right to equality and non-discrimination binding on public authorities. 8.004 Initial efforts to legislate. The Hong Kong colonial government, supported by business interests, had traditionally opposed the introduction of anti-discrimination legislation.6 When Anna Wu Hung-yuk, at the time a member of the Legislative Council (LegCo), introduced a comprehensive Equal Opportunities Bill (EOB) in 1994which would have prohibited discrimination on a range of grounds including family responsibility, sexuality, age, religious or political conviction, trade union activities and spent convictionthe government countered with its own compromise Sex Discrimination and Disability Discrimination Bills. These were followed a year later by the Family Status Discrimination Bill. These bills contained a mix of provisions based on UK legislation and Wus EOB which had been modelled largely on Australian anti-discrimination law.7 Attempts to provide protection on other grounds. After the enactment of the three initial statutes, further attempts by members of LegCo to introduce laws which would have addressed discrimination on other grounds, including sexual orientation and age, were unsuccessful. The government responded to these efforts by publishing non-binding guidelines for employers8 and emphasising publicity and education measures.9 Some non-governmental organisations (NGOs) and UN human rights treaty bodies, which monitor the implementation of state parties obligations under core international human rights treaties, have called for an extension of anti-discrimination legislation to ensure protection from discrimination on a range of grounds.10 Initially, the government resisted implementing legislation prohibiting racial discrimination but eventually agreed after a sustained local and international campaign and increasing support from international business organisations based in Hong Kong.11
8.005
7 8
9 10
11
See Petersen CJ, Investigation and Conciliation of Employment Discrimination Claims in the Context of Hong Kong (2001) 5 Employment Rights and Employment Policy Journal 627 at 632 and Petersen CJ A Critique of Hong Kongs Legal Framework for Gender Equality in Cheung FM and Holroyd E (eds), Mainstreaming Gender in Hong Kong Society (Hong Kong: Chinese University Press, 2009) at 405. Petersen notes that the colonial government justied its position [not to apply Convention on the Elimination of all Forms of Discrimination against Women to Hong Kong or enact anti-discrimination law] on the ground that it did not wish to interfere with traditional Chinese customs or over-regulate private sector employers. Ibid (Petersen, 2001). Labour Department, Practical Guidelines for Employers on Eliminating Age Discrimination in Employment, Jan 2006, available at: www.labour.gov.hk/eng/plan/.../Employers/PracticalGuidelines.pdf and Constitutional and Mainland Affairs Bureau, Code of Practice against Discrimination in Employment on the Ground of Sexual Orientation, http://www.cmab.gov.hk/en/issues/sexual.htm. See the Constitutional and Mainland Affairs Bureau website: http://www.cmab.gov.hk/en/issues/equal.htm. For example, see the IDAHO Hong Kong website: http://idahohk.org/2009/home.php. See also Concluding observations of the Committee on Economic, Social and Cultural Rights, Peoples Republic of China (including Hong Kong and Macao), UN Doc. No. E/C.12/1/Add.107, 13 May 2005, para 78(a). Although legislation concerning sexual orientation discrimination has not been enacted, the Hong Kong Court of Final Appeal has conrmed that a constitutional right to equality under the Basic Law (art.25) and Bill of Rights (arts.1 and 22) prohibits discrimination by public authorities on the ground of sexual orientation. See Secretary for Justice v Yau Yuk Lung [2007] 3 HKLRD 903. See Home Affairs Bureau of the Government of the Hong Kong SAR, Legislating Against Race Discrimination: A Consultation Paper (Sept 2004).
BACKGROUND AND CONTEXT
307
Legislative models and the application of English law. The Hong Kong statutes were modelled on older versions of UK legislation, the original 1975 Sex Discrimination Act (SDA) and the 1976 Race Relations Act (RRA), as well as Australian anti-discrimination law.12 As a result, Hong Kong courts have relied on both English and Australian case law for guidance when interpreting the Hong Kong legislation. In Chang Ying Kwan v Wyeth (HK) Ltd,13 a case involving pregnancy discrimination and discrimination by way of victimisation, the District Court conrmed this approach. It considered that English case law could serve as persuasive authority although it also noted that Hong Kong courts should not blindly follow the English courts reasoning which may not always be appropriate for the Hong Kong context.14 Relevance of the Codes of Practice on Employment. All four ordinances grant the EOC power to issue codes of practice (COPs) which contain practical guidelines for the purposes of the elimination of discrimination, the promotion of equality of opportunity and the elimination of harassment.15 The EOC has issued four COPs on Employment which are intended to provide guidance to employers on how to comply with their obligations under the anti-discrimination laws.16 Although the COPs do not create binding duties, employers may be able to avoid vicarious liability for their employees unlawful acts if they follow the Codes suggestions.17 The EOC will also take compliance with the COPs into account when investigating alleged discriminatory acts or conducting a formal investigation.18 In Sit Ka Yin Priscilla v Equal Opportunities Commission, the court rejected the plaintiffs submission that a failure to follow the SDO COP on Employment amounted to unlawful discrimination.19 It held that this
8.006
8.007
12
13 14 15 16
17
18 19
The Western Australia Equal Opportunities Act 1984 (No. 83) (WAEOA), served as the model for Anna Wus comprehensive Equal Opportunities Bill (EOB) in Hong Kong. Although the EOB was not ultimately enacted, the Hong Kong Government borrowed certain provisions from the Bill when drafting the Hong Kong statutes. Therefore, the four ordinances contain elements from the WAEOA as well as Federal Australian anti-discrimination legislation, such as the Sex Discrimination Act 1984 and the Disability Discrimination Act 1992. For example, SDO s.10, which explains how comparisons should be made for the purposes of determining direct discrimination, reects similar language in the WAEOA (s.8(1)). The SDO also includes protection from discrimination on the grounds of marital status and pregnancy, also covered in the WAEOA, but not in the original UK SDA (1975), although the SDA has since been amended to include the grounds of pregnancy and exercising a statutory right to maternity leave. The employment provisions in the four Hong Kong statutes closely follow similar sections in the Australian legislation. The SDO also denes sexual harassment in the same terms as the Australian Sex Discrimination Act, s.28A. Sexual harassment was not dened in the UK legislation until it was amended to reect the requirements of the European Equal Treatment Directive (Council Directive 2000/78/EC, 27 Nov 2000). [2001] 2 HKC 129. Ibid at 134. SDO s.69(1), DDO s.65(1), FSDO s.47(1), RDO s.63(1). The texts of all four Codes are available on the EOCs website: http://www.eoc.org.hk/eoc/GraphicsFolder/CoPs. aspx. SDO s.69(14), DDO s.65(13), RDO s.63(14). It is a defense for an employer to prove that he/she took such steps as were reasonably practicable to prevent the employee from doing unlawful, discriminatory acts. See SDO s.46, DDO s.48, FSDO s.34, RDO s.47. See also SDO Code of Practice (COP) on Employment at para 4.5 and discussion of the vicarious liability of employers at para 8.0137. Ibid (SDO COP) at para 4.3. (unrep., DCEO 11/1999, [2010] HKEC 208) at 161.
308
DISCRIMINATION LAW
view was a misperception and that not implementing the recommendations outlined in the Code cannot lead to an automatic nding of discrimination against the employer.20 (b) Inuence of human rights and constitutional jurisprudence 8.008 Human rights context. The statutes were enacted in response to international human rights instruments which have been extended to Hong Kong and which have been partially incorporated into domestic law.21 The courts have occasionally relied on these instruments and the materials produced by relevant international bodies when interpreting the ordinances. Although the focus of this chapter is on discrimination law as it applies to the eld of employment, the human rights context provides an important backdrop to this discussion and is necessary for a fuller understanding of the purpose of the legislation. This sub-section therefore considers the inuence and relevance of human rights to the statutes and their development and interpretation in light of Hong Kongs interaction with international human rights standards and mechanisms. Obligation to legislate under international human rights law. Non-discrimination is a fundamental principle of international human rights law.22 Hong Kong is bound by seven of the core international human rights treaties23 several of which obligate state parties to legislate to prohibit discrimination in both the public and private sectors in many elds, including employment. Of these treaties, the most relevant for this discussion of anti-discrimination law include the International Covenant on Civil and Political Rights (ICCPR);24 the International Covenant on Economic, Social and Cultural Rights (ICESCR);25 the Convention on the Elimination of all forms of Discrimination against Women (CEDAW)which was extended to Hong Kong around the same time the SDO came into force in 1996; the International Convention on the Elimination of all Forms of Racial Discrimination (ICERD)which has applied to Hong Kong since 1969; and the Convention on the Rights of Persons with Disabilities
8.009
20
21
22 23
24 25
Ibid. The SDO COP on Employment claries that [a] failure on the part of a person to observe any of the recommendations contained in this Code does not automatically render him or her liable to any proceedings. However, if a person is accused of discrimination, sexual harassment or victimisation, failure to implement the recommendations outlined in this Code could be used as evidence in a court of law (para 4.2). The RDO COP on Employment similarly explains that [t]he Code provides recommendations for good employment procedures and practices. It should be used to promote racial equality and harmony in the workplace. Following good employment procedures and practices will further have the benet of promoting racial equality and harmony beyond the workplace Although the Code is not law, it shall be admissible in evidence and the court shall take into account relevant parts of the Code in determining any question arising from proceedings under the RDO. If, for example, an employer has followed the Codes recommendations on taking reasonably practicable steps to prevent discrimination and harassment, it may help the employer to show that it has complied with the law (para 1.3.1). Through the Basic Law, the Bill of Rights, which forms Part II of the Hong Kong Bill of Rights Ordinance (Cap.383), the anti-discrimination legislation and other relevant statutes. Smith Rhona KM, Textbook on International Human Rights (Oxford University Press, 4th edn, 2010), 189. These include the 1965 International Convention on the Elimination of Racial Discrimination (ICERD), the 1966 International Covenant on Civil and Political Rights (ICCPR), the 1966 International Covenant on Economic, Social and Cultural Rights (ICESCR), The 1979 Convention on the Elimination of all Forms of Discrimination against Women (CEDAW), the 1984 Convention against Torture and other forms of Cruel, Inhuman or Degrading Treatment or Punishment (CAT), the 1989 Convention on the Rights of the Child (CRC), and the 2006 Convention on the Rights of Persons with Disabilities (CRPD). Articles 2(1), 3 and 26. Articles 2(2) and 3.
BACKGROUND AND CONTEXT
309
(CRPD) which came into force in May 2008 and has applied to Hong Kong since August 2008. The human rights treaty bodies. The Hong Kong government is required to submit periodic reportswhich generally form appendices to Chinas state reportsto the UN human rights treaty bodies, the committees which oversee state parties implementation of these instruments.26 The treaty bodies have on several occasions commented on Hong Kongs lack of adequate discrimination lawincluding the absence of legislation covering sexuality or age discriminationand weaknesses in the existing ordinances.27 These comments appear to have had an impact on the decision to introduce draft legislation against racial discrimination in 2006. The RDOlike the other ordinancesdoes not explicitly state that it is intended to implement Hong Kongs international human rights obligations, but the government claried that this was a key objective during the legislative process.28 Constitutional equality provisions. In addition to international human rights instruments which are applicable to Hong Kong, the discrimination legislation has developed alongside a growing body of constitutional jurisprudence interpreting the right to equality in art.25 of the Basic Law as well as arts.1 and 22 of the Bill of Rightswhich essentially mirror arts.2(1) and 26 of the ICCPR.29 The discrimination statutes reect the principle of equality. In Ma Bik Yung v Ko Chuen,30 the Hong Kong Court of Final Appeal (CFA) observed that the anti-discrimination statutes in Hong Kong reect the principle of equality enshrined in international human rights instruments which shall remain in force and be implemented through domestic law pursuant to art.39 of the Basic Law. It highlighted art.2(1) of the ICCPR (art.1(1) of the Hong Kong Bill of Rights) and art.2(2) of the ICESCR.31 The statutes should be construed consistently with international standards and constitutional rights. In Equal Opportunities Commission v Director of Education,32 a case which successfully challenged sex discrimination in the governments secondary school places allocation system under the SDO, the Court of First Instance concluded that the enactment of the SDO had met Hong Kongs obligation under CEDAW to adopt domestic legislation to protect women from discrimination. Therefore, the text 8.010
8.011
8.012
8.013
26
27
28 29
30 31
32
Although bound by the treaties, Hong Kong is technically not a state party and thus submits its reports as appendices to Chinas state reports except in the case of the ICCPR which does not apply to the PRC. For example, see Committee on Economic, Social and Cultural Rights, UN. Doc. No. E/C.12/1/Add.58, paras 30 and 31 and Human Rights Committee, UN Doc. No. CCPR/C/HKG/CO/2, 21 Apr 2006, para 19. See Home Affairs Bureau, Legislative Council Brief, Race Discrimination Bill, 29 Nov 2006, para 4. Article 2(1) obligates states to respect and to ensure to all individuals within its territory and subject to its jurisdiction the rights recognised in the present Covenant, without distinction of any kind, such as race, colour, sex, language, religion, political or other opinion, national or social origin, property, birth or other status. Article 26 provides that all persons are equal before the law and are entitled without any discrimination to the equal protection of the law. In this respect, the law shall prohibit any discrimination and guarantee to all persons equal and effective protection against discrimination on any ground such as race, colour, sex, language, religion, political or other opinion, national or social origin, property, birth or other status. [2002] 2 HKLRD 1 at para 5. Article 2(2) of the ICESCR essentially replicates the language of art.2(1) of the ICCPR (art.1(1) of the Hong Kong Bill of Rights). [2001] 2 HKLRD 690.
310
DISCRIMINATION LAW
of the SDO should be construed if it is reasonably capable of bearing such a meaning as consistent with CEDAW.33 8.014 Broad, purposive approach and generous and liberal interpretation. In Wong Lai Wan Avril v Prudential Assurance Co Ltd,34 the court agreed with the plaintiffs submission that the SDO and FSDO should be construed consistently with the ICCPR as it applies to Hong Kong since the statutes are aimed at providing comprehensive protection for equality and non-discrimination. As such, courts should adopt a broad and purposive approach and a generous and liberal interpretation of the legislation according to art.25 of the Basic Law and art.22 of the Bill of Rights.35 The courts can seek guidance from international standards and comparative case law. The courts have occasionally referred to international instruments and comparative human rights case law when interpreting the discrimination statutes and have used principles borrowed from constitutional law.36 In Equal Opportunities Commission v Director of Education, the court explicitly referred to CEDAW when stating that appropriate measures should be adopted to eliminate stereotyped concepts of men and women (art.10)37 and in order to clarify the meaning of special measures in s.48 of the SDO.38 It also observed that along with the Basic Law and Bill of Rights, the SDO forms part of a repository of fundamental rights recognised by free and open societies generally and therefore the courts can be guided by human rights jurisprudence from other jurisdictions as well as supra-national tribunals.39 It cautioned, however, that while this jurisprudence provided assistance in articulating general principles it may have more limited value when interpreting domestic legislation.40 Not all distinctions are invidious. In Equal Opportunities Commission v Director of Education, the court cited a General Comment issued by the UN Human Rights Committee, the body responsible for monitoring states implementation of their obligations under the ICCPR, which notes that equality does not require identical
8.015
8.016
33 34 35
36
37 38 39 40
Ibid at para 90. [2009] 5 HKC 494. Ibid at paras 37, 58 and 63 citing B v Ontario (Human Rights Commission) [2002] 3 SCR 403 and Ng Ka Ling v Director of Immigration (1999) 2 HKCFAR 4. Fn 32 above. Article 1(1) of the Bill of Rights (art.2(1) of the ICCPR) was mentioned although not signicantly relied upon in Chan Wah v Hang Hau Rural Committee [2000] 1 HKLRD 411 with regard to unlawful sex discrimination under the SDO. Fn 32 at para 88. Ibid at paras 109111. Ibid at para 113. Ibid. The courts may follow this approach and refer to the ICERD (fn 23) when interpreting the RDO or the CRPD when interpreting the DDO going forward. Although the CRPD came into force and was extended to Hong Kong twelve years after the enactment of the DDOand thus did not inuence the legislative process some claimants have attempted to rely on its provisions in disability discrimination cases. In Tong Wai Ting v Secretary for Education (unrep., HCAL 73/2009, [2009] HKEC 1367), the applicants argued that they had a legitimate expectation that the Government would comply with its Convention obligations (in the context of education policy). In M v Secretary for Justice [2009] 2 HKLRD 298, an employment discrimination case, the claimant attempted to argue that the DDO should be interpreted in light of the provisions in the Convention. The Court of Appeal, however, referred to the Convention as a statement of aspiration a position which conicts with current understandings of international human rights law. The EOC and NGOs have also mentioned the Convention when commenting on policy related to disability. See, for example, Submission from the Equal Opportunities Commission to the Meeting of the Legislative Council Panel on Health Services, Special Meeting on 22 Nov 2007, para 6.
FORMS AND DEFINITIONS OF DISCRIMINATION
311
treatment in every instance.41 This formulation has shaped the courts development of a justication test when determining whether distinctions are invidious and therefore discriminatory and unconstitutional under art.25 of the Basic Law and arts.1 and 22 of the Bill of Rights.42 Justication for differential treatment involves three steps. This constitutional justication test involves three steps: (1) the court must rst determine whether the difference in treatment pursued a legitimate aim which requires establishing a genuine need for such difference; (2) next it must be demonstrated that the difference in treatment is rationally connected to the legitimate aim; and (3) nally, the difference in treatment must be no more than is necessary to accomplish the legitimate aim.43 No general justication for discrimination under the anti-discrimination statutes. A plain reading of the text of the anti-discrimination statutes, however, indicates that this test is not available when determining direct discrimination under the four ordinances. Although the denition of direct discrimination in the SDO, DDO, FSDO and RDO does not provide for a general justication defense, the legislation does allow for certain exceptions in limited circumstances.44 A justication test may be applied as a defense in cases involving indirect discrimination, however, and the courts have adopted a 3-part test, similar to the constitutional test.45 8.017
8.018
3. FORMS AND DEFINITIONS OF DISCRIMINATION

Determining unlawful discrimination. Not all unequal treatment amounts to unlawful discriminationeven when made on one of the grounds covered by the ordinancesand several steps are involved in determining whether the legislation prohibits a particular act. First, the act in question must fall within the scope of the ordinances application which includes a range of employment-related contexts and activities.46 The act must have also occurred on the ground of one of the characteristics specied in the statutes which include sex, marital status, pregnancy, disability, family 8.019
41
42 43 44
45
46
Fn 32 at para 6, citing Human Rights Committee, General Comment No. 18, UN Doc. No. CCPR/C/21/Rev 1/ Add 1 (1989). The Human Rights Committee states that not every differentiation of treatment will constitute discrimination, if the criteria for such differentiation are reasonable and objective and if the aim is to achieve a purpose which is legitimate under the Covenant. See also R v Man Wai Keung (No. 2) [1992] 2 HKCLR 207. Fn 10 (Yau Yuk Lung), citing ibid (Man Wai Keung). Ibid (Yau Yuk Lung) at para 20. Because the denition of direct discriminationwhich is the same in all four ordinancesdoes not allow for the possibility of justication, the ordinances contain specic exceptions and defensessuch as a genuine occupational qualication defense (see s.6). Due to the different nature of constitutional equality guaranteeswhich have been articulated in broader and less precise language than the provisions in the discrimination statutesit may be inappropriate to apply this proportionality test when determining whether direct discrimination has occurred under the ordinances. There is potential overlap, however, since all of the ordinances apply to the government and the SDO, DDO and FSDO explicitly apply to the exercise of government powers and performance of its functions. The discriminatory policy which was challenged in Equal Opportunities Commission v Director of Education (fn 32) contravened the SDO as well as the Basic Law and Bill of Rights. Siu Kai Yuen v Maria College [2005] 2 HKLRD 775 at para 59 citing Board of Governors of St Matthias Church of England School v Crizzle [1993] IRLR 472. The denitions of direct and indirect discrimination and the relevant tests for proving both forms of discrimination and justifying indirect discrimination are discussed in s.3. Discussed in s.5.
312
DISCRIMINATION LAW
status or racea broad concept encompassing race, colour, descent or national or ethnic origin.47 It must also take on one of the forms of discrimination prohibited by the legislation. In other words it must fall within the denition of either direct or indirect discrimination or amount to harassment, discrimination by way of victimisation, vilication or serious vilication as dened in the legislation. In some cases, a particular exception or defense may be applicable.48 This section considers the forms of discrimination prohibited by the legislation including direct and indirect discrimination, harassment, discrimination by way of victimisation and vilication. (a) Direct discrimination (i) Denition of direct discrimination 8.020 Denition of direct discrimination. The four ordinances each contain essentially the same denitions of direct discrimination which are based on the original UK SDA.49 Direct discrimination occurs when a person, in any circumstances relevant for the purposes of any provision of one of the ordinances, treats another person less favourably on the grounds of that other persons sex, marital status, pregnancy, disability, family status or race than he/she would treat someone without the specied characteristic (in the case of disability, pregnancy, or family status) or someone with the opposite or different characteristic (in the case of sex, marital status or race).50 On the grounds of the claimants own race as opposed to on racial grounds. The denition of direct discrimination in the RDO follows the UK SDA and Hong Kong SDO models which stipulate that the less favourable treatment must be on the grounds of the claimants sex. In doing so, the RDO diverges from the UK RRA, which instead species that the treatment must be on racial grounds.51 This difference is signicant since the term racial grounds could encompass claims made by those who face discrimination on the basis of the race of another person or for reasons which could be characterised as racial. For example, in the United Kingdom this broader language has enabled individuals to successfully claim racial discrimination on the grounds that they had been dismissed from their jobs for failing to follow discriminatory instructions.52 Claims made on the grounds of a near relative or associate. Despite this more restrictive language in the RDO as compared with the UK RRA, another provision in the RDO extends protection from discrimination to less favourable treatment on the
8.021
8.022
47 48 49
50 51 52
Discussed in s.4. Discussed in s.6. UK SDA, s.1(2)(a). The denitions of indirect discrimination (but not direct discrimination) in the UK Acts have been amended in response to the limitations of the original denition and developments in European Law, especially a Directive issued by the Council of the European Union on establishing a general framework for equal treatment in employment and occupation, Council Directive 2000/78/EC, 27 Nov 2000, art.2(2)(b). The Hong Kong statutes do not reect these changes. SDO ss.5(1), 7(1) and 8(a), DDO s.6, FSDO s.5, RDO s.4(1). RRA, s.1(1)(a). Showboat Entertainment Centre Ltd v Owens [1984] ICR 65. For a discussion of the difference between the denition of direct discrimination in the RRA and SDA, see Karon Monaghan, Equality Law (Oxford University Press, 2007), 284285. See also Redfearn v Serco Ltd [2006] EWCA Civ 659; Zarczynska v Levy [1978] IRLR 532; and Weatherseld Ltd v Sargent [1999] ICR 425.
313
grounds of the race of a persons near relative.53 The DDO goes further and prohibits discrimination on the grounds of a persons associate which includes a relative as well as other relationships.54 The denition of disability also includes a disability that previously existed but no longer exists, may exist in the future or is imputed to a person.55 (ii) Proving direct discrimination Demonstrating less favourable treatment and causation. Hong Kong courts have relied on English authority to formulate a test for determining whether less favourable treatment has occurred and whether it has been caused by one of the prohibited groundsin other words whether the claimants sex, pregnancy, marital status, disability, family status or race was the reason why he/she faced unfavourable treatment.56 The but for test. The CFA in Secretary for Justice v Chan Wah (Chan Wah) has conrmed that the appropriate test for determining less favourable treatment is whether the relevant girl or girls (in the case of sex discrimination) would have received the same treatment as the boys but for their sex.57 Known as the but for test, this approach determines the existence of unfavourable treatment since it compares like with likereecting an equal treatment principleand may also reveal whether the treatment was caused by one of the prohibited grounds. Although Chan Wah was a sex discrimination case, courts have consistently applied the test to claims involving other prohibited grounds since the denitions of direct discrimination in the other statutes are essentially the same and also require a comparison. The but for test is objective and intent is not necessary. The CFA has conrmed that the but for test is objective, not subjective, in nature and afrmed that it is not necessary to establish the discriminators motive or intention although this may be relevant when determining appropriate remedies.58 It cited Lord Goff in R v Birmingham City Council who stated that it is possible to imagine cases of discrimination in which the defendant had no such motive.59 The need to identify a similarly situated comparator. Establishing less favourable treatment on the basis of a prohibited ground is a relative exercise. Applying the but for test to prove direct discrimination, therefore, requires the identication of a real or hypothetical comparator without the specied characteristic (i.e. not disabled under the DDO or not pregnant under the SDO) or with the opposite or different characteristic 8.023
8.024
8.025
8.026
53 54 55 56
57
58
59
RDO s.2(1) and s.5. See discussion at para 8.0108. DDO ss.2(1) and 6(c). See discussion at para 8.098. DDO s.2(1). See K v Secretary for Justice [2003] 3 HKLRD 777. Fn 19 at 133 citing Lord Nicholls of Birkenhead in Shamoon v Chief Constable of the Royal Ulster Constabulary [2003] ICR 337 at 7. Secretary for Justice v Chan Wah [2000] 3 HKLRD 641 (fn 36) citing Lord Goff in R v Birmingham City Council, Ex p Equal Opportunities Commission [1989] 1 AC 1155 at 1194 A-C and Lord Bridge applying this test in James v Eastleigh Borough Council [1990] 2 AC 751 at 765 D. Chan Wah (ibid) citing Lord Bridge in James v Eastleigh Borough Council (ibid) applying Lord Goffs test in Birmingham Council (ibid). Lord Bridge observes that the but for test is not subjective but objective. See discussion of intention in relation to remedies at para 8.0178. Chan Wah (ibid) at 656 citing Lord Goff in Birmingham Council (ibid). Also cited in, for example, Lam Wing Lai v YT Cheng (Chingtai) Ltd [2006] 1 HKLRD 639 and Yuen Wai Han v South Elderly Affairs Ltd [2002] 3 HKLRD 621.
314
DISCRIMINATION LAW
(i.e. a man, if the claimant is a woman and alleges sex discrimination under the SDO, or a person of a different race if the claim involves race discrimination under the RDO) but who is otherwise similarly situated. 8.027 The relevant circumstances must be the same. All four ordinances require that when making a comparison, the relevant circumstances in both cases be the same, or not materially different.60 The purpose of nding a comparator is to isolate the prohibited ground in the discrimination analysisby equalising all other relevant factorsin order to clarify whether the treatment would have occurred but for the prohibited ground.61 If not, then the treatment is less favourable. Difculties applying the equal treatment principle and nding a comparator. Identifying the correct comparator is not always straightforward in practice and often hinges on determining which conditions of the claimants situation are material and must therefore be similarly attributed to the comparator. This process sometimes exposes problems with formal denitions of direct discrimination. Direct discrimination provisions reect a concept of equality which is based on an equal treatment principle derived from Aristotles dictum that like cases should be treated alike.62 The comparator analysis becomes especially challenging when the prohibited grounds in the legislation are asymmetrical. Asymmetry in the context of anti-discrimination law means that only individuals who exhibit the protected characteristicsuch as having a disability or being pregnantare able to make claims. Those without the characteristic (i.e. those not having a disability or who are not pregnant) are not protected by the legislation. The SDOs provisions on sex discrimination and the RDO, by contrast, are symmetrical in nature since individuals of both sexes and from any racial group may make a claim of sex or race discrimination. Asymmetry signals recognition of past discrimination. Asymmetry often signals recognition that certain groupsdue to past or ongoing discrimination and disadvantageneed greater protection on the grounds of the relevant group characteristic. As a result, when a person from a disadvantaged groupsuch as a person with a disabilityclaims that he/she has experienced discrimination it may be difcult to locate a non-disabled comparator who is otherwise similarly situated. This is true since members of a marginalised group will be less likely to be in comparable circumstances to those who are more advantaged.63 For example, if women have traditionally been overrepresented in certain lower-paid professions, it may not be possible to nd a similarly situated male comparator to demonstrate that the lower pay received amounts to direct sex discrimination.64
8.028
8.029
60 61
62
63 64
SDO s.10, DDO s.8, FSDO s.7, RDO s.8(5). For a helpful overview of the uses of comparators in anti-discrimination law and related difculties see Aileen McColgan Cracking the Comparator Problem: Discrimination, Equal Treatment, and the Role of Comparisons (2006) 6 European Human Rights Law Review 650. Sandra Fredman, The Future of Equality in Britain, Equal Opportunities Commission Working Paper No. 5 (2002), 4 and Aristotle, Ethica Nicomachea, V .3 1131a1131b (trans. into English by Ross W, 1925). Ibid (Fredman). The comparator often reects the dominant norm or characteristic in society (male, non-disabled, etc.). Fredman notes that [u]nless the claimant conforms to this norm, she cannot surmount the threshold requirement of demonstrating that she is similarly situated to the comparator. The result is to create powerful conformist pressures. Ibid Fredman at 4.
315
Need for a causal link between the treatment and the proscribed ground. In L v Equal Opportunities Commission, the applicant alleged that the defendant employer had subjected him to direct disability discrimination, harassment and victimisation in employment after he had experienced an accident at work causing several conditions which he claimed amounted to a disability.65 When considering whether the treatment he faced constituted direct discrimination, the court afrmed that it was necessary to nd a causal link between the disability and the less favourable treatment.66 Different approaches to determining unfavourable treatment and causation. In some cases the courts have focussed on identifying an appropriate comparator when deciding whether direct discrimination has occurred since the reason why may become clear by way of comparison. In others, the courts have de-emphasised the comparator analysis and concentrated on whether discrimination can be inferred from the factual circumstances.67 In others, the courts have taken both approaches and conrmed that determining discrimination involves a two-part test.68 Two-part test to demonstrate less favourable treatment and then causation. In M v Secretary for Justice, a disability discrimination case, the Court of Appeal distinguished between (1) making a comparison in order to prove less favourable treatment and (2) determining whether the reason why a person faced such treatment is because of his/her sex, pregnancy, marital status, disability, family status or race. The court cited a two-part test which requires rst a determinationby identifying a comparatorof whether less favourable treatment has occurred: the comparator question. If the comparator analysis reveals less favourable treatment, then the court will determine whether it occurred on the ground of the claimants disability: the causation question.69 The less favourable treatment and the reason why issues are intertwined. In other cases, the courts have moved away from a strict comparator analysis when applying the but for test and have focussed primarily on determining causation. The District Court in Sit Ka Yin approved the dicta of Lord Nicholls who noted in Shamoon v Chief Constable of the Royal Ulster Constabulary70 that while the two-step, sequential approach may sometimes be convenient and helpful it may also give rise to needless problems especially where the identity of the relevant comparator is a matter of dispute. He observed that the issues of determining less favourable treatment and the reason why the treatment occurred are intertwined and stem from essentially one question: did the claimant on the proscribed ground receive less favourable treatment than others?71
8.030
8.031
8.032
8.033
65 66
67 68 69 70 71
(unrep., DCEO 1, 6/1999, [2002] HKEC 1390). See Driver, Federal Magistrate, in Chung v University of Sydney [2001] FMCA 94, afrmed on appeal by Spender J at [2002] FCA 186, as cited in ibid. The court held that to substantiate a complaint of discrimination it is not sufcient for you to show that you have a disability and that you have suffered unfair treatment. It is necessary to show that at least one reason for being treated less favourably than other students is based on your disability. For example, Fn 19. For example, see M v Secretary for Justice (fn 40). Ibid at para 45 citing Hayne and Heydon JJ in Purvis v State of New South Wales [2003] 217 CLR 92 at 231. Fn 56. Fn 19 at para 133 quoting Lord Nicholls of Birkenhead in Shamoon (ibid) at para 8.
316
DISCRIMINATION LAW
8.034
Focus on the factual inquiry. In Sit Ka Yin, the plaintiff claimed that she had faced less favourable treatmentincluding dismissal from her jobthan other colleagues on the grounds of sex and disability. Citing Shamoon as an example, the District Court noted that the identication of an appropriate comparator may sometimes cause unnecessary complication72 and instead focussed on a factual inquiry into why the plaintiff faced less favourable treatment. The judge agreed with Lord Nicholls view that concentrating primarily on why the claimant was treated as she was may allow the court to avoid arid and confusing disputes about the identication of the appropriate comparator.73 The relevant question is whether the treatment was on the proscribed ground which calls for an examination of all the facts of the case.74 If an act was done for more than one reason. The Hong Kong legislation species that if an act is done for two or more reasons and one of the reasons is the proscribed ground (whether or not it is the dominant or a substantial reason for doing the act) then the act shall be considered done for the reason of the relevant ground.75 In Chang Ying Kwan, the District Court observed that this provision signals a recognition that it is unusual to nd evidence of direct discrimination and that a nding of discrimination usually depends on what inferences it is proper to draw from the primary facts.76 Considering the evidence in the round. In approaching the evidence, the court in Sit Ka Yin, relying on Donaldson LJs opinion in Union of Construction, Allied Trades & Technicians v Brain,77 decided that the correct approach when evaluating a discrimination claim involving several complaints over a long period of time, was to consider the evidence in the round in the context of employment and human relations, and the dignity and rights accorded to a person by equal opportunities legislation.78 In a number of cases, the courts have emphasised the credibility of the plaintiffs, defendants and witnesses when considering the evidence involved in determining a discrimination claim.79
8.035
8.036
72 73 74
75 76
77 78 79
Ibid (Sit Ka Yin) at para 131 citing ibid (Shamoon). Ibid (Shamoon) at para 11 cited in ibid (Sit Ka Yin) at para 133. Ibid Lord Nicholls goes on to state that if the treatment was for some other reason, the application fails but if it was for the reason of the relevant ground there will usually be no difculty in deciding whether the treatment, afforded to the claimant on the proscribed ground, was less favourable than was or would have been afforded to others. SDO s.4, DDO s.3, FSDO s.4, RDO s.9. Fn 13 135. This provision copies the Australian model [the Australian Disability Discrimination Act (DDA) s.10 and the WAEOA s.5 (fn 12)] and is absent from the English legislation. The District Court in Chang Ying Kwan (fn 13) expressed the view, however, that the English courts have lled this gap through judicial interpretation. Fn 13 citing Neill LJ in King v GB China Centre [1992] ICR 516 at 528. [1981] IRLR 224 at 227. Also cited in Chang Ying Kwan (ibid). Fn 13 at 139. This approach was approved in Sit Ka Yin (fn 19) at paras 143 and 145. See, for example, Chen v Taramus Rus (unrep., DCEO 2/1999, [2000] HKEC 649) in which the court stated it had listened carefully to all of the evidence of all of the witnesses and observed their respective demeanors. The court cited s.73B of the District Court Ordinance (Cap.336): The Court in the exercise of its jurisdiction under the [SDO] shall not be bound by the rules of evidence and may inform itself on any matter in such manner as it sees t, with due regard to the rights of the parties to proceedings therein to a fair hearing, the need to determine the substantial merits of the case and the need to achieve a prompt hearing of the matters at issue between the parties.
317
Key principles related to the burden of proof. The District Court in Lam Wing Lai v YT Cheng (Chingtai) Ltd80 approved the application of several principles related to the burden of proof in discrimination cases.81
8.037
The burden of proof is on the applicant. The burden of proof is on the applicant who claims discrimination and the claim will fail if he/she does not prove the case on the balance of probabilities. Discrimination may not be ill-intentioned. Discrimination need not be ill-intentioned. It is unusual to nd direct evidence of discrimination and few employers will be prepared to admit such discrimination even to themselves. Drawing inferences from facts. Because of these difculties, the outcome of the case will often depend on what inferences it is proper to draw from the primary facts found by the Tribunal which can include any inferences that it is just and equitable to draw from an evasion of equivocal reply to a questionnaire. Findings of discrimination and difference. If a court nds less favourable treatment as well as a difference of sex, race, etc. this will often point to the possibility of discrimination. The court will then seek an explanation from the employer and if the explanation is inadequate or unsatisfactory, the court will infer that the treatment occurred on the prohibited ground.82 No shifting burden of proof and bearing in mind the difculties facing the claimant. A shifting burden of proof is unnecessary and a tribunal should rst determine the primary facts and then draw proper inferences from those facts. When reaching a conclusion about whether the applicant has met the burden of proof on the balance of probabilities, the court should bear in mind the difculties facing a person who complains of unlawful discrimination. 8.038
Application of the principles. Hong Kong courts have decided a number of direct discrimination cases which illustrate the different approaches to the application of these principles and the but for test, identifying a comparator, determining the relevant circumstances to attribute to the comparator, and determining causation. (iii) Direct sex discrimination claims Determining the relevant period of employment. Helen Tsang v Cathay Pacic Airways involved a claim that Cathay Pacics retirement policy discriminated on the
8.039
80 81
82
Lam Wing Lai v YT Cheng (Chingtai) Ltd (fn 59). See also Kwok Wing Sun v Law Yung Kai [2008] 5 HKLRD 340. These have been extracted from several English authorities including North West Thames RHA v Noone (No. 2) [1988] ICR 813, at p 822 by Neill LJ in King v GB China Centre (fn 76 above) at p 528 A-D and F-H. He notes that This is not a matter of law but, as May LJ put it in North West Thames RHA v Noone (No. 2) almost common sense.
318
DISCRIMINATION LAW
basis of sex.83 When the plaintiff, a female ight attendant, retired in 1992, Cathay stipulated different mandatory retirement ages for female and male cabin crew (40 for women and 55 for men). Although the plaintiff was subject to this policy before the SDO came into forceand therefore before sex discrimination in employment became unlawfulthe claimants employment relationship with Cathay was renewed according to temporary one-year contracts. The last of these began in 1996 before the SDO came into force but ended in 1997 after the relevant provisions in the SDO had taken effect. In 1993, Cathay had revised its policy so that both female and male ight attendants would retire at 45 and female staff who had already retired but were on extension contracts, such as the plaintiff, could be offered extensions until they reached the age of 45. Existing male cabin crew, however, had the option of either changing to the new terms or retaining the old terms and retiring at 55. When applying the but for test, the court recognised that the choice of comparator depended on whether the claimants employment with the defendant had been continuous from the time she was hired by Cathay in 1979 or had started with her nal one-year extension contract in 1996.84 The court upheld her claim accepting that Tsangs employment had been continuous and therefore the comparator should be a male ight attendant hired in 1979. 8.040 Break in employment and waiver clause. In a similar sex discrimination case,85 Au Kwai Fun v Cathay Pacic Airways Ltd, the plaintiffs, also female ight attendants employed by Cathay Pacic, failed in their claim because there had been a de facto break in the employment relationship and the employees had signed a waiver clause which had operated to extinguish the claims.86 The court chose as a comparator a male ight attendant who had joined Cathay Pacic in 1999, the year the claimants had been re-hired by Cathay in an attempt to settle outstanding discrimination claims and after gaps in employment of 1-2 years since the end of their nal extension contracts with Cathay when they reached the age of 45.87 (iv) Direct disability discrimination claims 8.041 Knowledge of a disability is not necessary. To establish a direct disability discrimination claim, it is not necessary to show that the employer was aware of the plaintiffs disability. M v Secretary for Justice (M)88 involved a claim of disability discrimination and harassment brought by a former civil servantan administrative ofcer employed on probationary termswho had resigned after being told that his employment would be terminated and that it was in his interests to leave. The claimant suffered from a psychiatric disorder known as Generalised Anxiety Disorder which he claimed was a disability causing symptoms that led to problems with his job performance. On the basis of expert medical evidence, the Court of Appeal accepted that the plaintiff had a disability at the material time but that the defendantthe Governmentdid not have
83
84 85 86 87 88
Tsang v Cathay Pacic Airways Ltd [2002] 2 HKLRD 677. Section 11(2) of the SDO renders it unlawful for an employer to discriminate against a woman in the terms of employment afforded to her. See discussion at paras 8.1188.119. Ibid (Tsang v Cathay Pacic Airways Ltd) at para 56. Au Kwai Fun v Cathay Pacic Airways Ltd [2008] 2 HKC 507. Ibid at para 22. Ibid at para 52. Fn 40.
319
knowledge of his condition.89 The Court, however, disagreed with the lower courts ruling that knowledge of a persons disability was necessary to a nding of direct disability discrimination.90 Determining the similar circumstances when choosing a comparator. The Court of Appeal in M decided that the appropriate comparator should be an ofcer without the disorder who had performed poorlyand thus was similarly situated. In doing so, it accepted the reasoning of the majority of the Australian High Court in Purvis v State of New South Wales91 on the method of choosing a comparator in the disability context and determining the relevant similar circumstances. In Purvis, a boy with brain damage that resulted in violent behaviour claimed disability discrimination when he was expelled from school. At issue was whether the non-disabled comparator should also exhibit the violent behaviour. If the comparator was similarly violent, but without the brain damage, then there would be no nding of less favourable treatment, since he/she would have also been expelled from the school. Separating the attributes of the disability for the purposes of comparison. In Purvis, the majority decided to separate the symptoms of the disability from the disability itself and thus attach those symptoms to the chosen non-disabled comparator as part of the similar circumstances. The three-judge majority held that [i]f the person without the disability is simply a pupil who is never violent, then it is difcult to know what context is given to the requirement that the circumstances be the same.92 The two judges who wrote the minority opinion argued, however, that the appropriate comparator should not be a student with behavioural problems and maintained that the purpose of a Disability Discrimination Act would be defeated if the comparator issue was determined in a way that enabled the characteristics of the disabled person to be attributed to the comparator.93 The crux of the minoritys argument was that a disabled student who is violent as a result of his disability would not be similarly situated to a boy who is wilfully violent. In M the Hong Kong court followed the majoritys reasoning in Purvis when determining that poor performance was not part ofeven if it had arisen fromthe claimants disability, and therefore should be assigned to the comparator. Comparators when unfavourable treatment stems from absences from work for reasons of disability. In Siu Kai Yuen v Maria College,94 the District Court held that the appropriate hypothetical comparator for a teacher with cancer who was dismissed from his job for his long absence should be a teacher on jury duty or maternity leave. Since it was evident that the school would not dismiss an employee for those reasons, the teachers claim was upheld. The court in L v Equal Opportunities Commission had more difculty.95 The plaintiff complained that he had been asked to undergo a medical exam when taking leave for a minor accident and claiming benets under the Employees Compensation Ordinance (ECO). The court reasoned that it was 8.042
8.043
8.044
89 90 91 92 93 94 95
Ibid. Ibid at 6970, 79 and 112. Fn 69. Gleeson CJ in Purvis (fn 69) at para 12 as cited in M v Secretary for Justice (fn 40) at para 46. McHugh J and Kirby J in Purvis (ibid) at para 130 as cited in M v Secretary for Justice (ibid) at para 55. Fn 45. Fn 65.
320
DISCRIMINATION LAW
impossible to nd an appropriate comparator because if the comparator did not have a disability, there would not have been any reason for the defendant to request such an exam. In addition, since the circumstances need to be the same, the comparator must be an employee on sick leave and according to the court the meaning of disability was so wide that anyone on sick leave must have some partial loss of bodily or mental functions and therefore be a person with a disability.96 In the end, the court held that the comparator was someone who had suffered from a minor work accident and was on prolonged sick leave with no indication as to the date of return to work. Since there was no evidence of a real comparator or how the EOC would have responded to such a hypothetical case, the court could not nd discrimination and rejected the claim.97 8.045 Comparators in cases of physical injury. In Ip Kai Sang v Federal Elite Ltd, the District Court held that the plaintiff, a waiter with a wrist injury, had suffered disability discrimination since other employees without a wrist injury would not have been dismissed.98 In Ma Bik Yung v Ko Chuen, a paraplegic woman in a wheelchair lodged claims of disability discrimination and harassment in the provision of services against a taxi driver who had refused to assist her and had verbally harassed her.99 The District Court held, and the Court of Appeal concurred, that the appropriate comparator should be an able-bodied person with heavy luggage.100 The Court of Appeal, however, overturned the District Courts determination of disability discrimination on the basis that the lower court judge did not explicitly nd that the defendant would have treated the comparator any differently.101 Comparators in cases of intellectual disability. The comparator problem is also apparent in the case of Tong Wai Ting v Secretary for Education102 which challenged the imposition of an alleged age limit of 18 years for free public education for students with intellectual disabilities attending special schools. The court chose as a comparator a secondary school student who had completed 11 years of free education and who wished to repeat secondary 5 in order to pass the public examinations. It held that the mainstream school students application to repeat a year would not be automatically approved, the two students therefore would have been treated in the same way, and there was no discrimination.103
8.046
96 97 98 99 100 101
102 103
Ibid at para 61. See discussion of the meaning of disability at paras 8.0978.101. Ibid at para 63. [2008] 2 HKLRD 563. Ma Bik Yung v Ko Chuen [2000] 1 HKLRD 514. Ibid. Ibid. Petersen points out that the disabled person and the person with heavy luggage are not really similarly situated since the person with heavy luggage could have more easily placed the luggage in the taxi on her own. See Petersen CJ, Chinas Ratication of the Convention on the Rights of Persons with Disabilities: The Implications for Hong Kong (2008) 38 Hong Kong Law Journal 611 at 632 and Petersen CJ, Implementing Equality: An Analysis of Two Recent Decisions under Hong Kongs Anti-Discrimination Laws (1999) 29 Hong Kong Law Journal 178 at 190. A similar observation could be made about the comparator in Purvis (fn 69) cited in M v Secretary for Justice (fn 40), discussed at paras 8.0428.043. A boy without the disability and with the violent behavior would not have been similarly situated, since he may have more easily responded to discipline or may have had more control over his behavior in the rst place. Fn 40. Ibid at paras 8083. Arguably, however, the situation facing the two students (attendance at a mainstream school and attendance at a special school) was not actually comparable. In other words, the students were not really similarly situated even apart from the disability and it would therefore be difcult to ascertain the relevant facts for the purposes of making a formal comparison to prove discrimination.
321
(v) Direct pregnancy discrimination claims and maternity leave Direct pregnancy discrimination cases. Establishing direct pregnancy discrimination requires a comparison between the claimant and someone who is not pregnant but otherwise similarly situated.104 The courts have conrmed that the but for test is appropriate for determining direct pregnancy discrimination claims.105 As with other grounds of discrimination, disputes may arise when deciding which circumstances are relevant and similar and should therefore be considered for the purposes of comparison in pregnancy cases. The comparator must be an employee who is not pregnant. In Chang Ying Kwan,106 the District Court found that the employer, a pharmaceutical company, had discriminated against the plaintiff when it attempted to force her to resign after she informed them of her pregnancy, and then by way of victimisation after she had complained to the EOC.107 Although there was evidence that the company treated other pregnant employees well, the court held that no inferences could be drawn from this fact since the appropriate comparator was not another pregnant employee, but a normal, or non-pregnant, employee in an otherwise similar position.108 In this case the court held that the company would have treated the comparatoran ordinary employee who was under-performingbetter than the claimant and would have put steps in place to allow for a proper evaluation before taking any decision or action on dismissal or demotion. Less reliance on a comparator analysis in pregnancy cases. In a number of pregnancy discrimination cases, the courts have focussed less on a comparator analysis and more on drawing inferences from the established facts. One example is the case of Yuen Wai Han v South Elderly Affairs Ltd,109 in which the employeran elderly persons homerescinded its employment contract with a pregnant social worker before she commenced her work with them. The court considered the facts and inferred that pregnancy was at least one of the reasons for the employers decision.110 Although the court applied the but for test it did not provide detailed reasoning and simply held that pregnancy was at least one of the reasons for the unfavourable treatment and that a person who was not pregnant would not have received the same unfavourable treatment (having his/her contract rescinded) as the plaintiff .111 8.047
8.048
8.049
104 105
106 107 108
109 110
111
SDO ss.8(a) and 10. See, for example, Chan Choi Yin v Toppan Forms (Hong Kong) Ltd [2006] 3 HKC 143 at para 52 citing Chang Ying Kwan (fn 13) and Yuen Wai Han v South Elderly Affairs Ltd (fn 59) both of which cited R v Birmingham City Council Ex p Equal Opportunities Commission and James v Eastleigh Borough Council (fn 57). See also Lam Wing Lai v YT Cheng (Chingtai) Ltd (fn 59). Ibid (Chang Ying Kwan). Ibid. Fn 13 at 135 citing Chief Constable of West Yorkshire Police v Khan [2000] IRLR 324. See also Lam Wing Lai v YT Cheng (Chingtai) Ltd (fn 59). Fn 59. Ibid at paras 1314. The court relied, for example, on a letter from the defendant to the EOC which mentioned that the supervisor the position which the plaintiff had been hired to ll was required to carry residents with disabilities from the rst oor to the ground oor and help them take part in activities. Ibid at 22.
322
DISCRIMINATION LAW
8.050
Drawing inferences from facts. In Chan Choi Yin v Toppan Forms (Hong Kong) Ltd,112 the plaintiff, an account manager, claimed direct pregnancy discrimination and discrimination by way of victimisation under the SDO. The claimant had had a difcult pregnancy and had taken sick leave on various occasions. She claimed that she had been demoted and subjected to a difcult working environment due to her pregnancy and upon return from maternity leave. This treatment continued after she told the company that she would le a claim with the EOC. The defendant argued that her job performance had been poor even when allowances were made for her sick leave, that she had maintained a hostile attitude and that she had been dismissed more than a year after giving birth. The court upheld the pregnancy discrimination and victimisation claims based on an assessment of the facts applying the principles established in Chang Ying Kwan and Yuen Wai Han including the but for test.113 It held that she had shown from the primary facts that inferences can be drawn that disclosed a possibility of discrimination and that the employer had not provided a satisfactory explanation.114 The court took into account its view that the plaintiff had been an honest witness and had established the basic facts of her claim on a balance of probabilities.115 Failure to offer a reasonable explanation for dismissal. Lam Wing Lai v YT Cheng (Chingtai Ltd)116 involved a claim of pregnancy and family status discrimination as well as discrimination by way of victimisation. The plaintiff was an executive secretary to the chairman of the Board of Directors of the respondent company. She had taken frequent sick leave during pregnancy due to a threatened miscarriage and was dismissed a week after returning from her maternity leave on the pretext that a customer had complained about her. The defendant failed to offer a reasonable explanation for her dismissal and the court inferred discrimination based on an evaluation of the facts. In doing so, the court considered evidence that she had received a salary increment and passed a probation period when evaluating the defendants claim that she had been dismissed due to poor work performance. Maternity leave. In Chan Choi Yin v Toppan Forms (Hong Kong) Ltd,117 the court upheld a claim of pregnancy discrimination on the basis of less favourable treatment which had occurred both before the claimant had given birth and after she returned from maternity leave (so technically after she was no longer pregnant). Although the
8.051
8.052
112 113
114
115 116 117
Fn 105. See discussion at paras 8.0238.037 of the principles set out in Birmingham City Council, Ex p Equal Opportunities Commission (fn 57); James v Eastleigh Borough Council (fn 57); and by Neill LJ in King v GB China Centre (fn 76). Chan Choi Yin v Toppan Forms (Hong Kong) Ltd (fn 105) at para 68 citing Neill LJ in King v GB China Centre (fn 76) considering the relevant authorities and the dictum of May LJ in North West Thames RHA v Noone (fn 81): In these cases of alleged racial discrimination it is always for the complainant to make out his or her case. It is not often that there is direct evidence of racial discrimination, and these complainants more often than not have to be dealt with on the basis of what are the proper inferences to be drawn from the primary facts. For myself I would have thought that it was almost common sense that, if there is a nding of discrimination and of difference of races and then an adequate or unsatisfactory explanation by the employer for the discrimination usually legitimate inference will be that the discrimination was on racial grounds. Chan Choi Yin v Toppan Forms (Hong Kong) Ltd (ibid) at para 71. Lam Wing Lai v YT Cheng (Chingtai) Ltd (fn 59). Chan Choi Yin v Toppan Forms (Hong Kong) Ltd (fn 105).
323
Hong Kong legislation does not explicitly indicate that discrimination on the basis of taking maternity leave is prohibited,118 the court has taken a broad approach. The EOC has stated its view that pregnancy discrimination includes acts such as refusing to hire a pregnant woman, dismissing or transferring a pregnant woman into a lower paid position or dismissing a woman on return from maternity leave.119 The EO provides that female employees under continuous contract are entitled to take maternity leave for a period specied in the ordinance and the continuity of her employment shall not be treated as broken.120 Protection from dismissal for pregnancy under the EO. The EO prohibits employers from terminating a womans employment after she serves notice of her pregnancy to her employer other than for reasons stated in s.9 of the ordinance.121 (vi) Direct family status and marital status discrimination claims Direct family status discrimination. As with other grounds of discrimination, the denition of direct family status discrimination requires a comparison between the claimant and a person without family status but who is otherwise similarly situated.122 In Lam Wing Lai v YT Cheng (Chingtai) Ltd, the plaintiff maintained she had been dismissed because she had responsibility for the care of her child.123 The court upheld her claim relying on evidence which included a statement made by her employers prior to her dismissal that she should stay home to take care of her son. Marital status discrimination. In addition to sex and pregnancy discrimination, the SDO also prohibits discrimination on the grounds of a persons marital status. Direct marital status discrimination occurs if a person treats another person less favourably on the grounds of the second persons marital status than he/she would treat another person of the same sex with a different marital status.124 As with other forms of direct discrimination, the SDO requires that the comparison be such that the relevant circumstances in the one case are the same, or not materially different, in the other.125 Identifying a comparator in marital status discrimination cases. Difculties may arise when determining which aspects of these circumstances are relevant and should be attributed to the comparator. In Wong Lai Wan Avril v Prudential Assurance Co Ltd, the plaintiff claimed marital status discrimination126 when an insurance company terminated her agency relationship because her husband had 8.054 8.053
8.055
8.056
118 119 120 121
122 123 124 125 126
UK legislation has been amended to explicitly protect from this form of discrimination. See EOC website: http://www.eoc.org.hk. EO s.12. See discussion in Chapter 7 at para 7.024. Section 9 of the EO deals with termination of contract without notice or payment in lieu of notice. The reasons include willful disobedience of a lawful and reasonable order, misconduct which is inconsistent with the due and faithful discharge of his/her duties, being guilty of fraud or dishonesty, or habitually neglectful in his/her duties, or on any other ground on which the employer would be entitled to terminate the employees contract at common law. See discussion of protection for pregnant employees under the EO in Chapter 7 at paras 7.0227.029. FSDO ss.5(a) and 7. See discussion of the meaning of family status at 8.102. Lam Wing Lai v YT Cheng (Chingtai) Ltd (fn 59). SDO s.7(1)(a). See discussion of the denition of marital status at para 8.095. SDO s.10. The plaintiff also claimed family status discrimination although the basis for this claim was not dealt with extensively in the judgment. Fn 34.
324
DISCRIMINATION LAW
been dismissed from the same company.127 The defendant argued that being married to a particular personrather than the status of being married generallydoes not contravene the statutes and proposed that the hypothetical comparator should be the de facto (rather than the de jure) spouse of the plaintiff s husband.128 In that case the comparator would have been treated in the same way and there would be no nding of discrimination. The court, however, expressed a preference for a broader interpretation of marital status based on human rights standards and the Supreme Court of Canadas approach in B v Ontario (Human Rights Commission).129 The Canadian court held that discrimination based on marital status includes treatment resulting from the particular identity of the spouse.130 (vii) Direct race discrimination 8.057 Direct race discrimination under the RDO. Although at the time of writing, no claims had been brought before the courts under the RDO, the EOCs Code of Practice on Employment (RDO COP) provides some guidance and hypothetical examples of possible direct racial discrimination in the Hong Kong context. One example involves a job seeker of Pakistani origin who speaks uent Cantonese and has adopted a Chinese name. When arriving at the job interview, the employer falsely informs him that the position has already been lled. The Code suggests that the comparator should be a successful job seeker who is not of Pakistani origin.131 The second example involves a Chinese manager who is paid less than an English manager on the ground of their different origins when they are in the same or materially similar employment situations. The Code points out that racial segregationfor example requiring Chinese employees to eat in a separate canteen than those of other ethnic originsalso amounts to discrimination under the RDO.132 It also advises that a persons command of a language or accent could be related to race and that employers should ensure that employees are not treated less favourably on those grounds.133 (viii) Equal pay for work of equal value 8.058 Equal pay for work of equal value. Although Hong Kong does not have separate legislation implementing the principle of equal pay for equal work or work of equal
127
128
129
130 131 132 133
Ibid. At the time of writing, this had been the only claim of direct marital status discrimination to reach the Hong Kong courts but the substantive issues had not yet been decided. The judgment cited here consideredand deniedan application by the defendant to strike out the Plaintiffs Statement of Claim on the ground that it disclosed no reasonable cause of action. In doing so, the defendant relied on an Australian case in which an employer declined to employ a married woman on the grounds that she might disclose condential information to her husband who worked for a competitor. See ibid at para 28. The defence cited Boehringer Ingelheim Pty Ltd v Reddrop [1984] 2 NSWLR 13 in which the New South Wales Court of Appeal held that marital status discrimination did not include discrimination on the grounds of the identity or situation of a persons spouse. It also referred to Waterhouse v Bell [1991] 25 NSWLR 99 and Re Mount ISA Mines Ltd [1997] 1 QD R 249. The court followed the CFAs approach in interpreting the legislation according to the constitutional equality provisions which are based on international human rights standards. See B v Ontario (Human Rights Commission) (fn 35) at para 63 and Ng Ka Ling (fn 35) cited in Wong Lai Wan Avril v Prudential Assurance Co Ltd (fn 34). See discussion at para 8.014. Ibid (B v Ontario (Human Rights Commission)). RDO COP on Employment (fn 20) at para 6.1.1(1). Ibid, and RDO s.4(3). Ibid.
325
value, paying a woman or man less than another employee of the opposite sex who engages in the same work, or work of equal value, could amount to unlawful direct sex discrimination in the terms and conditions of employment.134 In order to avoid this form of unlawful sex discrimination, the EOC has advised employers to identify jobs of equal value through objective means that are free of sex bias and preferably establish a grading structure that is transparent to staff ; to establish clear policies and guidelines for the determination of individual pay such as the setting up of a salary structure as internal reference; and to apply consistent criteria in pay administration process for male and female staff performing equal work or work of equal value.135 (b) Indirect discrimination Indirect discrimination. The denition of indirect discrimination in all four ordinances is based on the original provisions in the UK SDA (1975) and RRA (1976), which have since been amended in the United Kingdom to reect developments in European law.136 Despite criticism of the old formulation, the Hong Kong ordinances retain the more restrictive language.137 The denition of indirect discrimination. Indirect discrimination is dened identically in all four ordinances.138 It occurs when a person applies a requirement or condition to an individual from a group protected by the legislation (e.g. women, pregnant women, the disabled or an ethnic minority community) which has been applied equally to another group (e.g. men, those who are not pregnant, the non-disabled or the racial majority) but the proportion of members of the rst group who can comply with it is considerably smaller than the proportion of members of the second group who can comply. In addition, the alleged discriminator must not be able to demonstrate that the requirement or condition is justiable irrespective of the persons group characteristic. Finally, it must be to the detriment of the claimant because he/she cannot comply. Group approach to comparison. According to this denition, in order to establish indirect discrimination, the claimant must demonstrate that the proportion of the members of the group to which he/she belongs who can comply with the requirement or condition is considerably smaller than the proportion of those from another group who can comply. This analysis requires the identication of a comparator groupor a pool 8.059
8.060
8.061
134
135
136
137
138
See SDO s.5(1) (denition of direct discrimination) and SDO s.11(1)(b) and s 11(2)(b) (concerning the terms of employment offered or afforded to a person). Hong Kong Equal Opportunities Commission, A Systematic Approach to Pay Determination Free of Sex Bias, 2009. See SDA (1975) s.1(2) and the European Equal Treatment Directive (Council Directive 2000/78/EC, 27 Nov 2000). See Petersen CJ, Hong Kongs Race Discrimination Bill A Critique and Comparison with The Sex Discrimination and Disability Discrimination Ordinances, Submission to the Hong Kong Legislative Councils Bills Committee to study the Race Discrimination Bill, June 2007; McColgan A, UK Equality Law Developments, presentation at: Promoting Racial Harmony? Hong Kongs Race Discrimination Bill in International and Comparative Perspective, 31 Mar 2007, the University of Hong Kong; and Loper K One Step Forward, Two Steps Back? The Dilemma of Hong Kongs Draft Race Discrimination Legislation, (2008) 38 Hong Kong Law Journal 15. The UN Committee on the Elimination of Racial Discrimination has also expressed concern that the RDO does not clearly dene indirect discrimination in relation to language. See UN Committee on the Elimination of Racial Discrimination, Concluding Observations on Chinas report, Aug 2009, UN Doc. No. CERD/C/CHN/CO/10-13 at para 27. SDO s.5(1)(b), DDO s.6(1)(b), FSDO 5(1)(b), RDO 4(1)(b).
326
DISCRIMINATION LAW
of comparators.139 In University of Manchester v Jones, the English Court of Appeal afrmed that determining indirect discrimination involves looking at the population of claimants as a whole and not only individuals.140 8.062 Determining the pool of comparators. The relevant pool of comparators should not be the entire population of men or women (in the case of sex discrimination, for example) but should be the portion of the population within each group who are similarly qualied.141 In Coker v Lord Chancellor, the English Court of Appeal observed that the pool of potential candidates will almost always be restricted by other requirements or conditions which have not been challenged as discriminatory.142 Possible chain of reasoning when determining the pool of comparators. The court in University of Manchester v Jones143 approved of the following chain of reasoning for determining the pool of comparators.144 The court should (1) identify the challenged criterion for selection; (2) identify the relevant population, comprising all those who satisfy all of the other criteria for selection; (3) divide the relevant population into groupsone representing those who satisfy the challenged criterion and those who do not; (4) predict statistically what proportion of each group should consist of men or women (or different racial groups, the disabled and non-disabled, etc.); (5) determine the actual balances between the two groups; and (6) compare the actual with the predicted balances. The criterion is proved discriminatory if women (or a racial minority, persons with disabilities, etc.) are found to be under-represented in the rst group and over-represented in the second.145 The Court of Appeal accepted, however that this was not the only approach open to a tribunal to determine accurately whether indirect discrimination had occurred.146 A requirement excluding almost the entire pool of candidates is unlikely to constitute indirect discrimination. In Coker v Lord Chancellor, the Court of Appeal held that the test for indirect discrimination focuses on the effect that a requirement or condition had on the pool of potential candidates and that such a requirement could only have a discriminatory effect if a signicant proportion of the pool of comparators could satisfy the requirement.147 Therefore a requirement that excludes almost the entire pool of candidates could not constitute indirect discrimination.148 In this case, the claimant challenged the Lord Chancellors decision to hire a person who was well-known to himand was the only candidateas his personal advisor and not to advertise the position more widely. Since the pool of people known to the Lord
8.063
8.064
139
140 141 142 143 144 145 146 147 148
Perera v Civil Service Commission and Another (No. 2) [1983] ICR 428 approving the dictum of Phillips J in Price v Civil Service Commission [1978] ICR 27 (EAT) at 32 that an applicant must prove that a substantially smaller number of qualied persons from the claimants racial group could comply with the requirement or condition than the proportion of similarly qualied applicants of a different racial group. University of Manchester v Jones [1993] ICR 474. Fn 139 (Perera and Price). [2002] ICR 321 at para 26. Fn 140. Set out by Mustill LJ in Jones v Chief Adjudication Ofcer [1990] IRLR 533, at 537 cited in ibid. Mustill LJ in ibid (Jones v Chief Adjudication Ofcer) cited in ibid (University of Manchester v Jones). Ibid (University of Manchester v Jones). Fn 142 at para 38. Ibid.
327
Chancellor represents a tiny proportion of the potential pool of applicants otherwise qualied for the post, it would be difcult to show that a signicant proportion of the comparator pool could qualify and therefore difcult to nd indirect discrimination. Use of statistics when determining indirect discrimination. Although statistics may be helpful when establishing indirect discrimination, the Hong Kong District Court in Siu Kai Yuen v Maria College149 favourably cited the Northern Ireland Court of Appeal in Briggs v North Eastern Education and Library Board150 which held that it is undesirable to require elaborate statistical evidence to prove an indirect discrimination claim. The court can instead take into account its own knowledge and experience. The Hong Kong court also agreed with London Underground Ltd v Edwards (No. 2)151 that it is still possible to establish indirect discrimination even if only one person cannot comply with the condition as long as it can be shown that it has a disparate impact.152 Requirement or condition as an absolute bar. English courts have held that the terms requirement or condition in the original denition of indirect discrimination must amount to an absolute bar to employment and must therefore be more than a mere preference.153 Hong Kong courts, however, have not applied this stringent approach to indirect discrimination claims154 and the amended denition of indirect discrimination in the UK statutes now more broadly covers the application of a criterion, provision or practice.155 Justifying indirect discrimination. The RDO, unlike the other three ordinances, explicitly claries that a requirement or condition is justiable if it serves a legitimate objective and bears a rational and proportionate connection to that objective.156 The District Court developed and applied a similar justiability test in Siu Kai Yuen v Maria College,157 a disability discrimination case involving a teacher who had been absent from work and then ultimately dismissed while recovering from cancer. The defendant school had an attendance requirement which applied equally to everyone, but had a disproportionate impact on the claimant because of his disability (cancer). Three-step justication test. The court accepted a three-step test, citing the criteria used in Board of Governors of St Matthias Church of England School v Crizzle.158 To justify a requirement or condition the court must consider (1) whether the objective of the requirement was legitimate; (2) whether the means used to achieve the objective are reasonable; and (3) whether the conditions are justied when balanced on the principles of proportionality between the discriminatory effect upon the applicants 8.065
8.066
8.067
8.068
149 150 151 152 153 154 155 156
157 158
[2005] 2 HKLRD 775 at para 56. [1990] IRLR 181 at para 33. [1999] ICR 494. Siu Kai Yuen v Maria College (fn 45). Perera (fn 139). Siu Kai Yuen v Maria College (fn 45). SDA (1975) s.1(2). RDO s.4(2). The original draft legislation included an alternative test which would have allowed an alleged discriminator to justify the application of a discriminatory requirement or condition if it was not reasonably practicable for the discriminator not to apply it. This alternate test was eventually deleted and is not contained in the enacted legislation. Fn 137 (Loper). Fn 45. Ibid.
328
DISCRIMINATION LAW
racial group and the reasonable needs of those applying the condition. In Siu Kai Yuen, the District Court found that the attendance requirement did not meet this justication test and therefore upheld the indirect discrimination claim. 8.069 Intention is only relevant for compensation. Although it is not necessary to prove intention on the part of the discriminator in order to establish an indirect discrimination claim, if the defendant can show that he/she did not intend to discriminate, there can be no compensation for the claimant. The SDO, FSDO and RDO state that no award of damages shall be made if the respondent proves that the requirement or condition concerned was not applied with the intention of treating the claimant unfavourably on the relevant ground.159 The DDO does not contain this restriction. Language and indirect racial discrimination. Although language is not enumerated as one of the prohibited grounds of discrimination in the RDO, requirements and conditions based on language could amount to indirect racial discrimination if they satisfy the test for indirect discrimination in the RDO and are not justiable. The RDO Code of Practice for Employment cautions employers to apply consistent selection criteria (including language requirements) which reect job requirements and should be commensurate with the satisfactory performance of the job. It also recommends that employers develop consistent selection criteria as one of the rst steps in establishing a fair recruitment practice, and from time to time re-examine the criteria to see whether they still apply or need to be modied.160 Language and job-advertisements. The Code encourages employers to place job advertisements in both the English and Chinese media but also notes that when ability in a certain language is necessary for satisfactory job performance, an advertisement may specify - and be published in - the relevant language. It further recommends that employers advertise in English if the job requires the ability to speak, but not read, Chinese and that employment agencies provide services in both languages.161 (c) Harassment 8.072 The SDO, DDO and RDO prohibit harassment. The SDO, DDO and RDO prohibit sexual harassment, disability harassment, and racial harassment respectively.162 The statutes follow the Australian model and include separate harassment provisions making it unnecessary for the plaintiff to prove that harassment falls within the denition of discrimination or to identify an appropriate comparator. 163 (i) Sexual harassment 8.073 Denition of sexual harassment. The SDO prohibits two types of sexual harassment. The rst, often referred to as misuse of authority or quid pro quo harassment includes unwelcome sexual advances, unwelcome requests for sexual favours or other
8.070
8.071
159 160 161 162 163
SDO s.76(5), FSDO s.54(6), RDO s.70(6). RDO COP (fn 20) at para 2. Ibid at para 5.3.4(3). See SDO ss.2; DDO s.RDO s.7 Fn 99 at 523.
329
unwelcome conduct of a sexual nature in circumstances where a reasonable person, having regard to all the circumstances, would have anticipated that the individual (male or female) would be offended, humiliated or intimidated.164 The second type is generally referred to as hostile environment harassment and occurs when a person, alone or together with other persons, engages in conduct of a sexual nature which creates a hostile or intimidating environment for an individual.165 Hong Kong courts have considered a number of sexual harassment claims under the SDO.166 Unwelcome conduct: subjective and objective tests. According to the denition of harassment, only conduct which is unwelcome is unlawful. The meaning of unwelcome conduct was considered by the District Court and the Court of Appeal in Chen v Tamara Rus.167 The plaintiff in that case claimed he had been sexually harassed by a colleague and discriminated against by way of victimisation after making a complaint. In its judgment, the District Court noted that the test for whether such conduct was unwelcome was both subjective and objective.168 It observed that according to the language of the statute, the conduct must be unwelcome by the complainant him/herself and not necessarily by a reasonable person. If the conduct is consensual and welcome then there would be no nding of harassment. The test would be whether the circumstances were such that [the employer] should have realised that his approaches were unwelcome.169 The Court of Appeal conrmed that the word unwelcome must relate to the parties concerned. In particular the matter must be unwelcome in relation to the person who is the object of the advance, request or conduct.170 If the advances were solicited by the plaintiff at the material time, then they would not be deemed unwelcome.171 Unwelcome at the time the conduct occurred. The conduct must be unwelcome at the time it occurred and not when the plaintiff reected on the events in retrospect.172 Consideration of all of the relevant circumstances. When determining whether the conduct was unwelcome, the court may consider all of the relevant circumstances including the plaintiffs behavior at the material time and his/her testimony in court.173 The plaintiff must make it known that the conduct is unwelcome. In Chen v Tamara Rus, the court favourably cites another Australian case in which the court held that the defendant would not have realised that his conduct was unwelcome because 8.074
8.075 8.076
8.077
164 165 166
167 168 169 170 171 172
173
SDO s.2(5)(a). SDO s.2(5)(b). See, for example, Chen v Tamara Rus (fn 79); Yuen Sha Sha v Tse Chi Pan [1999] 2 HKLRD 28; and Wong Kwok Mui v Lee Yuen Tim (unrep., DCEO 9/1999, [2001] HKEC 249). Fn 79. Ibid. See also fn 65 at para 65. Ibid (Chen v Tamara Rus) citing OCallaghan v Loder [1983] 3 NSWLR 89. Ibid (Chen v Tamara Rus) at 9. Ibid. The test was not how the complainant viewed the advances and sexual conduct in retrospect, after she had had time to dwell upon the one-sided nature of the relationship, and the futility of what had occurred but, viewed objectively, whether the advances and the acts of sexual conduct were unwelcome at the time they happened, and whether the respondent reasonable understood that his conduct was unacceptable. Ashton v Wall [1992] EOC 92-447 cited in ibid. Ibid (Chen v Tamara Rus). In this case, the court considered that the plaintiff was evasive and lacked credibility while the defendant was an honest witness.
330
DISCRIMINATION LAW
the plaintiff did not make it known within a context of friendship with the defendant.174 Although the plaintiff is not required to prove that he/she expressly objected to the conduct, this would be one factor for the court to consider when deciding whether the conduct was unwelcome.175 The Hong Kong court also referred to the European Unions Recommendation and Code of Practice176 which provides that the conduct amounts to harassment if it is unwanted, unreasonable and unacceptable to the recipient. The plaintiff must make clear by words or deeds that the conduct is unwelcome. This does not need to involve a public fuss, however, and decision-makers should be sensitive to the problems that victims may face in dealing with a man, perhaps in a senior position to herself, who will be likely to deny that he was doing anything untoward and whose defences may often be that the victim was being oversensitive.177 The test is whether any reasonable person would understand the complainant was rejecting the conductif so, then continuation of the conduct would be unlawful harassment.178 8.078 Objective reasonable person test. Once the plaintiff has established unwelcome conduct, then he/she must show objectively that a reasonable person having regard to all of the circumstances would have anticipated that the claimant would be offended, humiliated or intimidated by that conduct.179 Conduct of a sexual nature. The conduct in question must also be of a sexual nature. According to the SDO conduct of a sexual nature at least includes making an oral or written statement of a sexual nature to a person, or in the persons presence.180 In Yuen Sha Sha, the District Court held that defendants secret videotaping of the plaintiff dressing and undressing without her consent amounted to conduct of a sexual nature and was unwelcome.181 The SDO COP on Employment includes several examples of behavior of a sexual nature which may constitute sexual harassment. According to the COP, unwelcome sexual advances may include leering and lewd gestures; touching, grabbing or deliberately brushing up against another person.182 Unwelcome requests for sexual favours may take the form of suggestions that sexual cooperation or the toleration of sexual advances may further a persons career.183 Unwelcome verbal, non-verbal or physical conduct of a sexual nature, such as sexually derogatory or stereotypical remarks or persistent questioning about a persons sex life, could constitute unlawful behavior.184 Examples of conduct of a sexual nature that creates a hostile or intimidating work environment may include sexual or obscene jokes around the workplace or displaying sexist or other sexually offensive pictures or posters.185
8.079
174 175 176 177 178 179 180 181 182 183 184 185
Ibid citing Hardy v Kelly [1991] EOC 92369. Ibid (Chen v Tamara Rus). European Commission, Commission Document C(91) 2625, 27 Nov 1991. Reed v Stedman, [1999] IRLR 299 cited in Chen v Tamara Rus ( fn 79). Ibid. Ibid (Chen v Tamara Rus). SDO s.2(7). Fn 166. SDO COP on Employment (fn 17) at para 6.1.1. Ibid at s.6.1.2. Ibid at s.6.1.3. Ibid s.6.1.4.
331
(ii) Disability harassment Denition of disability harassment. Disability harassment occurs when a person engages in unwelcome conduct (which may include a written or oral statement) on account of another persons disability, or the disability of an associate of that person, in circumstances in which a reasonable person, having regard to all the circumstances, would have anticipated that the person would be offended, humiliated or intimidated by that conduct.186 As with sexual harassment, proving disability harassment involves both a subjective unwelcome conduct test and an objective reasonable person test.187 On account of the persons disability. According to this denition of harassment, the unwelcome conduct must be on account of the complainants disability or on account of the disability of the persons associate. In L v Equal Opportunities Commission, the District Court equated the term on account of with the phrase on the grounds of in the denition of discrimination.188 In Aquino Celestina Valdez, the court observed that if the conduct in question is done for two or more reasons and one of the reasons is the persons disability, then it will be taken to have been done on account of a persons disability.189 It also stated that the court should bear in mind the cumulative effects of various incidents of harassment on the employee.190 Examples of conduct which may amount to disability harassment. In Ma Bik Yung, the Court of Appeal afrmed the lower courts ruling that a woman with a disability had been unlawfully harassed on account of her disability by a taxi driver.191 In that case, the driver had been rude and offensive and had remarked on the plaintiffs disability.192 The DDO COP on Employment provides some examples of possible disability harassment in the employment context. These include making insulting comments, offensive jokes, unnecessary gestures mimicking someones disability, or intentionally disclosing or threatening to disclose information on disability or medical history in circumstances that would offend, humiliate or intimidate the employees with the disability concerned.193 (iii) Racial harassment Denition of racial harassment. Like the SDO, the RDO denes two types of harassment. The rst occurs when a person engages in unwelcome conduct toward another person on the ground of the race of the second person or that persons near relative.194 Unwelcome conduct may include an oral or written statement. The second form of harassmenthostile environment harassmentoccurs when a person, alone or with others, engages in conduct which creates a hostile environment for another person on the ground of that persons race or the race of his/her near relative.195 8.083 8.080
8.081
8.082
186 187 188 189 190 191 192 193 194 195
DDO s.3(6). Fn 65 at para 65. Ibid at para 48. DDO s.3 and Aquino Celestina Valdez v So Mei Ngor (unrep., DCEO 3/2004, [2005] HKEC 1407) at para 16. Ibid. Fn 99. Ibid at 524. DDO COP on Employment at para 6.1 (fn 16). RDO s.7(1). RDO s.7(2).
332
DISCRIMINATION LAW
(iv) Scope of the harassment provisions 8.084 Harassment in the employment context. The provisions in the SDO, DDO and RDO on the scope of protection from harassment in the employment context are virtually identical. It is unlawful for employers or employees at an establishment in Hong Kong to harass another person who is seeking to be employed by or who is employed by that establishment.196 In addition, an employeeor a person seeking to become an employeemay not harass his/her employer (or potential employer).197 Harassment toward the following persons is unlawful: contract workers (by a principal or fellow contract worker), partners in a rm or those seeking to become partners in a rm (by another partner in a rm) and commission agents (by a principal or fellow commission agent).198 Other Harassment. It is unlawful under the SDO, DDO and RDO for a member of an organisation of workers, employers or a professional or trade organisation to harass a person who is seeking to be, or who is, a member of that organisation.199 It is also unlawful for a member of an authorisation or qualication body to harass a person seeking authorisation or qualication related to employment and a person who operates, or is an employee at, an employment agency may not harass someone in the course of offering or providing services.200 Barristers and barristers clerks may not harass a person on a prohibited ground in the course of offering him/her pupilage or tenancy in chambers, when that person is a pupil or tenant in chambers.201 Harassment is also unlawful in the context of employment training and when offering to provide or providing goods, facilities, services or premises.202 (d) Victimisation 8.086 Denition of victimisation. All four ordinances protect claimants from discrimination by way of victimisation which occurs if a person treats another person less favourably for one of four reasons: (1) because that other person, or any other person, has brought proceedings under one of the ordinances; (2) because the victimised person, or a third party, has given evidence or information in connection with proceedings under the ordinance; (3) because the victimised person has otherwise done anything under or by reference to one of the ordinances; or (4) has alleged that the discriminator or any other person has committed an act which (whether or not the allegation so states) would amount to a contravention of one of the ordinances.203 Victimisation does not include treatment for reason of an allegation that was false and not made in good faith. A number
8.085
196 197 198 199 200 201 202 203
SDO s.23(1), (2) and (3); DDO s.22(1), (2) and (3). SDO s.23(11), DDO s.22(11), RDO s.24(11). SDO s.23(4)(10), DDO s.22(4)(10), and RDO s.24(4)(10). SDO s.24(1), DDO s.23(1), and RDO s.25(1). SDO s.24(2), DDO s.23(2), and RDO s.25(2). SDO s.40(6), DDO s.39(4), and RDO s.39(7). SDO ss.24(3) and 40(1) and (2), DDO ss.23(3), 38, and 39(1) and (2), and RDO ss.39(1) and (2). SDO s.9, DDO s.7, FSDO s. 6, and RDO s.6. See also discussion of protection for employees who have given evidence or have agreed to give evidence in enforcement proceedings under the EO (fn 120). See discussion in Chapter 7 at 7.0357.039.
333
of claims of discrimination by way of victimisation heard by Hong Kong courts have been considered in conjunction with the plaintiffs claims of other forms of discrimination.204 The but for test and victimisation. In Chang Ying Kwan v Wyeth (HK) Ltd, an employee claimed that she faced pressure from her employer and was constructively dismissed after lodging a claim of pregnancy discrimination with the EOC.205 The District Court, relying on Nagarajan v London Regional Transport,206 conrmed that the but for test should also be applied to victimisation claims.207 The statutes require a comparison between the treatment afforded to the plaintiff (for one of the four reasons) and the treatment afforded to other employees who have not done one of the protected acts (e.g. lodged a complaint of discrimination).208 Proving victimisation. In Chang Ying Kwan, the court held that a plaintiff who claims discrimination by way of victimisation under the SDO must show that the defendant had knowledge of at least one of the four acts set out in the statute at the time he/she carried out the less favourable treatment. Once established, and in the absence of a satisfactory explanation from the employer, the plaintiff will have proven on the balance of probabilities that victimisation had occurred.209 In Chen v Tamara Rus,210 the plaintiff claimed he had been dismissed because he complained of sexual harassment. In assessing the claim, the court placed a great deal of weight on the credibility of the witnesses. It dismissed the claim of victimisation after concluding on the basis of the facts that the claimant had been let go for cause and not because of his allegation of sexual harassment, which he had made only during the exit interview.211 (e) Vilication, serious vilication, instructions and pressure to discriminate The denition of vilication. The DDO and RDO prohibit vilication and make serious vilication a criminal offence. Vilication means the incitement of hatred towards, serious contempt for or severe ridicule of, a person with a disability or members of a class of persons with a disability.212 It is immaterial whether a person is actually incited by such an activity.213 Vilication does not include (a) a fair report of an 8.089 8.087
8.088
204
205 206 207
208 209
210 211 212 213
For example, Chang Ying Kwan (fn 13) (pregnancy discrimination and discrimination by way of victimisation), Sit Ka Yin (fn 19) (disability, sex and victimisation discrimination and disability harassment), Lam Wing Lai v YT Cheng (Chingtai) Ltd (fn 59) (pregnancy, family status and victimisation), Chan Choi Yin v Toppan Forms (Hong Kong) Ltd (fn 105) (pregnancy discrimination and victimisation), Chen v Tamara Rus (fn 79) (sexual harassment and victimisation). Ibid (Chang Ying Kwan). [2000] 1 AC 501. Fn 13 at 135. See also Lam Wing Lai v YT Cheng (Chingtai) Ltd (fn 59) in which the court accepted Chang Ying Kwans conrmation of the appropriateness of the but for test in establishing victimisation claims. Fn 108 at paras 2328 cited in Lam Wing Lai v YT Cheng (Chingtai) Ltd (fn 59) at 37. Fn 13 at 137138. In its reasoning on this point, the court cites Slynn LJ in Seide v Gillette Industries Ltd [1980] IRLR 427 and Nagarajan (per Lord Nicholls of Birkenhead) and at 518H and 522B (fn 206) (per Lord Steyn). The court relied on English case law because there is no equivalent statutory provision to s.4 of the SDO in the SDA or RRA. Because the court held that s.4 of the SDO does not apply when considering victimisation claims, it instead looked to English case law when determining the weight to be placed on the reason for the act in question (in this case unfavourable treatment by way of victimisation). Chen v Tamara Rus (fn 79). Ibid. DDO s.46(1), RDO s.45(1). DDO s.46(1A), RDO s.45(2).
334
DISCRIMINATION LAW
activity in public; (b) an activity in public that is a communication or the distribution or dissemination of any matter and consists of a publication which is subject to a defense of absolute privilege in proceedings for defamation; or (c) an activity in public done reasonably and in good faith, for academic, artistic, scientic or research purposes in the public interest, including discussions about and expositions of any matter.214 8.090 The denition of serious vilication. An offence of serious vilication occurs when a person intentionally, by any activity, incites hatred towards, serious contempt for or severe ridicule of, another person with a disability or members of a class of persons with a disability; and the activity occurs in public and consists of threatening physical harm or inciting others to threaten physical harm towards, or towards any premises or property of, the second-mentioned person or the members of the class of persons; or towards the premises or property of any other person to which the second-mentioned person or the members of the class of persons have access. As with vilication, it is immaterial whether anyone is actually incited by the activity. The penalty for committing an offence of serious vilication is a ne at level 6 and imprisonment for two years.215 Instructions or pressure to discriminate. It is unlawful for a person (such as an employer) to instruct another person over whom he/she has authority (such as an employee) to do any unlawful act covered by any of the four ordinances.216 It is also unlawful to induce, or attempt to induce, a person to do an unlawful act under the ordinances by providing or offering to provide a benet or subjecting (or threatening to subject) the person to any detriment.217 The offer or threat may be made directly to the person concerned or indirectly in a way that he/she is likely to hear it.218
8.091
4. PROHIBITED GROUNDS OF DISCRIMINATION

8.092 Prohibited grounds of discrimination. Discrimination is dened in all four ordinances with reference to certain markers of identity which are sometimes referred to as prohibited grounds, proscribed grounds, protected grounds or enumerated grounds. These reect the characteristics of members of certain groups such as women, men, pregnant women, those with a particular marital status, persons with family status, persons with disabilities, racial groups, etc. Not all differential treatment which is based on a group characteristic amounts to unlawful discrimination for the purposes of Hong Kong anti-discrimination law and the ground in question must be expressly included in one of the statutes.219 The SDO prohibits discrimination on the grounds of sex, pregnancy and marital status; the DDO prohibits discrimination on the grounds of disability; the FSDO prohibits discrimination on the grounds of family status; and the RDO prohibits discrimination on the grounds of race, colour, descent or ethnic or national origin.
214 215 216 217 218 219
DDO s.46(2), RDO s.46(3). An activity in public is dened in DDO s.46(3) and RDO s.46(4). DDO s.47, RDO s.46. SDO s.44, DDO s.44, FSDO s.32, RDO s.43. SDO s.45(1), DDO s.45(1), FSDO s.33(1), RDO s.44(1). SDO s.45, DDO s.45, FSDO s.33, RDO s.44. For example, the ordinances do not cover discrimination based on age or religion. The constitutional provisions, discussed at paras 8.0118.014, arguably cover a broader range of grounds since the equality provisions in the Bill of Rights contain a non-exhaustive list of grounds which includes other status.
PROHIBITED GROUNDS OF DISCRIMINATION
335
The choice of prohibited grounds. Some of the prohibited grounds are symmetrical in nature while others are asymmetrical. Symmetry means equal treatment regardless of an individuals race or sex and does not consider historical disadvantage or other differences between protected groups. Therefore, men receive the same protection from discrimination as women and all racial groups are equally protected. By contrast, an asymmetrical approach does not provide the same level of protection for members of a group without the protected characteristic. For example, the prohibition of pregnancy discrimination does not make unfavourable treatment on the ground of not being pregnant unlawful. Likewise, the denition of disability discrimination does not cover unfavourable treatment based on the absence of a disability. The prohibited grounds of discrimination in Hong Kongs four anti-discrimination laws reect both symmetrical and asymmetrical approaches. The SDO provides protection for both men and women from sex discrimination.220 Similarly the RDO protects individuals from all racial groups from discrimination, whether or not the group constitutes the majority or is a privileged community in society. The DDO, FSDO and s.8 of the SDO, which prohibits discrimination on the grounds of pregnancy, are asymmetrical.221 (a) Sex, marital status and pregnancy Sex includes both men and women. Section 5 of the SDO denes direct and indirect sex discrimination and s.6 claries that s.5 shall be read as applying equally to the treatment of men. Hong Kong courts have not interpreted the ground of sex to include sexuality or sexual orientation.222 Marital Status. Section 7 of the SDO denes discrimination on the ground of marital status.223 Marital status means the state or condition of being (a) single; (b) married; (c) married but living separately and apart from ones spouse; (d) divorced; or (e) widowed.224 Pregnancy. It is unlawful to discriminate on the grounds of a persons pregnancy in employment under the SDO. The UK SDA did not initially include pregnancy as an explicit prohibited ground although pregnancy-related discrimination was read into the denition of sex discrimination. The UK Act has since been amended to explicitly protect against pregnancy discrimination and discrimination on the ground that a woman is exercising or seeking to exercise, or has exercised or sought to exercise, a statutory right to maternity leave. Despite the absence of any mention of maternity leave in the SDO, Hong Kong courts have read protection from this type of discrimination into the prohibition of pregnancy discrimination.225
8.093
8.094
8.095
8.096
220 221
222
223 224 225
SDO ss.5 and 6. See discussion of symmetry and asymmetry at paras 8.0288.029 in the context of proving direct discrimination and identifying a comparator. The Human Rights Committee has interpreted the term sex to include sexual orientation in the ICCPR arts.2(1) and 26. See Toonen v Australia, UN Doc No. CCPR/C/50/D/488/1992, 4 Apr 1994. SDO, s.7(1)(a). SDO s.2(1). See discussion at para 8.052.
336
DISCRIMINATION LAW
(b) Disability 8.097 Disability. The denition of disability in the DDO replicates the broad denition in the 1992 Australian Disability Discrimination Act.226 It includes the total or partial loss of a persons bodily or mental functions; the total or partial loss of a part of a persons body; the presence of organisms in the body causing disease or illness; the presence of organisms in the body capable of causing disease or illness; the malfunction, malformation or disgurement of a part of a persons body; a disorder or malfunction that results in a person learning differently from a person without the disorder or malfunction; or a disorder, illness or disease that affects a persons thought processes, perception of reality, emotions or judgment or that results in disturbed behaviour. The denition also includes a disability that presently exists; previously existed but no longer exists; may exist in the future; or is imputed to a person.227 The disability of an associate. In K v Secretary for Justice, the District Court held that the plaintiffs had been discriminated against on the basis of the disability of an associatesince they had either been dismissed or not hired because their parents had sufferedor allegedly sufferedfrom schizophrenia.228 An associate, in relation to a person, includes a spouse of the person; another person living with the person on a genuine domestic basis; a relative of the person; a carer of the person; and another person who is in a business, sporting or recreational relationship with the person.229 Broad understanding of disability including temporary conditions. Hong Kong courts have accepted that the denition of disability includes psychiatric or psychological illnesses such as General Anxiety Disorder or adjustment disorder,230 schizophrenia,231 and depression;232 diseases such as cancer;233 physical injuries, including a wrist injury;234 having a physical deformity,235 and being a paraplegic.236 In L v Equal Opportunities Commission, the District Court noted that the denition in the DDO is broad and that [j]ust about anything will do. The loss of function or the effect of the disorder on thought processes or emotions need not be substantial or long-term. The way is open for claims based on minor and temporary disability which a really disabled person, such as a paraplegic, would no doubt nd ludicrous; but that is the way the legislation is drawn.237 Proving disability. In L v Equal Opportunities Commission the plaintiff, claimed he had suffered from an accident which resulted in a number of debilitating conditions
8.098
8.099
8.100
226 227 228 229 230 231 232 233 234 235 236 237
DDO s.4. Considered in K v Secretary for Justice (fn 55). Ibid. DDO s.2(1). M v Secretary for Justice (fn 40). K v Secretary for Justice (fn 55). M v Secretary for Justice (fn 40), ibid, and fn 65. Siu Kai Yuen v Maria College (fn 45). Fn 98. Aquino Celestina Valdez v So Mei Ngor (fn 189). Fn 99. Fn 65 at para 44. The denition of disability copies the relevant provision in the Australian Disablity Discrimination Act is much broader than the more restrictive denition in the UK DDA.
337
and that he was therefore a person with a disability according to s.2(1) of the DDO. Before considering the discrimination claim, the court rst put the plaintiff to strict proof as to whether he was a person with a disability since the defendant had disputed this point. Although the court found that the plaintiff was prone to exaggeration and that his evidence should not be accepted without corroboration, it concluded that there was sufcient independent conrmation that the accident had occurred.238 Next it reviewed the meaning of disability in s.2 of the DDO when considering whether the resulting conditions t the denition. Since the denition of disability mirrors the denition in the Australian legislation, the court relied on an Australian case, Oreb v Discovery Clothing Co Pty Ltd,239 in which it was held that expert evidence of the affect on a person of panic disorder and psychiatric distress was necessary in order to decide whether the symptoms complained of amounted to a disability which affects a persons thought processes, perception of reality, emotions or judgment.240 Based on a review of the medical evidence, the Hong Kong court decided that the plaintiff had suffered from a mild and temporary disability followed later by depression which also amounted to a disability. Palliative or therapeutic devices and auxiliary aids. Disability discrimination also occurs when a person is treated less favourably because of any matter relating to the fact that the person is accompanied by or possesses a palliative or therapeutic device or auxiliary aid.241 These devices and aids are listed in Sch.2 of the DDO and include, for example, braille writing devices, hearing aids, wheelchairs, prostheses, walking aids, aids for dialysis therapy, speech aids, oxygen units, aids for any activities of a personal nature, including a feeding aid and an aid in respect of toilet needs, among others.242 (c) Family status Family Status. Family status means the status of having responsibility for the care of an immediate family member.243 An immediate family member is a person who is related to the claimant by blood, marriage, adoption or afnity.244 In other jurisdictions this ground is sometimes referred to as family responsibility while family status is often dened similarly to marital status.245 (d) Race Race and colour. The denition of race in the RDO replicates the range of grounds enumerated in the ICERD including race, colour, descent or national or ethnic origin. Race is construed broadly in the Convention partly in response to a growing understanding at the time the Convention was drafted that race is a socially constructed 8.103 8.102 8.101
238 239 240 241 242 243 244 245
Ibid at para 26. [2001] NSWADT 48. Fn 65 at para 42. DDO ss.9 and 10. These provisions reect ss.7 and 8 of Australian DDA. DDO s.2(1) and Sch.2. FSDO s.2. FSDO s.2. See discussion of family status in Lam Wing Lai v YT Cheng (Chingtai) Ltd (fn 59).
338
DISCRIMINATION LAW
category and amidst the wide rejection of biologically based racial theories.246 Colour is not dened in the RDO, but is generally understood to include physical criteria, such as skin colour.247 8.104 Grounds excluded from the denition of race. Section 8 of the RDO excludes several categories from the denition of race. Discrimination on the basis of race does not include acts done on the grounds of: (1) being or not being an indigenous inhabitant of the New Territories; (2) being or not being a person descended through the male line from a person who was resident of an established village in Hong Kong in 1898; (3) being or not being a Hong Kong permanent resident; (4) having or not having the right of abode or the right to land in Hong Kong; (5) being or not being a person subject to any restriction of stay imposed under the Immigration Ordinance (Cap.115); (6) being a person who has or has not been given the permission to land or remain in Hong Kong under the Immigration Ordinance; (7) the length of a persons residence in Hong Kong; or (8) a persons nationality, citizenship or resident status. Descent. According to the RDO, discrimination on the grounds of descent only means discrimination against members of communities based on forms of social stratication such as caste and analogous systems of inherited status which nullify or impair their equal enjoyment of human rights. This denition essentially copies the Committee on the Elimination of Racial Discriminations General Recommendation on the meaning of descent248 but is more restrictive since the committee understands discrimination based on descent as including, but not necessarily limited to, discrimination against members of these communities. Ethnic Origin. The RDO does not dene ethnic origin but a line of UK cases has elaborated a test for determining whether a group ts within this category. In Mandla v Dowell Lee, the House of Lords held that Sikhs constitute a racial group for the purposes of the RRA, taking a number of criteria into account including whether a group has a long, shared history, common language or distinctive cultural tradition.249 The Hong Kong government indicated its acceptance of the Mandla test for the purposes of interpreting the meaning of race and ethnic origin under the RDO.250 Although religion is not explicitly included in the list of grounds, UK courts have also held that people of Jewish origin and culture fall within the denition of race, although Muslims and Rastafarians do not.251 UK courts have also applied the Mandla test to gypsies and held that this group conforms to the denition of ethnic origin for the purposes of the RRA.252
8.105
8.106
246
247 248 249 250
251
252
Boyle K and Baldaccini A, International Human Rights Approaches to Racism in Fredman S (ed), Discrimination and Human Rights: The Case of Racism (OUP 2001). Ibid. Committee on the Elimination of Racial Discrimination, General Recommendation XXIX, Nov 2002. [1983] 2 AC 548. Home Affairs Bureau, paper prepared for the LegCo Bills Committee on the Race Discrimination Bill, Compatibility with Articles 24 and 25 of the Basic Law, Jan 2007, para 14. See Seide v Gillette Industries Ltd (fn 209) (on people of Jewish origin); JH Walker Ltd v Hussain [1996] ICR 291 (Muslims); and Crown Suppliers v Dawkins [1993] ICR 517 (Rastafarians). Commission for Racial Equality v Dutton [1989] QB 783.
339
National Origin. The RDO does not expressly dene national origin. While nationality and national origin may overlap to some extent, these two terms are generally considered to be distinct concepts, especially when nationality is understood in the sense of citizenship. In Ealing LBC v Race Relations Board,253 the House of Lords distinguished between nationality and national origin. Lord Chelsea of Cross explained that national origin suggests a connection subsisting at the time of birth between an individual and one or more groups of people who can be described as a nationwhether or not they also constitute a sovereign state.254 This usually arises when a persons parents are identied by descent with the nation in question. For example, the child of a man of French descent and a woman of German descent who have made their home in England would have three national origins (French, German and English).255 He notes that although an individual normally will have only one national origin which coincides with his/her nationality this is not necessarily the case.256 One of the defendants in Ealing was of Polish national origin, but had Russian and then British nationality. Although the ICERD allows states parties to make distinctions between citizens and non-citizens,257 this exception to the denition of discrimination has been interpreted narrowly by the Committee on the Elimination of Racial Discrimination in a General Recommendation on the application of the convention to non-citizens.258 Discrimination on the grounds of the race of a near relative. The RDO prohibits discrimination on the ground of the race of a persons near relative259 which is dened as (a) the persons spouse; (b) a parent of the person or of the spouse; (c) a child of the person or the spouse of such a child; (d) a brother or sister (whether full blood or half blood) of the person or of the spouse or the spouse of such a brother or sister; (e) a grandparent of the person or of the spouse; or (f) a grandchild of the person or the spouse of such a grandchild.260 (e) Anti-union discrimination and participating in a strike Protection from anti-union discrimination. The EO provides protection from dismissal based on membership of a trade union and for partaking in trade union activities.261 Discrimination on these grounds was considered by the Court of First Instance in John Simpson Warham v Cathay Pacic Airways Ltd,262 which involved a claim of unfair dismissal by a group of 18 pilots who had been union members. The court considered
8.107
8.108
8.109
253 254 255 256 257 258
259 260 261 262
[1972] AC 342. Ibid at E. Ibid at F. Ibid at G. ICERD (fn 23) art.1(2). Committee on the Elimination of Racial Discrimination, General Recommendation 30, Discrimination Against Non-citizens, 2004. See also R (on the application of Elias) v Secretary of State for Defence [2006] IRLR 934 in which the Court of Appeal held that national origin is not equated with place of birth. RDO s.5. Ibid, s.2. Employment Ordinance (fn 120) s.21. See discussion in Chapter 7 at 7.0437.047 and Chapter 16 at 16.05216.061. John Simpson Warham v Cathay Pacic Airways Ltd (unrep., HCMP 4400/2001, HCA 2822/2002, 299, 1405/2006, 807/2007, [2009] HKEC 1848). See discussion of this case in Chapter 16 at 16.056.
340
DISCRIMINATION LAW
whether the termination of the plaintiffs employment occurred because they had exercised their rights to be members of the trade union as well as participated in a contract compliance campaign conducted by the union, among other issues.263 The court held that the claimants had been dismissed for reasons of their perceived participation in union activities and that their dismissal had been unfair under the EO.264 8.110 Protection for discrimination on the grounds of participating in a strike. For the purposes of s.9 of the EO, an employees participation in a strike does not entitle the employer to terminate his/her contract in lieu of notice.265 (f ) Taking sick leave, work-related injuries and whistle-blowing 8.111 Protection from dismissal for taking sick leave, work-related injuries and whistle-blowing. The EO protects employees from dismissal for taking statutory sick leave, unless summary dismissal is justied.266 The ECO prohibits employers from dismissing an employee who is suffering from work-related injuries which entitle them to compensation under the Ordinance.267 In addition, an employer may not terminate or threaten to terminate the contract of an employee who has given or agreed to give evidence in certain proceedings specied in the EO.268 (g) Multiple grounds 8.112 Multiple discrimination. Hong Kongs anti-discrimination law and the requirement to nd a similarly situated comparator for the purposes of establishing direct discrimination may not provide protection for those facing multiple forms of discrimination. This type of discrimination often has a different character than discrimination occurring on one ground alone and it may be difcult to establish discrimination on each of the grounds separately by applying the but for test and utilising a comparator analysis. Hong Kong courts have not yet addressed this issue, but the practical difculties in establishing discrimination have been considered by courts in other jurisdictions.269
5. THE SCOPE OF APPLICATION OF THE EMPLOYMENT PROVISIONS

8.113 The act must fall within the scope of protected activities in the statutes. In addition to establishing that an act conforms to the denition of discrimination, harassment, victimisation or vilication and has occurred on one of the prohibited grounds, a claimant must demonstrate that it falls within the scope of activities covered by the
263 264 265 266 267 268 269
Ibid at para 55. Ibid at para 198. EO (fn 120) s.9. See discussion of the meaning of strike in Chapter 16 at 16.061. Ibid, (EO) s.33(4)B. Employees Compensation Ordinance s.48(1). See discussion in Chapter 7 at paras 7.0307.031 and 7.040. Ibid, (EO) s.72B. See discussion in Chapter 7 at para 7.035. For a discussion of this jurisprudence, see McColgan A, Reconguring Discrimination Law, (2007) Public Law 7494 and Hannett S, Equality and the Intersections: the Legislative and Judicial Failure to Tackle Multiple Discrimination, (2003) 23 Oxford Journal of Legal Studies 6586.
THE SCOPE OF APPLICATION OF THE EMPLOYMENT PROVISIONS
341
statutes. The employment provisions in each ordinance reect the language of the relevant sections of the 1975 UK SDA and 1976 RRA. Application to employment and employment-like situations. The anti-discrimination ordinances apply to employment and employment-like situations, as well as many other areas including education, vocational training and the provision of goods, facilities, services and premises. They also cover several employment-like situations including discrimination against contract workers and commission agents as well as discrimination by rms consisting of not less than six partners, trade unions and professional organisations, qualifying bodies, employment agencies and barristers or barristers clerks.270 In addition, they prohibit the publication of advertisements which indicate an intention to discriminate unlawfully.271 Given the breadth of this scope, there has been little dispute about whether a particular employment claim is covered by these provisions in the Hong Kong context. Application to the government and the private sector. All of the ordinances bind the government,272 as well as the private sector, but only the SDO, DDO, and FSDO specify that it is unlawful for the government to discriminate in the performance of its functions or the exercise of its powers.273 The RDO does not contain similar provisionsan issue which was the subject of debate during the legislative process.274 Nevertheless the RDO clearly binds the government when it is acting as an employer or when it is engaging in any of the employment-like activities covered by the ordinance. The majority of claims are related to employment. Although the scope of application of the four ordinances covers a range of activities, the majority of discrimination, harassment and victimisation claims received by the EOC and heard by the courts have been related to employment.275 The meaning of employment. All four ordinances dene employment as employment under (a) a contract of service or of apprenticeship; or (b) a contract personally to execute any work or labour.276 Employment is construed broadly in the legislation to 8.114
8.115
8.116
8.117
270 271 272 273 274
275
276
For example, see SDO ss.13, 15, 16, 17, 19 and 20. The other three Ordinances contain comparable provisions. SDO s.43; DDO s.43; FSDO s.31; RDO s.42. SDO s.3, DDO s.5, FSDO s.3, RDO s.3. SDO ss.21 and 38; DDO ss.21 and 36; FSDO ss.17 and 28. See, for example, Constitutional and Mainland Affairs Bureau, The Administrations further response to the major issues raised by the Bills Committee, LC Paper No. CB(2)1292/07-08(01), Mar 2008. The UN Committee on the Elimination of Racial Discrimination questioned this omission from the RDO when considering Hong Kongs report on the implementation of its obligations under the ICERD (fn 23) in Aug 2009. See UN Committee on the Elimination of all forms of Racial Discrimination, Concluding Observations (fn 137) at para 28. In 2009, 950 out of 1161 complaints under the four ordinances were related to the employment eld. For statistics, see the website of the Hong Kong Equal Opportunities Commission (EOC): http://www.eoc.org.hk/ EOC/GraphicsFolder/InforCenter/Papers/StatisticList.aspx. SDO s.2(1), DDO s.2(1), FSDO s.2(1), RDO s.2(1). The SDO, DDO and FSDO explicitly state that related expressions shall be construed accordingly. These provisions (which duplicate their counterparts in the UK statutes) and the meaning of an employment relationship for the purposes of the anti-discrimination statutes have been interpreted in several UK cases. For example, see Mirror Group Newspapers Ltd v Gunning [1986] 1 WLR 546 (involved an agency relationship); Hugh-Jones v St Johns College Cambridge [1979] ICR 848 (involving a research fellowship); Kelly v Northern Ireland Housing Executive [1999] 1 AC 428 (involving applications by two solicitors for their rms to be appointed to a panel which defended public liability claims made against the public housing authority and for naming themselves as the solicitors responsible for their rms work); and Patterson v Legal Services Commission [2003] EWCA Civ 1558 (in which a sole principal solicitor sought a legal aid franchise for her rm from the Legal Services Commission).
342
DISCRIMINATION LAW
include a number of working relationships therefore protecting individuals who do not necessarily conform to the denition of employee as understood in the EO.277 As such, the statutes place restrictions on the principle of freedom of contract to the extent that employers may notsubject to limited exceptionsdirectly or indirectly discriminate on any of the prohibited grounds during any stage of employment including when determining who to hire, setting the terms and conditions of employment and dismissing employees. Although there must still be a contractual relationship, the contract need not be enforceable as a matter of common law.278 8.118 Employment includes temporary contracts and should be construed in general terms. In Tsang v Cathay Pacic Airways Ltd, the Court of Appeal conrmed that temporary employment on short-term, yearly contracts falls within the broad meaning of employment covered by the statutes and that employment should be considered in general rather than conned to the terms of a particular contract.279 The case involved a claim made by a female ight attendant under the SDO that Cathay Pacic Airways retirement policy discriminated on the basis of sex.280 The court rejected Cathay Pacics argument that the terms of employment should be determined with reference to the employment contract and that the relevant contract was the one concluded with the claimant in 1996 which was not discriminatory and did not mention retirement benets. Purposive approach to interpretation: protection goes beyond the contractual terms. Instead, the Court of Appeal took a purposive approach to interpreting the statute so that its objects could be achieved 281 stating that it was clear that the legislation goes beyond any contractual terms which may have been concluded between the employer and the employee.282 The court, therefore, held that Cathay had unlawfully discriminated against the plaintiff on the basis of sex under ss.5 (the denition of direct discrimination) and 11(2). These provisions render discrimination
8.119
277
278
279
280 281
282
See Chapter 2 of this volume for a discussion of the meaning of employee in the EO (fn 120) and the ECO. These statutes only apply to employees as dened by reference to a contract of employment in s.4(1) of the EO and by reference to a contract of service in s.5(1) of the ECO. Many of the protections and benets conferred by the EO are only available to employees who are engaged under a continuous contract for the required period (dened in s.3 and the Sch.1 to the EO which means that they have to have been employed for four weeks or more for not less than 18 hrs every week. Such as in cases where the contract is tainted with illegality. See Hall v Woolston Hall Leisure Ltd [2001] 1 WLR 225 (the anti-discrimination Acts are not really concerned with employees rights under their contracts of employment) and Rhys-Harper v Relaxion Group Plc [2003] UKHL 33. Tsang v Cathay Pacic Airways Ltd (fn 83). Although this case involved the SDO, given the similarities of the employment provisions in all four statutes the courts holdings in this regard would also apply to the scope and meaning of employment under the DDO, FSDO and RDO. See the discussion of this case in s.2 above. Ibid (Tsang v Cathay Pacic Airways Ltd) at paras 26 and 27. The court cited s.19 of the Interpretation and General Clauses Ordinance (Cap.1), Laws of Hong Kong: [a]n Ordinance shall be deemed to be remedial and shall receive such fair, large and liberal construction and interpretation as will best ensure the attainment of the object of the Ordinance according to its true intent, meaning and spirit. This case is discussed in more detail at para 8.039. Ibid (Tsang v Cathay Pacic Airways Ltd) at para 27. The Court cited Leighton v Michael [1995] ICR 1091; In Leighton, the Employment Appeals Tribunal cited Quinnen v Hovells [1984] ICR 525 and Mirror Group Newspapers Ltd v Gunning (fn 276) in which the courts had interpreted employment under the 1975 SDA to include self employment. The EAT distinguished cases in which an illegal employment contract had been held to disqualify applicants for unfair dismissal from discrimination claims under the SDA.
343
on the basis of sex unlawful in the way in which the employer affords the employee access to opportunities for promotion, transfer or training or to any other benets, facilities or services or by refusing or deliberately omitting to afford access to him/her; in the terms of employment afforded to an employee; or by dismissing or subjecting an employee to any other detriment. Meaning of employment at an establishment in Hong Kong. The employment provisions in all four ordinances require that the employment must be at an establishment in Hong Kong. The statutes specify that the employment is to be regarded as being at an establishment in Hong Kong unless the employee mainly or wholly works outside of Hong Kong.283 Employment at an establishment in Hong Kong includes employment on a ship registered in Hong Kong or employment on an aircraft or a dynamically supported craft registered in Hong Kong and operated by a person who has his/her principal place of business, or is ordinarily resident, in Hong Kong.284 Determining who should be offered employment. All four ordinances make it unlawful for a person to discriminate on a prohibited ground against a person in the arrangements made for the purposes of determining who should be offered employment, in the terms by which the employment is offered, or by refusing or deliberately omitting to offer employment to a person.285 Terms and conditions of employment. It is unlawful for an employer to discriminate, on any of the prohibited grounds covered by the four ordinances, against a person employed by him/her at an establishment in Hong Kong in the way the employer affords the employee opportunities for promotion, transfer or training, or to any other benets, facilities or services, or by refusing or deliberately omitting to afford the employee access to them; in the terms of employment; or by dismissing the employee or subjecting him/her to any other detriment.286 Any other detriment. English courts have construed the term detriment broadly and have essentially equated it with the phrase less favourable treatment in the denition of direct discrimination.287 Detriment includes any disadvantage288 even if the claimant was not aware of it at the time it happened.289 It does not need to be a concrete loss but could be a mere loss of opportunity as measured by the claimant. In L v Equal Opportunities Commission the court determined that the acts complained of amounted to a detriment and thus fell within the scope of the employment provisions. According to the judgment, the defendant had argued that an emotional sense of grievance is not enough to meet the understanding of detriment under the DDOs employment provisions.290 The District Court, however, followed Ministry 8.120
8.121
8.122
8.123
283 284 285 286 287 288 289 290
SDO s.14, DDO s.14, FSDO s.10, RDO s.16. SDO s.14, DDO s.14, FSDO s.10, RDO s.16. SDO s.11(1), DDO s.11(1), FSDO s.8(1), RDO s.10(1). SDO s.11(2), DDO s.11(2), FSDO s.8(2), RDO s.10(2). See Monaghan (fn 52) at 290 and 452. Jeremiah v Ministry of Defence [1980] QB 87. Garry v Ealing LBC [2001] IRLR 681. See also Aquino Celestina Valdez v So Mei Ngor (fn 189) at para 12. Relying on fn 56 (Shamoon); Lord Chancellor v Coker [2001] ICR 507 (decision by the EAT) and Barclays Bank v Kapur (No. 2) [1995] IRLR 87.
344
DISCRIMINATION LAW
of Defence v Jeremiah291 in which Brightman LJ held that a detriment exists if a reasonable worker would or might take the view that the [treatment] was in all the circumstances to his detriment.292 In Tsang v Cathay Pacic Airway Ltd, the court considered that the plaintiff had been subjected to a detriment which resulted from the continuing discriminatory nature of Cathay Pacics retirement policy.293 8.124 Dismissal from employment. In addition, each of the four statutes species that it is unlawful to discriminate against an employee by dismissing him/her.294 References to dismissal in the legislation include the termination of a persons employment or partnership at the end of any period (including a period expiring by reference to an event or circumstance) or to the termination of a persons employment or partnership by his/her own action in circumstances in which he/she is entitled to terminate employment without notice by reason of the conduct of the employer.295 Dismissal is construed broadly. The case of Aquino Celestina Valdez v So Mei Ngor 296 involved a foreign domestic worker who claimed she had been dismissed by her employer because of a deformity in her hand and had therefore been discriminated against on the grounds of her disability. The District Court held that since the purpose of the DDOs employment provisions is to protect employment, the terms dismissing or dismissal must be given their broadest meaning.297 Therefore dismissal would include any form of termination of employment such as termination by way of notice or wages in lieu of notice.298 The court concluded that it would frustrate the purpose of the Ordinance if an employees contract of employment could be terminated by notice or wages in lieu of notice for no reason other than his disability since the giving of notice or payment of wages in lieu of notice only discharges an employers obligation under the contract of employment or under the EO. These actions do not exempt an employer from liability for discrimination if the termination is an act of discrimination for the purpose of the [DDO].299 Summary dismissal for misconduct of the employee is not discrimination.300 Based on a review of the facts in Aquino Celestina Valdez v So Mei Ngor,301 the court determined that the employee had engaged in misconduct and that in cases where summary dismissal was justied at common law or under s.9 of the EO then the dismissal would clearly not be unlawful discrimination under the DDO.302 The court distinguished between this situation and circumstances in which an employee was not at fault. If the employee had not engaged in misconduct, it would not have
8.125
8.126
291 292
293
294 295 296 297 298 299 300 301 302
Fn 288 followed in Khan (fn 108). Cited in fn 65 at para 46. The court approved this broader approach since the DDO allows the court to award damages for injury to feelings (DDO s.72(5)). Tsang v Cathay Pacic Airways Ltd (fn 83). See the discussion of this case in s.3 above in relation to the denition of direct discrimination and the need to identify a comparator. SDO s.11(2)(c), DDO s.11(2)(c), FSDO s.8(2)(c), RDO s.10(2)(c). SDO s.2(2), DDO s.2(2), FSDO s.2(2), RDO s.2(3). Fn 189. Ibid at para 12. Ibid. Ibid. See Chapter 7. Fn 189. Ibid at para 14.
345
been difcult for the employee to demonstrate by other circumstantial evidence or by inference that the dismissal was connected with her disability.303 Discrimination against contract workers. A person may not discriminate, on any of the prohibited grounds covered by the four ordinances, against contract workers who are not directly employed by the person, but are employed by his/her contractor or sub-contractor.304 In Leeds City Council v Woodhouse, the English Court of Appeal held that the provisions in the UK RRA which protect from discrimination against contract workers305 should be interpreted broadly and with a focus on the facts of a particular claim.306 Discrimination in relation to a position as a partner in a rm. A rm consisting of not less than six partners may not discriminate on any of the prohibited grounds in relation to a position as a partner in the rm in (1) the arrangements the rm makes for the purposes of determining who should be offered the position; (2) in the terms on which the position is offered; or (3) when a person already holds the position, in the way the rm affords the person access to any benets, facilities or services, or by refusing or deliberately omitting to afford him/her access to them, or by expelling the person from the position or subjecting him/her to any other detriment.307 The legislation species that the provisions also apply to persons who are proposing to form themselves into a partnership.308 If beingor not beinga member of a group dened by the prohibited grounds is a genuine occupational requirement then the provisions making it unlawful to discriminate in the arrangements made for determining who should be offered the position (or by refusing or deliberately omitting to offer the position) will not apply.309 Discrimination by trade unions. It is unlawful for an organisation of workers or employers or professional or trade organisations to discriminate on any of the prohibited grounds in the following ways: (1) in the terms for admission to membership of the organisation; (2) by refusing or deliberately omitting to accept a persons application for membership; (3) in the way the organisation affords a member access to benets, facilities or services; (4) by depriving a person of his/her membership or varying the terms of membership; or (5) by subjecting a person to any other detriment.310 In the United Kingdom, the Employment Appeal Tribunal has interpreted the meaning of trade union to include an organisation consisting of both employers and self-employed people with no employees.311 8.127
8.128
8.129
303 304 305 306
307 308 309
310 311
Ibid. SDO s.13, DDO s.13, FSDO s.9, RDO s.15. The Hong Kong legislation replicates these provisions. [2010] EWCA Civ 410. See also Harrods Ltd v Remick [1998] ICR 156 in which the Court of Appeal held that employees hired by a licensee under contract with a large department store to manage and operate various departments in the store were doing work for the store as well as the licensee. The store would therefore be liable for unlawful discrimination against those employees. Like the other employment-related provisions in the Hong Kong legislation, the relevant sections on contract workers in the four ordinances are essentially the same as their counterparts in the UK statutes. SDO s.15, DDO s.15, FSDO s.11, RDO s.17. SDO s.15(2), DDO s.15(2), FSDO s.11(2), RDO s.17(2). SDO s.15(3), DDO s.15(3), RDO s.17(3). See the discussion of the genuine occupational qualication defense at paras 8.1408.157. SDO s.16, DDO s.16, FSDO s.12, RDO s. 18. National Federation of Self-Employed and Small Businesses Ltd v Philpott [1997] ICR 518.
346
DISCRIMINATION LAW
8.130
Qualifying bodies. An authority or body which can confer an authorisation or qualication which is needed for, or facilitates, engagement in a particular profession or trade may not discriminate on any of the prohibited grounds in the terms on which it is prepared to confer authorisation or qualication; by refusing or deliberately omitting to grant a persons application for authorisation or qualication; or by withdrawing or varying the terms of someones authorisation or qualication.312 In addition, when an authority or body is required by law to satisfy itself of a persons good character before conferring authorisation or qualication on that person, the authority or body has a duty to have regard to any evidence which tends to show that the person, or any of his/her employees or agents (past or present) has practiced unlawful discrimination or engaged in unlawful harassment in connection with carrying out any profession or trade. The term profession includes any vocation or occupation.313 English courts have considered the scope of these provisions in several cases. For example, in Patterson v Legal Services Commission, the English Court of Appeal held that the Legal Services Commission, in granting a franchise to a solicitors rm to enable the rm to use public money for the provision of legal services, acted as a body which conferred an authorisation on the rm.314 Other cases have interpreted the meaning of qualication bodies in the UK statutes more narrowly.315 Provision of vocational training. A person who provides, or makes arrangements for the provision of, facilities for vocational training may not discriminate in the terms on which he/she affords someone access to training courses or other associated facilities; by refusing or deliberately omitting to afford such access; by terminating the training; or by subjecting someone to any other detriment during the course of his/her training.316 Employment agencies. An employment agency may not discriminate on any of the prohibited grounds in the terms on which it offers its services, by refusing or deliberately omitting to provide any of its services, or in the way it provides its services.317 Services includes guidance on careers and any other employment-related services. It is lawful, however, to discriminate under these provisions concerning employment which the employer could lawfully refuse to offer to the person.318 An agency shall not be subject to any liability if it proves that it acted in reliance on a
8.131
8.132
312 313 314 315
316
317 318
SDO s.17, DDO s.17, FSDO s.13, RDO s.19. SDO s.2(1), DDO s.2(1), FSDO 2(1), RDO s.2(1). Patterson v Legal Services Commission (fn 276) interpreting the same provision in the UK RRA (s.12). See, for example, Tattari v Private Patients Plan Ltd [1998] ICR 106 in which the Court of Appeal held that qualications bodies are bodies which are empowered to grant qualications for recognition for the purpose of practicing a profession, calling, trade or activity and do not include providers of medical insurance which stipulate that doctors on their accepted list of specialists must have obtained a certain qualication. In Arthur v A-G [1999] ICR 631 the Employment Appeal Tribunal held that a committee established to advise the Lord Chancellor on the appointment of justices of the peace was not a qualifying body. It concluded that a justice of the peace was not an occupation within the denition of profession and distinguished between a panel which was sifting applications and therefore merely performing a ltering function and a qualifying body conferring an approval. In Triesman v Ali [2002] ICR 1026 the Court of Appeal held that a political party, in selecting a candidate for local elections, is not a body which can confer an authorisation or qualications as intended by the statute. SDO s.18, DDO s.18, FSDO s.14, RDO s.20. The provisions in the ordinances which protect against discrimination in the provision of goods, services and facilities may also cover some vocational training activities. See SDO s.28, DDO s.26, FSDO s.19, RDO s.27. SDO s.19(1), DDO s.19(1), FSDO s.15(1), RDO s.21(1). SDO s.19(3), DDO s.19(3), FSDO s.15(3), RDO s.21(3).
347
statement made to it by an employer to that effect and that it was reasonable for the agency to rely on such a statement.319 A person who knowingly or recklessly makes such a statement which is false or misleading commits an offence.320 Discrimination against commission agents. A person (the principal) who hires individuals (commission agents) who are remunerated in whole or in part by commission may not discriminate against such agents in relation to work done for the principal (1) in the terms on which the principal allows the agent to do the work; (2) by not allowing the agent to door continue to dothe work; (3) in the way the principal affords the agent access to any benets, facilities or services, or by refusing or deliberately omitting to afford the agent access to them; or (4) by subjecting the agent to any other detriment.321 The SDO, DDO and RDO contain genuine occupational qualication exceptions.322 All four ordinances specify that it is not unlawful for a principal to discriminate in the way he/she affordsor by refusing or deliberately omitting to affordthe agent access to benets, facilities or services if the principal is concerned with the provision of benets, facilities or services of the same description to the public, or to the section of the public to which the agent belongs.323 Discrimination by barristers or barristers clerks. It is unlawful for a barrister or barristers clerk to discriminate against a person in the arrangements made for the purposes of determining who should be offered a pupilage or tenancy, in respect of the terms on which the pupilage or tenancy is offered, by refusing or deliberately omitting to offer the pupilage or tenancy to the person; in respect of any terms applicable to a pupil or tenant; in opportunities for training or gaining experience; in benets facilities or services; termination of his/her pupilage or subjecting him/her to pressure to leave the chambers. It is also unlawful for a person to discriminate when giving, withholding or accepting instructions to/from a barrister.324 Aiding unlawful acts. A person who knowingly aids another person to do an unlawful act under any of the ordinances shall also be treated as doing the unlawful act.325 Constructive dismissal. In the case of Chang Ying Kwan, the court held that although Ms. Chang had resigned, her resignation amounted to constructive dismissal in light of the treatment she received from her employer including pregnancy discrimination and discrimination by way of victimisation.326 Vicarious liability. The four ordinances all provide that an employer is vicariously liable for the actions of his/her employees, whether or not the employer knew about 8.133
8.134
8.135 8.136
8.137
319 320 321 322 323
324 325 326
SDO s.19(4), DDO s.19(4), FSDO s.15(4), RDO s.21(4). SDO s.19(5), DDO s.19(5), FSDO s.15(5), RDO s.21(5). SDO s.20, DDO s.20, FSDO s.16, RDO s.22. Fn 34. SDO s.20(3), DDO s.20(3), RDO s.20(3). SDO s.20(4), DDO s.20(5), FSDO s.16(3), RDO s.22(4). The DDO contains an additional exception when, after taking all reasonable factors into account, the commission agent would be unable to carry out the inherent requirements of the job because of his/her disability or in order to carry out those requirements, would need services or facilities which would impose an unjustiable hardship on the principal. SDO s.36, DDO s.33, FSDO s.26, RDO s.35. SDO s.47, DDO s.49, FSDO s.35, RDO s.48. Fn 13. See Chapter 7.
348
DISCRIMINATION LAW
the action or it was done with the employers approval.327 In proceedings brought under any of the four ordinances, it is a defence for an employer to prove that he/she took such steps as were reasonably practicable to prevent the employee from doing an unlawful act.328 In Chen v Tamara Rus, the District Court held that deciding whether an employer has taken all steps as were reasonably practicable involves a determination of fact.329 It held that the defendant company had discharged its burden since it had provided guidelines on sexual harassment and required employees to sign a declaration stating that they had read and understood the guidelines. The court also considered evidence which indicated that the employer had a zero tolerance policy toward harassment.330 8.138 Discriminatory advertisements. All four ordinances make it unlawful to publish advertisements which indicate or might reasonably be understood to indicate an intention to do any act which is or might be unlawful under the ordinances in relation to the arrangements made for the purpose of determining who should be offered employment or by refusing or deliberately omitting to offer employment.331 This does not apply, however, if the intended act would not in fact be unlawful.332 Under the SDO, FSDO, and RDO, the use of a job description which is specic to sex, race or having or not having family status shall be taken to signify an intention to discriminate, unless the advertisement contains an indication to the contrary.333 In Equal Opportunities Commission v Apple Daily Ltd,334 the Court of Appeal considered whether advertisements published by Apple Daily seeking beautiful female reporters to report on balls and parties breached these provisions in the SDO. The court held that this was not unlawful since the advertisement was capable of two meanings and the original Chinese text was ambiguous.335
6. EXCEPTIONS AND DEFENSES

8.139 Exceptions and defenses to unlawful employment discrimination. Although the SDO, DDO, FSDO and RDO do not include general justication clauses for direct discrimination, they contain a number of exceptions. This section considers these exceptions and certain defenses which apply in the employment context, including exceptions when a characteristic including sex, disability or race is a genuine occupational qualication and for special measures. Certain exceptions and defenses
327 328 329
330
331 332 333 334 335
SDO s.46, DDO s.48, FSDO s.34, RDO s.47. SDO s.46(3), DDO s.48(3), FSDO s.34(3), RDO 47(3). Chen v Tamara Rus (fn 79) citing Balgobin v Tower Hamlets LBC [1987] IRLR 401. Miss L Carter v Westcliff Hall Sidmouth Ltd (unrep., Exeter IT, Case No. 31165/90). In the latter case, it was decided that taking action after discovering a sexual harassment complaint was insufcient and an employer must take measures to prevent harassment in the rst place by instructing staff that sexual harassment was unlawful and unacceptable. For example, the claimants supervisor had lectured him after becoming aware of an email sent by the claimant to the defendant in which he had referred to her as Tamara baby. Chen v Tamara Rus (fn 79). SDO s.43(1), DDO s.43(1), FSDO s.31(1), RDO s.42(1). SDO s.43(2), DDO s.43(2), FSDO s.31(2), RDO s.42(2). SDO s.43(3), DDO s.43(2), FSDO s.31(2), RDO s.42(2). [1999] 1 HKLRD 188. Ibid.
EXCEPTIONS AND DEFENSES
349
unique to the DDO include the defenses of unjustiable hardship and when not having a disability is an inherent requirement of the job. (a) Genuine occupational qualications Exceptions for genuine occupational qualications (GOQs). The SDO, DDO and RDO provide for exceptions where being a man or a woman, not having a disability, or being of a particular race are genuine occupational qualications (GOQs). These are sometimes referred to in other jurisdictions as genuine occupational requirements or bona de occupational requirements. These are not broad exemptions and are not applicable to general categories of jobs but only apply to limited, particular circumstances. The burden is on the employer to demonstrate that the exception applies to the particular position in question. This exception cannot be relied upon in cases of pregnancy, marital status or family status discrimination. (i) SDO GOQs under the SDO. Under the SDO, it is not unlawful to discriminate on the grounds of sex when determining who should be employed or by refusing or by deliberately omitting to offer employment to a person in circumstances where being either a man or a woman is a genuine occupational qualication for the job.336 This exception also applies to opportunities for promotion or transfer to, or training for, such employment.337 The ordinance limits the genuine occupational qualication exception to particular situations including: Reasons of physiology. It is a GOQ where the essential nature of the job calls for a man or woman for reasons of physiologybut not physical strength or stamina338or in dramatic performances or other entertainment for reasons of authenticity.339 Examples may include actors and models in certain circumstances. Preservation of decency or privacy. It is a GOQ when the job needs to be held by a man or a woman to preserve decency or privacy340 such as an attendant working in a male or female changing room or washroom.341 When working in a private home. It is a GOQ when the employee is likely to do his/ her job in, or live in, a private home and there may be reasonable objection to allowing a man or a woman to have the degree of physical or social contact with a person living in the home, or the knowledge of intimate details of a persons life which would be likely due to the nature or circumstances of the job or the home. Living in premises provided by the employer. It is a GOQ when the nature of the location of the establishment makes it impracticable for the person doing the job to live anywhere but in premises provided by the employer and the only available 8.141 8.140
8.142
8.143
8.144
8.145
336 337 338 339 340 341
SDO s.12(1)(a). SDO s.12(1)(b). Which would amount to an unacceptable gender stereotype. SDO s.12(2)(a). SDO s.12(2)(b). SDO COP (fn 17) at para 10.6.2.
350
DISCRIMINATION LAW
premises are not equipped with separate sleeping accommodation or private sanitary facilities for men and women and it is not reasonable to expect the employer to equip the premises with such accommodation and facilities or provide other premises. The Code of Practice provides the example of a resident janitor at a single-sex school where there are no separate accommodations or sanitary facilities for the other sex.342 8.146 Nature of the establishment. It is a GOQ when the nature of the establishment requires the job to be held by a man or a woman because it is a hospital, prison or other establishment for persons requiring special care, supervision or attention, those persons are all of one sex, and it is reasonable that the job should not be held by someone of a particular sex. The SDO Code of Practice points out that this exception would only apply to the relevant section of the establishment dealing with such persons and not necessarily the establishment as a whole.343 Personal services. It is a GOQ when the holder of the job provides individuals with personal services promoting their welfare or education or similar personal services and those services can be most effectively provided by someone of a particular sex, for example a counsellor at a shelter for female victims of domestic violence.344 Restrictions imposed by other regulations. It is a GOQ when the job needs to be held by a man or a woman because of restrictions imposed by provisions in the Women and Young Persons (Industry) Regulations, the Factories and Industrial Undertakings Regulations; Construction Sites (Safety) Regulations; and Dutiable Commodities (Liquor) Regulations; Performance of duties outside of Hong Kong and married couples. It is a GOQ when the job needs to be held by a man or a woman because it is likely to involve the performance of duties outside Hong Kong in a place where the laws or customs are such that the duties could not, or could not effectively, be performed by a woman. For example, being a male may be a genuine occupational requirement for a sales manager who is required to spend considerable time in countries where customs forbid the involvement of women in this type of work.345 It is also a GOQ when the job is one of two to be held by a married couple.346 Example of an attempt to apply a GOQ in a conciliated case. In one case settled through the EOCs early conciliation process, the respondent refused to interview a male applicant for the position of private tutor for her son. Although the tutor would only be working with her son, she was concerned that a male tutor may cause inconvenience to her daughter who would also be in the house at the same time. Although the male applicant accepted the respondents explanation during the conciliation process, the EOC notes in the register of settlement that the circumstances of the case may not be sufcient to meet the requirements of the genuine occupational qualication exception.347
8.147
8.148
8.149
8.150
342 343 344 345 346 347
Ibid at para 10.6.4. Ibid at para 10.6.5. Ibid at para 10.6.6. Ibid at para 10.6.7. SDO s.12(2). Register of Settlement by Conciliation: Sex Discrimination Ordinance. Available at http://www.eoc.org.hk.
351
(ii) DDO GOQ and the DDO. Since the DDO only applies to discrimination on the grounds of having a disability,348 it allows for exceptions in cases where not having the relevant characteristicin this case not having a disabilityis a GOQ. Like the SDO provisions, the GOQ exception under the DDO may apply in limited circumstances to discrimination claims involving the arrangements an employer makes for determining who should be offered the employment; by refusing or deliberately omitting to offer a person the employment; or when providing opportunities for promotion or transfer to, or training for, such employment.349 Physiology or authenticity. It is a GOQ when the the essential nature of the job calls for a person without a disability for reasons of physiology or, in dramatic performances or other entertainment, for reasons of authenticity, so that the essential nature of the job would be materially different if carried out by a person with a disability.350 Unlike the SDO, this provision does not specify that physical stamina or strength cannot be considered part of the essential nature of the job.351 Premises not equipped with accommodation or facilities. It is also a GOQ where the nature or location of the establishment makes it impracticable for the holder of the job to live elsewhere than in premises provided by the employer, and the only such premises which are available for persons holding that kind of job are lived in, or normally lived in, by persons without a disability and are not equipped with accommodation and facilities for persons with a disability where the alteration of those premises to be so equipped would impose an unjustiable hardship on the employer. (iii) RDO GOQ and the RDO. The RDO allows employers to take race into consideration when making arrangements to determine who to employ or when refusing to offer employment to a person only if being a member of a certain racial group is a GOQ for the job.352 This applies in limited circumstances. Reasons of authenticity. Race may be a GOQ when the job involves (1) participation in a dramatic performance or other entertainment in a capacity for which a person of that racial group is required for reasons of authenticity; (2) participation as an artists or photographic model in the production of a work of art, visual images or sequence of visual images for which a person of that racial group is required for reasons of authenticity; or (3) working in a place where food or drink are provided to and consumed by members of the public and a person of that racial group is required for reasons of authenticity.353 Provision of personal services. Membership in a particular racial group may also be a GOQ when the job involves provision of personal services to members of that racial 8.154 8.151
8.152
8.153
8.155
8.156
348 349 350 351 352 353
See discussion of asymmetry at 8.0288.029. DDO s.12(1)(a) and (b). DDO s.12(3). DDO s.12(3)(a). RDO s.11(1). RDO s.11(2)(a)(c).
352
DISCRIMINATION LAW
group which promote their welfare and which can be most effectively provided by a person of the same racial group. In addition, race may be a GOQ when the job involves providing persons of a racial group with personal services which require familiarity with the racial groups language, culture and customs and sensitivity to the needs of that racial group, and those services can most effectively be provided by a person of the same racial group.354 8.157 Careful scrutiny is required and the burden of proof is on the employer. Relevant case law from the United Kingdom suggests that the courts will scrutinise the GOQ exception carefully and that the burden of proof is on the employer to demonstrate that race is a GOQ of the job.355 In its Code of Practice on Employment under the RDO, the EOC cites a UK case in which the court interpreted the GOQ exception narrowly. The court held that in employment contexts which involve the provision of services promoting the welfare of a certain racial group, the GOQ defense would not apply to managerial or administrative positions.356 (b) Other exceptions under the DDO 8.158 Exception if the person with a disability is unable to carry out the inherent requirements of the job. The DDO provides for an additional exception not found in the SDO, FSDO or DDO and is therefore unique to disability discrimination law. Section 12 of the DDO stipulates that certain employment provisions will not apply if the person with a disability would be unable to carry out the inherent requirements of the particular employment or would, in order to carry out those requirements, require services or facilities that are not required by persons without a disability and the provision of which would impose an unjustiable hardship on the employer.357 When determining whether this exception is applicable, all relevant factors which are reasonable to take into account will be considered including the persons past training, qualications and experience relevant to the particular employment and the persons performance as an employee (if already employed by the employer).358 Determining what constitutes unjustiable hardship. When determining what constitutes unjustiable hardship, all relevant circumstances of the particular case must be taken into account including (a) the reasonableness of any accommodation to be made available to a person with a disability; (b) the nature of the benet or detriment likely to accrue or be suffered by any persons concerned; (c) the effect
8.159
354 355
356 357
358
RDO s.11(2)(e). Lambeth LBC v Commission for Racial Equality [1989] IRLR 379. See also RDO Code of Practice on Employment (fn 20), 26-27. Ibid. DDO s.12(2)(c)(i) and (ii). The provisions which would not apply include DDO ss.11(1)(a) and (c) and 11(2)(c) which deal with discrimination in the arrangements made for the purpose of determining who should be offered the employment; by refusing or deliberately omitting to offer employment; or by dismissing a person or subjecting him/ her to any other detriment. The exception also applies to the provisions related to discrimination against contract workers (see DDO s.13 and discussion at para 8.0127), discrimination in relation to partnership positions (see DDO s.15 and discussion at para 8.0128), discrimination by qualifying bodies (see DDO s.17 and discussion at para 8.0130), discrimination by employment agencies (see DDO s.19 and discussion at para 8.0132), and discrimination against commission agents (see DDO s.20 and discussion at para 8.0133). DDO s.12(2)(a)(c).
353
of the disability of a person concerned; and (d) the nancial circumstances of and the estimated amount of expenditure (including recurrent expenditure) required to be made by the person claiming unjustiable hardship.359 Reasonable accommodation. These factors contain an implied requirement for employers to provide reasonable accommodation up until the point of unjustiable hardship in order to avoid unlawful discrimination. Although the DDO does not dene the term reasonable accommodation, the UN Convention on the Rights of Persons with Disabilities, which is applicable to Hong Kong, may provide guidance. In the Convention, reasonable accommodation means necessary and appropriate modication and adjustments not imposing a disproportionate or undue burden, where needed in a particular case, to ensure to persons with disabilities the enjoyment or exercise on an equal basis with others of all human rights and fundamental freedoms.360 The degree and consequences of risk. In K v Secretary for Justice,361 the court considered whether safety was an inherent requirement of certain jobs in the Fire Services Department and the Customs and Excise Department of the Hong Kong Government. The case involved claims of discrimination on the grounds of the disability of an associate since the plaintiffs were either dismissed or not hired because each had a parent who suffered from a psychological illness. In this case, the court considered the degree of risk involved and held that if the plaintiffs genetic predisposition to acquire the same illness as their parents presented a real risk to public safety, then they could not fulll the inherent requirements of the job and thus the exception would apply. When determining whether an employee poses a risk to the health and safety of others, the court decided it was relevant to consider both the degree of the risk and the consequences if the risk is realised.362 The Hong Kong court ultimately determined that an individual assessment of risk was necessary and in the plaintiffs case it was unlikely that the schizophrenia of a rst-degree relative would pose a real risk to the applicants ability to meet the inherent requirements of the job.363 (c) Other exceptions Provision for death or retirement. The employment provisions in the SDO and RDO contain a qualied exception for provisions related to death or retirement which applied beforeand continued afterthe date of the enactment of the relevant statute.364 In Au Kwai Fun v Cathay Pacic, the District Court reviewed the history and development of this exception in the UK SDA and concluded that it would only cover cases where the differential treatment in the retirement scheme does not involve dismissal, promotion 8.162 8.160
8.161
359 360 361 362 363 364
DDO s.4. CRPD art. 2. K v Secretary for Justice (fn 55). Ibid adopting a test developed by McHugh J in X v Commonwealth of Australia (1999) 167 ALR 529. Ibid at 808809. SDO s.11(4) qualied by s.(5) and RDO s.10(4) qualied by s.10(5).
354
DISCRIMINATION LAW
or transfer of an employee.365 Since Au Kwai Fun v Cathay Pacic involved dismissal in relation to a retirement policy, the exception would not apply.366 8.163 Exception for religion in the SDO and RDO. Section 22 of the SDO provides for an exception within the employment eld for the purposes of an organised religion where the employment is limited to one sex so as to comply with the doctrines of the religion or to avoid offending the religious susceptibilities common to its followers.367 This section also provides for an exception for qualifying bodies which may limit authorisation or qualications for the purposes of organised religion to one sex. The RDO contains a similar exception allowing organised religion to limit employment to members of a particular racial group so as to comply with the doctrines of the religion or to avoid offending the religious susceptibilities common to its followers.368 Exception for special measures. All four ordinances include an exception for special measures which amount to any acts which are reasonably intended to ensure equal opportunities, afford goods or access to services, facilities, opportunities, grants, benets or programmes to meet the special needs of persons of a particular sex, marital status, family status or race or who are pregnant or have a disability, in relation to employment, among other areas.369 The Court of First Instance interpreted this provision in the education context in light of Hong Kongs obligations under CEDAW, holding that such measures must be temporary in nature.370 The Committee on the Elimination of Discrimination against Women and the Committee on the Elimination of Racial Discrimination have issued General Recommendations on the meaning and scope of the special measures provisions in CEDAW and the ICERD which may provide helpful guidance when interpreting the relevant sections in the SDO and RDO.371 Exception for affording training and work opportunities to underrepresented groups. The SDO, DDO and RDO provide that an act done in connection with affording trainingor access to training facilitiesonly for women or men, persons with disabilities, or persons of a particular racial group is not unlawful where it reasonably appears that at any time within the previous twelve months there were no personsor a comparatively small number of personsfrom the group concerned doing that work in Hong Kong.372 Similarly it is not unlawful to encourage only members of one of these groups to take advantage of opportunities to do a certain type of work if the same conditions apply.373 These exceptions, however, do not apply
8.164
8.165
365 366 367 368 369 370 371
372 373
Fn 85 at paras 3648. Ibid. SDO s.22(1). RDO s.23. This exception also applies to discrimination by qualication bodies. SDO s.48, DDO s.50. Fn 32. See Committee on the Elimination of Discrimination against Women, General Recommendation No. 25 (2004) and Committee on the Elimination of Racial Discrimination, General Recommendation No. 32 (2009). In the second document the Committee stated that measures include the full span of legislative, executive, administrative, budgetary and regulatory instruments, at every level in the State apparatus, as well as plans, policies, programmes and preferential regimes in areas such as employment, housing, education, culture, and participation in public life for disfavoured groups, devised and implemented on the basis of such instruments (at para 13). SDO s.53, DDO s.53, RDO ss.51. Ibid.
355
in relation to the main employment provisions in the three ordinances.374 In addition it is not unlawful for an employer in relation to work in his/her employment to afford employees of a particular sex, racial group or with a disability access to facilities for training which would help t them for that work or encourage only persons from that group to take advantage of opportunities for doing that work if at any time within the immediately preceding 12 months there were noor a comparatively small number ofpersons from that group doing work at that establishment.375 Exception for underrepresented groups under the SDO. The SDO claries that it would not be unlawful to afford persons access to facilities for training which would help t them for employment, where it reasonably appears that those persons are in special need of training because they have been discharging domestic or family responsibilities to the exclusion of regular full time employment.376 Exception in the RDO for training for skills to be used outside of Hong Kong. It is not unlawful for an employer to do an act in connection with employing a person at an establishment in Hong Kong if the purpose of that employment is to provide the person training in skills which are intended to be exercised wholly outside of Hong Kong.377 Exception in the RDO for persons with special skills, knowledge or experience. The RDO exempts any act done by an employer under the main employment provisions (s.10) for the benet of a person where the employment (1) requires skills, knowledge or experience not readily available in Hong Kong; (2) the person possesses those skills, knowledge and experience and is recruited or transferred from a place outside of Hong Kong; and (3) the act is reasonably done having regard to the prevailing terms of employment offered to persons with those skills in places outside of Hong Kong and any other relevant circumstances other than race.378 This provision was included in the RDO to address initial concernsexpressed by employers during consultations on the draft race discrimination legislationabout the lawfulness of benets provided to expatriate workers in Hong Kong. Exception for differential treatment based on local and overseas terms of contract. The RDO also exempts any differential treatment by an employer in connection with employing a person on local terms of contract on the one hand and on overseas terms on the other.379 This provision also exempts any differential treatment by an employer toward persons from different countries in connection with employing someone on overseas terms of employment.380 These exceptions only apply, however, to an employee in an existing employment. This term means either (1) an employee who began his or her employment pursuant to an offer of employment made before the commencement date of the RDO and who continues to be employed by the employer without a break; or (2) an employee who is employed after one or more transfers of 8.166
8.167
8.168
8.169
374 375
376 377 378 379 380
i.e. SDO s.11, DDO s.11, RDO s.10. SDO s.54, DDO s.54, RDO 52. This provision also applies to similar acts done by trade unions in relation to posts held in the organisation. See SDO s.54(2) and (3), DDO s.54(2) and (3), RDO s.52(2) and (3). SDO s.53(2) and (3). RDO s.12. RDO s.13. The terms local and overseas terms of employment are dened in RDO Sch.2 at para 11. RDO s.14.
356
DISCRIMINATION LAW
employment within the same group of companies where the employment immediately preceding the rst transfer was pursuant to an offer made before the commencement of the RDO.381
7. ENFORCEMENT AND REMEDIES

(a) The Equal Opportunities Commission 8.170 The establishment of the Equal Opportunities Commission (EOC). The EOC was established pursuant to s.63 of the SDO and began operating in September 1996. The EOC is a statutory body which is responsible for implementing Hong Kongs anti-discrimination legislation and plays a key enforcement role. All four ordinances stipulate the functions and powers of the Commission which include conducting formal investigations and reporting on the ndings; issuing enforcement notices; and assisting with the conciliation of discrimination claims. If a conciliation settlement is not reached, the commission may consider providing legal assistance where the case raises a question of principle or where it is unreasonable to expect the applicant to deal with the case unaided.382 The EOC is unable to grant legal assistance for most applicants, however. Since September 1996, it has provided assistance to 192 applicants out of a total of 470 applications.383 Composition and mandate of the Commission. The Commission has a full-time chairperson and must have between four and sixteen other part-time or full-time members.384 The EOCs mandate includes: working toward the elimination of discrimination; promoting equality of opportunity; working toward the elimination of sexual, disability and racial harassment; and reviewing the ordinances and proposing possible amendments. The Commission also has the power to undertake or provide assistance for research and educational activities.385 Study of the EOCs mechanisms. In a study of the EOCs investigation and conciliation mechanisms, researchers found that claimants bargaining power may be reduced by the lack of resources for legal assistance, among other factors.386 Although individuals may bring a civil action directly to the District Court under any of the four ordinances, legal costs are high and the overall number of cases brought before the courts remains
8.171
8.172
381
382 383 384
385 386
RDO Sch.2 at para 2. Sch.2 also species that other categories of employees are also employees in an existing employment including, for example, judicial ofcers, ICAC ofcers, other public ofcers, and English teachers who have been serving for certain specied periods of time. SDO s.85. Equal Opportunities Commission, http://www.eoc.org.hk, statistics. SDO s.63. The EOC has had 6 chairpersons since its establishment including Fanny Mui-ching Cheung (199699), Anna Wu (19992003), Michael Wong (2003), Patricia Chu (200304), Raymond Tang (200410), and WK Lam (2010). The role of the Commission and the actions of its chairpersons have been the subjects of controversy on several occasions since the EOCs establishment. See Kapai P The Hong Kong Equal Opportunities Commission: Calling for a New Avatar, (2009) 39 Hong Kong Law Journal 339. SDO 64(1), DDO 62(1), FSDO s.44(1), RDO s.59(1). Petersen CJ, Fong J, and Rush G, Enforcing Equal Opportunities: Investigation and Conciliation of Discrimination Complaints in Hong Kong, Centre for Comparative and Public Law, Faculty of Law, The University of Hong Kong (2003).
ENFORCEMENT AND REMEDIES
357
small. The emphasis on conciliation has also arguably limited the development of anti-discrimination law in Hong Kong and the numbers of cases brought under the ordinances. In April 2009, the chairman of the EOC proposed the establishment of an Equal Opportunities Tribunal to enhance access to the adjudication system in discrimination cases and to make it more user-friendly and less formal.387 (b) Remedies Possible remedies in proceedings before the District Court. The four anti-discrimination ordinances provide for a number of possible remedies which may be obtainable in proceedings before the District Court.388 The District court may: (1) make a declaration that the respondent has engaged in conduct or committed an act which is unlawful under the relevant ordinance and order that the respondent not repeat such conduct or act; (2) order that the respondent shall perform any reasonable act to redress any loss of damage suffered by the claimant; order that the respondent shall employ or re-employ the claimant; (3) order that the respondent shall promote the claimant; (4) order that the respondent shall pay to the claimant damages by way of compensation for any loss or damage suffered by reason of the respondents conduct or act; (5) order that the respondent pay the claimant punitive or exemplary damages; or (6) make an order declaring void in whole or in part any contract or agreement made in contravention of the relevant ordinance. Applicable principles when determining appropriate remedies. The Court of Final Appeal (CFA) considered the issue of appropriate remedies for discrimination in the case of Ma Bik Yung v Ko Chuen.389 The CFA observed that under the DDO, the District Court has a wide range of remedies at its disposal and that it is for the court to fashion the remedies that are appropriate for the case in question.390 Secondly, In deciding on the remedy or the package of remedies that would be appropriate in the circumstances of the case, the court should consider the matter in the round and take a global approach.391 Thirdly, [i]t is important for the court to bear in mind that the remedies granted should ensure respect for the legislation and its purposes. In fashioning remedies, the court should be prepared, where necessary, to be innovative. At the same time, the court should be exible and pragmatic in its approach to remedies.392 Order of an apology. The CFA considered an appeal of a decision by the Court of Appeal in the case of Ma Bik Yung that s.72(4)(b) of the DDO did not grant the power to the courts to order an apology as a remedy in discrimination cases.393 The CFA examined whether the courts could make an order of apology against an unwilling defendant and whether such an order would necessarily infringe a defendants freedom of thought or conscience, freedom to manifest ones beliefs and/or freedom 8.173
8.174
8.175
387
388 389 390 391 392 393
Equal Opportunities Commission Press Release, EOC recommends to the Government the establishment of a specialised Equal Opportunities Tribunal, 8 Apr 2009. SDO s.76(3A), DDO s.72(4), FSDO s.54(3), RDO s.70(4). Fn 30. Ibid, para 30. Ibid, para 31. Ibid, para 32. Ibid.
358
DISCRIMINATION LAW
of expression under the Basic Law and the Bill of Rights Ordinance. The court held that it had the power to make such an order but that this would only occur in rare cases where the circumstances are exceptional and the court must proceed with great circumspection.394 In Chan Choi Yin v Toppan Forms (Hong Kong) Ltd, the District Court referred to the CFAs judgment in Ma Bik Yung when considering the issue of ordering an apology and providing the claimant with a reference letter.395 8.176 Damages for injury to feelings. The Hong Kong Court of Appeal applied three bands of compensation for injury to feelings identied by the UK Court of Appeal in Vento v Chief Constable of West Yorkshire Police.396 The top band is for the most serious cases, the middle band is for serious cases which do not merit an award in the highest band; and a third band for less serious cases such as where the act of discrimination is an isolated or one-off occurrence.397 The UK court held that there is considerable exibility within each band allowing tribunals to x what is considered to be fair, reasonable and just compensation in the particular circumstances of the case.398 In addition, the decision whether or not to award aggravated damages and, if so, in what amount must depend on the particular circumstances of the discrimination and on the way in which the complaint has been handled. The court went on to rule that common sense requires that regard should also be had to the overall magnitude to the sum total of the awards of compensation for non-pecuniary loss made under the various headings of injury to feelings, psychiatric damage and aggravated damage. The Hong Kong Court of Appeal has held that damages for injury of feelings in pregnancy discrimination cases should not normally be less than HK$50,000.399 Considerations for determining damages in sexual harassment cases. Although the District Court dismissed the plaintiffs claim of sexual harassment and discrimination by way of victimisation in Chen v Tamara Rus, the court nevertheless considered the damages it would have awarded had the claim been successful. In considering the award of damages for injury to feelings the court stated it would have taken into consideration the plaintiffs deliberate choice not to take advantage of the facilities provided by the companys sexual harassment guidelines. It also noted it would be entitled to consider the character of the plaintiff in assessing the amount to award in damages.400 It would have also considered the salary of the defendant and the award granted in two other sexual harassment cases in Hong Kong. The judge assessed the award for damages for injury of feelings at HK$15,000 and determined that she would not have granted exemplary damages given the conduct of the plaintiff in the case which she had held was deliberately malicious and frivolous in engaging in material non-disclosure. Damages and indirect discrimination. In all four ordinances, the intent of an alleged discriminator is irrelevant when determining whether direct or indirect
8.177
8.178
394 395 396 397 398 399 400
Ibid at para 53. Chan Choi Yin v Toppan Forms (Hong Kong) Ltd (fn 105) at 112114 citing Ma Bik Yung (fn 30) at 3435. [2003] IRLR 102 cited in Yuen Wai Han v South Elderly Affairs Ltd [2005] 2 HKLRD 277. Ibid (verto), para 65. Ibid. Yuen Wai Han (fn 59). Chen v Tamara Rus (fn 79) citing Snowball v Gardner Merchant Ltd [1987] IRLR 397.
CONCLUSION
359
discrimination has occurred.401 The motive of the defendant does have relevance, however, when awarding damages for indirect discrimination in the SDO, FSDO, and RDO (but not the DDO). If a respondent proves that there was no intention to treat the claimant unfavourably on a prohibited ground when applying a discriminatory requirement or condition, then the court cannot award any damages.402 Petersen has observed that this could have the effect of limiting claims of indirect discrimination since a claimant would have little incentive to pursue his/her case.403 A member of the Legislative Council, Christine Loh, unsuccessfully attempted to remove this provision in 1997. Costs when the proceedings were brought maliciously. Section 73B(3) of the District Court Ordinance provides that Each party to any proceedings in the Court in the exercise of its jurisdiction under the [SDO] shall bear its own costs unless the Court otherwise orders on the grounds that (a) the proceedings were brought maliciously or frivolously; or (b) there are special circumstances which warrants an award of costs. In Chen v Tamara Rus, the court held that the plaintiff had deliberately and maliciously failed to disclose material evidence which was calculated to put forth a one-sided and distorted picture to the court. As a result, it held that the proceedings were brought maliciously and therefore awarded costs to the defendant. 8.179
8. CONCLUSION
Summary of the application of discrimination law to the eld of employment. Hong Kongs four anti-discrimination statutes provide wide-ranging protection from direct and indirect discrimination, harassment, victimisation and other forms of discrimination in the employment context on a range of grounds including sex, marital status, pregnancy, disability, family status and race. The scope of coverage includes discrimination at all stages of employment including the arrangements made for determining who should be employed, the terms of employment and any benets provided and treatment during the course of employment, as well as discrimination by way of dismissal or subjection to any other detriment. The legislation also covers a number of employment-like situations which go beyond a formal employer-employee relationship. Certain exceptions apply, including when sex, race or not having a disability is a genuine occupational qualication for a job and when the inherent requirements of the job require an employee without a disabilitybut only if hiring that person would require accommodation which would impose an unjustiable hardship on an employer. Other exceptions allow for special measures to promote 8.180
401
402 403
See Secretary for Justice v Chan Wah (fn 36) citing Lord Goff in R v Birmingham City Council, Ex p Equal Opportunities Commission (fn 57): The intention or motive of the defendant to discriminate, though it may be relevant so far as remedies are concerned ... is not a necessary condition of liability; it is perfectly possible to envisage cases where the defendant had no such motive, and yet did in fact discriminate on the ground of sex. See also fn 32 at para 7: intent is not required to render an act that is discriminatory unlawful. The test is an objective one; causation is the touchstone not intent. SDO s.76(5); FSDO s.54(6); RDO s.70(6). Petersen CJ Equal Opportunities: A New Area of Law for Hong Kong, in Wacks R (ed), The New Legal Order in Hong Kong, (1999: Hong Kong University Press), p 601.
360
DISCRIMINATION LAW
equal opportunities. The courts have claried that Hong Kongs anti-discrimination laws involve the fundamental right to equality and non-discrimination and therefore must be interpreted in light of international human rights standards applicable to Hong Kong and the constitutional guarantee of equality. Debate continues about extending the law to provide protection from discrimination on other grounds including age, sexual orientation and religion.
CHAPTER 9
HEALTH AND SAFETY AT WORK I THE SAFETY LEGISLATION REGIME, THE INSPECTORATE, ENFORCEMENT AND PENALTIES
Para. 1. Introduction .............................................................................................................................. 9.001 2. General principles of liability .................................................................................................. 9.003 (a) Criminal liability ............................................................................................................... 9.003 (b) Civil liability ..................................................................................................................... 9.010 3. Occupational Safety and Health Ordinance ............................................................................. 9.011 (a) Overview ........................................................................................................................... 9.011 (b) Duty on the part of the employer ...................................................................................... 9.012 (c) Duty on the part of the occupier ....................................................................................... 9.019 (d) Relationship between section 6 and section 7 of OSHO .................................................. 9.023 (e) Duty on the part of the employee ...................................................................................... 9.025 (f) Proceedings for offences ................................................................................................... 9.028 (g) Reporting obligations under OSHO .................................................................................. 9.030 (h) Improvement and suspension notices ................................................................................ 9.032 (i) Inquiries into workplace accidents and dangerous occurrences ....................................... 9.034 (j) Regulations under OSHO .................................................................................................. 9.035 (k) Civil liability ..................................................................................................................... 9.039 (l) Codes of practice ............................................................................................................... 9.040 4. Factories and Industrial Undertakings Ordinance .................................................................... 9.043 (a) Overview ........................................................................................................................... 9.043 (b) Duty on the part of the proprietor ..................................................................................... 9.047 (c) Duty on the part of the employee ...................................................................................... 9.052 (d) Burden of proof ................................................................................................................. 9.054 (e) Notication of workplace .................................................................................................. 9.055 (f) Prohibition notices ............................................................................................................ 9.056 (g) Proceedings for offences ................................................................................................... 9.059 (h) Regulations under FIUO ................................................................................................... 9.062 (i) Civil liability ..................................................................................................................... 9.068 (j) Codes of practice ............................................................................................................... 9.069 5. Other relevant legislation ......................................................................................................... 9.072 (a) Other relevant legislation .................................................................................................. 9.072 (b) Provisions relating to children and young persons ........................................................... 9.081 6. Role and function of the Labour Department in relation to health and safety at work ............ 9.085 (a) Inspection, investigation, enforcement and prosecution ................................................... 9.085 (b) Training ............................................................................................................................. 9.087 (c) Codes of practice ............................................................................................................... 9.088
362
HEALTH AND SAFETY AT WORK I 7. Role and function of the Occupational Safety and Health Council ......................................... 9.089 (a) Aims and purposes ............................................................................................................ 9.089 (b) Structure and funding of the OSH Council ....................................................................... 9.090 (c) Occupational Safety Charter ............................................................................................. 9.092 Appendix A Regulations made under the FIUO (Cap.59)
1. INTRODUCTION
Overview of chapter. In Hong Kong, the health and safety of employees at work are protected both under the common law and under various statutory provisions. Statutory duties and standards for industrial and occupational safety can be found in ordinances and/or in the regulations made thereunder. The general duties are to be found in the ordinances while more specic standards and duties are to be found in the regulations. The Labour Department is responsible for enforcing these duties and standards. A breach of these duties, whether in ordinances or regulations, can give rise to criminal and/or civil liability. This chapter focuses on the statutory regime1 in relation to health and safety at work under the two most important work safety ordinances and their regulations: the Occupational Safety and Health Ordinance2 (OSHO) and the Factories and Industrial Undertakings Ordinance3 (FIUO). In addition to these two core pieces of legislation, there are numerous other statutory enactments dealing with specic aspects of health and safety at work. While a detailed examination of them all is beyond the scope of this chapter, a general description and brief explanation of the subject matter, purposes and implications of the most relevant pieces of legislation is provided. A culture of safety. A statutory workplace safety regime must be supported by a culture of safety. This entails a familiarity with the law and safety standards, and a commitment to follow them. It requires the resolve of all of the participants in the workplaceemployers, contractors, sub-contractors, occupiers, employees and others4to implement and follow safety standards, to keep proper records, to notify the authorities of accidents, to provide and take training courses, and to cooperate with the government inspectorate. Indeed, each of the workplace participants is under legal obligations to implement and follow safety laws and standards, but there can be no doubt that in Hong Kong the commitment is in many respects lacking and a culture of safety is more an aspiration than a reality. Comparisons of accident statistics with other jurisdictions are not favourable.5 A transient workforce lacking in job security and a time-is-money business philosophy that would trade safety for 9.001
9.002
1 2 3 4
The common law regime is addressed in Chapter 10. Cap.509. Cap.59. Even medical practitioners come under a statutory duty. Under s.15 of OSHO they are expected to be vigilant in treating patients who they suspect of suffering from a notiable occupational disease, and to notify the authorities of such suspicion: see OSHO s.15. In 2008 there were 41,900 occupational injuries and 181 occupational fatalities: see Occupational Safety and Health Statistics Bulletin Issue No. 9 (Aug 2009) issued by the Occupational Safety and Health Branch of the Labour Department at http://www.labour.gov.hk/eng/osh/pdf/Bulletin2008.pdf. By comparison, in England, with roughly seven times the population of Hong Kong, in the one year period straddling 200809 there were 88,961 reported work-related injuries of three days or more duration and 147 occupational fatalities: see Health and Safety Executive website at http://www.hse.gov.uk/statistics/regions/england/. For a regional comparison, in Singapore, with a population of just over 5 million, there were 10,018 workplace injuries and 63 occupational fatalities in 2007 (gures for 2008 not yet available): see Ministry of Manpower website at http://www.mom. gov.sg/publish/momportal/en/communities/workplace_safety_and_health/reports_and_statistics/workplace_ injuries2.html (all three websites visited 17 May 2010).
364
HEALTH AND SAFETY AT WORK I
prots creates a culture of risk-taking conducive to accidents rather than safety.6 It hardly needs to be stated that it is in the interests of employers as much as employees that workplace injuries and loss of life be avoided. A safe workplace is more likely to be a happy workplacewhich will in turn produce a more productive workforce, to the benet of all.
2. GENERAL PRINCIPLES OF LIABILITY

(a) Criminal liability 9.003 Criminal sanctions for non-compliance with the relevant statutory provisions. Non-compliance with the statutory provisions relating to health and safety at work may give rise to criminal proceedings against the offender, be it the employer, occupier, owner, proprietor or person responsible for the workplace.7 On conviction, criminal sanctions will apply, usually a penalty by way of a ne with the possibility of imprisonment for the more serious offences. The entity on whom the duty is imposed and hence against whom criminal proceedings lie may be an individual, a limited company, or a rm. As in all criminal proceedings, the prosecution is required to prove its case beyond a reasonable doubt. Liability of directors, ofcers, partners, etc. Where the offender is a limited company or rm, primary criminal responsibility is with the company or rm. However, the offences and penalties may extend beyond those entities to embrace the companys directors, ofcers, employees and sub-contractors, and to embrace the partners of a rm. By virtue of s.33 of the OSHO, where the person convicted of an offence under that ordinance is a company and it is proved that the offence was committed with the consent or connivance of, or was attributable to any neglect on the part of, any director, manager, secretary or other similar ofcer of the company, the director, manager, secretary or other similar ofcer shall be guilty of the like offence.8 Similarly, where the person convicted of an offence under the OSHO is a rm and it is proved that the offence was committed with the consent or connivance of, or was attributable to any neglect on the part of, any partner in the rm or any person concerned in the management of the rm, the partner or the person concerned in the management of the rm shall be guilty of the like offence.9 Similar provisions can be found in s.14 of the FIUO. Regulations promulgated under the primary legislation. The general scheme by which regulations are created is that the legislature through the enabling ordinance
9.004
9.005
8 9
By way of example, in Ahmed Masood v Chung Kau Engineering Co Ltd (unrep., DCPI 517/2003, [2005] HKEC 151), where an employee injured his back while carrying twice the normal load of pipes along a slippery path on a construction site, the court observed that the employees haste in carrying out an otherwise routine task was triggered by a fear of verbal abuse and dismissal at the hands of a supervisor placing unrealistic demands on employees. As will be seen, the various ordinances and their regulations use different terminology and dene the entity on whom the duty is imposed in different ways. OSHO s.33(1). OSHO s.33(2).
GENERAL PRINCIPLES OF LIABILITY
365
delegates the formulation and promulgation of regulations to an appropriate authority. Usually the appropriate authority is designated as the titular head of the relevant government department. For example, under s.42 of the OSHO the Commissioner for Labour may make regulations for or with respect to, inter alia, ensuring the safety and health of employees when they are at work, and imposing additional responsibilities on employers and employees and on occupiers of workplaces who are not employers. All regulations made by the Commissioner are subject to the approval of the Legislative Council. Similar powers to make regulations in respect of industrial undertakings under the FIUO are conferred on the Commissioner by virtue of s.7 of the FIUO. The regulations will be invalid if they are promulgated ultra vires or in excess of enabling power under the parent ordinance.10 The mental element required for any particular statutory offence. In Hin Lin Yee v HKSAR,11 the Court of Final Appeal held that there are four possibilities regarding the mental element required for any particular statutory offence: (1) the offence may require proof of mens rea; (2) the prosecution need not prove mens rea (i.e. the offence is one of strict liability) but the accused has a good defence if he can prove on the balance of probabilities that he honestly and reasonably but mistakenly believed in the existence of facts which, if true, would render his conduct innocent (the so-called common law defence of honest and reasonable belief );12 (3) the defences available to the accused may be limited to those expressly provided by the statute (such that the common law defence of honest and reasonable belief is not available); and (4) the offence is one of absolute liability so that the prosecution succeeds if the accused is proved to have performed the actus reus, regardless of his state of mind (the common law defence of honest and reasonable belief is not available).13 Common law defence of honest and reasonable belief may be available. In HKSAR v Hyundai Engineering Construction Co Ltd14 and HKSAR v Shun Tak Properties Ltd,15 the courts held that the common law defence of honest and reasonable belief is not available to offences involving public health and safety, 9.006
9.007
10
11 12
13 14 15
See Utah Construction & Engineering Pty Ltd v Janos Pataky [1966] AC 629 and HKSAR v Lam Geotechnics Ltd [2000] 4 HKC 367. (unrep., FAMC 40/2009, [2009] HKEC 1079). Crimes which do not require intention, recklessness or even negligence as to one or more elements in the actus reus are known as offences of strict liability: see David Ormerod, Smith and Hogan on Criminal Law, 12th edn (Oxford: Oxford University Press, 2008), p 150 and Chapter 7 in particular. The existence of the common law defence of honest and reasonable belief in compliance with ones statutory obligations in relation to strict liability offences has been consistently conrmed in numerous judgments: see e.g. A-G v Fong Chin Yue, [1995] 1 HKC 21; HKSAR v Paul Y-ITC Construction Ltd [1998] 2 HKLRD 35; HKSAR v Hip Hing Construction Co Ltd (No. 1) [2001] 3 HKC 619; and HKSAR v Leighton Contractors (Asia) Ltd [2000] 1 HKLRD 787. It would be a defence if the alleged offender believed for good and sufcient reason, though erroneously, that there had been compliance with the regulatory provisions. The onus of proving that defence rests upon the alleged offender, and the standard of proof is on the balance of probabilities: see HKSAR v Paul Y-ITC Construction Ltd (ibid) at 45. Fn 11 above at para 136. (unrep., HCMA 815/2002, [2003] HKLRD (Yrbk) 309, [2003] HKEC 52). [2009] 3 HKLRD 299. It should be noted that in HKSAR v Shun Tak Properties Ltd, Stock JA in the minority found the offence to be one of absolute liability by reason of the use of the word ensure in the provision. By that reasoning, Stock JA arrived at the conclusion that the common law defence of honest and reasonable belief was not available to the defendant. To that extent the judgment of Stock JA is consistent with the ruling of the CFA in Hin Lin Yee (fn 11 above) and accordingly was approved by the CFA.
366
as a class. However, in Hin Lin Yee the Court of Final Appeal ruled that Hyundai Engineering Construction and Shun Tak Properties were wrongly decided, by reason of such a proposition being overly broad.16 Chan PJ, agreeing with Ribeiro PJ and Bokhary PJ, emphasised that the availability of the common law defence ultimately depends upon a proper construction of the relevant statutory provisions, taking into account whether there is an express provision of a statutory defence and whether there is any inconsistency between the application of the common law defence and the statutory defence: It is thus clear that these questions are ultimately to be resolved by a construction of the relevant provisions. There is no support in the authorities for a rule of law which requires the displacement of the presumption of mens rea simply on the ground that it is a piece of safety legislation. Where the declared object of the statute is the protection of public health and safety, the court would no doubt be much more ready to come to that conclusion. I should also mention that where a statutory defence is expressly provided in the same statute creating the offence, it is not correct to say (as suggested by Deputy Judge Line in HKSAR v Hyundai Engineering Construction Co Ltd (unrep., HCMA 815/2002, [2003] HKLRD (Yrbk) 309, [2003] HKEC 52) that as a matter of law, the common law defence is necessarily excluded. Whether this is so depends on the construction of the statutory defence in the context of the whole statute. One must examine the scope of such statutory defence and the purpose it is aimed at serving in deciding whether it is intended that the common law defence is replaced or excluded. Where the applicability of the common law defence is inconsistent with the presence and the terms of the statutory defence, the necessary implication must be that the legislature intended the exclusion of the common law defence.17 9.008 Presumptive inference of strict liability. The trend in regulatory law relating to occupational safety has been to impose strict liability upon those responsible for employing persons at their undertakings, but the courts have been more reluctant to impose absolute liability. Whilst there may be a presumptive inference that regulatory law in relation to safety is likely to impose offences of strict liability, it is still necessary for the specific provision in the ordinance or regulation to be considered and pronounced to be such. In HKSAR v Paul Y-ITC Construction Ltd,18 a case concerning offences under the Noise Control Ordinance,19 Stuart Moore JA held that the test to determine the true intention of a penal provision was to apply Lord Scarmans five propositions enunciated in Gammon (HK) Ltd v A-G of Hong Kong:20
16 17 18 19 20
Fn 11 above at paras 137, 204206. Fn 11 above at paras 1516. Fn 12 above. Cap.400. [1985] AC 1 at 14B-D. For an application of the principles in Gammon (HK) Ltd v A-G of Hong Kong to interpret a provision in the Dutiable Commodities (Liquor) Regulation (Cap.109B) prohibiting the employment of young persons in a licensed establishment to be one of strict liability, see A-G v Ng Chung Hing [1991] 1 HKLR 225.
GENERAL PRINCIPLES OF LIABILITY
367
In their Lordships opinion, the law relevant to this appeal may be stated in the following propositions (1) there is a presumption of law that mens rea is required before a person can be held guilty of a criminal offence; (2) the presumption is particularly strong where the offence is truly criminal in character; (3) the presumption applies to statutory offences, and can be displaced only if this is clearly or by necessary implication the effect of the statute; (4) the only situation in which the presumption can be displaced is where the statute is concerned with an issue of social concern, and public safety is such an issue; (5) even where a statute is concerned with such an issue, the presumption of mens rea stands unless it can also be shown that the creation of strict liability will be effective to promote the objects of the statute by encouraging greater vigilance to prevent the commission of the prohibited act. An unqualied duty to ensure is a duty of absolute liability. In many of the regulations made under the FIUO the duty imposed is to ensure a certain state of affairs, for instance to ensure that every part of any load to be raised or lowered by the hoist is securely suspended or supported when being raised or lowered.21 When no qualifying words are used (e.g. to ensure so far as reasonably practicable), the duty can be taken to be one of absolute liability. In HKSAR v Shun Tak Properties Ltd,22 the Court considered the offence created in reg.4(e) of the Factories and Industrial Undertakings (Suspended Working Platforms) Regulation requiring that the owner of a suspended working platform shall ensure that it is not used for carrying persons unless it is properly maintained. Stock JA, whose judgment was approved by the Court of Final Appeal in Hin Lin Yee v HKSAR,23 explained the meaning of ensure where no qualifying words are used: To ensure is to make sure, to make certain, to satisfy oneself that a state of affairs in fact exists. The duty imposed is one that, in my opinion, goes beyond a duty to take reasonable steps to ensure safety of those who might be placed at risk by their engagement in platform work. It is, rather, a duty to ensure that they are in fact safe. It is therefore a non-delegable duty of care; a special responsibility to see to it that a state of affairs exists No defence is provided as it might have been and as one nds in other safety regulations to show that it was not reasonably practicable for the person to comply or that the commission of the offence was due to causes over which the person had no control.24 (b) Civil liability Breach of statutory duty and negligence. Non-compliance with legislation establishing statutory duties and standards for industrial and occupational safety 9.010 9.009
21 22 23 24
Constructions Sites (Safety) Regulations (Cap.59I) reg.38(1)(a). Fn 15 above. Fn 11 above. Fn 15 above at pp 324325.
368
may give rise to civil liability by way of a tort action for breach of statutory duty. The availability of such a tort action is independent of any criminal prosecution that might have taken place, and depends on the construction of the relevant legislation. The Hong Kong courts take a exible approach and are quick to interpret work safety legislation, whether primary or secondary legislation, as intended to provide a civil remedy for a breach of its terms where injury is caused.25 Moreover, contravention of such safety legislation may also serve as evidence of negligence for the purposes of an action in negligence and/or breach of occupiers liability.26 Finally, if there is a criminal conviction for a contravention of the provisions of the legislation, the conviction gives rise to a presumption of liability in any civil proceedings.27 The issue of civil liability for breach of a statutory provision is a specialised subject and is addressed in full in Chapter 10.28
3. OCCUPATIONAL SAFETY AND HEALTH ORDINANCE

(a) Overview 9.011 General. The OSHO provides for the safety and health of employees. Its purposes are very broadly dened:29 (a) to ensure the safety and health of employees when they are at work; (b) to prescribe measures that will contribute to making the workplaces of employees safer and healthier for them; (c) to improve the safety and health standards applicable to certain hazardous processes, plant and substances used or kept in workplaces; (d) generally to improve the safety and health aspects of working environments of employees. The OSHO imposes general duties on employers,30 occupiers of premises,31 and employees32 regarding workplace safety.33 The regulations made under the OSHO provide for more detailed requirements in relation to accident prevention, re
25
26
27 28 29 30
31 32 33
See e.g. the comments of M Ng J in Ahmed Masood v Chung Kau Engineering Co Ltd (fn 6 above), considered further at para 10.053 and fn 129 of Chapter 10 below. See e.g. Tang Shau Tsan v Wealthy Construction Co Ltd (unrep., CACV 58/2000, [2000] HKLRD (Yrbk) 378, [2000] HKEC 357), where the nding of negligence was reached solely on the basis of the employers breach of statutory duty in failing to place a guard on a circular saw. See also para 10.013 below. Applying s.62 of the Evidence Ordinance (Cap.8). See in particular paras 10.049 to 10.078. OSHO s.2. OSHO s.6. By virtue of s.4 the OSHO also applies to independent contractors and self-employed persons but only in their capacity as employers or as occupiers of premises where workplaces are located. OSHO s.7. OSHO s.8. By virtue of s.5(1) the OSHO applies to the Government, but by virtue of s.5(2) neither the Government nor any public ofcer is liable to be prosecuted for an offence under the Ordinance.
OCCUPATIONAL SAFETY AND HEALTH ORDINANCE
369
prevention, working environment, workplace hygiene, rst aid, manual handling operation, and use of display screen equipment.34 (b) Duty on the part of the employer Duty imposed upon employers. Section 6(1) provides that every employer must, so far as reasonably practicable, ensure the safety and health at work of all the employers employees. Employer is dened as a person who employs natural persons under contracts of employment or apprenticeship.35 Employee is dened as a natural person who works under a contract of employment or apprenticeship, but does not include a domestic servant.36 A person is at work only during the time when the person is actually at a workplace.37 Workplace is dened, with certain exceptions, as any place where employees work.38 Examples of non-compliance. Section 6(2) provides a non-exhaustive list of examples in which the employer will be regarded as having failed to comply with s.6(1): (a) a failure to provide or maintain plant39 and systems of work that are, so far as reasonably practicable, safe and without risk to health; (b) a failure to make arrangements for ensuring, so far as reasonably practicable, safety and absence of risks to health in connection with the use, handling, storage or transport of plant or substances; (c) a failure to provide such information, instruction, training and supervision as may be necessary to ensure, so far as reasonably practicable, the safety and health at work of the employers employees; (d) as regards any workplace under the employers control (i) (ii) a failure to maintain the workplace in a condition that is, so far as reasonably practicable, safe and without risks to health; a failure to provide or maintain a working environment for the employers employees that is, so far as reasonably practicable, safe and without risks to health. 9.012
9.013
34 35 36 37
38
39
OSHR (Cap.509A) and OSHDSER (Cap.509B), considered at paras 9.0359.037 below. OSHO s.3(1). OSHO s.3(1). For contract of employment generally, see Chapter 2 above. OSHO s.3(4) reads: For the purposes of this Ordinance, a person is at work only during the time when the person is actually at a workplace. However, a person is not to be regarded as being at work at a workplace for those purposes when the person is being conveyed as a passenger in a vehicle referred to in paragraph (b) of the denition of workplace in circumstances no different from those applicable to persons being so conveyed who are not at work at a workplace. For s.3(1)(b), see fn 38 below. See also Leung Kwok Yin Victoria v Secretary for Justice (unrep., DCPI 1399/2009, [2010] HKEC 834). OSHO s.3(1). The exceptions are: (a) an aircraft or vessel when located in a public place; (b) when a vehicle that is designed or used for the carriage of people, animals or goods is located in a public place, the seat or position normally occupied by the driver of the vehicle; (c) domestic premises at which the only employees are domestic servants; (d) a place at which only self-employed persons work; (e) any other place of a kind prescribed by a regulation for the purposes of this paragraph. Plant includes machinery, equipment, appliances, furniture, furnishings and ttings: OSHO s.3(1).
370
9.014
Penalties. Section 6(3) creates an offence for non-compliance with s.6(1) and stipulates that the employer is liable on conviction to a ne of HK$200,000. Section 6(4) further provides that an employer who fails to comply with s.6(1) intentionally, knowingly or recklessly commits an offence and is liable on conviction to a ne of HK$200,000 and to imprisonment for six months. Relevant considerations in determining criminal liability. In HKSAR v Gold Ram Engineering & Development Ltd,40 a team of construction workers lifted up a penetration test hammer, weighing some 80 kg, with a drilling-rig and a wire cable. The drilling-rig was not constructed to act as a crane or hoist, but it was common practice to use it to lift objects. At some stage, the drilling-rig tilted and the platform collapsed. As a result, one worker lost balance, fell down and sustained injuries, while another worker also fell down from the slope and sustained fatal injuries. The defendant employer was convicted after trial in the Magistrates Court for failing to ensure the health and safety of its employees, contrary to ss 6(1), (2)(a), (2)(b) and (3) of the OSHO and was ned HK$12,000. The employers appeal to the Court of First Instance was dismissed. Lugar-Mawson J identied the considerations the magistrate should take into account in deciding whether there was a contravention of s.6 of the OSHO: The Magistrates job, however, was not to determine the cause of the accident and apportion liability. He had to consider whether there was any risk involved in the operation carried out; if there was a risk, what precautions the Appellant, or its servants, had taken to ensure that it was a safe operation and whether, so far as reasonably practicable those precautions, if any had been taken, were sufcient.41
9.015
9.016
Safe system of work. In the same decision, Lugar-Mawson J expressed the view that the magistrate correctly directed himself on the law relating to the duty of an employer to provide his employees with a safe system of work and cited the decision of the House of Lords in Winter v Cardiff Rural District Council.42 In that case, Lord Oaksey said: ... the common law duty of an employer of labour is to act reasonably in all the circumstances ... it is therefore, reasonable that he should employ competent servants, should supply them with adequate plant, and should give adequate directions as to the system of work or mode of operation, but this does not mean that the employer must decide on every detail of the system of work or mode of operation ... where the system or mode of operation is complicated or highly dangerous or prolonged or involves a number of men performing different functions, it is naturally a matter for the employer to take the responsibility of deciding what system be adopted. On the other hand, where the operation is simple and the decision how it shall be done has to be taken frequently it is natural and reasonable that it should be left to the foreman or workmen on the spot.43
40 41 42
43
[2002] 2 HKC 600. Ibid, at para 18. [1950] 1 All ER 819. Although a civil case, Winter v Cardiff Rural District Council was relied upon by both the magistrate and the appellate judge in the criminal proceedings in Gold Ram Engineering (fn 40 above) in their consideration of the law relating to the duty of an employer to provide his employees with a safe system of work. Ibid, at pp 822H to 823B.
371
The requirement of reasonable practicability. Section 6(1) of the OSHO requires that every employer must, so far as reasonably practicable, ensure the safety and health at work of all of his employees. Section 38 provides that the onus rests upon the defendant to establish, on the balance of probabilities, that compliance with the requirement or obligation was not practicable or was not reasonably practicable, or that steps, reasonable steps or reasonably practicable steps were taken to comply with the requirement or obligation. Thus, in Gold Ram Engineering, Lugar-Mawson J agreed with the magistrate that the employer had failed to discharge the onus on the basis that there was a patently obvious risk resulting from the improper lifting method used, yet no risk assessment was carried out by the employer and the employer had implemented no safety management system.44 The test of reasonable practicability. In Marshall v Gotham Co Ltd,45 the House of Lords established that the test of what is reasonably practicable is not simply what is practicable as a matter of engineering, but depends on a consideration, in the light of the whole circumstances, at the time of the accident, whether the time, trouble and expense of the precautions suggested are or are not disproportionate to the risks involved, and also an assessment of the degree of security which the measures suggested may be expected to afford. As Lord Reid explained: ... if a precaution is practicable it must be taken unless in the whole circumstances that would be unreasonable. And as mens lives may be at stake it should not lightly be held that to take a practicable precaution is unreasonable ... Slickenside was a known danger, but there was no more reason to anticipate it or provide against it at the place of the accident than elsewhere in the mine, and a nding that precautions ought to have been adopted at the place of the accident would imply that they ought also to have been adopted generally. I am of the opinion that this was not reasonably practicable, and I base my opinion on these factors. The danger was a very rare one. The trouble and expense involved in the use of the precautions, while not prohibitive, would have been considerable. The precautions would not have afforded anything like complete protection against the danger, and their adoption would have had the disadvantage of giving a false sense of security.46 (c) Duty on the part of the occupier Duty imposed upon occupiers. Section 7(1) of the OSHO imposes a duty upon occupiers of premises. Where an employees workplace is located on premises not under his employers control, the occupier of those premises must ensure that:
9.017
9.018
9.019
44 45
46
Gold Ram Engineering (fn 40 above), at paras 40 to 44. [1954] AC 360. Although a civil case, Marshall v Gotham Co Ltd was relied upon by both the magistrate and the appellate judge in the criminal proceedings in Gold Ram Engineering (fn 40 above) in their consideration of the test of reasonable practicability. Ibid, at 373.
372
(a) (b) (c)
the premises; and the means of access to and egress from the premises; and any plant or substances kept at the premises, are, so far as reasonably practicable, safe and without risks to health.
9.020
Denition of occupier. Section 3(1) of the OSHO provides that occupier, in relation to any premises or workplace, includes a person who has any degree of control over the premises or workplace. The term occupier is further dened in s.3(5) and s.3(6). Section 3(5) provides that: a person who, under a lease or contract, has an obligation for: (a) (b) the maintenance or repair of premises; or the safety of, or the absence of risks to health arising from the condition or use of any plant or substance located on the premises is taken to be an occupier of the premises for the purposes of this Ordinance.
Section 3(6) provides that: A person who, under a lease or contract, has an obligation to provide, maintain or repair a means of access to, or egress from, premises is taken to be an occupier of the premises for the purposes of this Ordinance. However, s.3(5) and s.3(6) do not apply to persons in their capacity as occupiers of domestic premises.47 9.021 Denition of premises. The OSHO provides a very broad denition of premises. Section 3(1) stipulates that premises include any vehicle and any public place, and also includes a part of particular premises. Thus, the duty of an occupier is wide ranging.48 Penalties. Section 7(2) stipulates that an occupier who fails to comply with s.7(1) commits an offence and is liable on conviction to a ne of HK$200,000. Section 7(3) further stipulates that an occupier who fails to comply with s.7(1) intentionally, knowingly or recklessly commits an offence and is liable on conviction to a ne of HK$200,000 and to imprisonment for six months. (d) Relationship between section 6 and section 7 of OSHO 9.023 Clear demarcation between sections 6 and 7 of OSHO. In HKSAR v China Overseas Building Construction Ltd,49 a worker on a construction site in the employ of the sub-contractor was killed while operating a concrete pumping machine. The principal contractor was regarded as the occupier of the construction site by reason that
9.022
47 48 49
OSHO s.3(7). Although not as wide ranging as the duty of employers under s.6(1): see paras 9.0239.024 below. [2007] 2 HKLRD 216.
373
it had control over the site. McMahon J held that there is a clear demarcation between the duty as an employer under s.6 and the duty as an occupier under s.7. An employer is responsible to provide a safe system of work for his employees, whereas no such duty is imposed upon the occupier by the OSHO. An occupier is only responsible for the physical safety of the premises. McMahon J held that the principal contractor, as the occupier of the site, did not owe a duty to the deceased under s.7 of the OSHO to provide a safe system of work: There is a plain demarcation between the two sections as to the nature of the differing responsibilities of an employer and an occupier of premises. In my judgment, the language of the legislation clearly distinguishes between the different concepts of system of work, workplace and premises. It clearly intends to demarcate the boundaries between the duties and responsibilities of an employer of workers and an occupier of premises where those workers are employed. It seems to me that by its plain language section 6 intended an employer to be responsible for the system of work which his employees used. If such a responsibility had been intended to be cast upon an occupier of premises then, in my view, there was nothing to prevent equally clear language being used in section 7. Indeed the use of the specic phrase system of work in section 6 and its omission in the immediately following section 7 argues strongly in favour of the proposition that the legislature did not intend occupiers of premises to be responsible for the system of work adopted by employees of other persons working within the premises. Equally the categories of matters the occupier must ensure are safe as set out in section 7(1)(b) and (c) of the Ordinance are matters relating to the physical state of the premises or the things upon it. Whereas the matters an employer must ensure are safe pursuant to section 6 include not only the physical aspects of the workplace, but also non-physical aspects such as training, instruction and supervision of workers and the making of arrangements to ensure the safe use and handling of items on the site. It is plain that the duties of an occupier pursuant to section 7 are not intended to be so wide ranging as the duties of an employer pursuant to section 6. In my judgment section 7 plainly is intended to refer to the safety of the physical premises and the machinery and substances upon it, and not the systems of work adopted.50 Principal contractor may be responsible for system of work under FIUO. In the same decision, McMahon J observed that there could potentially be a situation where the employee of a sub-contractor is required to act in accordance with the principal contractors instructions in an unsafe way. In such a case, it is likely that the principal contractor would escape liability under s.7 of the OSHO, by reason that the improper instructions only go to show an unsafe system of work and not unsafe premises.51 However, McMahon J was satised that, in such a case, the principal contractor would be liable under s.13 of the FIUO52 which stipulates: 9.024
50 51 52
Ibid, at pp 221222. Ibid, at p 222. Ibid, at pp 222223.
374
(1) Except as may be otherwise provided by regulations made under this Ordinance, the proprietor of every industrial undertaking in or in respect of which any offence against this Ordinance has been committed shall be guilty of a like offence, and shall be liable to the penalty prescribed for such offence. (2) It shall be no defence to a prosecution of the proprietor of an industrial undertaking for an offence against this Ordinance that the offence was committed without his knowledge or consent or that the actual offender has not been convicted of the offence. Furthermore, McMahon J noted that the Commissioner for Labour has wide ranging powers under the FIUO to make regulations in respect of industrial undertakings so as to impose duties on proprietors of, and contractors and persons employed at, industrial undertakings.53 Section 7(5) of the FIUO stipulates that the breach of any such regulation may be made an offence. Accordingly, there were alternative avenues of prosecution available apart from relying upon s.7 of the OSHO.54 (e) Duty on the part of the employee 9.025 Duty imposed upon the employee. Section 8(1) of the OSHO imposes a duty of safety on employees as follows: An employee while at work (a) must, so far as reasonably practicable, take care for the safety and health of persons (including the employee) who are at the employees workplace and who may be affected by the employees acts or omissions at work; and as regards any requirement imposed in the interests of safety or health on the employees employer or any other person by this or any other Ordinance, must, so far as reasonably practicable, co-operate with the employer or other person so far as may be necessary to enable the requirement to be complied with.
(b)
9.026
Penalties. Section 8(2) stipulates that an employee who fails to comply with s.8(1) commits an offence and is liable on conviction to a ne at level 3. Section 8(3) further stipulates that an employee who fails to comply with s.8(1) intentionally, knowingly or recklessly commits an offence and is liable on conviction to a ne at level 5 and to imprisonment for 6 months. Duty extends to employee of another company. In HKSAR v Ng So Yee,55 the appellant was an employee of company A, which undertook to provide certain repairing services
9.027
53 54 55
FIUO s.7(1)(o). HKSAR v China Overseas Building Construction (fn 49 above), at p 223. (unrep., HCMA 181/2008, [2008] HKEC 805).
375
of a noodle-making machine to company B. An employee of company B was injured while the appellant was repairing the machine at the premises of company B. At issue was whether the duty of an employee to take care for the safety and health of others extended to the employee of another company (company B in this case). The court ruled in the afrmative, and held that the appellant was acting in contravention of s.8 by failing to take reasonable care for the safety of the injured person. Taking into consideration the purposes of the OSHO as stated in s.2 as well as the provisions of s.7, Barnes J concluded that it dees logic to say that only fellow employees safety and health would be protected, and not those whose safety and health are affected by people employed by others.56 (f ) Proceedings for offences Occupational safety ofcer may bring prosecution. An occupational safety ofcer57 may, in the name of the Commissioner for Labour, bring and conduct a prosecution for any offence against a provision of the OSHO.58 A summons relating to such an offence may be addressed to the occupier of premises where a specied workplace is located without actually naming that occupier.59 Person not liable to be prosecuted twice for the same offence. As there may be some overlap with the FIUO, the OSHO provides that a person who has been convicted or acquitted of an offence under the FIUO is not liable to be prosecuted for an offence under a corresponding provision of the OSHO relating to the same act or omission.60 (g) Reporting obligations under OSHO Person responsible for workplace obliged to notify occupational safety ofcer of accidents. Section 13 of the OSHO imposes extensive obligations on the person responsible for the workplace to report accidents at the workplace.61 Where an accident occurs at a workplace resulting in the death of or serious bodily injury to an employee, the person responsible for the workplace must notify an occupational safety ofcer within 24 hours of the accident.62 If such notice is not contained in a written report indicating the particulars of the accident and the parties concerned, the person responsible for the workplace is further obliged to report the accident in writing within seven days and such report must indicate the particulars of the accident and specify the victim, the employer and/or occupier.63 A person responsible for a workplace who 9.030 9.028
9.029
56
57 58 59 60 61
62 63
Ibid, at para 15. See also Yeung Kin Chung v HK Scafform Suppliers Ltd (unrep., DCPI 1332/2005, [2008] HKEC 2045), although in this case the matter was discussed in the context of civil liability in a personal injuries action. Under OSHO s.3(1), occupational safety ofcer means a public ofcer designated as such under OSHO s.20. OSHO s.34. OSHO s.35(1). OSHO s.39. OSHO s.3(2) reads: For the purposes of this Ordinance, the person responsible for a workplace is the employer of the employees who are employed to carry out work there, or if the employer does not exercise any degree of control over the relevant part or aspect of the workplace, means the occupier of the workplace. OSHO s.13(1). OSHO ss 13(2) and (3). See ss 13(4) and (5) for further reporting obligations. A useful guide for reporting workplace accidents and dangerous occurrences is available on the Labour Department website at http://www. labour.gov.hk/eng/public/os/A/accidentdo.pdf.
376
fails to comply with a requirement of this section commits an offence and is liable on conviction to a ne at level 5.64 9.031 Occupier of workplace obliged to report to an occupational safety ofcer any dangerous occurrence that occurs at the workplace. Whether or not an accident has been notied under s.13, the occupier of premises where a workplace is located must report in writing to an occupational safety ofcer any dangerous occurrence65 that occurs at the workplace within 24 hours of its occurrence.66 The report must contain the time of occurrence, the particulars of damage to property and the circumstances of the occurrence.67 An occupier of premises who fails to comply with a requirement of this section commits an offence and is liable on conviction to a ne at level 5.68 (h) Improvement and suspension notices 9.032 Employer or occupier to comply with improvement notice served by Commissioner. Where the Commissioner69 is of the opinion that the employer or occupier is contravening the OSHO or the FIUO, or has contravened either of those Ordinances in circumstances that make it likely that the contravention will be continued or repeated, the Commissioner may serve an improvement notice requiring the employer or occupier either to remedy the contravention within the period specied in the notice or to refrain from continuing or repeating the contravention.70 Any such notice must be in writing, specify the particulars of the contravention, and the period specied for compliance must be reasonable having regard to the requirement imposed in the notice.71 An employer or occupier who, without reasonable excuse, fails to comply with a requirement of an improvement notice commits an offence and is liable on conviction to a ne of HK$200,000 and to imprisonment for 12 months.72 However, the defendant has a reasonable excuse for not complying with a requirement of an improvement notice if the defendant establishes that it was not reasonably practicable to comply with the requirement.73 Employer or occupier to comply with suspension notice served by Commissioner. Where the Commissioner is of the opinion that there is an imminent risk of death or serious bodily injury because of an activity undertaken on the work premises, or because of the condition or use of the premises or of any plant or substance located on the premises, the Commissioner may serve a suspension notice directing that the activity not be undertaken, or the premises, plant or substance not be used, while the notice remains in force.74 Any such notice must be in writing and provide sufcient
9.033
64 65
66 67 68 69
70 71 72 73 74
OSHO s.13(6). OSHO s.3(1) denes dangerous occurrence as an occurrence of a kind specied in Schedule 1, which provides a list of eight examples of dangerous occurrences. OSHO ss 14 (1), (2) and (4). OSHO s.14(3). OSHO s.14(5). Under OSHO s.3(1), Commissioner means the Commissioner for Labour as appointed under s.19 to administer and enforce the OSHO. OSHO ss 9(1) and (2). OSHO ss 9(2) and (3). OSHO s.9(5). OSHO s.9(6). OSHO ss 10(1) and (2).
377
particulars; it takes effect on the date it is served or on the date specied in the notice.75 An employer or occupier who, without reasonable excuse, contravenes a suspension notice commits an offence and is liable on conviction to a ne of HK$500,000 and to imprisonment for 12 months, and to a further ne of HK$50,000 for each day or part of a day during which the offender knowingly and intentionally continues the contravention.76 (i) Inquiries into workplace accidents and dangerous occurrences Commissioner may arrange for informal and formal inquiries into workplace accident or dangerous occurrence. Whenever an accident or dangerous occurrence occurs in a workplace, the Commissioner may arrange for an inquiry to be held by an occupational safety ofcer to determine the causes and circumstances of the accident. Such an inquiry is to be conducted in an informal manner and culminate in a written report to the Commissioner.77 Where the occupational safety ofcer considers that it is not possible to conclude the inquiry, because a person who appears to have relevant information or documents is unable or unwilling to provide the information or documents or to answer questions about any relevant matter, or for any other reason, the occupational safety ofcer may terminate the inquiry.78 In that case, the Commissioner may arrange for a formal inquiry in which witnesses and parties may be examined under oath, and in which witnesses may be directed to attend and give evidence and produce documents and other material evidence.79 If a person without reasonable excuse, fails to attend to give evidence or produce documents or other material evidence after being required to do so, or on attending the inquiry, refuses to answer a question or to produce a document or other material evidence that is in their possession, or in answer to a question, provides information that is to the persons knowledge false or misleading, or produces a document or other material evidence that is to the persons knowledge false or misleading, that person commits an offence and is liable on conviction to a ne at level 5 and to imprisonment for three months.80 ( j) Regulations under OSHO OSHR. The regulations made under the OSHO are the Occupational Safety and Health Regulation81 (OSHR) and the Occupational Safety and Health (Display Screen Equipment) Regulation82 (OSHDSER). The OSHR imposes obligations on the person responsible for the workplace in the following areas, each of which gives rise to separate offences in case of contravention of the relevant provisions: 9.035 9.034
75 76 77 78 79
80 81 82
OSHO ss 10(2) and (3). OSHO s.10(6). Reviews of suspension notices and appeals of review decisions are provided for in ss 11 and 12. OSHO ss 16(1), (2) and (3). OSHO s.16(4). OSHO ss 17(1), (2) and (3). By virtue of s.17(4), the Commissioner or Deputy Commissioner conducting the inquiry is not bound by the rules of evidence and can receive any evidence that appears to be relevant to determining the matters before the inquiry. OSHO s.17(6). Cap.509A. Cap.509B.
378
(1)
accident prevention, with particular attention to the guarding of dangerous parts of plant and equipment and the fencing of dangerous parts of the workplace;83 re precaution, including egress and escape;84 workplace environment control, including clearance of debris, adequate lighting and draining of wet oors;85 hygiene at the workplace, including drinking water and washing and toilet facilities;86 ready availability of rst aid facilities;87 and what employers and employees are expected to do in manual handling operations.88
(2) (3) (4) (5) (6)
9.036
Penalties under OSHR. Persons who are responsible for a workplace and who fail to comply with OSHR commit an offence and are liable to a maximum ne of up to HK$200,000, or, if the offence is a continuing one, the imposition of a further ne of HK$5,000 for each day or part of a day during which the offence has continued89 and imprisonment for 12 months.90 Display screen equipment regulation. The Occupational Safety and Health (Display Screen Equipment) Regulation (OSHDSER) applies to any workstation in a workplace that is provided by a person responsible for the workplace to be used or normally used by an employee who, by reason of the nature of his work, is required to use display screen equipment for a prolonged period of time almost every day.91 It requires the person responsible for a workplace to conduct a risk assessment of a workstation before it can be used, and for a record to be kept of the risk assessment.92 The person responsible for a workplace must take steps to reduce any risks identied in a risk assessment to the lowest extent as is reasonably practicable.93 A record of the ndings of the risk assessment and a record of any action he has taken after the assessment shall be made available to users of the workstation in question.94 Moreover, an employer shall, so far as reasonably practicable, ensure that a workstation user is provided with
9.037
83 84 85 86 87 88 89 90 91
92 93 94
OSHR ss 3 to 6. OSHR ss 7 to 11. OSHR ss 12 to 14. OSHR ss 15 to 16. OSHR ss 17 to 21. OSHR ss 22 to 32. For the empowering provision, see OSHO s.42(5). For the empowering provision, see OSHO s.42(7). OSHDSER ss 2 and 3(1). However, according to s.3(2), the Regulation does not apply to (a) display screen equipment that is used mainly to show pictures, television or lms; (b) drivers cabs or control cabs for vehicles or machinery; (c) display screen equipment on board a means of public transport; (d) portable systems not in prolonged use; (e) calculators, cash registers or any equipment having a small data or measurement display required for direct use of the equipment; or (f) window typewriters. OSHDSER s.4. OSHDSER s.5. OSHDSER s.6.
379
necessary safety and health training in the use of workstations.95 Offences for a failure to comply with OSHDSER are punishable by a ne at either level 5, or, in the case of users, at level 3.96 Regulations under OSHO to prevail. A provision of a regulation made under the OSHO is to prevail over any inconsistent provision of a regulation made under the FIUO.97 (k) Civil liability Civil liability presumed from criminal conviction. A criminal conviction for breach of a provision under the OSHO or its regulations may also serve as evidence in establishing negligence and/or breach of occupiers liability and/or breach of statutory duty, thus giving rise to civil liability. A criminal conviction for breach of statutory duty provides proof of the defendant having committed the acts in question for the purposes of a civil action,98 subject only to the defendant proving to the courts satisfaction that he did not commit the offence.99 ( l) Codes of practice Codes of practice. The Commissioner for Labour may issue codes of practice for the purpose of providing practical guidance to employers and employees, and to occupiers of workplaces who are not employers.100 A workplace code of practice may consist of a code, standard, rule, specication or provision relating to occupational safety or health approved by the Commissioner.101 In addition, such a code of practice may apply, incorporate or refer to any document that has been formulated or published by a body or authority either as in force at the time when the document is approved by the Commissioner or as amended, formulated or published from time to time.102 The Commissioner is required to publish in both English and Chinese any code of practice issued under this provision and any amendments subsequently made thereto.103 The commissioner is required to make available at the head ofce of the Labour Department, during ordinary business hours, all workplace codes of practice for inspection by members of the public. No charge is to be made for the inspection of a workplace code of practice.104 9.040 9.039 9.038
95 96 97 98 99
100 101 102 103 104
OSHDSER s.8. Section 9 obligates a user to comply with risk reduction measures taken. OSHDSER s.11. OSHO s.46(1). Applying s.62 of the Evidence Ordinance (Cap.8). Ibid, s.62(2). In Lee Hang Kuen v Chan Hong (unrep., HCPI 548/2002, [2006] HKEC 312), proof of criminal convictions under the FIUO and its regulations provided proof of negligence in the common law negligence action, applying s.62 of the Evidence Ordinance (Cap.8). For the issue of proof of negligence based on criminal conviction for breach of a statutory provision generally, see fn 27 and accompanying text, and para 10.013 below. OSHO s.40(1). OSHO s.40(2)(a). OSHO s.40(2)(b). OSHO s.40(4). OSHO s.40(6). Workplace codes of practice are also available online at the Labour Department website at http://www.labour.gov.hk/eng/public/content2_8b.htm. See also para 9.088 below.
380
9.041
Effect of workplace code of practice. A person does not incur civil or criminal liability only because the person has contravened a provision of a workplace code of practice.105 Moreover, a workplace code of practice is not subsidiary legislation for the purposes of the Interpretation and General Clause Ordinance (Cap.1) Part V , ss 2837A.106 However, if in any legal proceedings the court is satised that a workplace code of practice is relevant to determining a matter that is at issue in the proceedings, the code of practice is admissible in evidence in the proceedings, and proof that the person contravened or did not contravene a relevant provision of the code may be relied on by any party to the proceedings as tending to establish or negate that matter.107 Code of practice under OSHO to prevail. A provision of a code of practice issued under the OSHO is to prevail over any inconsistent provision of a code of practice issued under the FIUO.108
9.042
4. FACTORIES AND INDUSTRIAL UNDERTAKINGS ORDINANCE

(a) Overview 9.043 General. The FIUO provides for the safety and health of workers in the industrial sector. Whereas OHSO applies to all workplaces, the FIUO applies only to industrial undertakings. Nonetheless, industrial undertaking is broadly dened and includes: (a) any factory; (b) any mine or quarry; (c) any industry in which articles are manufactured, altered, cleansed, repaired, ornamented, nished, adapted for sale, broken up or demolished, or in which materials are transformed, including shipbuilding; (d) the generation, transformation, and transmission of electricity or motive power of any kind; (e) any construction work; (f) the loading, unloading, or handling of goods or cargo at any dock, quay, wharf, warehouse or airport;
(fa) container handling; (g) the carriage of coal, building materials, or debris; (h) the transport of passengers or goods by road, rail, cableway or aerial ropeway; (ha) the preparation of food for consumption and sale on the premises where it is prepared;
105 106 107
108
OSHO s.41(1). OSHO s.41(4). OSHO s.41(2). See e.g. Mehmood Khalid v Million Harvest Wharves Logistics Ltd (unrep., CACV 303/2007, [2008] HKEC 970), where the ship loading standard in the Safety Guide for Shipboard Container Handling published by the Marine Industrial Safety Section of the Marine Department was preferred by the court to that of the actual common practice in the industry. OSHO s.46(2).
FACTORIES AND INDUSTRIAL UNDERTAKINGS ORDINANCE
381
(i)
any premises or site in or upon which, and the machinery, plant, tools, gear and materials with which, any of the foregoing industrial undertakings is carried on.109 9.044
Meaning of factory. Under the FIUO, factory is broadly dened as follows: any premises or place, (other than a mine or quarry), in which articles are manufactured, altered, cleansed, repaired, ornamented, nished, adapted for sale, broken up or demolished or in which materials are transformed, and within the close or curtilage or precincts of which (a) any machinery other than machinery worked entirely by hand is used; or (b) 20 or more persons are employed in manual labour.110 Meaning of construction work. Under the FIUO, construction work means: (a) the construction, erection, installation, reconstruction, repair, maintenance (including redecoration and external cleaning), renewal, removal, alteration, improvement, dismantling, or demolition of any structure or works specied in the Third Schedule;111 (b) any work involved in preparing for any operation referred to in paragraph (a), including the laying of foundations and the excavation of earth and rock prior to the laying of foundations;112 (c) the use of machinery, plant, tools, gear, and materials in connection with any operation referred to in paragraph (a) or (b).113
9.045
109 110
111
112
113
FIUO s.2(1). FIUO s.2(1). In Mexx Consolidated (Far East) Ltd v A-G [1987] HKLR 1210, the court noted that the requirement of 20 or more persons employed in manual labour was intended to achieve reasonable minimum safety and related standards in factories, without affecting the operation of smaller family or cottage type industries [which have less than 20 employees]. The structures and works specied in the Third Schedule of the FIUO are as follows: (1) Any building, edice, wall, fence, or chimney, whether constructed wholly or partly above or below ground level. (2) Any road, motorway, railway, tramway, cableway, aerial ropeway or canal. (3) Any harbour works, dock, pier, sea defence work, or lighthouse. (4) Any aqueduct, viaduct, bridge, or tunnel. (5) Any sewer, sewage disposal works, or lter bed. (6) Any airport or works connected with air navigation. (7) Any dam, reservoir, well, pipeline, culvert, shaft, or reclamation. (8) Any drainage, irrigation, or river control work. (9) Any water, electrical, gas, telephonic, telegraphic, radio, or television installation or works, or any other works designed for the manufacturing or transmission of power or the transmission or reception of radio or sound waves. (10) Any structure designed for the support of machinery, plant, or power transmission lines. In A-G v Marples International Ltd [1987] 2 HKC 400 at 403E-F, Bewley J held that the words including the laying of foundation and the excavation of earth and rock prior to the laying of foundation are not words of limitation and are only examples of what goes on during construction work. FIUO s.2(1).
382
9.046
Construction work does not include decoration work. In Leung Lai Yin v Yeung Kei Chu,114 a master carpenter was employed by a sub-contractor to redecorate a residential unit, in the course of which the carpenter sustained injuries. It was held that decoration or redecoration work as such are not construction work within the meaning of the Ordinance, unless they form part of the maintenance work of the building. Obvious examples would include removing defective plaster, rendering the wall surfaces, covering up exposed concrete, and xing decorative tiles or even marble slabs. They have to be works that have to do with the well-being of the building as a whole.115 (b) Duty on the part of the proprietor
9.047
Duty imposed upon the proprietor. Section 6A(1) of the FIUO imposes duties upon the proprietor of an industrial undertaking as follows: It shall be the duty of every proprietor of an industrial undertaking to ensure, so far as is reasonably practicable, the health and safety at work of all persons employed by him at the industrial undertaking.
9.048
Meaning of proprietor. The proprietor, in relation to any industrial undertaking or notiable workplace, is dened in s.2(1) to include: the person for the time being having the management or control of the business carried on in such industrial undertaking or notiable workplace and includes a body corporate and a rm and also the occupier of any industrial undertaking or notiable workplace and the agent of such occupier. In Chow Cheung Ching v Right Base Construction and Engineering Co Ltd,116 it was held that the denition of proprietor under s.2(1) was inclusive rather than exhaustive, and any interpretation should be liberal and purposive rather than restrictive. Counsel for the second defendant argued that the occupier of any industrial undertaking was not a second limb of the denition, but referred to the person for the time being having the management or control of the business carried on in such industrial undertaking, who was at the same time in actual occupation of such industrial undertaking. This argument was rejected by the court: The phrase the occupier of any industrial undertaking or notiable workplace and the agent of such occupier; was prefaced by and also and if the occupier only means the person having the management and control of the business, it will render the inclusion of an occupier otiose.117
114
115 116 117
[2000] HKLRD (Yrbk) 381. In this case, construction work as dened in FIUO s.2(1) was considered in the context of civil proceedings arising from a breach of statutory duty. Ibid. [2002] 2 HKLRD 738. Ibid, at p 745.
383
In Leung Lai Yin v Yeung Kei Chu,118 Deputy Judge To observed that the principal contractor was not a proprietor as dened under s.2(1) of the FIUO, by reason that it did not have management or control over the business of the sub-contractor which the injured person was engaged by. However, it should be noted that the second limb of the denition of proprietor, i.e. the occupier of any industrial undertaking, had not been considered by the court. Further duties imposed by section 6A(2). Section 6A(2) of the FIUO stipulates the duties of a proprietor as follows: (2) Without prejudice to the generality of a proprietors duty under subsection (1), the matters to which that duty extends include in particular (a) (b) the provision and maintenance of plant and systems of work that are, so far as is reasonably practicable, safe and without risks to health; arrangements for ensuring, so far as is reasonably practicable, safety and absence of risks to health in connection with the use, handling, storage and transport of articles and substances; the provision of such information, instruction, training and supervision as is necessary to ensure, so far as is reasonably practicable, the health and safety at work of all persons employed by him at the industrial undertaking;119 so far as is reasonably practicable as regards any part of the industrial undertaking under the proprietors control, the maintenance of it in a condition that is safe and without risks to health and the provision and maintenance of means of access to and egress from it that are safe and without such risks; and the provision and maintenance of a working environment for all persons employed by him at the industrial undertaking that is, so far as is reasonably practicable, safe, and without risks to health. 9.049
(c)
(d)
(e)
Section 6BA imposes a further duty upon the proprietor of an industrial undertaking not to employ a relevant person who does not have a relevant certicate obtainable after attending a safety course.120 Denition of at work. Section 6C provides the meaning of at work as follows: For the purposes of sections 6A, 6B and 6BA, a person is at work throughout the time when he is in the course of employment, but not otherwise. 9.050
118 119
120
Fn 114 above. Whether written instructions are required would depend on the circumstances of the case. For an example of a case where it was held that oral instructions regarding the safe operation of machines on the site were sufcient, see HKSAR v Leighton Contractors (Asia) Ltd (unrep., HCMA 1029/2000, [2001] HKEC 21). See FIUO s.6BA(5) in particular and s.6BA generally.
384
9.051
Penalties. Section 6A(3) provides that a proprietor of an industrial undertaking who contravenes s.6A is liable to a ne of HK$500,000. Further, s.6A(4) provides that a proprietor of an industrial undertaking who contravenes s.6A wilfully and without reasonable excuse commits an offence and is liable to a ne of HK$500,000 and to imprisonment for six months. (c) Duty on the part of the employee
9.052
Duty imposed upon the employee. Section 6B(1) provides for the duty required of an employee as follows: It shall be the duty of every person employed at an industrial undertaking while at work (a) to take reasonable care for the health and safety of himself and of other persons who may be affected by his acts or omissions at work; and as regards any duty or requirement imposed on a proprietor of the industrial undertaking or on any other person by this Ordinance for securing the health and safety of persons employed at the industrial undertaking, to co-operate with him so far as is necessary to enable that duty or requirement to be performed or complied with.
(b)
9.053
Penalties. Section 6B(2) provides that a person who contravenes s.6B(1) commits an offence and is liable to a ne at level 4. Moreover, s.6B(3) provides that a person employed at an industrial undertaking who wilfully and without reasonable excuse does anything while at work likely to endanger himself or other persons commits an offence and is liable to a ne of $50,000 and to imprisonment for 6 months. (d) Burden of proof
9.054
Evidential burden on defendant to prove the limits of what is practicable. Section 18 of the FIUO imposes an evidential burden on the defendant to prove the limits of what is practicable. Section 18 reads: (1) In a proceeding for an offence under a provision in this Ordinance consisting of a failure to comply with a duty or requirement to do something so far as is necessary, where practicable, so far as is reasonably practicable, or so far as practicable or to take all reasonable steps, all practicable steps, adequate steps or all reasonably practicable steps to do something, the onus is on the accused to prove that it was not necessary, not practicable or not reasonably practicable to do more than was in fact done to satisfy the duty or requirement, or that he has taken all reasonable steps, or practicable steps or done the appropriate thing to satisfy the duty or requirement. (2) In a proceeding for an offence under a provision in this Ordinance consisting of an exemption from compliance with a duty or requirement to do something where it is impracticable, not reasonably practicable or rendered
385
impracticable to comply with that duty or requirement, the onus is on the accused to prove that it was impracticable or not reasonably practicable to do more than was in fact done to comply with the duty or requirement. (e) Notication of workplace Notication requirements. Section 9 of the FIUO imposes certain notication requirements upon a person having the management and control of a notiable workplace.121 That person should notify the Commissioner122 in the prescribed form of such particulars relating to the workplace and the industrial process or industrial operation as may be specied in the prescribed form before commencement of operation.123 The Commissioner for Labour must also be given notication in advance of any changes in the particulars of the workplace, e.g. its name, location or the industrial processes, before such changes take effect.124 Any subsequent changes in the identity of the person having the management or control of a notiable workplace must be made known to the Commissioner for Labour within 21 days of such changes.125 Under the Construction Sites (Safety) Regulations,126 a contractor must notify the Commissioner for Labour in writing within seven days after commencement of any construction work.127 (f ) Prohibition notices Issue of prohibition notices. If at any time the Commissioner for Labour considers that any notiable workplace, regardless of whether it has been notied to him, is not suitable for use as a factory, mine or quarry, or for the carrying on in it of any dangerous trade or scheduled trade, or for the carrying on in the workplace of any industrial process or industrial operation or any part of such process or operation, he may issue to the proprietor of the notiable workplace a prohibition notice to prohibit it from being used for the relevant purpose.128 Upon issuing a prohibition notice in respect of any notiable workplace, the Commissioner for Labour is required on the notice to state the reasons for the issuing of the notice and specify a date by which it is to be complied with.129 Cancellation of prohibition notices. Where at any time after issuing a prohibition notice in respect of a notiable workplace the commissioner is satised that the matter leading to the issuing of the notice has been remedied, he may (and if so requested by the proprietor of the notiable workplace, must) cancel the prohibition notice, but may 9.056 9.055
9.057
121
122
123
124 125 126 127 128 129
Notiable workplace means (a) any factory, mine or quarry and (b) any premises in which a dangerous trade or scheduled trade is carried on but does not include a construction site within the meaning of the Construction Sites (Safety) Regulations (Cap.59I): FIUO s.2(1) Commissioner means the Commissioner for Labour holding ofce under the OSHO (Cap.509) and includes any person who is acting in that ofce and any person authorised to exercise or perform the function: FIUO s.2(1), FIUO s.9(1). The prescribed form is obtainable from the various district ofces of the Occupational Safety Operations Division. FIUO s.9(2). FIUO s.9(3). Cap.59I. Reg.56. FIUO s.9A(1). FIUO s.9A(2).
386
upon doing so give directions in writing to the proprietor of the notiable workplace in respect of any matter which led to the issuing of the notice.130 9.058 Appeals to the Administrative Appeals Board. Section 9A(4) of the FIUO provides that: Any proprietor of a notiable workplace who is aggrieved by (a) the issue of a prohibition notice in respect of that notiable workplace; (b) a refusal by the Commissioner for Labour to cancel a prohibition notice; or (c) the giving of any direction upon the cancellation of a prohibition notice, may, within 28 days of being notied of such issue, refusal or direction, appeal against it to the Administrative Appeals Board. (g) Proceedings for offences 9.059 Prosecution of offences. Prosecutions for offences under the FIUO may be brought in the name of the Commissioner for Labour, and may be commenced and conducted by any ofcer of the Labour Department.131 No such prosecution may be commenced without the written consent of the Commissioner for Labour.132 Person not liable to be prosecuted twice for the same offence. A person who has been convicted or acquitted of having committed an offence under a provision of the OSHO in relation to an act or omission is not liable to be proceeded against for an offence under a corresponding provision of the FIUO relating to the same act or omission.133 Procedure. Any summons relating to an offence under the FIUO by a proprietor of an industrial undertaking may be served by leaving a copy of the summons with some person for him at the industrial undertaking mentioned in the summons.134 Any such summons may be addressed to the proprietor of an industrial undertaking without specifying the name of the proprietor.135 Any summons relating to any offence by a person employed in an industrial undertaking may be served by leaving a copy of the summons either with some person for him at his last or most usual place of abode or with some person for him at the industrial undertaking mentioned in the summons.136 (h) Regulations under FIUO 9.062 Various regulations. Section 7 of the FIUO gives the Commissioner for Labour broad power to make regulations. Under the FIUO, there are currently 30 sets of regulations prescribing detailed safety and health standards for work situations, plant and
9.060
9.061
130 131 132 133 134 135 136
FIUO s.9A(3). FIUO s.17(1). FIUO s.17(2). FIUO s.17(4). FIUO s.15(1)(a). FIUO s.15(1)(b). FIUO s.15(2).
387
machinery, and processes and substances.137 They cover various aspects of hazardous work activities in industrial workplaces, including factories, building and engineering, construction sites, catering establishments, cargo and container handling undertakings and so on. A list of the regulations made under the FIUO and a brief description of the purpose of each is provided in Appendix A at the end of this chapter. Contractors duty under Construction Sites (Safety) Regulations may extend to independent contractors. In Raineld Design & Associates Ltd v Siu Chi Moon,138 the Court of Final Appeal had to determine the scope of the statutory duty of a contractor on a construction site to ensure that, so far as is reasonably practicable, suitable and adequate safe access to and egress from every place of work on the site is provided and properly maintained under reg.38A(2) of the Construction Sites (Safety) Regulations139 promulgated under the FIUO. In this decision the issue was not whether the plaintiff injured on the work site was an employeehe plainly was not. The court interpreted the statutory provision in question to mean that the duty was not restricted to employees but extended to independent contractors such as the plaintiff. As observed by Bokhary PJ: Physical safety is plainly the paramount element of the laws policy in this sphere. The only concern is whether the person injured or killed as a result of non-compliance with a statutory duty was within the class of persons which such statutory duty was imposed to protect. As a person working on a construction site, Mr. Siu was clearly within the class of persons which the statutory duty here in question was imposed to protect. Penalties under the regulations. Contraventions of the regulations made under the FIUO constitute offences that are punishable by ne up to HK$200,000 and imprisonment for up to 12 months.140 No sentencing guidelines or tariffs. In HKSAR v Chuen Kee Construction Co Ltd,141 the appellant pleaded guilty to two summons alleging offences contrary to regs 38B(1A), 68(1)(a) and 68(2)(g) of the Construction Sites (Safety) Regulations and was ned HK$100,000 by the Magistrate. In dismissing the defendants appeal, Deputy Judge Wright in the Court of First Instance observed that there is no sentencing guideline or tariff for offences without injuries due to the wide diversity of circumstances in which these offences may be committed. Moreover, there was no rule that cases involving no accident should be viewed differently from cases involving accident in terms of sentencing, although it was inevitable that the fact of an accident causing either injury or death will be a matter which a court is entitled to take into account in determining the level of sentence.142 Deputy Judge Wright was of the view 9.064 9.063
9.065
137
138 139 140 141 142
The full text of the regulations made under FIUO can be accessed through the Labour Department website at http://www.labour.gov.hk/eng/legislat/contentB3.htm. In addition, helpful guides to each set of regulations can be found at http://www.labour.gov.hk/eng/public/content2_8a.htm. [2000] 2 HKLRD 226. Cap.59I. FIUO s.7(5). [2006] 1 HKC 277. Ibid, at 281.
388
that in the absence of guidelines or tariff cases, the reference to sentences imposed in previously decided matters was only of limited assistance, and the reference to an average of nes was even less meaningful.143 From this it can be inferred that the determination of sentence to be imposed by the court for breach of the regulations under the FIUO is a highly fact-sensitive exercise. 9.066 Person injured on frolic of his own no defence. In HKSAR v China Overseas Building Construction Ltd,144 the principal contractor for a construction site was convicted of failing to take adequate steps to prevent a scaffolder, employed by a sub-sub-contractor, from falling from a height of 6m, contrary to reg.38B(1) of the Construction Sites (Safety) Regulations. The scaffolder was not wearing a safety belt, nor was any safety net put in place. The principal contractor appealed, contending that he should not be held liable because the scaffolder was on a frolic of his own. In dismissing the appeal, Deputy Judge A To held that in the context of statutory offences under FIUO and its regulations, the fact that a worker was on a frolic of his own did not amount to a defence. Rather, it was to be regarded as a pointer for dening the standard that a contractor must meet in performing its statutory duty.145 Regulations under OSHO to prevail. A provision of a regulation made under the OSHO is to prevail over any inconsistent provision of a regulation made under the FIUO.146 (i) Civil liability 9.068 Civil proceedings. Section 19(a) of the FIUO provides that the ordinance does not confer a right of action in civil proceedings in respect of a failure to comply with ss 6A, 6B or 6BA. Section 19(b) provides that the FIUO does not affect the extent to which breach of any other provision is actionable. Thus, where any other provision under the FIUO is under consideration, the court will have to determine, by way of statutory construction, whether it was the intention of the legislature to allow such a civil cause of action. In the area of industrial safety, the courts have consistently demonstrated a strong judicial sympathy for injured workers and have readily recognised a cause of action for breach of safety legislation even where the legislation does not expressly provide for a civil remedy. Accordingly, apart from ss 6A, 6B and 6BA, breaches of the other provisions under the FIUO are likely to give rise to a civil cause of action for breach of statutory duty.147 Moreover, a breach of regulations made under the FIUO is routinely recognised as giving rise to liability for breach of statutory duty.148
9.067
143
144 145 146 147 148
Ibid, at 283. Deputy Judge Wright quoted Beeson J in HKSAR v Teemway Engineering (unrep., HCMA 1081/2003, [2004] HKEC 62): That the average ne was $21,000 reects no more than the fact that nes, in the context of often heartless safety conditions on Hong Kong construction sites, are (not infrequently) far too low. Fn 49 above. Ibid, from the translated headnote, as the judgment was given in Chinese. See fn 97 above and accompanying text. See Chapter 10 below. For a recent typical example see Gurung Tiki Maya v Shum Shing Cheung (unrep., HCPI 168/2008, [2009] HKEC 280), at paras 3132.
OTHER RELEVANT LEGISLATION
389
( j) Codes of practice Codes of practice. For the purpose of providing practical guidance in respect of the requirements or regulations under the FIUO, the Commissioner for Labour may issue such codes of practice, whether prepared by him or not, as he considers appropriate.149 Effect of codes of practice. A failure by any person to observe a provision of an approved code will not of itself cause him to incur any criminal liability, but may be used as evidence where, in any criminal proceedings, the defendant is alleged to have committed an offence either by reason of a contravention of or a failure to comply with (whether by act or omission) the FIUO or its regulations, and an approved code relates to the alleged contravention.150 Code of practice under OSHO to prevail. A provision of a code of practice issued under the OSHO is to prevail over any inconsistent provision of a code of practice issued under the FIUO.151 9.069
9.070
9.071
5. OTHER RELEVANT LEGISLATION

(a) Other relevant legislation Introduction. In addition to the OSHO and the FIUO, there are many other ordinances and regulations relating to occupational safety and health. Not all of them can be addressed in this chapter, but a summary of the more important ones among them is provided in the following paragraphs. Boilers and Pressure Vessels Ordinance (BVPO) and Regulations.152 The BVPO and its three sets of subsidiary regulations153 regulate the standards and operation of boilers and pressure vessels, including thermal oil heaters, steam receivers, steam containers, air receivers and pressurised cement tanks mounted on trucks and trailers.154 Such boilers and pressure vessels are required to be registered with the Labour Department before being put into use.155 Section 22(1) of the BPVO provides that every boiler and pressure vessel and its auxiliary equipment shall be properly maintained. Section 24 further provides that every boiler and pressure vessel must be examined by an appointed examiner before it is put into use. Periodic examination of all boilers and pressure vessels is also required under s.27. Offences and penalties are provided for in ss.4956. 9.072
9.073
149
150 151 152 153
154 155
FIUO s.7A(1). A list of codes of practice can be found at the Labour Department website: see fn 104 above. See also para 9.088 below. FIUO s.7A(4). See fn 108 above and accompanying text. Cap.56. See also para 9.086 below. Boilers and Pressure Vessels Regulation (Cap.56A), Boilers and Pressure Vessels (Forms) Order (Cap.56B), and Boilers and Pressure Vessels (Exemption)(Consolidation) Order (Cap.56C). The full text of the BVPO and the regulations made thereunder can be found at the Labour Department website at http://www.labour.gov.hk/eng/ legislat/contentB3.htm. See relevant denitions under BPVO s.2. BPVO ss.13 to 16.
390
9.074
Dangerous Goods Ordinance and Regulations.156 This ordinance denes approximately 450 dangerous goods, including explosives, compressed gases, poisonous substances, corrosive substances, substances liable to spontaneous combustion, and ammable substances. It provides for the classication of such dangerous goods, and regulates their manufacture, use, storage and transport. Offences and penalties are provided for in ss.14, 17 and 18. Fire Safety (Commercial Premises) Ordinance and Regulations.157 This ordinance provides for re-safety improvements to be made to certain commercial premises used as ofces or for the purposes of business, trading or any entertainment (such as banks, off-course betting branches, supermarkets and shopping centres) constructed on or before 23 March 1973. Offences and penalties are provided for in ss.1718. Builders Lifts and Tower Working Platforms (Safety) Ordinance and Regulations.158 This ordinance applies to owners or lessees of builders lifts and tower working platforms. It regulates the design, construction, installation, maintenance, testing, examination and use of such work equipment. Offences and penalties are provided for in ss.4547. Gas Safety Ordinance and Regulations.159 This ordinance applies to gas supply companies, gas contractors and establishments using liqueed petroleum gas, natural gas or town gas installations (such as restaurants and cooking oil manufacturers). It regulates the approval of gas installations and controls the importation, manufacture, storage, transport, supply and use of gaseous fuels. Offences and penalties are provided for in s.27. Electricity Ordinance and Regulations.160 This ordinance applies to electrical workers, electrical contractors and owners of xed electrical installation. It regulates the testing and examination of prescribed xed electrical installations, and requires registration of electrical workers and electrical contractors with the Electrical and Mechanical Services Department. Offences and penalties are provided for in ss.55, 56 and 56A. Employment Ordinance (EO) and Regulations.161 The EO is not concerned with work safety as such, but with terms of engagement and service and provides a basic oor of rights and entitlements. Nonetheless, the EO and some of its regulations contain some workplace safety provisions. In particular, s.15AA of the EO prohibits the assignment of heavy, hazardous or harmful work to a pregnant employee on production of a medical certicate with an opinion as to her untness to handle heavy materials, or to work in places where gas injurious to pregnancy is generated, or to do other work injurious to pregnancy. Offences and penalties are provided for in ss.15A, 60 and 6363D.
9.075
9.076
9.077
9.078
9.079
156 157 158 159 160 161
Cap.295. Cap.502. Cap.470. Cap.51. Cap.406. Cap.57.
OTHER RELEVANT LEGISLATION
391
No fault compensation for injury and disease. An employee who is injured at work by accident or who suffers from certain occupational diseases has the right under the Employees Compensation Ordinance (ECO)162 to receive compensation from his employer on an essentially no-fault basis. In addition, an employee who develops occupational deafness, or who suffers from either of the silica and asbestos-related diseases known as pneumoconiosis and mesothelioma may have the right to compensation, also on an essentially no-fault basis.163 For each of these statutory regimes, there are specic conditions to be satised and special procedures to be followed in order to qualify for compensation, particularly in the case of the ECO, the oldest and most comprehensive of the three regimes. As this is a highly specialised subject, it is dealt with separately and comprehensively in Chapter 11. (b) Provisions relating to children and young persons Employment of Children Regulations.164 These regulations, made under the EO, apply to the employment of children.165 In the EO a child is dened as a person under the age of 15 years.166 These regulations prohibit the employment of children below the age of 13,167 and the employment of children below the age of 15 in any industrial undertaking.168 Children who have completed Form III and have attained the age of 13 years may, with parental consent, be employed, so long as the employment is other than in an industrial undertaking.169 However, no such child referred to shall be employed before 7am or after 7pm on any day, for more than eight hours on any day, at work continuously for a period of more than ve hours without thereafter an interval of not less than one hour for a meal or rest; and no such child may be employed to lift or carry any load exceeding 18 kg in the course of the employment.170 Children who have attained the age of 13 years but who have not completed Form III, may, under certain conditions,171 be employed on a part-time basis, but such employment may not be in any occupation specied in the Schedule.172 A contravention of these regulations is an offence punishable by ne.173 Finally, it is to be noted that, under the
9.080
9.081
162 163
164 165
166 167 168
169 170 171 172
173
Cap.282, considered below at paras 11.00211.154. Namely, the Pneumoconiosis and Mesothelioma (Compensation) Ordinance (Cap.360) (PMCO), discussed below at paras 11.15511.194, and the Occupational Deafness (Compensation) Ordinance (Cap.469) (ODCO), discussed below at paras 11.19511.212. Cap.57B. They provide an extra level of protection for children, in addition to the workplace safety and health legislation considered elsewhere in this chapter. Cap.57 s.2(1). Cap.57B reg.4(1)(a). Ibid, reg.4(1)(b). Under reg.2, industrial undertaking has the meaning assigned to it in the FIUO (Cap.59). The prohibition in respect of industrial undertakings does not extend to the preparation of food for consumption and sale on the premises where it is prepared: ibid, reg.4(3). Ibid, reg.5(1). Ibid, reg.5(2). Ibid, regs 6(1) and (2). Ibid, reg.6(2)(a). The Schedule includes work that involves dangerous machinery or the handling of dangerous goods, or that takes place on premises where liquor is sold, etc. Ibid, reg.9. In A-G v Demand Enterprises Ltd [1987] HKLR 195, the reg.4(1)(b) prohibition against the employment of children under 15 in an industrial undertaking was held to be an offence of absolute liability. The employer was convicted despite evidence that the child lied to her employer about her age, claiming to be 15 when she was in fact 13 years of age.
392
EO, the Commissioner for Labour has the discretion to exempt any person or class of persons from any of the regulations made under the Ordinance.174 Thus, there is scope for permitting the employment of children when it is thought to be benecial for them, for instance in the arts and entertainment, and education sectors.175 9.082 Employment of Young Persons (Industry) Regulations.176 These regulations, made under the EO, apply to the employment of young persons, dened in the EO to mean a person who has attained the age of 15 years but not the age of 18 years.177 The regulations prohibit the employment of any young person in underground work in any mine or quarry, or in any other industrial undertaking178 involving a tunnelling operation,179 or in any dangerous trade.180 The regulations impose restrictions on the weight of loads that may be carried by young persons employed in industrial undertakings,181 and require the provision of suitable seating during work.182 The hours that a young person may work in an industrial undertaking are restricted, and the meal and rest periods closely regulated. The total hours worked shall not exceed eight in any day and 48 in any week,183 and the period of employment shall not exceed 10 hours in any day and shall not begin earlier than 7am nor end later than 7pm.184 Working hours and rest days must be posted in a conspicuous place,185 and a young person cannot be required to work on a rest day.186 No young person shall be required or permitted to work continuously for a period of more than ve hours without an interval of not less than half an hour for a meal or rest.187 Shift work is generally not permitted unless certain strict conditions are satised.188 Every employer of young persons in an industrial undertaking is required to maintain a register with the details of young persons employed, including period of employment, meal and rest breaks, rest days, job description and the like.189 Contraventions of these provisions are punishable on conviction by a ne.190
174 175
176 177 178 179 180 181 182 183 184
185 186 187
188 189 190
Cap.57 s.73(2). A Guide to the Employment of Child Entertainers, produced by the Labour Department, explains the application procedure and the standard conditions imposed when seeking to employ children in the entertainment industry: see http://www.labour.gov.hk/eng/public/lid/GuideEmploymentChildEntertainers.pdf. Cap.57C. Cap.57 s.2(1). Under Cap.57C reg.2, industrial undertaking has the meaning assigned to it in the FIUO (Cap.59). Ibid, reg.4. Ibid, reg.5(1). Under reg.5(2), dangerous trade has the meaning assigned to it in the FIUO (Cap.59). Ibid, reg.6. Ibid, reg.7. Ibid, reg.8(1)(a). Ibid, reg.8(1)(b)(ii). Under reg.2, period of employment is dened as the period (inclusive of the time allowed for meals and rest) within which persons may be employed on any day. Ibid, reg.9. Ibid, reg.14. Ibid, reg.8(1)(c). According to reg.13, No employer shall require or permit a young person to work in an industrial undertaking during any part of an interval allowed to such young person for a meal or rest under regulation 8. Ibid, reg.11. Ibid, reg.16. Ibid, regs 1821.
ROLE AND FUNCTION OF THE LABOUR DEPARTMENT
393
Employment of Young Persons and Children at Sea Ordinance.191 Under this ordinance, no child under 15 years of age can be employed as a member of the crew of any vessel, other than a vessel upon which only members of the same family are so employed.192 A contravention constitutes an offence punishable by ne.193 Dutiable Commodities (Liquor) Regulations.194 These regulations are neither concerned with employment as such nor with work safety in the usual sense.195 Nonetheless, they provide a modicum of employment safety for young persons who might become employed on licensed premises. They prohibit the employment on licensed premises of any person under the age of 15 years,196 and restrict the employment on licensed premises of those under 18 years to the hours of 6am to 10pm and then only with the written permission of the Liquor Licensing Board.197 A contravention constitutes an offence punishable by ne or imprisonment.198 In A-G v Ng Chung Hing,199 a case concerning the employment of underage night-club hostesses, the offence in s.29 was interpreted to be an offence of strict liability. Thus, it was no defence that the employer was ignorant of the age of the employees in question.
9.083
9.084
6. ROLE AND FUNCTION OF THE LABOUR DEPARTMENT IN RELATION TO HEALTH AND SAFETY AT WORK
(a) Inspection, investigation, enforcement and prosecution Role of the Labour Department. The OSHO, FIUO and their regulations are enforced by the Labour Department through its occupational safety ofcers, who inspect workplaces to ensure that the requirements on safety, health and welfare are complied with. They also conduct accident investigations and give advice to employers and employees on how to reduce existing workplace hazards. The OSHO provides for the designation of occupational safety ofcers by the Commissioner for Labour. Occupational safety ofcers so appointed also have parallel powers under the FIUO.200 Under the OSHO, an occupational safety ofcer may, with or without a warrant, enter and inspect premises to ascertain compliance, seize any articles that the ofcer believes to be evidence of a contravention of the ordinance, conduct relevant tests and examinations, and make inquiries and request provision of relevant records.201 It is an offence under the OSHO to obstruct occupational safety 9.085
191 192 193 194 195 196 197 198 199 200
201
Cap.58. Ibid, s.2. Ibid, s.5. Cap.109B. They are concerned with the granting of liquor licenses. Cap.109B reg.29(1)(a). Ibid, regs 29(1)(b) and (c). Ibid, reg.30. Fn 20 above. According to FIUO s.2(1), occupational safety ofcer has the same meaning as under the OSHO: see fn 57 above. OSHO ss 2124.
394
ofcers and others exercising or performing functions under the ordinance,202 or to impersonate an occupational safety ofcer.203 Similar powers can be found under the FIUO,204 with related offences provided for. An occupational safety ofcer may, in the name of the Commissioner, bring and conduct a prosecution for any offence under the legislation.205 Alternatively, the Commissioner may: (a) issue an improvement notice206 in cases of contravention of the OSHO to require corrective action by the employer or occupier within a certain time frame; (b) issue a suspension notice207 requiring suspension of a certain action until corrective steps have been taken, if he is of the opinion that there is an imminent risk of death or serious bodily injury because of an activity undertaken on the premises, or the condition or use of the premises, or any plant of substance located on the premises; or (c) issue a prohibition notice208 under the FIUO to prohibit the use of a workplace which the Commissioner for Labour considers not suitable for use.209 9.086 The Boilers and Pressure Vessels Division. There is a separate Boilers and Pressure Vessels Division that is responsible for enforcing the BPVO to ensure the safe operation of boilers and pressure vessels.210 The work of this division includes the registration of boilers and pressure vessels,211 the carrying out of spot checks on pressure equipment in work sites,212 and the conducting of examinations213 and issuing of certicates of competency to qualied candidates as competent persons214 for various types of boiler and steam receiver.215 (b) Training 9.087 Training provided by the Labour Department. The Labour Department also operates the Occupational Safety and Health Training Centre, which provides free-of-charge training in occupational safety and health for personnel in the public and private sectors.216
202 203 204 205 206 207 208 209
210 211 212 213 214 215
216
OSHO s.26. OSHO s.27. FIUO s.4. OSHO s.34 and FIUO s.17. OSHO s.9. See para 9.032 above. OSHO s.10. See para 9.033 above. See para 9.056 above. The total number of inspections in 2008 was 132,525, up from 131,818 in 2007. Most inspections were in the sector that includes wholesale, retail, import/export trades restaurants and hotels (70,374) with comparatively few in manufacturing (14,746), reecting Hong Kongs increasingly service-based economy. In terms of prosecutions under the various ordinances and regulations there were 4,376 convictions resulting in nes totalling HK$18,194,250. See Labour Department Annual Report 2008 at http://www.labour.gov.hk/eng/public/ iprd/2008/chapter8.htm#6.2. BPVO s.4(1). See also para 9.073 above. Ibid, ss 7 and 16(1). Ibid, s.66(1). Ibid, ss 24 to 31. Ibid, s.6. A summary of the Boilers and Pressure Vessels Divisions responsibilities can be found at the Labour Department website at http://www.labour.gov.hk/eng/osh/content3.htm. For more details, see the Labour Department website at http://www.labour.gov.hk/eng/osh/content5.htm.
ROLE AND FUNCTION OF THE OCCUPATIONAL SAFETY AND HEALTH COUNCIL
395
(c) Codes of practice Codes of practice. The Labour Department has issued many codes of practice217 for the purposes of providing practical guidance in respect of the relevant statutory requirements, and the contents of these codes of practice are reviewed and amended from time to time. In practice, the contents of the relevant codes of practice are often relied on by experts from the Labour Department when seeking to establish alleged breaches of safety legislation.218 Of course, a code of practice cannot be used to impose duties upon a person that are not specied in the relevant ordinances or regulations. 9.088
7. ROLE AND FUNCTION OF THE OCCUPATIONAL SAFETY AND HEALTH COUNCIL

(a) Aims and purposes Aims and purposes of the OSH Council. The Occupational Safety and Health Council (hereinafter the OSH Council) was established in 1988 pursuant to section 3 of the Occupational Safety and Health Council Ordinance.219 The OSH Council aims to encourage and promote higher standards of safety and health for people at work, by fostering greater community awareness, promoting the application of modern technology, promoting education and training, disseminating technical knowledge, developing strategies and formulating programmes, providing consultancy services, and encouraging and facilitating cooperation and communication between the Government, employers, employees and relevant professional and academic bodies.220 (b) Structure and funding of the OSH Council Structure of the OSH Council. The OSH Council is composed of a chairman, a vice-chairman, 10 to 14 non-public ofcers representing employers, employees, professional and academic interests, and not more than ve public ofcers.221 They are appointed by the Chief Executive for a term not exceeding three years, except for the public ofcers, whose term is decided by the Chief Executive.222 The OSH Council currently consists of 18 members.223 9.090 9.089
217
218 219 220
221 222 223
By virtue of FIUO s.7A, the Commissioner may issue such codes of practice as he considers appropriate. These codes of practice are available online at the website of the Labour Department: see fn 104 above. Also see paras 9.040-42 and 9.069-71 above. For the evidential status of codes of practice issued under the OSHO and FIUO, see paras 9.041 and 9.070 above. Cap.398. Cap.398 s.4. For more information, see the Occupational Safety and Health Council website at http://www.oshc. org.hk/eng/about_us/about_us.asp. Cap.398 s.3. Ibid. See the OSH Council website at http://www.oshc.org.hk/eng/about_us/structure.asp. The full list of the current members can be found at http://www.oshc.org.hk/eng/about_us/structure_ppl.asp.
396
9.091
Funding. The OSH Councils major source of funding is the Employees Compensation Insurance Levy.224 Other income includes surcharges, penalties, donations and fees received by the OSH Council,225 and cost recovery from services provided by the OSH Council, such as their training courses and consultancy and secretarial services.226 (c) Occupational Safety Charter
9.092
Occupational Safety Charter. A major initiative of the OSH Council is the Occupational Safety Charter. Employers are strongly encouraged by the Labour Department to establish an Occupational Safety Charter and to use it as the basis for building a safety management system.227 The Occupational Safety Charter is intended to be a written document highlighting the commitment of both employers and employees in creating and maintaining a safe and healthy work environment. It should spell out the safety goals of the organisation and specify the responsibilities of various parties. The objectives of setting up a safety management system are to prevent improper behaviour that may lead to accidents, to ensure that problems are detected and reported, and to ensure that accidents are reported and handled properly.228
224 225 226 227
228
Cap.398 s.18. Ibid, s.6. See the OSH Council website at http://www.oshc.org.hk/eng/about_us/structure.asp. See the OSH Council website at http://www.oshc.org.hk/eng/company/safety_contract.asp. Note that it is a statutory requirement for certain contractors or proprietors to maintain a safety management system and/or to prepare a written safety policy statement for workers: see e.g. Cap.59AF ss 8 to 9. A list of the 1,126 organisations which have subscribed to the Occupational Safety Charter (as of 31 May 2010) can be found at http://www.oshc.org.hk/download/eng/Safety%20Charter%20List_Eng.pdf. For a brief introduction to the Occupational Safety Charter, see the Civil Service Bureau website at http://www.csb.gov.hk/ english/osh/promo/448.html.
APPENDIX A
Regulations made under the FIUO (Cap.59) Factories and Industrial Undertakings Regulations (Cap.59A). Regulates the medical examinations of persons employed to work underground, the reporting of accidents in industrial undertakings resulting in death or incapacity, and the environmental condition and maintenance of workplaces. Offences and penalties are provided for in regs.44 to 48. Factories and Industrial Undertakings (Blasting by Abrasives) Special Regulations (Cap.59C). Regulates the use of sand or free silica as an abrasive in a blasting process, which is prohibited unless permitted by the Commissioner for Labour. Offences and penalties are provided for in reg.3. Factories and Industrial Undertakings (First Aid in Notiable Workplaces) Regulations (Cap.59D). Regulates the provision of rst aid at workplaces, requiring the availability of rst-aid equipment and that it be placed in the charge of a team of responsible persons. These regulations do not apply to quarries. Offences and penalties are provided for in reg.8. Factories and Industrial Undertakings (Notication of Occupational Diseases) Regulations (Cap.59E). Requires medical practitioners to notify the Director of Health of cases of occupational disease suffered by persons employed in industrial undertakings. Offences and penalties are provided for in reg.4. Quarries (Safety) Regulations (Cap.59F). Regulates the operation, inspection and safety requirements of quarries. Requires application for approval as supervisor of a quarry and stipulates the supervisors duties. Also prescribes the duties of proprietors to provide safety equipment and rst aid. Offences are provided for in regs.9, 1454, 56 and 57. Penalties are provided for in reg.58. Factories and Industrial Undertakings (Woodworking Machinery) Regulations (Cap.59G). Regulates the use and maintenance of woodworking machinery in industrial undertakings, and sets out the requirements of the area in which the machinery can be used. Offences and penalties are provided for in reg.20. Factories and Industrial Undertakings (Electrolytic Chromium Process) Regulations (Cap.59H). Regulates the carrying on of electrolytic chromium processes at industrial undertakings. Duties are imposed on proprietors to implement protective measures, and on workers to use appliances and protective clothing appropriately. Offences and penalties are provided for in reg.11. Construction Sites (Safety) Regulations (Cap.59I). Regulates the provision of machinery, plant, tools, gear and materials for construction site safety. Offences and penalties are provided for in regs.68 to 71. Factories and Industrial Undertakings (Lifting Appliances and Lifting Gear) Regulations (Cap.59J). Regulates the examination, periodic inspection and operation
398
of lifting appliances and lifting gears used in industrial undertakings. Offences and penalties are provided for in regs.19 to 22. Factories and Industrial Undertakings (Cargo and Container Handling) Regulations (Cap.59K). Regulates the safety requirements of cargo handling operations at a dock, quay or wharf, the provision of rst-aid facilities at a dock, quay or wharf, and the posting of notices which indicate the location of life-saving and rstaid facilities. Offences and penalties are provided for in regs.17 and 18. Factories and Industrial Undertakings (Abrasive Wheels) Regulations (Cap.59L). Regulates the use of abrasive wheels and related devices for grinding or cutting operations in industrial undertakings. Offences and penalties are provided for in reg.17. Factories and Industrial Undertakings (Work in Compressed Air) Regulations (Cap.59M). Applies to construction work involving the use of compressed air. Regulates the structure, use and safety of compressed air equipment, man-locks, working chambers, and medical locks. Stipulates medical supervision requirements. Offences and penalties are provided for in reg.38. Factories and Industrial Undertakings (Spraying of Flammable Liquids) Regulations (Cap.59N). Regulates the use and storage of ammable liquids used in industrial undertakings, and the conditions under which a ammable liquid spraying process may be carried on. Offences and penalties are provided for in reg.16. Factories and Industrial Undertakings (Goods Lifts) Regulations (Cap.59O). Regulates the construction, maintenance, examination and operation of lifts used for carriage of goods in industrial buildings. Offences and penalties are provided for in regs.11 to 12. Factories and Industrial Undertakings (Dry Batteries) Regulations (Cap.59P). Regulates the manufacturing of dry batteries, and stipulates operating standards for manufacturing facilities and the safety measures required. Offences and penalties are provided for in reg.19. Factories and Industrial Undertakings (Guarding and Operation of Machinery) Regulations (Cap.59Q). Regulates the guarding of dangerous parts of machinery and the operation of machinery by young persons for workplace safety. Offences and penalties are provided for in reg.13. Factories and Industrial Undertakings (Cartridge-Operated Fixing Tools) Regulations (Cap.59R). Regulates the use of instruments designed and used for driving pins into structural material, the driving force being derived from a cartridge. Offences and penalties are provided for in reg.18. Factories and Industrial Undertakings (Protection of Eyes) Regulations (Cap.59S). Requires proprietors to provide employees with proper eye-protection equipment and requires employees to make full use of them during specied processes. Offences and penalties are provided for in reg.9. Factories and Industrial Undertakings (Noise at Work) Regulation (Cap.59T). Prescribes the duties of proprietors whose employees are exposed to noise in industrial
APPENDIX A
399
undertakings, such as the duty to provide ear protectors. Offences and penalties are provided for in reg.12. Factories and Industrial Undertakings (Fire Precautions in Notiable Workplaces) Regulations (Cap.59V). Stipulates the precautions to be taken for prevention of re accidents, including requirements for doors, re escapes, and prohibitions on smoking, and prohibitions on alterations and additions to premises, etc. Offences and penalties are provided for in reg.14. Factories and Industrial Undertakings (Electricity) Regulations (Cap.59W). Regulates the general safety requirements for electricity usage. Stipulates safety requirements for switches, conductors, electric motors, switchboards and switchboard apparatus, and requires the provision of protective equipment, lighting of apparatus, and precautions to be taken against special risks. Offences and penalties are provided for in reg.32. Factories and Industrial Undertakings (Safety Ofcers and Safety Supervisors) Regulations (Cap.59Z). Regulates the registration, employment and duties of safety ofcers and safety supervisors, and requires specic employers to employ safety ofcers. Offences and penalties are provided for in reg.22. Factories and Industrial Undertakings (Carcinogenic Substances) Regulations (Cap.59AA). Regulates the manufacture and use of carcinogenic substances, of which some are prohibited substances while others are controlled substances. Offences and penalties are provided for in reg.10. Factories and Industrial Undertakings (Dangerous Substances) Regulations (Cap.59AB). Imposes duties on proprietors to label dangerous substances, and to implement relevant safety measures. Duties are also imposed on workers to take safety precautions when handling dangerous substances. Offences and penalties are provided for in regs.16 and 17, while defences are provided for in reg.18. Factories and Industrial Undertakings (Suspended Working Platforms) Regulation (Cap.59AC). Regulates the structure, use and inspection of suspended working platforms used for carrying persons, and provides for platform owners and users duties. Offences and penalties are provided for in regs.2931. Factories and Industrial Undertakings (Asbestos) Regulation (Cap.59AD). Applies to all industrial undertakings in which any work with asbestos is carried out. Regulates the identication, assessment and notication by proprietors of asbestos related work, relevant hygiene and safety requirements for protection against asbestos, the storage, distribution of loose asbestos and waste which contains asbestos, the labelling of containers and articles containing asbestos, employment of young workers for asbestos related work, prohibitions for proprietors, and the duties of workmen and others who perform asbestos related work. Offences and penalties are provided for in regs.23 to 25. Factories and Industrial Undertakings (Conned Spaces) Regulations (Cap.59AE). Applies to work that takes place within a conned space or within the immediate vicinity of a conned space. Duties of proprietors and contractors, certied workers and competent persons instructed by proprietors or contractors are stipulated. Offences and penalties are provided for in reg.14.
400
Factories and Industrial Undertakings (Safety Management) Regulation (Cap.59AF). Regulates the registration of safety auditors and scheme operators, and provides for the duties of proprietors and contractors to develop a safety management system, to prepare a written safety policy, to establish a safety committee, and/or to conduct safety audits and reviews. Also prescribes the constitution and function of the disciplinary board. Offences and penalties are provided for in reg.34. Factories and Industrial Undertakings (Load-shifting Machinery) Regulation (Cap.59AG). Prescribes the duties of employees and responsible persons involved in the operation of load-shifting machinery, such as duties to provide or attend training. Offences and penalties are provided for in reg.8. Factories and Industrial Undertakings (Gas Welding and Flame Cutting) Regulation (Cap.59AI). Prescribes the duties of employers and employees involved in gas welding and ame cutting work, such as duties to provide or attend training. Offences and penalties are provided for in reg.7.
CHAPTER 10
HEALTH AND SAFETY AT WORK II CIVIL LIABILITIES

Para. 1. Introduction ............................................................................................................................ 10.001 2. Negligence in the employment relationship ........................................................................... 10.002 (a) Duty of care ..................................................................................................................... 10.004 (b) Breach of duty ................................................................................................................. 10.011 (c) Competent co-workers .................................................................................................... 10.014 (d) Safe place of work ........................................................................................................... 10.016 (e) Safe plant and tools ......................................................................................................... 10.018 (f) Safe system of work ........................................................................................................ 10.022 (g) Deliberate harm caused by third parties .......................................................................... 10.025 (h) Employee working off-site .............................................................................................. 10.027 (i) Occupational stress ......................................................................................................... 10.031 (j) Causation and remoteness of damage ............................................................................. 10.033 (k) Defences .......................................................................................................................... 10.034 (i) Common employment ........................................................................................... 10.034 (ii) Volenti non t injuria ............................................................................................. 10.035 (iii) Contributory negligence ........................................................................................ 10.036 3. Vicarious liability ................................................................................................................... 10.040 4. Breach of statutory duty ......................................................................................................... 10.049 (a) Breach of statutory duty in general ................................................................................. 10.049 (b) Advantages of breach of statutory duty action over negligence ..................................... 10.054 (c) Statutory duty is non-delegable ....................................................................................... 10.056 (d) Ambit of legislation ........................................................................................................ 10.057 (i) Class of persons protected .................................................................................... 10.059 (ii) Statutory duties imposed must apply to defendant ............................................... 10.060 (iii) Terms and purpose of the legislation .................................................................... 10.061 (iv) Breach of standard imposed by legislation ........................................................... 10.062 (e) Causation ........................................................................................................................ 10.070 (f) Defences .......................................................................................................................... 10.072 (i) Volenti non t injuria ............................................................................................. 10.072 (ii) Ex turpi causa ....................................................................................................... 10.073 (iii) Contributory negligence ........................................................................................ 10.074 5. Employers liability as occupier of the work premises ........................................................... 10.079 (a) Occupiers liability in general ......................................................................................... 10.079 (b) Who is an occupier? ........................................................................................................ 10.086 (c) Who is a visitor? ............................................................................................................. 10.090
402
HEALTH AND SAFETY AT WORK II (d) Meaning of premises ....................................................................................................... 10.095 (e) Extent of the common duty of care ................................................................................. 10.098 (i) Common duty of care in general ....................................................................... 10.098 (ii) Section 3(3): particular types of visitors ............................................................... 10.105 (iii) Section 3(4)(a): warning of danger ....................................................................... 10.107 (iv) Section 3(4)(b): reasonable care in hiring independent contractors ..................... 10.112 (f) Defences .......................................................................................................................... 10.117
1. INTRODUCTION
Overview of chapter. The civil liabilities imposed on employers for work-related injuries and the corresponding remedies available to injured employees run the gamut of the common law of torts. Where an employee has been injured at work, an employer may face actions in one or more of negligence, vicarious liability, breach of statutory duty and occupiers liability.1 This chapter will outline the elements of each cause of action and the defences that can be raised by an employer.2 Although the civil liabilities under consideration are of general application, the focus here is on their application in the employment context. 10.001
2. NEGLIGENCE IN THE EMPLOYMENT RELATIONSHIP

Specialised case law and rules for negligence in the employment relationship. Recognising the importance of the role of workers in society and their particular vulnerability to injury in the workplace, the common law requires employers to take proactive steps to ensure safe working conditions for workers. Thus, a specialised body of negligence case law has developed with rules tailored to the employment relationship. Employee has the burden to prove all elements of tort of negligence. As in any negligence action, the injured worker as plaintiff will be required to prove a duty of care, breach of that duty, causation and injury. (a) Duty of care Employer owes a duty of reasonable care to employees. An employer owes a duty of care to his employees in respect of their safety at work. As in negligence generally 10.004 10.002
10.003
It is a common practice to plead multiple causes of action: see e.g. Cheng Liu Nei Su v Clare Environmental Services Ltd (unrep., DCPI 842/2008, [2009] HKEC 1681), and Gurung Tiki Maya v Shum Shing Cheung (unrep., HCPI 168/2008, [2009] HKEC 280) (plaintiffs successful in negligence, occupiers liability and breach of statutory duty). See also Cheng Kai Kit v Kwong Kam Tim Marble Co Ltd (unrep., DCPI 2627/2008, [2010] HKEC 153); Lam Pui Yi Anita v Secretary for Justice (unrep., HCPI 924/2002, [2009] HKEC 1316); and Chung Ping Wai v Pedder Logistics Godown Ltd (unrep., DCPI 1770/2007, [2009] HKEC 1790). It is even possible to plead breach of the implied term of the contract of employment to provide safe conditions of work: see e.g. Li Wai Kin v Ready Chance Ltd (unrep., HCPI 466/2008, [2010] HKEC 632) and Wong Ki v Wong Tung Sing (unrep., HCPI 50/2008, [2010] HKEC 811). However, since the duty in contract is treated, as a matter of law, the same as in negligence, the contract action is not the subject of separate consideration in this chapter. For each of the actions considered in this chapter, the limitation period is the same, three years from the date of injury, or in cases of latent injury, from the date of its reasonable discoverability: see s.27 of the Limitation Ordinance (Cap.347), and Glofcheski R, Tort Law in Hong Kong (Hong Kong: Sweet & Maxwell Asia, 2nd edn, 2007), pp 456458. Principles of damages assessment will not be considered in this chapter, because there is nothing in the employment context that requires a specialised study of personal injury damages. Since the general law of personal injury damages applies, a general work on the subject can be consulted. See e.g. Glofcheski R, Tort Law in Hong Kong (ibid), Chapter 10.
404
HEALTH AND SAFETY AT WORK II
the duty is one of reasonable care only,3 but the specic content of the duty has been spelled out in greater detail than in other areas of negligence law. 10.005 Duty of care based on the employment relationship. A duty of care owed by the employer to the employee is established not by reference to the Donoghue v Stevenson 4 neighbour principle, but on the basis of the existence of an employment relationship. Once that relationship is established, a duty of care is presumed. The duty applies in respect of the period in which the employee is engaged in the work he is employed to do, including matters incidental to that work.5 The criteria necessary for the establishment of an employment relationship have been considered in Chapter 2, including difculties in identifying the employer.6 Duty of care is fourfold. In Wilsons & Clyde Coal Co Ltd v English,7 Lord Wright stated the obligation as threefold: the provision of a competent staff of men, adequate material, and a proper system and effective supervision. Subsequently, his statement has been interpreted to include a fourth head, namely the duty to provide a safe place of work.8 Four-fold duty is a single duty. The duty owed by an employer to workers has been explained as being a single duty.9 Nonetheless, in practice, one or more of the four aspects of the duty may be pleaded in an appropriate case.10 There is naturally some overlap in the four aspects of the duty of care. Duty of care is an afrmative duty requiring positive action. The four-fold duty established in Wilsons and Clyde Coal v English is an afrmative duty, requiring positive action by the employer to ensure the safety of workers. In Ho Ying Wai v Keliston Marine (Far East) Ltd,11 the duty required the employer, a diving company, to conduct a proper inquiry of the employees medical history at the time of his employment in order to ensure that working as a deep sea diver would not unreasonably endanger the employee. In Kwan Shek Sang v Chan Kam Wah,12 the
10.006
10.007
10.008
3 4 5
7 8 9 10 11 12
Per Lord Wright in Wilsons & Clyde Coal Co Ltd v English [1938] AC 57. [1932] AC 562. In Tam Kam Fai v Michael J Design Ltd (unrep., HCPI 347/2005, [2006] HKEC 1820), the court held that activities incidental to work to which the duty extended included the employee leaving the work site at the end of the work period (he was injured while still at the work site). In Cheung Shuk Wah Jessica v Wong Kang Hung Darwin (unrep., HCPI 12/2009, [2010] HKEC 909), it extended to escorting a female co-worker to her destination after the pub in which they worked was closed in the early hours of the morning. In that case, the court relied in part on the employers admission in ECO Form 2 that the worker was responsible for escorting the co-worker to her destination. More controversially, the court held that the nding by the District Court in the ECO proceedings that the worker was in the course of employment was binding on the Court of First Instance in the common law action, as being res judicata (see para 26 of the judgment). For contract of employment, see paras 2.002 to 2.041 above. For employer identication, see paras 2.058 to 2.076 above. From this, it can be inferred that the duty is not owed to non-employees, for instance, employees of subcontractors on-site as in Ferguson v Welsh [1987] 1 WLR 1553 (Per Lord Goff). However, the usual duty in negligence may be owed as in Waan Chuen Ming v Lo Kin Nam (unrep., CACV 281/2008, [2009] HKEC 1668). See also Chapter 2 above, fn 22. Fn 3 above. Latimer v AEC Ltd [1953] AC 643. Cathay Pacic Airways Ltd v Wong Sau Lai (2006) 9 HKCFAR 371, per Bokhary PJ. Sin Kin Man v Hsin Cheong Construction Co Ltd (unrep., HCPI 740/ 2004, [2005] HKEC 1972). [2003] 1 HKLRD 343. [2003] 2 HKLRD 967.
NEGLIGENCE IN THE EMPLOYMENT RELATIONSHIP
405
duty required that the employer not only provide goggles to a worker engaged in grinding iron bars, but that he ensure that the goggles were actually worn, if necessary by strict orders followed by reasonable supervision. In Khan Amar v Cheung Ying Construction Engineering Ltd,13 the court held that the employer must be proactive in inspecting stools on which employees stood while working. An inspection and maintenance system relying on complaints from employees about defective stools was not adequate. Duty of care is non-delegable. The employers duty is a personal, non-delegable duty. It is no defence for an employer to say that he has delegated his responsibility to provide a safe system or proper plant to the employee himself 14 or to other skilled personnel. This principle was afrmed and applied in Kristan Bowers Phillips v Initial Environmental Services Ltd15 where the plaintiff, a musician employed by the Hong Kong Philharmonic Society, was injured by pesticides which the occupier of the premises, the Hong Kong Academy for the Performing Arts, had negligently permitted on the premises. The duty of the employer to provide a safe place of work was not discharged by the Philharmonic Society by delegation to the Academy as the occupier.16 Duty of care is owed to the individual employee. The employers duty of care must take into account the employees individual characteristics and any particular susceptibility of the employee of which the employer is or ought to have been aware. This means that greater care is required for new or untrained workers or those with disabilities.17 On the other hand, it would be wrong to infer from this principle that the duty of care owed to an experienced worker would be reduced. The dictum of Ching PJ in Raineld Design & Associates Ltd v Siu Chi Moon is particularly apt: ... it is often more important to give experienced workmen instructions of this sort 10.009
10.010
13 14
15
16
17
(unrep., HCPI 231/2005, [2006] HKEC 496). In Wilsons & Clyde Coal Co Ltd v English, Lord Wright said: The obligation is fullled by the exercise of due care and skill. But it is not fullled by entrusting its fullment to employees, even though selected with due care and skill Such a duty is the employers personal duty, whether he performs or can perform it himself, or whether he does not perform it or cannot perform it save by servants or agents. A failure to perform such a duty is the employers personal negligence (fn 3 above at 78, 8384). See also Tsang Chun Wan v Li Ming [1998] 2 HKLRD 354 and Lee Hang Kuen v Chan Hong (unrep., HCPI 548/2002, [2006] HKEC 312), where Deputy Judge Muttrie said: I do not see that letting the worker make his own arrangements can be dignied with the name of a system; or if it can, it was certainly not a safe system (at para 39). (unrep., HCPI 580/1996, [1997] HKEC 755). The pest control company, the Hong Kong Philharmonic Society and the Hong Kong Academy for the Performing Arts were all named as co-defendants. See also 10.116 below. In Ho Ying Wai v Keliston Marine (Far East) Ltd (fn 11 above), it was presumably the non-delegable aspect of the duty that motivated the employer, a diving company, to admit its liability for the negligence of a doctor it appointed for the very purpose of ensuring that employees were medically t to undertake diving work. Note that the non-delegable, four-fold duty applies to the course of employment only. Thus, where an employer provides transportation to and from the workplace, or provides accommodation for an employee working overseas, a duty of care may arise but it is the ordinary duty in negligence: see Leung Kwok Yin, Victoria v Secretary for Justice (unrep., DCPI 1399/2009, [2010] HKEC 834) and Li Hoi Shuen v Man Ming Engineering Trading Co Ltd [2006] 1 HKLRD 84. Paris v Stepney [1951] AC 367. The employer must even take into account language difculties, as with a Pakistani labourer who had limited prociency in Chinese and English: Ahmed Masood v Chung Kau Engineering Co Ltd (unrep., DCPI 517/2003, [2005] HKEC 151).
406
because their familiarity with their work may tend to leave them contemptuous of safety precautions.18 (b) Breach of duty 10.011 Standard of care is of the reasonable employer in the circumstances. The employers duty is not absolute.19 It requires reasonable care only.20 The question of the breach of employers duty of care is determined according to similar criteria as in the tort of negligence generally.21 The standard of care is the standard of the reasonable employer, having regard to all the circumstances, including the individual characteristics of the worker in question and his level of experience and training.22 As in negligence generally, common practice will be highly inuential in the determination of the standard of reasonable care, but it will not be conclusive.23 Although this standard may be high, it is not one of strict liability. Factors such as the likelihood of an accident, the magnitude of the injury should an accident occur, the cost to eliminate the risk and the social utility of the activity are relevant considerations and may be determinative.24 Risk of injury must be foreseeable. Risk of injury must be foreseeable for breach of duty to be found, but this does not require foreseeability of the precise sequence of events by which the accident occurs. In Lin Chiu Lung v Ile Co Ltd,25 the court held that it did not matter whether the way in which the plaintiffs gloved hand got caught in the lifting machinery was foreseeable. What mattered was that there was a foreseeable risk of some injury arising from the system of work. It follows that where the risk of
10.012
18 19 20
21
22
23
24
25
[2000] 2 HKLRD 226 at 231. Per Lord Wright in Wilsons & Clyde Coal Co Ltd v English (fn 3 above). For a recent statement of this principle, see Lee Ping v Hong Kong Kartingsport Association Ltd (unrep., HCPI 496/2008, [2010] HKEC 142). Indeed it can, as in negligence generally, be proved by reference to the inferential reasoning of res ipsa loquitur: see e.g. Saneld Building Contractors Ltd v Li Kai Cheong (2003) 6 HKCFAR 207. See also Chan Kwok Ping v Hop Yick Engineering Co [1997] HKLRD 1390 (defendant-employers defective spray paint gun spraying into plaintiffs eye) and Ma Kam Yeung v Fu Hay Kin [1998] 2 HKLRD 615 (defendant-employers unguarded circular saw injuring plaintiffs thumb). For the requirements of res ipsa loquitur, see Glofcheski R, Tort Law in Hong Kong (fn 1 above), pp 5866. As in Ho Man Wa v Wong Shui Fun (unrep., DCPI 730/2009, [2010] HKEC 366). See also Bitto v Cheng How Kiu (unrep., HCPI 823/2008, [2010] HKEC 346). See Mehmood Khalid v Million Harvest Wharves & Logistics Ltd (unrep., CACV 303/2007, [2008] HKEC 970), where a particular practice of loading containers onto vessels was widespread in the industry but nonetheless found to be negligent. In Wong Kit Chun v Wishing Long Hong (unrep., CACV 168 of 2000, [2000] HKEC 1216), the employee was killed in a fall in a night-time trek with his employer as a result of the employers failure to provide a torch. In nding a breach of duty, Woo JA said: Factors in determining the standard of care include magnitude of the risk, likelihood of the occurrence of the risk and the cost required to reduce or extinguish such risk. The torch only cost RMB 18 each. The Court of Appeals decision was upheld in Wishing Long Hong v Wong Kit Chun (2001) 4 HKCFAR 289, with Sir Thomas Eichelbaum NPJ delivering the unanimous view of the Court of Final Appeal. (unrep., HCPI 1056/2002, [2006] HKEC 1464).
407
injury is found by the court to be unforeseeable, the employer will not be in breach of the duty of care.26 Statutory standards relevant to common law standard of care. Statutory standards in an ordinance 27 can be referred to by the courts to determine the reasonable standard of care for the purposes of a common law negligence action. Indeed, such standards are highly persuasive and are likely to be adopted as the reasonable standard without much or any analysis.28 Worker safety is the area of greatest statutory intervention in Hong Kong. Safety standards abound in a variety of regulations, with penalties attaching for their breach. The greatest number of such regulations is found in the subsidiary legislation made pursuant to the Factories and Industrial Undertakings Ordinance (Cap.59) (FIUO) and the Occupational Safety and Health Ordinance (Cap.509) (OSHO).29 (c) Competent co-workers Employer must provide competent co-workers. The employers duty of care requires him to take reasonable care in the appointment, training and supervision of staff with whom an employee is required to work.30 It is an ongoing duty that might also necessitate the termination of incompetent staff. The duty is of less practical 10.014 10.013
26
27
28
29
30
As in Ali Rafaqat v Wise Security Ltd (unrep., DCPI 896/2009, [2010] HKEC 393), where intruders on a construction site assaulted the security guard. The employers duty was acknowledged but found not breached, because the risk of such an assault was very low. See also Mo Po v Yat Fai Engineering Ltd (unrep., HCPI 405/2005, [2006] HKEC 674). On the facts one might well question the decision in Mo Po. The plaintiff was injured when a nail he was hammering bounced off the wood and injured his eye. The court held that the injury was not sufciently foreseeable to give rise to liability for failing to provide protective eyewear. It is submitted that foreseeability of injury should be considered against the severity of injury should the risk eventuate. By contrast, in Chow Wai Hung v King Rise Engineering Ltd (unrep., CACV 213/2005, [2005] HKEC 1619), the Court of Appeal held that an eye injury to a worker not provided with goggles was a foreseeable consequence when removing a nail embedded in concrete. See also Hang Huu Duc v Hanbo Engineering Ltd (unrep., HCPI 172/2004, [2005] HKEC 1882), where Deputy Judge Muttrie observed that any carpenter who has to hammer nails into wood should be provided with some kind of eye protection. Such statutory standards may also give rise to liability for breach of statutory duty: see paras 10.049 to 10.078 below. For example, in Feerni Development Ltd v Daniel Wong & Partners [2001] 2 HKLRD 13, the statutory standard of reasonable care stipulated in the Supply of Services (Implied Terms) Ordinance (Cap.457) was relied on by the court in reinforcing the standard of care in negligence imposed on the defendant solicitors in a land transaction case. See Chapter 9 above. Non-statutory codes of practice, although not legally binding, will also be relevant, as in Mehmood Khalid v Million Harvest Wharves Logistics Ltd (fn 23 above), where the ship loading standard in the Safety Guide for Shipboard Container Handling published by the Marine Industrial Safety Section of the Marine Department was preferred by the court to that of the actual common practice in the industry. See also Leung Po Chun v Yat Lee Booth Construction Co Ltd (unrep., CACV 399/2007, [2008] HKEC 948). Moreover, by virtue of s.62 of the Evidence Ordinance (Cap.8), a person convicted of a criminal offence will, for the purposes of a civil action, be presumed to have committed that offence. Thus, where the actus of the criminal offence subsumes the requirements for civil liability, the plaintiff can prove his civil case without the need to adduce further evidence: see e.g. Lee Hang Kuen v Chan Hong (fn 14 above). In Lau Pai Yam v Tai Tung Coffee Co Ltd (unrep., HCPI 745/2002, [2003] HKEC 1191), this aspect of the duty of care was not expressly mentioned, but must have been what the court had in mind when deciding liability. The plaintiff delivery truck driver was engaged with a co-worker in stacking bags of sugar on a trolley. He was injured when his co-worker slipped and fell while tipping the trolley, knocking the trolley onto the plaintiff. The court found the employer to be in breach of his duty to the plaintiff where the reason for the accident was the co-workers inadequate footwear (ip-ops). The employer was also found to be vicariously liable.
408
signicance today given the abolition of the defence of common employment31 and the availability of a vicarious liability action against the employer for the negligence of a co-worker.32 However, it is still occasionally pleaded and would have particular application where the co-workers actions causing injury to the plaintiff fall outside of the course of employment. The duty is particularly relevant in the case of harassment and victimisation by co-workers, an area of increasing concern for the courts, where vicarious liability may not always be clear-cut.33 10.015 No liability where reasonable care taken. The duty is one of reasonable care, so an employer who has taken reasonable care in screening recruits, has provided adequate training and supervision to staff, and has no knowledge of serious shortcomings in staff, will not, in general, be liable under this head, although such an employer may still be vicariously liable for injuries caused by one worker to another. In Ling Man Kuen v Chow Chan Ming,34 the defendants employee assaulted the plaintiff, also an employee of the defendant, during an altercation arising from a work-related dispute. The court found that the employers knowledge of the offending-employees conviction for assault many years earlier did not constitute a foreseeable risk of such an attack. The employer was found not liable for negligent hiring, but was still found vicariously liable for the offending employees actions.35 (d) Safe place of work 10.016 Employer must provide a safe place of work. The employer must take reasonable care to ensure that the work premises are safe, including access to and from the workplace.36 Again, the duty is one of reasonable care in the circumstances, which may, in appropriate circumstances, include a duty to make the premises safe from intruders who might injure workers.37 On the other hand, a construction worker carrying pipes who slipped on a muddy path was unable to prove a breach of this aspect of the duty of care. In the words of Judge M Ng, The standard of a smooth ballroom oor or of safety in a nursery cannot be applied to a construction site. Water, mud and building debris are usual features and those who work in construction sites must be aware of these obvious and usual dangers.38 Overlap with occupiers liability. The duty to provide a safe place of work overlaps with the duties of an occupier under the Occupiers Liability Ordinance.39 An employer
10.017
31 32 33
34 35 36 37 38
39
By virtue of s.22 of the Law Amendment (Reform) Consolidation Ordinance (Cap.23). See paras 10.040 to 10.048 below. It was the basis for imposing liability in negligence on the employer in Ha Kwok Ming v Boxton Ltd (unrep., CACV 106/2009, [2009] HKEC 2055), where one kitchen worker attacked another. The court found that the employer was aware of the assailants history of bullying the plaintiff but did nothing to prevent it. For more on harassment and victimisation by co-workers, see para 10.026 below. (unrep., DCPI 1445/2005, [2006] HKEC 1566). For vicarious liability generally, see paras 10.040 to 10.048 below. Tam Kam Fai v Michael J Design Ltd (unrep., HCPI 347/2005, [2006] HKEC 1820). Wong Wai Ming v Hospital Authority [2001] 3 HKLRD 209. Ahmed Masood v Chung Kau Engineering Co Ltd (fn 17 above), at para 38. Note that the employer was found in breach of the duty to provide a safe system of work because workers were required to carry too many pipes at once. Occupiers Liability Ordinance (Cap.314), hereinafter referred to as the OLO.
409
may owe duties under the OLO as well as under the common law.40 However, applying the criteria laid down in the case law, some employers may not qualify as occupiers. They are nonetheless under a common law duty to take reasonable care to provide a safe place of work, even when the worker is working off-site.41 In Wong Lok Keung v Discovery Bay Transportation Services Ltd,42 occupiers liability was not pleaded, but the employer who failed to remove a 1-inch thick metal plate on the pier over which the plaintiff tripped and stumbled was found to be in breach of his duty to provide a safe place of work. (e) Safe plant and tools Employer must provide safe plant and tools. An employer is under a duty to take reasonable care in the selection and provision of plant, tools and appliances to be used by workers. In Chan Kwai Sum v Ultimate Engineering Ltd,43 the duty was found to be breached merely by the fact that the employer should have provided a stool to the worker asked to scrape paint off the oor of a corridor, who, after a number of hours so engaged, suffered numbness and chronic symptoms in his right foot. Duty includes maintenance and inspection. The employers duty does not end with the purchase of safe plant and tools, but extends to the on-going maintenance and inspection of such equipment.44 In Fan Hung Shing v Hang Fung Shipping Co Ltd,45 a worker fell from a defective rope ladder on board the defendant employers ship; the defendant was found in breach of his duty of care for failing to provide a reasonable inspection and maintenance system. In Chan Kin Ka v Siu Tung Hung,46 where a worker suffered eye injuries when his goggles broke, the court held that the defendants should have carried out reasonable supervision to ensure that safe goggles were worn by the plaintiff. A maintenance system that does not provide for regular inspection but relies on reports of equipment defects by workers is not sufcient to satisfy the duty.47 Moreover, the duty requires the employer to ensure safe storage of tools in order to prevent use by unauthorised personnel whose improper use of the equipment might pose a danger to other workers.48 Duty includes instruction in proper use. The employers duty extends to instruction in the proper use of equipment. This may be considered an aspect of the duty to ensure 10.018
10.019
10.020
40
41
42 43
44 45 46 47 48
See paras 10.079 to 10.085 below. An employer also owes a duty to ensure safe work premises under s.6(2) of the OSHO (Cap.509). For a recent application see Leung Kin Fai v IDS Logistics (Hong Kong) Ltd (unrep., CACV 192/2009, [2010] HKEC 1103). See paras 10.027 to 10.030 below. For more on worker loan arrangements, see Chapter 2, paras 2.064 to 2.071 above. (unrep., CACV 238/2005, [2006] HKEC 259). (unrep., HCPI 309/2003, [2004] HKEC 1226). In such circumstances, the failure to provide adequate equipment speaks equally to the duty to provide a safe system of work (see paras 10.022 to 10.024 below). In Ho Wan Yung v AS Watson & Co Ltd (unrep., HCPI 264/2008, [2010] HKEC 855) the provision of an ordinary carpenters hammer to chop ice in a supermarket meat freezer was found to be a breach of the duty to provide appropriate tools and thus a failure to provide a safe and proper system of work. Smith v Baker [1891] AC 325. (unrep., HCPI 1192/1995, [2000] HKEC 65). (unrep., HCPI 570/1998, [1999] HKEC 355). Khan Amar v Cheung Ying Construction (unrep., HCPI 231/2005, [2007] HKEC 1009). To Wei Kei v Vickcore Engineering Ltd [2003] 1 HKLRD 69.
410
a safe system of work.49 In a breach of statutory duty action regarding the provision of safe equipment, the House of Lords recently held that, in order to full this aspect of the duty, the employer must consider not only the skilled and careful man who never relaxes his vigilance but also the contingency of carelessness on the part of the workman in charge of [the equipment] and the frequency with which that contingency is likely to arise.50 10.021 Employer not liable for latent defects where reputable supplier selected. The duty to provide safe plant and tools is complicated since equipment may contain latent defects that an employer cannot detect, even with the exercise of reasonable care. In Davie v New Merton Board Mills Ltd,51 the plaintiff sustained an eye injury as a result of his use of a defective tool supplied to him by his employer. The tool had been negligently manufactured by otherwise reputable manufacturers and no reasonable inspection by the employer would have disclosed the latent defect. Viscount Simonds held that the employer discharged his duty by using reasonable care in the selection of a reputable supplier; he did not see the purchase of the tool as a delegation of the duty, but as a fullment of it.52 In Li Kai Cheong v Lam Ying Wai, where a worker was injured when he fell from scaffolding, the court held that the caster wheels on the scaffolding provided by another contractor contained a latent defect: There was nothing to put the 1st defendant on notice of inquiry as to defects in the scaffold ... It is difcult to see what the 1st defendant or any of his employees could have been expected to do to discharge the duty of reasonable care owed to the plaintiff . 53 Thus the employer was found not in breach of his duty to provide safe plant and equipment. (f ) Safe system of work 10.022 Employer must exercise reasonable care in providing a safe system of work. This is by far the most important aspect of the four-fold duty of care. It is less specic and encompasses more subject matter than the previously discussed aspects of the duty of care, and it is the most frequently pleaded and litigated. The steps it may require of
49 50 51 52
53
For more on duty to ensure a safe system of work, see paras 10.022 to 10.024 below. Robb v Salamis Ltd [2006] UKHL 56, per Lord Hope of Craighead, at para 8. [1959] 1 All ER 604. Note that in the United Kingdom the decision in Davie v New Merton Board Mills Ltd (ibid) has been superseded by s.1 of the Employers Liability (Defective Equipment) Act 1969, which effectively deems any defect in equipment attributable to the fault of the manufacturer also to be attributable to negligence on the part of the employer. However, no similar enactment has been introduced in Hong Kong. (unrep., HCPI 920/2000, [2001] HKLRD (Yrbk) 636). See also Chan Kit Man v Rayable Consultants Ltd and Ajax Engineering & Surveyors Ltd (Third Party) [1999] 2 HKLRD 577, where the deceased was killed when a crane tower on which he was working suddenly collapsed. The crane was 15 years old and had been hired from X, who had hired it from Y, who had imported it into Hong Kong without any guarantee as to its condition. The trial judge found that the collapse was caused by a rusty weld of the crane prior to its being exported to Hong Kong, and held the defendant employer liable for failing to make inquiries regarding the history and condition of the crane. The Court of Appeal allowed the employers appeal, emphasising that the duty is one of reasonable care only. In view of the latency of the defect, with nothing to put the employer on notice of any problem, the employers duty was discharged.
411
the employer vary widely depending on the nature and all of the circumstances of the work involved.54 Cathay Pacic Airways v Wong Sau Lai. In Cathay Pacic Airways Ltd v Wong Sau Lai,55 a ight attendant was injured when opening a drawer of drinks from a bar cart. The drawer, weighing about 30 pounds and about 15 inches long, fell onto the plaintiffs knee while she was in a squatting position, causing injury. In dismissing the defendant employers appeal, the Court of Final Appeal laid down a number of principles applicable to the determination of the employers duty to ensure a safe system of work. While acknowledging the four-fold nature of the duty, the court asserted that this is essentially a single duty of care in negligence. The court observed that judges and academics alike speak in open-ended terms of the matters that system of work encompasses, and that there was no known attempt to provide an exhaustive list of what that included. Although the court doubted whether any such attempt could ever be successful, it went on to provide a useful and careful analysis. A system of work must be instituted even where the work is of a regular and uniform kind including, as in the case before the court, obtaining drinks for airline passengers. Regard must be had to the fact that some workers have to function in circumstances in which the dangers are obscured by repetition56 and under considerable pressure. An employer must always have in mind not only the careful man, but also the man who is inattentive to such a degree as can normally be expected.57 Although a heavy onus rests upon a plaintiff who seeks to have condemned as unsafe a system that has been used for a long time, there was no warrant for insisting that a complaint against the employers system can never be established unless the plaintiff manages to propose an acceptable alternative system.58 It is relevant to see if the plaintiff can propose an alternative system, but the failure to do so does not preclude the court from nding the employer in breach of its duty. Moreover, the absence of any previous accident, although relevant, is not conclusive. The defendant was found in breach of the duty of the care because its 10.023
54
55 56
57
58
Circumstances in which employers have been held to be in breach of the duty to provide a safe system of work range from the need to provide adequate protection to a domestic helper against the employers dangerous dogs, as in Mujiati v Chong Wai Kwan (unrep., DCPI 424/2003, [2004] HKEC 1271); to the need to undertake an adequate assessment of the risk from criminals before sending police ofcers on a raid, as in Chan Sze Ki v Department of Justice [2006] 3 HKLRD 413; and, more recently, the need to provide earplugs to prevent deafness in noisy work, as in Lai King Yiu v Acciona Infraestructureas SA (unrep., HCPI 444/2008, [2009] HKEC 742); and the need to provide a safe method of garbage disposal in residential premises, as in Cheung Yuen Fan Sally v Hong Kong University of Science and Technology (unrep., HCPI 106 and 107/2003 [2009] HKEC 420) and Lam Shui Ngan v Global Cheer Ltd (unrep., DCPI 2530/2007, [2009] HKEC 2036). Where heavy manual work such as the lifting of bales of cloth or cartons of food, or the lifting of patients in a hospital, is regularly required of a worker, the court may nd the employer in breach if a safe system of lifting has not been implemented through proper instruction and training, as in Ho Wing Sai v Wong Muk Hung (unrep., HCPI 787/2000, [2005] HKEC 824) and Yeung Sze Hoi v New Trade Good Food Centre Ltd (unrep., HCPI 568/2004, [2005] HKEC 595); or in the provision of additional manpower as in Rana Bimla v Hong Tak (Shing Fat) Home for the Aged Co Ltd (unrep., DCPI 74/2009, [2010] HKEC 173). Where heavy lifting work outside the normal job description is required, a safe system of work is all the more urgent, and its absence will result in a nding of breach of duty, as in Liu Shui Bik v Countfortune Ltd (unrep., HCPI 60/2008, [2010] HKEC 414). Fn 9 above. Ibid, at 594, quoting Le Pichon JA of the Court of Appeal citing Lord Oakseys observation in General Cleaning Contractors Ltd v Christmas [1953] AC 180 at 190. Ibid, at 595, quoting Le Pichon JA of the Court of Appeal, citing Lord Reids statement in Smith v National Coal Board [1967] 1 WLR 871 at 873. Ibid, at 598.
412
system of work requiring the ight attendant to pull the drawer open only 5 inches was inadequate, given the pressures of time, the likelihood of momentary lapses of attention, and the repetitive nature of the task.59 10.024 Safe system of work not required for simple tasks. Notwithstanding Cathay Pacic Airways Ltd v Wong Sau Lai, there are tasks that are of a simple, every-day nature that anyone should be capable of performing. In appropriate cases, the employer may be excused from implementing any particular safe system of work.60 In Lam Wai Chi v Project Concern Hong Kong,61 the plaintiff suffered a wrist injury while helping two colleagues move a 60-pound display board to another oor of the defendant employers premises. The court cited Lord Oaksey in Winter v Cardiff Rural District Council62 to the effect that there is a sphere in which the employer must exercise his discretion and there are other spheres in which foremen and workmen must exercise theirs where the operation is simple and the decision how it shall be done must be taken frequently, it is natural and reasonable that it should be left to the workmen on the spot. In Wong Wing Chow v Lee Wing Hang,63 the plaintiff was injured when he slipped and fell from a ladder while entering a ditch. There were no handrails on the ladder, the rungs of the ladder were round rather than at, and they were wet from water and rain. Nonetheless, the plaintiff failed to prove a breach of duty to provide a safe system of work. Deputy Judge To said: One cannot lose sight of the reality of the conditions in a construction site. The standard of safety to be applied in a nursery cannot be applied to a construction site. Water, mud, building debris are the usual things to be found in a construction site. Those who work in a construction site must be aware of these obvious, usual and inherent dangers of working in a construction site. I am quite unable to nd the effect of the absence of a handrail, the round rungs and the presence of mud and water on the rung, whether by itself or in combination, made the work system unsafe. (g) Deliberate harm caused by third parties 10.025 Employer must take reasonable precautions against deliberate harm caused by third parties. The duty to ensure a safe place of work can extend to protecting
59
60
61 62 63
See also Lai Wah Wai v Castco Testing Centre Ltd [1996] 2 HKC 44, where Cheung J cited Charlesworth & Percy on Negligence (8th edn) to the effect that system of work includes the organization of the work; the way in which it is intended the work shall be carried out; the giving of adequate instructions (especially to inexperienced workers); the sequence of events; the taking of precautions for the safety of the workers and at what stages; the number of such persons required to do the job; the part to be taken by each of the various persons employed; and the moment at which they shall perform their respective tasks. For example, see Lam Ka Lok v Swire Properties Management Ltd (unrep., HCPI 914/2003, [2005] HKEC 650), involving the picking up of a bucket of water while leaning over the railing of a window washing gondola; Ng Kong v Golden Caterers Ltd (unrep., HCPI 206/2004, [2005] HKEC 185), involving a kitchen workers removal of a six-pound steaming plate from an oven; Law Shu Ming v Tung Wah Group of Hospitals (unrep., HCPI 630/2008, [2009] HKEC 1390), involving a hospital cook disposing of trash; and Wong Ching Yau v Group Yield International Development Ltd (unrep., HCPI 637/2008, [2010] HKEC 113), involving a waitress storing a glass turntable after a banquet. (unrep., HCPI 78/2002, [2003] HKEC 456). [1950] 1 All ER 819. (unrep., HCPI 244/2002, [2003] HKEC 1285).
413
the worker from deliberate harm from third parties. In Wong Wai Ming v Hospital Authority,64 the plaintiff was a psychiatric nurse employed by the defendant. He was injured when a mentally unbalanced person attending at the defendants clinic threw corrosive acid at him. Cheung J at trial found a breach of duty and the Court of Appeal agreed. Keith JA said: An employer is under a duty to its workforce to take reasonable care for their safety. Where one employment happens to be more dangerous than another, a greater degree of care must be taken, but where the employer cannot eliminate the risk of danger, it is required to take reasonable precautions to reduce the risk as far as possible ... These principles have been applied to the employers duty to protect its workforce from attacks while they carry out their duties.65 Keith JA explained how the reported cases concerning the duty to protect from injury inicted by third parties tend to involve those handling or banking cash, but the duty can obviously extend beyond that.66 Employer to take reasonable care to protect against victimisation and harassment by co-workers. In Waters v Commissioner of Police of the Metropolis,67 a striking-out application, the House of Lords held that the duty of the employer to provide a safe place of work can extend to protecting the employee from mental harm resulting from victimisation, harassment and bullying at the hands of co-workers. The plaintiff police ofcers action was not struck out, despite the line of authority limiting the duty of care owed by the police.68 Foreseeability is the key. On that basis, the employer in Ha Kwok Ming v Boxton Ltd 69 was found liable for an attack by one kitchen worker on another, 10.026
64 65 66
67 68
69
[2001] 3 HKLRD 209. Ibid, at 213214. As in Lee Tin Yeung v Chiu Chow Association Secondary School [2003] 2 HKLRD 669, where the plaintiff, a remedial class teacher in the employ of the defendant had been subjected to a course of aggressive behaviour by a pupil and suffered psychiatric injury. The court found the defendant employer to be in breach of the duty to provide a safe system of work to prevent such an attack, which the court found to be reasonably foreseeable, because the pupil was known to the defendant to be violent, and the plaintiff had not been provided with adequate training to deal with such situations. More recently, in Cheung Shuk Wah Jessica v Wong Kang Hung Darwin (fn 5 above), where the deceased pub worker was murdered by pub customers while escorting a female co-worker to her destination after the closing of the pub in the early hours of the morning, the court found a duty owed and breached. The attack occurred shortly after a dispute in the pub with the assailants, who had threatened violence against the pub staff for refusing to serve alcohol after hours. The court found that, in such circumstances, violence was reasonably foreseeable and the employer was under a duty to ensure the safety of the deceased against such an attack. See also Ali Rafaqat v Wise Security Ltd (fn 26 above), where the duty was found not breached given the low risk of assaults to security guards on the construction site in question. [2000] 1 WLR 1607. Lord Slynn of Hadley put it thus: If an employer knows that acts being done by employees during their employment may cause physical or mental harm to a particular fellow employee and he does nothing to supervise or prevent such acts, when it is in his power to do so, it is clearly arguable that he may be in breach of his duty to that employee. It seems to me that he may also be in breach of that duty if he can foresee that such acts may happen and, if they do, that physical or mental harm may be caused to an individual (ibid, at 1611). Fn 33 above.
414
the court being satised that the employer was aware of the history of bullying and baiting that had preceded the attack and had done nothing to prevent it.70 (h) Employee working off-site 10.027 Employer owes same duty of care to off-site employees. When a worker is sent to another employers premises to perform the work, the employers duty of care remains non-delegable and is one of reasonable care.71 In Lee Wai Man v Wah Leung Finance Ltd,72 the deceased was in the employ of the defendant, a project manager managing the construction of a building in Shanghai. The deceased was working on the building when he was blown by a sudden gust of wind into an unguarded hole and fell nine oors to his death. The defendant denied liability on the basis that the worksite was in Shanghai and the defendant, based in Hong Kong, could not reasonably ensure safe conditions on the site. In the courts view, the defendant ought to have known that the site would be fraught with the usual risks found on construction sites of this nature. The court found the defendant in breach of its non-delegable duty to take reasonable care for the deceased employees safety, because it had not taken any steps to inspect the site and satisfy itself that the Shanghai contractor in charge of the site had adopted a safe system of work. Non-delegable aspect of duty to off-site employees may be relaxed where employer takes reasonable care. The non-delegable aspect of the employers duty of care may be relaxed, allowing for some scope, however limited, for the discharge of the employers duty through appropriate delegation, if accompanied by reasonable steps to ensure the safety of workers. In Wilson v Tyneside Window Cleaning, Pearce LJ said: Whether the servant is working on the premises of the master or those of a stranger, that duty is still, as it seems to me, the same; but as a matter of common sense its performance and discharge will probably be vastly different in the two cases. The masters own premises are under his control: if they are dangerously in need of repair he can and must rectify the fault at once if he is to escape the censure of negligence. But if a master sends his plumber to mend a leak in a respectable private house, no one could hold him negligent for not visiting the house himself to see if the carpet in the hall creates a trap. Between these extremes are countless possible examples in which the court may have to decide the question of fact: Did
10.028
70
71
72
A variation of this aspect of the duty of care may have been created in Li Hoi Shuen v Man Ming Engineering Trading Co Ltd (fn 16 above). The deceased was employed in Hong Kong but required to work in Guangdong, where he used the employers warehouse premises for his overnight sleep accommodation, as did two co-workers hired to assist him. The two co-workers attacked and murdered him in his sleep. The court found that the deceased was not in the course of employment at the time of the attack, and hence was not at that moment owed the fourfold duty of care identied in Wilsons & Clyde Coal Co Ltd v English (fn 3 above). However, the court found that under the more general neighbour principle, the employer owed a duty to take reasonable care in the provision of safe accommodation, and found this duty breached. The reasoning is remarkable because the general duty of care in negligence on which the court relied does not impose a duty to take positive action on behalf of others, as do the Wilsons four-fold duty and the duty of an occupier to visitors. This appears to be a new species of duty, over and above the usual four-fold duty. It is, presumably, only applicable to employers who provide accommodation to employees and is, exceptionally, a duty to take positive action on behalf of the neighbour (the employee). Li Moon Chai v Leung Shu Man (unrep., HCPI 48/2007, [2008] HKEC 1517), citing McDermid v Nash Dredging & Reclamation Co Ltd [1987] AC 906. [2004] 1 HKLRD 1023.
415
the master take reasonable care so to carry out his operations as not to subject those employed by him to unnecessary risk? Precautions dictated by reasonable care when the servant works on the masters premises may be wholly prevented or greatly circumscribed by the fact that the place of work is under the control of a stranger. Additional safeguards intended to reinforce the mans own knowledge and skill in surmounting difculties or dangers may be reasonable in the former case but impracticable and unreasonable in the latter. So viewed, the question whether the master was in control of the premises ceases to be a matter of technicality and becomes merely one of the ingredients, albeit a very important one, in a consideration of the question of fact whether, in all the circumstances, the master took reasonable care.73 Off-site contractors undertaking to provide safe work place insufcient. An off-site contractors contractual undertaking to the employer to provide a safe place of work in regard to the employers workers on the contractors site is not sufcient to discharge the employers duty of care. In Ng Koon Ki v Hilti (Hong Kong) Ltd,74 the court held that in circumstances of its technicians visiting worksites to carry out anchor testing, requiring work on scaffolding, the employer should have itself inspected the site to ensure safe working platforms. Dual liability of regular and on-site employers possible. Exceptionally, both the regular employer and the on-site employer will owe a duty of care to the worker, for example where a worker is on loan from one employer to another. In Wong Yat Chiu v Chan Kwok Wa,75 both the regular and on-site employers were held liable in negligence for the plaintiffs injuries caused by a defective system of work used by the on-site employer.76 (i) Occupational stress Occupational-stress claims may be recognised. Psychiatric injury suffered by workers due to occupational stress or harassment and victimisation has not been the subject of claims by workers in Hong Kong. This may change, judging by the increase in such 10.031 10.029
10.030
73
74 75 76
[1958] 2 QB 111 at 121. See also Wong Chi Wing v Chun Wo Building Construction Ltd (unrep., HCPI 1476/2000, [2003] HKEC 329), where the plaintiff was sent to a clients site to do toilet-extraction work and was injured due to unsafe conditions there. The court found that the employer had discharged its non-delegable duty, having earlier taken reasonable steps to ensure that there is a safe place of work by inspecting the site and ensuring that the occupiers were responsible and competent. [2004] 2 HKLRD 634. [1999] 2 HKLRD 849. The same principle was acknowledged by the Court of Appeal in Jerry Chen v Whirlpool (Hong Kong) Ltd (unrep., CACV 325/2005, [2006] HKEC 1316), although, on the facts, the regular Hong Kong-based employer was not liable for the plaintiffs injuries caused by the negligence of the on-site employers driver, because the regular employer was found to have acted reasonably in delegating the provision of a driver and car for the purposes of the business trip in Beijing to the on-site employer. This decision was afrmed by the Court of Final Appeal in 2007: see Jerry Chen v Whirlpool (Hong Kong) Ltd (unrep., FACV 23/2006, [2007] HKEC 1908). See also Chung Yuen Yee v Sam Woo Bore Pile Foundation Ltd (unrep., HCPI 1053/2006, [2010] HKEC 1228), where the contractor who gave instructions to an on-site worker was found to be employer pro hac vice (for this occasion) and thus liable in negligence (with the regular employers) for having failed to provide proper supervision and a safe system of work. For a rare case in which only the on-site employer was held liable, see Garrard v A E Southey & Co [1952] 2 QB 174. For a discussion of the legal position of employees on loan, see paras 2.0642.071 above.
416
actions in the United Kingdom. In Barber v Somerset County Council,77 the House of Lords allowed the appeal of the plaintiff, a teacher who was required to work long hours under difcult conditions, resulting in stress of which the employer was aware, and who eventually suffered a nervous breakdown. The court held that the overall test was that of the reasonable and prudent employer, taking positive steps for the safety of his employees in light of what he knew or ought to have known. The court held that, in view of its knowledge of the plaintiffs condition, the employer ought to have taken the initiative in inquiring about the plaintiffs problems and attempting to ease them.78 10.032 Foreseeability of injury is the main determinant. Foreseeability of psychiatric injury will be the main determinant in occupational-stress claims against an employer.79 Foreseeability will depend on the inter-relationship between the particular demands of a job and the characteristics of the employee concerned. In the case of harassment and victimisation, where harassment among workers is known to take place, the employer will be expected to take steps to alleviate the problem. The employers duty is owed to each individual worker.80 Thus, if there are indications that a particular worker is emotionally vulnerable or is showing signs of stress and nothing is done about it by the employer, the employer may be found to be in breach of his duty to provide a safe system and place of work. ( j) Causation and remoteness of damage 10.033 Causation and remoteness treated as in the general tort of negligence. Causation and remoteness of damage will be treated in accordance with the principles of negligence law in general.81 In Wong Wai Ming v Hospital Authority,82 the defendant Hospital Authority argued that, even if safety precautions such as a protective screen and emergency button had been installed, the plaintiff-receptionist would have been injured by the intruders corrosive acid anyway, because he would have left the reception counter to help others. This argument was rejected by the Court of Appeal, which afrmed the trial judges decision that causation was proved.83
77 78
79
80 81 82 83
[2004] ICR 457. See also Waters v Commissioner of Police of the Metropolis (fn 67 above) and Intel Corp (UK) Ltd v Tracy Ann Daw [2008] EWCA Civ 70. Wong Tai Wai v HK SAR Government (unrep., CACV 19/2003, [2004] HKEC 1093), a pre-trial strike-out application, may be a local example of such a claim. The court found the plaintiffs pleading to the effect that his employer, the Government of the HKSAR, was negligent in not stopping employees from harassing the plaintiff and causing psychiatric injury, was sufcient to order a trial on the matter. See also Lee Tin Yeung v Chiu Chow Association Secondary School (fn 66 above), where an actual assault was seen as the precipitating factor in the psychiatric illness. Hartman v South Essex Mental Health and Community Care NHS Trust [2005] EWCA Civ 6, per Lord Justice Scott-Baker. Paris v Stepney (fn 17 above). See Glofcheski R, Tort Law in Hong Kong (fn 1 above), Chapter 4. Fn 64 above. In Li Wai Ming v Tang Siu Fat (unrep., HCPI 512/2006, [2008] HKEC 2199), the action failed because the plaintiffs injury was found to have been caused not by any failure on the part of the employer to provide a safe system but by the employees outburst of temper during which he threw a four-wheeled trolley to the ground. In Ali Rafaqat v Wise Security Ltd (fn 26 above), the court held that even if the alleged breach of duty, principally the poor lighting on the construction site, could be proved, it did not cause the assault committed against the security guard. Exceptionally, where the work-related negligently caused injury leads to depression and suicide, damages for the suicide may be actionable as having been caused by the employers negligence: see e.g. Corr v IBC Vehicles [2008] 1 AC 884, where the House of Lords rejected the defendants arguments based on novus actus interveniens and remoteness of damage, in nding for the plaintiff.
417
(k) Defences (i) Common employment Common-employment defence abolished. The defence of common employment, once an important device for employers to avoid liability, has been abolished by statute. This defence, based on the presumption that an employee has implicitly agreed to accept the risks of the negligence of co-workers, precluded employer liability where an employee was injured by the negligence of a fellow employee. In earlier times, the judicial policy was to protect employers from the heavy nancial burden of being sued by employees. The defence of common employment has been abolished by s.22 of the Law Amendment and Reform (Consolidation) Ordinance.84 (ii) Volenti non t injuria Volenti non t injuria of limited relevance. Modern judicial activism has greatly limited the defence of volenti non t injuria, by which an employee is deemed to have voluntarily assumed the risk of injury and the employer is thereby relieved of liability for any resulting harm.85 It has long been established that a workers knowledge of risks, even in circumstances where he does not complain, is not sufcient for volenti non t injuria to apply.86 This defence was considered in Lau Kam Tai v United Soundfair Engineering Co Ltd.87 The plaintiff-worker was moving a mound of wet concrete to another location on-site, and to facilitate this he decided to construct a ramp out of planks. After moving many loads the ramp became slippery and the plaintiff slipped, fell and suffered injury. The Court of Appeal afrmed the trial decision and rejected the volenti defence, holding that, although the plaintiff may have chosen a method which was not ideal, it could not be said that he had knowingly and voluntarily taken a risk upon himself .88 In Wood v Wah Tung (E&M) Ltd,89 the court rejected the defence of volenti non t injuria in the case of a quality-control inspector injured while walking on a ooded and uneven oor in an unlit area.90 10.035 10.034
84 85 86
87 88
89 90
Law Amendment and Reform (Consolidation) Ordinance (Cap.23), hereinafter referred to as LARCO. For a more complete discussion, see Glofcheski R, Tort Law in Hong Kong (fn 1 above), 245251. Smith v Baker (fn 44 above). The fact that the plaintiff, drilling holes in rock, knew that cranes were lifting stones overhead could not be taken as consent to the risk of being injured by falling rocks. See also Merrington v Ironbridge Metal Works Ltd [1952] 2 All ER 1101: if a man acts under the compulsion of a duty, such consent should rarely, if ever, be inferred, because a man cannot be said to be willing unless he is in a position to choose freely (from the abstract of Hallett Js judgement). (unrep., CACV 181/1999, [2000] HKEC 74). See also Li Moon Chai v Leung Shu Man (fn 71 above): the fact that the plaintiff was an experienced worker and was aware of the risks would not help the 1st defendant. The plaintiffs options were either to accept the risks or refuse to do the work and face the consequences dispensed by the employer. If the plaintiff took the rst option it was not open to the 1st defendant to say that the plaintiff had voluntarily assumed the risk (at para 49). (unrep., HCPI 1004/1998, [2000] HKEC 277). In this context, the case of Tsang Siu Hong v Hong Hoi For (unrep., HCPI 173/2001, [2003] HKEC 304) may be of interest. The plaintiff, an illegal immigrant, was injured at work, and obtained judgment against his employer. The defence of volenti was not raised, but the assessment of damages was based not on the plaintiffs Hong Kong earnings but on what he would have earned in his lawful employment in Mainland China during the same period.
418
(iii) Contributory negligence 10.036 Defence of contributory negligence subject to workplace circumstances. As in the tort of negligence generally,91 the defence of contributory negligence is available and is often pleaded by employers. However, it is more difcult to prove in the employment context as compared to general negligence cases. The courts are sensitive to the plight of workers, generally reluctant to complain about an unsafe system of work due to a natural fear of job loss,92 and are cognizant of the often ad hoc and improvised nature of the work systems within which many workers must operate, even more so when the work involves an element of danger or where it must be performed under strict time pressures.93 In Lau Wing Shing v Chung Fat Mechanical Works Co,94 the plaintiff, employed underground to disconnect electric cables from a welding machine, was struck by a locomotive passing along a railway track running close by in the tunnel in which he was working. In reducing contributory negligence from 65 per cent as found by the trial judge to 20 per cent, Cons VP said: What is required of a workman with regard to his own safety will depend upon the particular circumstances of his work It is not difcult to envisage the conditions in that tunnel of compressed air, with its constant noise of drilling at the work face and other machinery. They cannot have been conducive to calm and deliberate reection before the undertaking of any particular individual act. 10.037 Employers breach of statutory duty mitigates contributory negligence. Where the employers breach of the common law duty of care coincides with a breach of statutory duty, the level of care a worker owes to himself is reduced. The imposition of a statutory duty on an employer increases the burden of responsibility to be borne by employers.95 Other relevant factors to be considered include the workers level of skills and experience, the degree of familiarity with machinery, and the degree of pressure imposed on the worker.96 No contributory negligence where worker follows employers instructions or employer fails to give instructions regarding safe method. A worker who follows the employers instructions will generally not be found contributorily negligent. In
10.038
91
92
93
94 95 96
Section 21(1) of LARCO (Cap.23) reads: Where any person suffers damage as the result partly of his own fault and partly of the fault of any other person or persons, a claim in respect of that damage shall not be defeated by reason of the fault of the person suffering the damage, but the damages recoverable in respect thereof shall be reduced to such extent as the court thinks just and equitable having regard to the claimants share in the responsibility for the damage. See also Chapter 6 of Glofcheski R, Tort Law in Hong Kong (fn 1 above). In Liu Shui Bik v Countfortune Ltd (fn 54 above), where the plaintiff, a middle aged female hired to clean trucks, was asked on her third day on the job to lift heavy concrete slabs and who was injured in the process, the court found no contributory negligence, remarking that proper regard must be had to the circumstances of an employee who fears termination of employment if they refuse to undertake a task or complain about that task. In Cheung Kai Chi v Chun Wo Contractors Ltd (unrep., CACV 98/2006, [2008] HKEC 1034), where the Court of Appeal reversed the trial judge and found no contributory negligence in view of the dangerous conditions, Tang V-P explained that if the court is too ready to nd contributory negligence it might encourage employers to be less careful, and their insurers less eager to insist on compliance with industrial safety. See also Ahmed Masood v Chung Kau Engineering Co Ltd (fn 17 above) at para 57. [1988] 1 HKLR 435. See Tang Hung On v Crown Rich Transportation Ltd (unrep., HCPI 304/2006, [2010] HKEC 380). Ma Kam Yeung v Fu Hay Kin [1998] 2 HKLRD 615.
VICARIOUS LIABILITY
419
Lam King Tong v Kam Hung Construction (Holdings) Ltd,97 the conveyor belt on a machine malfunctioned and the plaintiff attempted to rectify the problem without rst turning off the machine. The court found that the employers system of work required that such repairs be carried out in the manner adopted by the plaintiff, and thus the plaintiff was not contributorily negligent in adopting a technique that was otherwise careless.98 Similarly, a nding of contributory negligence is unlikely where the employer has left the matter of a safe method of work to the employees initiative.99 Contributory negligence apportionment higher where worker ignores employers instructions. Where a worker ignores express instructions from the employer, the worker will be found to be contributorily negligent, and the apportionment will be higher than in other cases. In Yip King Leung v China Inspection Co Ltd,100 the plaintiff was told not to light a naked ame in the hold of a container of goods he was to inspect, but he did so and was injured in the ensuing explosion. The employer was found in breach of his duty for not having explained to the plaintiff the risk of gas accumulation in the container, but contributory negligence was assessed at 60 per cent. 10.039
3. VICARIOUS LIABILITY
Vicarious liability is a separate basis of employer liability for injured workers. Just as an employer is vicariously liable to third parties for the negligence of his employees, so too is the employer liable to employees for injuries caused by the negligence of other employees. The non-delegable duty of the employer to the employee discussed above101 co-exists with any vicarious liability that might arise when an employee is injured by the negligence of a co-worker. Thus, where it is difcult to show that the employer was in breach of the personal, non-delegable duty to the employee, an employee injured by a co-worker may choose to plead vicarious liability of the employer. Vicarious liability can also provide a cause of action for an injured worker where there is doubt about the injured workers status as an employee.102 Two requirements for vicarious liability. There are two requirements to prove vicarious liability of the employer for injuries caused by a co-worker. First, the plaintiff must show 10.040
10.041
97 98
99
100 101 102
(unrep., HCPI 1144/2003, [2004] HKEC 1390). All the more so where the employee points out an unsafe system that is ignored by the employer: Muhammed Ashgar v Tak Shing Metal Co (unrep., HCPI 1027/2004, [2009] HKEC 909). See also Ko Kam Wai v Sze Hak Fung (unrep., HCPI 292/2005, [2006] HKEC 1270). Conversely, in Hang Huu Duc v Hanbo Engineering Ltd (fn 26 above), the plaintiff, expressly instructed to hammer a nail into a steel tube, was injured when the nail rebounded and hit him in the eye. Despite the instructions, the court ruled that the plaintiff, an experienced carpenter, should have understood the inherent difculty and risk of hammering a nail into steel, and ought to have exercised his own judgment and refused. The plaintiff was found 25% contributorily negligent. On this basis, the Court of Appeal reduced the trial judges nding of 50% contributory negligence to no contributory negligence in Leung Po Chun v Yat Lee Booth Construction Co Ltd (fn 29 above). See also Ho Man Wa v Wong Shui Fun (fn 22 above) and Chow Po v Chow Hau Man (unrep., DCPI 2594/2007, [2010] HKEC 349). A nding of contributory negligence is still possible in cases where a safer method should have been obvious to the employee despite the absence of instructions or a safe system: see e.g. Bitto v Cheng How Kiu (fn 22 above). (unrep., HCPI 1019/2001, [2004] HKEC 368). See paras 10.004 to 10.010 above. For a more thorough discussion of the issues and case law regarding vicarious liability in general, see Chapter 11 of Glofcheski R, Tort Law in Hong Kong (fn 1 above).
420
that the wrongdoer who caused the injury was an employee of the defendantemployer. This requires proof of a contract of employment.103 Secondly, the plaintiff must show that the tort causing the injury was committed by the tortfeasor/co-worker in the course of employment or while engaging in activities incidental to the employment. Once these two conditions are satised, and assuming that it has been established that the employee did commit a tort, there are no defences available to the employer. 10.042 Acts committed in the course of employment. The adjudication of vicarious liability cases requires the courts to examine the scope of the employment duties, in order to determine whether or not the tort injuring the plaintiff was committed in the course of employment, or in the course of activities incidental to the employment. It has long been held that wrongful acts authorised or instructed by the employer will be treated as committed in the course of employment, as will the more common occurrence of lawful acts authorised by the employer but done in a wrongful or unauthorised way.104 The latter category includes an employees negligent performance of normal work duties causing injury to the plaintiff. However if, during the course of work, an employee engages in a diversion, going on a frolic of his own, engaging in an unauthorised act not connected with the employment, he will be deemed to have stepped out of the course of employment and there will be no vicarious liability.105 Acts closely connected to the employment are committed in the course of employment. It has recently been held that an employer is liable for the unauthorised acts of an employee, provided they are so connected with authorised employment activities that they may be regarded as modesalthough improper modesof doing them.106 This close connection test for proving vicarious liability offers an alternative means of proving that the tort was committed in the course of employment. Originally introduced in the context of an employees trespassory tort,107 it is now clear that this approach will be applied equally to employees negligent conduct. In Ming An Insurance Co (HK) Ltd v Ritz-Carlton Ltd,108 the Court of Final Appeal found vicarious liability in circumstances where a hotel doorman, not authorised by the employer/hotel to drive the hotels limousines, nonetheless drove one in order to collect food for himself and his colleagues, in the process knocking down and injuring the plaintiff/pedestrian. Bokhary PJ said: By close connection is meant a connection between the employees unauthorised tortious act and his employment which is so close as to make it
10.043
103 104
105
106
107 108
See paras 2.002 to 2.041 above for a full discussion of the requirements for a contract of employment. This is the so-called Salmond formulation, named after John William Salmond (18621924), a New Zealand legal scholar and judge, and the original author of Salmond and Heuston on the Law of Torts, now in its 21st edition and currently authored by RFV Heuston and RA Buckley. Once these two conditions are satised, and assuming that it has been established that the employee did commit a tort, there are no defences available to the employer. As in Storey v Ashton (186869) LR 4 QB 476, where the court considered the delivery mans deviation to be an entirely new and independent journey. Ming An Insurance Co (HK) Ltd v Ritz-Carlton Ltd (2002) 5 HKCFAR 569, applying Lister v Hesley Hall Ltd [2001] 2 WLR 1311. Lister v Hesley Hall Ltd (ibid). Fn 106 above.
VICARIOUS LIABILITY
421
fair and just to hold his employer vicariously liable. I consider close connection to be an intellectually satisfying and practical criterion for vicarious liability. It imposes vicarious liability when, but only when, it would be fair and just to do so. And it provides a workable concept, namely a sufciently close connection, for determining in each case whether doing so would be fair and just.109 Although the case did not involve injury to a co-worker, there is no doubt that the close connection test would apply equally to a case where a worker was injured through a co-workers negligence and brought an action in vicarious liability against his employer. Vicarious liability applies equally to negligence and trespass. Vicarious liability normally arises in the context of negligence. In Wong Wai Ming v Hospital Authority,110 the Court of Appeal found, as an alternative ground to the employers negligence, that the employer was vicariously liable for the negligence of the supervising nurse in not reacting properly to the threat posed by the mentally unstable intruder. Similarly, it was an alternative ground in Lau Pai Yam v Tai Tung Coffee Co Ltd111 where the plaintiff, stacking a trolley with bags of sugar, was injured when his co-worker, wearing improper footwear, slipped and toppled the trolley onto the plaintiff. Equally, an employer may be found vicariously liable to an employee for the trespassory tort of another employee. In Ling Man Kuen v Chow Chan Ming,112 the plaintiff, an engineer employed by the defendant, was assaulted by his supervisor, also an employee of the defendant. The assault occurred following a dispute in which the supervisor reprimanded the plaintiff for having produced inaccurate specications on a particular job. The court found the defendant vicariously liable for the trespassory tort on the basis that the assault was sufciently connected to the employment to justify the imposition of liability.113 Vicarious liability for independent contractors carrying out non-delegable duties. For some types of work delegated by an employer to an independent contractor, the employer may still be found liable for damage caused by the independent contractors negligence. This occurs only in the category of so-called non-delegable duties, which include operations carried on by the employer on or adjoining a highway that may cause injury to persons using the highway; extra-hazardous activities (a broad, open-ended category); and, in particular, an employers duty to provide safe working conditions for workers.114 10.044
10.045
109
110 111 112
113
114
Ibid, at 852. From this it is clear that the close connection approach has great potential to expand the scope of vicarious liability. See Ronia Ltd v Clarke (unrep., HCA 3972/2000, [2005] HKEC 326). Also see Glofcheski R, A Frolic in the Law of Tort: Expanding the Scope of Employers Vicarious Liability (2004) 12 Tort L Rev 1. Fn 64 above. Fn 30 above. (unrep., DCPI 1445/2005, [2006] HKEC 1566). A similar argument failed in Li Hoi Shuen v Man Ming Engineering Trading Co Ltd (fn 16 above). Vicarious liability may also be available where the employee is the victim of bullying and harassment at the hands of other employees: see Majrowski v Guys and St Thomas NHS Trust [2006] UKHL 34 (an action brought under the UK Protection from Harassment Act but, by implication, available if a common law tort is committed). For more on safe system of work, see paras 10.022 to 10.024 above. For a discussion of non-delegable duties, see Glofcheski R, Tort Law in Hong Kong (fn 1 above), at 439442.
422
10.046
Vicarious liability for torts of an agent. It is also possible, although rare, that an employer will be found liable for the torts of an agent who is not necessarily an employee. In Hong Kong the principle examples from the case law have taken place in the context of debt collection.115 Vicarious liability for driver of employers vehicles. An alternative form of vicarious liability arises where a tort is committed by a driver hired to operate a vehicle owned by the employer. A vehicle owner is liable for damage and injuries caused by a negligent driver, whether or not the driver is an employee, if it is shown that the vehicle was being used for the owners purpose under delegation of a task or duty. Typically this applies in circumstances where the owner can exercise some control over the driver as, for instance, when the owner is present in the car.116 It will normally be easy to show that an employers paid driver (whether an employee or not) is using the vehicle for the owners purpose.117 This can provide an injured employee/passenger with an alternative cause of action vis--vis the employer. Vicarious liability where employee on loan. Where an employer borrows an employee from another employer for a period of time or for a particular task, and that employee commits a tort causing injury to a co-worker, it will generally be difcult to impose vicarious liability on the borrowing employer.118
10.047
10.048
4. BREACH OF STATUTORY DUTY

(a) Breach of statutory duty in general 10.049 Breach of statutory duty is a separate and distinct common law remedy. In Hong Kong, tort actions for breach of statutory duty are routinely brought against employers by employees injured at work. Breach of statutory duty ranks equal or a close second to negligence actions in terms of frequency of use as a common law remedy for work-related injuries. It is separate and distinct from negligence and occupiers liability, and it may be brought alone or in addition to negligence or occupiers liability. Legislative basis and purpose of the action. In Hong Kong, legislation establishing statutory duties and standards for industrial and occupational safety can be found in
10.050
115
116 117
118
Wong Wai Hing v Hui Wei Lee [2001] 1 H.K.L.R.D. 736. See also Etacol (Hong Kong) Ltd v Sinomast Ltd [2006] 4 HKC 572. In Jerry Chen v Whirlpool (Hong Kong) Ltd (fn 76 above), the argument was made in the context of an employee injured while he was a passenger in a vehicle driven negligently by a driver designated by his employer. The argument was rejected in both the lower courts. In the Court of Final Appeal, the plaintiff based his case on the broader argument of enterprise liability, citing Australian authorities, but this too was rejected. Morgans v Launchbury [1973] AC 127. For examples of the application of vicarious liability to the operation of motor vehicles, see Kwong Kwok Kin v Observatory Watch & Jewellery Co Ltd [1987] 3 HKC 138; Teng Wei Yan v Kwok Kai Wing (unrep., DCPI 54/2005, [2006] HKEC 933); and Kwong Kwan Hing v Centre Mark Engineering Ltd (unrep., HCPI 320/2000, [2002] HKEC 1376). For a rare example of dual vicarious liability of both the vehicle owner and the employer, see So Wing Kwong v Cheng Chi Kwong [1999] 3 HKLRD 689. Mersey Docks & Harbour Board v Coggins & Grifth [1947] AC 1. For more on worker loan arrangements, see paras 2.064 to 2.071 above.
BREACH OF STATUTORY DUTY
423
ordinances and in the regulations made thereunder.119 The general duties are found in the ordinances while more specic duties and standards are to be found in the regulations. The regulatory regime for industrial and workplace safety is criminal or quasi-criminal in nature. A contravention of such provisions is normally punishable by ne, with the further possibility of imprisonment for the most serious offences. The threat of a penalty is meant to encourage compliance with the legislation. The availability of a common law tort action for breach of such provisions provides a further incentive to employers to comply. It also provides a substantial damages remedy to the injured worker or, in the case of death, to his dependents and estate. Availability of action depends on construction of legislation. The availability of a cause of action for breach of statutory duty depends on construction of the relevant legislation. The legislation may expressly provide for a cause of action,120 it may expressly preclude a cause of action,121 or, as is most often the case, it may be silent on the issue.122 In Hong Kong most of the industrial and occupational safety legislation is silent on the issue of a cause of action. Proof of legislative intention to create a cause of action required. Where legislation is silent on the issue, the courts require proof that the legislature intended to create a cause of action. This is an open-ended, largely intuitive process.123 Proof of such an intention normally rests on certain judicially recognised presumptions. A legislative intention is more likely be proved if it can be shown that the legislation is intended to benet a class of persons124 as opposed to the public generally;125 that the legislation does not otherwise provide a remedy for a breach of its provisions;126 that a breach of 10.051
10.052
119
120
121
122
123
124 125
126
In Hong Kong the principal pieces of legislation are the OSHO (Cap.509), imposing duties of workplace safety on employers and occupiers, and the FIUO (Cap.59), imposing duties on proprietors of industrial undertakings. The regulations made under each impose duties with more detailed standards. For a more complete discussion of the OSHO and the FIUO, see Chapter 9 above. For example, s.76(1) of the Sex Discrimination Ordinance (Cap.480) (damages for sex discrimination); s.108 of the Securities and Futures Ordinance (Cap.571) (damages for misrepresentations inducing a securities transaction); and s.8(2) of the Civil Aviation Ordinance (Cap.448) (damages caused by aircraft taking off, in ight or landing). For example, s.22 of the Fire Services Ordinance (Cap.95) (excluding civil liability of members for damages arising out of the performance of duties on the occasion of a re); and s.57 of the Mass Transit Railway Ordinance (Cap.556) (excluding civil liability for breach of any duty created by the Ordinance). An interesting and important example in the industrial safety context is s.19 of the FIUO (Cap.59) which provides that the Ordinance does not (a) confer a right of action in civil proceedings in respect of a failure to comply with section 6A, 6B or 6BA; and (b) affect the extent (if any) to which breach of any other provision is actionable. Section 19(b) invites the argument that a right of civil action can be available for a breach of provisions in the Ordinance other than those enumerated in section 19(a). A similar argument was made by Judge M Ng in Ahmed Masood v Chung Kau Engineering Co Ltd (fn 17 above) at para 52 of the judgment. Regulation 31 of the Construction Sites (Safety) Regulations, made pursuant to the FIUO (Cap.59), is an example of a typical statutory provision that, as with most legislation, is silent on the question of the availability of a civil cause of action for breach of statutory duty. In Island Records Ltd v Corkindale [1978] Ch 122, Lord Denning was prompted to observe (at p 135), The dividing line between the pro-cases and the contra-cases is so blurred and so ill-dened that you might as well toss a coin to decide it. I decline to indulge in such a game of chance. X (Minors) v Bedfordshire County Council [1995] 2 AC 633. As in Mohammed Yaqub Khan v A-G [1987] HKLR 145 and Tse Lai Yin v Incorporated Owners of Albert House (unrep., HCPI 828/1997, [2001] HKLRD (Yrbk) 446). Atkinson v Newcastle Waterworks Co [187480] All ER Rep 757.
424
statutory duty action is the only civil remedy available to an injured worker;127 and that the breached provision on which the cause of action rests is provided in primary, not secondary legislation.128 10.053 Breach of statutory duty action routinely recognised in Hong Kong. A cause of action for breach of statutory duty for a violation of industrial or occupational safety legislation is routinely recognised by the courts in Hong Kong with little or no regard to the conditions and presumptions required for such a cause of action in other contexts.129 Indeed, although it is accepted that industrial and occupational safety legislation is designed to benet a class of persons, namely workers, for most such legislation a breach of statutory duty action is not the only remedy in the legislation (there is normally a criminal penalty), it is usually not the only available common law action (negligence is typically available, as is occupiers liability), and the provisions imposing the safety obligations are typically found in regulations rather than in the primary legislation. Nonetheless, Hong Kong courts will generally recognise a cause of action for breach of statutory duty where an employee is injured at work in circumstances of a violation of a statutory safety provision, whether in an ordinance or in regulations.130 (b) Advantages of breach of statutory duty action over negligence 10.054 Breach of statutory duty simpler to prove than negligence. To prove negligence, the plaintiff must establish the relevant standard of care and show that it has been breached. This can be a difcult and time-consuming process, sometimes requiring complex scientic, statistical and expert evidence. By contrast, in breach of statutory duty, the standard is typically clear and readily ascertainable because it is expressly set out in legislation. It is simply a matter of statutory interpretation.131 For this reason, a breach of statutory duty action may prove more attractive to an injured worker than a negligence action.
127
128
129
130
131
X (Minors) v Bedfordshire County Council (fn 124 above); Yick Ming Kit v Securities and Futures Commission (unrep., CACV 252/2005, [2006] HKEC 577); Phillips v Britannia Hygienic Laundry [1923] 1 KB 539; and Tse Lai Yin v Incorporated Owners of Albert House (fn 125 above). R v Deputy Governor of Parkhurst Prison, Ex p Hague [1992] 1 AC 58; and Li Yuk Lan v Lau Kit Ling [1989] 2 HKLR 128. See e.g. Ahmed Masood v Chung Kau Engineering Co Ltd (fn 17 above), where Judge M Ng stated the position bluntly: The Court of Final Appeal [in Raineld Design & Associates Ltd v Siu Chi Moon (fn 18 above) said that the policy of CSSR was to promote safety at construction sites by imposing duties designed to protect construction workers from physical harm and that the statutory duties on the defendant as contractor were absolute and non-delegable. It was held that a breach of the regulation was causative of loss and on that basis, civil liability followed. Likewise in my view, the legislative intention for civil remedy in respect of OSHO and OSHR is amply shown by provisions targeted for the safety of employees at the workplace. See Yeung Yu v Wong Yung (unrep., HCA 9069/1981, [1985] HKLY 417) for a rare example in which the court addressed some of the considerations listed in para 10.052 above. It is revealing that neither the existence of a penalty, nor the fact that the provision was contained in subsidiary legislation, nor the availability of a negligence action, prevented the court from inferring a legislative intention to create a civil cause of action for a breach of regulations made under the Shipping and Port Control Ordinance (Cap.313). For another example with a similar result, see Wong Chi Shing v Argos Engineering & Heavy Industries Co Ltd [1993] 1 HKC 598. That said, one should not lose sight of the fact that the principles of statutory interpretation must be applied and may give rise to complications of their own when the court is attempting to give meaning to statutory terms in the context of real cases. For examples of the complexities of statutory construction, see paras 10.05710.069 below.
425
Statutory standards often strictly worded and more stringent. Workplace safety legislation is often worded in strict language, giving rise to what approaches an absolute duty for its breach.132 Moreover, such legislation may establish a more stringent standard than the common law duty of reasonable care in the circumstances, and thus may impose a duty where the common law of negligence does not. In breach of statutory duty, the plaintiff does not have to prove negligence as such, and reasonable care does not provide an excuse to the defendant. (c) Statutory duty is non-delegable Statutory duty is non-delegable. Employers cannot discharge or avoid their statutory duties regarding workplace safety by delegating to a subcontractor or to the worker the responsibility for compliance with the statute.133 Moreover, it is not sufcient for employers, after instructing employees on safety, to leave employees to choose whether or not to follow the regulations. In Mak Woon King v Wong Chiu,134 Ribeiro JA adopted the words of Lord Reid in Boyle v Kodak: Employers are bound to know their statutory duty and take all reasonable steps to prevent their men from committing breaches.135 (d) Ambit of legislation Harm caused must fall within ambit of legislation. In order to succeed in an action for breach of statutory duty, an injured worker must show that the harm caused falls within the ambit of the legislation. The plaintiff must establish that he comes within the class of persons protected by the legislation, that the statutory duties apply to the defendant, that the activity that gives rise to the injury, and the injury itself, come within the purpose and ambit of the legislation; and that the relevant provision was breached according to its terms.136 All these issues involve statutory interpretation. Fair, large and liberal interpretation required. In Lam Fung Ying v Lui Kwok Fu,137 Sakhrani J in interpreting the meaning of construction site in the Construction Sites (Safety) Regulations (Cap.59I) cited s.19 of the Interpretation and General Clauses Ordinance which, under the heading general principles of interpretation, provides the following guidance on statutory construction: An Ordinance shall be deemed to be remedial and shall receive such fair, large and liberal construction and interpretation
10.055
10.056
10.057
10.058
132
133 134 135 136
137
Baroness Hale of Richmond commented on this phenomenon in Fytche v Wincanton Logistics Plc [2004] ICR 975, a case concerning work boots supplied to the worker that contained a small hole, undetectable by the employer and unnoticed by the worker for six months: Many of the duties imposed by the regulations are strict in the sense that they may be broken without any negligence or other fault. We have long been used to this. Indeed, the normal rule that penal statutes must be strictly construed has not been allowed to stand in the way of the protection given to the workman by the statutory language (at 989). For example, see Raineld Design & Associates Ltd v Siu Chi Moon (fn 18 above). [2000] 2 HKLRD 295. [1969] 1 WLR 661 at 668. In this context, the familiar issues of breach of duty and remoteness of damage may arise, but liability does not require proof of common law negligence. (unrep., HCPI 826/2002, [2004] HKEC 255).
426
as will best ensure the attainment of the object of the Ordinance according to its true intent, meaning and spirit.138 (i) Class of persons protected 10.059 Class of persons a matter of statutory construction. Where legislation protects a specic class of persons, the question of whether the plaintiff comes within that class is a matter of legislative construction of the enactment as a whole. It also depends on the particular facts of the case. In Yeung Yu v Wong Yung,139 the plaintiff, a lorry driver sitting in his lorry waiting for his turn to be loaded, was injured when the overhead lifting gear suddenly collapsed. The legislation in question, the Shipping and Port Control Regulations,140 referred to persons employed in handling cargo. Mantell J held that the plaintiff came within the terms of the legislation: Then the next question must be: was the plaintiff employed in handling cargo Clearly those on deck taking part in the off-loading were handling the cargo whether they were required to handle it in a literal sense or not. So I would think [there] would be someone on the quayside guiding it into place even if only by giving instructions. So, too, I am prepared to say, is the driver of the wagon which is actually being loaded at the time But how far back in the chain does this reasoning extend? It must, of course, always depend on the particular facts of the case but where, as here, there is a lorry waiting to be loaded and prepared to move forward at some signal from those in charge of loading and close enough to the actual loading to be affected by breach of the regulations, then I am prepared to hold that the driver of that lorry is a person who for the time being is employed in cargo handling.141 In Raineld Design & Associates Ltd v Siu Chi Moon142 the issue before the Court of Final Appeal was the scope of the contractors duty under the Construction Sites (Safety) Regulations to ensure that, so far as is reasonably practicable, suitable and adequate safe access to and egress from every place of work on the site is provided and properly maintained.143 The court interpreted the statutory provision in question to mean that the duty was not restricted to employees but extended to independent contractors such as the plaintiff. Bokhary PJ said: Physical safety is plainly the paramount element of the laws policy in this sphere. The only concern is whether the person injured or killed as a result of non-compliance with a statutory duty was within the class of persons which such statutory duty was imposed to protect. As a person working on a construction site, Mr Siu was clearly within the class of persons which the statutory duty here in question was imposed to protect.144
138 139 140 141 142 143 144
Section 19 of the Interpretation and General Clauses Ordinance (Cap.1). Fn 130 above. Made under the Shipping and Port Control Ordinance (Cap.313). Fn 130 above. Fn 18 above. Cap.59I, s.38A(2). Fn 18 above at 232.
427
(ii) Statutory duties imposed must apply to defendant Statutory duties imposed must apply to defendant. Just as the plaintiff must fall within the class of persons protected by the legislation, the statutory duties imposed by the legislation must apply to the defendant. For example, many of the duties in the FIUO (Cap.59) and the regulations made thereunder are imposed on proprietors and contractors, terms that require proof that the defendant falls within the denition of such persons. The term proprietor, in relation to any industrial undertaking or notiable workplace, includes the person for the time being having the management or control of the business carried on in such industrial undertaking or notiable workplace and includes the occupier of any industrial undertaking or workplace.145 The term contractor, in relation to construction work, means any person or rm engaged in carrying out construction work by way of trade or business.146 From this it is clear that persons other than the employer may come under the statutory duty. (iii) Terms and purpose of the legislation Circumstances of accident must come within terms and purpose of the legislation. In Leung Lai Yin v Yeung Kei Chi,147 the key issue was whether the domestic at where the plaintiff decoration worker was injured during renovation work while operating a circular saw was an industrial undertaking to which the FIUO Regulations would apply. Deputy Judge To found that the Regulations did not apply: The part of the denition of construction work relied upon by [the plaintiff] is the construction or maintenance (including redecoration) of any building. These words have to be interpreted in their proper context and not by merely considering the word redecoration in isolation. Hence, decoration or redecoration work as such are not construction work within the meaning of the Ordinance, unless they form part of the maintenance work of the building.148 By the same token, in Yeung Kam Fuk v Len Shing Construction Co Ltd,149 the plaintiff who fell more than 6 feet through a defective platform had no statutory cause of action because the Construction Sites (Safety) Regulations spoke of falling more than 6 feet off of the edge of such a platform.150 By contrast in Ng Koon Ki v Hilti (Hong Kong) Ltd,151 the application of a purposive approach to statutory interpretation meant that the plaintiff was able to succeed. The plaintiff, a scaffolding worker, was provided with only a plank to stand on. He was able to successfully argue that his accident came within the terms of reg.38L of the Construction Sites (Safety) Regulations (now 10.061 10.060
145 146
147 148 149 150
151
Section 2 of the FIUO (Cap.59). Ibid. In Wong Sai Pui v Lam Ngai Pang (unrep., HCPI 391/2002, [2005] HKEC 389), the breach of statutory duty action failed because the court found that the defendant had merely introduced the plaintiff to the employer, and was not himself carrying out any construction work by way of trade or business. (unrep., HCPI 317/1999, [2000] HKLRD (Yrbk) 597). Ibid. (unrep., HCA 6612/1982, [1986] HKLY 959). For a similar approach and result, see also Cheang Kam Ian v Hong Kong Prime Printing Co (unrep., HCPI 143/1998, [2000] HKEC 44); Mo Po v Yat Fai Engineering Ltd (fn 26 above); and Fytche v Wincanton Logistics Plc (fn 132 above). Fn 74 above.
428
repealed) requiring the use of properly and evenly secured working platforms when working on scaffolding, despite the fact that his injury was not due to a fall but due to twisting his back while moving the plank along the scaffolding: The inference that I draw from those provisions is that the security of the working platform is designed not only to ensure that the platform itself does not shift thereby permitting a worker to fall from it, but that it is secured in position in order that the platform itself may not fall, either hitting someone or causing injury to an employee on the platform who endeavours to prevent falling for safety reasons.152 (iv) Breach of standard imposed by legislation 10.062 Standard of liability varies with wording of enactment. In breach of statutory duty actions, the standard of liability will vary with the wording of the relevant enactment. It can range from a reasonable standard of care, similar to that in negligence, to strict liability. Statutory standards often tantamount to strict liability. Depending on the wording of the relevant provisions, statutory standards are often tantamount to strict liability, particularly in the eld of industrial safety legislation. In general, this works in favour of the plaintiff since, once the defendant has been shown to have violated the statutory standard, any evidence that the defendant acted reasonably will be rejected as irrelevant. Specic statutory requirements make breach easy to prove. Since most workplace safety legislation establishes specic precautions to be taken, such as the use of machine guards, safety belts or platforms for work carried out beyond a certain height, breaches are usually beyond argument and easy for an injured worker to prove. In Tse Hoi Cheung v Hip Hing Construction Co Ltd,153 the court considered reg.38L of the Construction Sites (Safety) Regulations (Cap.59I), requiring that the contractor responsible for a construction site shall ensure that ... every board or plank forming part of a working platform [more than 2 metres high] is of sound construction ... and not less than 200 millimetres in width. The court held that the word ensure means what it says, namely, if the prohibited act occurs, there has been a failure to ensure that it did not occur.154 Reasonably practicable requires more than reasonable care. The expression so far as reasonably practicable arises often in workplace safety legislation,155 imposing a duty on employers that goes beyond that of reasonable care. In Tse Hoi Cheung v Hip
10.063
10.064
10.065
152 153 154 155
Ibid, at 644. [1995] 3 HKC 581. Ibid., at 587, citing A-G v Shun Shing Construction and Engineering Co Ltd [1986] HKLR 311. Importantly, the general duty imposed on employers by s.6 of the OSHO (Cap.509), one of Hong Kongs principal industrial safety ordinances, requires that every employer must, so far as reasonably practicable, ensure the safety and health at work of all the employers employees. Sections 7 and 8 contain a similarly worded provision regarding the duties imposed on occupiers and on employees themselves. Section 6(A) of the FIUO employs similar wording for the general duties imposed on proprietors. See paras 9.019 to 9.020 above.
429
Hing Construction Co Ltd,156 the court also considered reg.38A of the Construction Sites (Safety) Regulations (Cap.59I), requiring the contractor to ensure that there is, so far as reasonably practicable, suitable and efcient safe access to and egress from every place on the site ... Barnett J said that practicable means that which is feasible or which can be done. Something does not become impracticable merely because it is inconvenient. Moreover, reasonably introduces a qualication: nevertheless, something more than reasonable care is still required.157 Barnett J further elaborated on the reasonably practicable standard by reference to Edwards v National Coal Board:158 Reasonably practicable is a narrower term than physically possible, and seems to me to imply that a computation must be made by the owner in which the quantum of risk is placed on one scale and the sacrice involved in the measures necessary for averting the risk (whether in money, time or trouble) is placed in the other, and that, if it be shown that there is a gross disproportion between them the risk being insignicant in relation to the sacrice the defendants discharge the onus on them. Moreover, this computation falls to be made by the owner at a point of time anterior to the accident. The questions he has to answer are: (a) What measures are necessary and sufcient to prevent any breach of s.49? (b) Are these measures reasonably practicable?159 Employer bears burden of proof for what is reasonably practicable. In proceedings for offences under the FIUO (Cap.59), the burden of proof for what is reasonably practicable falls on the accused employer. Section 18(1) of the Ordinance stipulates: 18(1) In a proceeding for an offence under a provision in this Ordinance consisting of a failure to comply with a duty or requirement to do something so far as is necessary, where practicable, so far as is reasonably practicable, or so far as practicable or to take all reasonable steps, all practicable steps, adequate steps or all reasonably practicable steps to do something, the onus is on the accused to prove that it was not necessary, not practicable or not reasonably practicable to do more than was in fact done to satisfy the duty or requirement, or that he has taken all reasonable steps, or practicable steps or done the appropriate thing to satisfy the duty or requirement.160 From this it can be inferred that in civil proceedings, where the burden of proof on the plaintiff is lower, the burden of proof regarding the taking of reasonably practicable steps is also on the employer.161 10.066
156 157 158 159 160 161
Fn 153 above. Ibid., at 58788. [1949] 1 KB 704 at 712, as cited in Tse Hoi Cheung v Hip Hing Construction Co Ltd (fn 153 above). See also Marshall v Gotham Co Ltd [1954] AC 360, discussed at 9.018 above. Section 18(1) of the FIUO (Cap.59). See also s.38 of the OSHO (Cap.509) for a broadly similar provision.
430
10.067
Criminal conviction constitutes proof of breach of statutory duty. Most legislation regarding workplace safety includes criminal sanctions for a breach. As with proof of breach of the duty of care in negligence, proof of a criminal conviction here will constitute proof of a breach of statutory duty for the purposes of a civil action for damages.162 Acquittal on criminal charges does not preclude successful civil action. Acquittal in Magistrates Court on a criminal charge of breach of a statutory duty does not preclude a successful civil action for breach of statutory duty. As pointed out by Deputy High Court Judge Longley in Chan Yu Chau v Fong On Construction & Engineering Co Ltd,163 the standard of proof is on the balance of probabilities, which he found was satised by the plaintiff, and not the higher standard of the Magistrates Court, where the defendant had been acquitted. Res ipsa loquitur may apply to breach of statutory duty actions. In Saneld Building Contractors Ltd v Li Kai Cheong,164 Bokhary PJ left open the possibility that res ipsa loquitur may apply to proof of a breach of statutory duty in a civil action, although it is not immediately clear how this could be so. Perhaps, in the rubric from res ipsa loquitur that the circumstances of the accident would not happen in the ordinary course of events without negligence, the term negligence should be replaced with breach of the statutory provision pleaded. This is a narrow conguration unlikely to be of help to most plaintiffs. (e) Causation
10.068
10.069
10.070
Causation treated as in negligence actions. The question of causation is treated as in an action for negligence. In Wong Kam Nan v Wang Tat Paper Products Factory,165 the defendant was in breach of regulations for allowing the use of an unguarded machine. The plaintiff suffered hand injuries while cleaning the machine. On these facts, the court held that the breach of statutory duty did not cause the injury because any safety guard that might have been in place would have had to be removed to clean the machine anyway. Where worker would have refused to use equipment not provided. In McWilliams v Sir William Arrol & Co,166 the defendant employer was in breach of a statutory duty to provide safety belts. On the evidence, the worker had always refused to wear one, so the court dismissed the action on the basis that causation was not proved. However, Hong Kong courts have been reluctant to draw such a conclusion. In Raineld Design & Associates Ltd v Siu Chi Moon,167 the court considered the defendants argument that the injured workman would not have used a ladder even if one had been provided. Bokhary PJ in the Court of Final Appeal held that, even if the worker would not have complied with the defendants suggestion to use the ladder,
10.071
162
163 164 165 166 167
See Lee Hang Kuen v Chan Hong (fn 14 above), where s.62 of the Evidence Ordinance (Cap.8) was applied to prove a breach of the OSHO (Cap.509). (unrep., HCPI 753/2000, [2002] HKLRD (Yrbk) 595). Fn 21 above. (unrep., HCA 1862/1989, [1994] HKEC 9). [1962] 1 WLR 295. (2000) 3 HKCFAR 134.
431
It still does not destroy the causal link between Rainelds breach of statutory duty and Mr Sius accident. The nding is that Mr Siu would not have complied with a suggestion that he use a ladder. But Rainelds statutory duty under the regulation was not merely to make suggestions towards suitable and sufcient access and egress. Rather it was to ensure there was, so far as was reasonably practicable, suitable and sufcient safe access and egress. And the regulation cannot simply be read down to mean that the duty thereunder was merely to make suggestions toward that end.168 (f ) Defences (i) Volenti non t injuria Volenti non t injuria not likely to apply. It is doubtful that the defence of volenti non t injuria,169 by which an employee is deemed to have voluntarily assumed the risk of injury and the employer is thereby relieved of liability for any resulting harm, can ever have application to the tort of breach of statutory duty. To permit that defence would be tantamount to the court recognising an agreement between the parties to violate the criminal law. Thus, in Yeung Yu v Wong Yung,170 this defence was rejected by the court, and indeed was abandoned by the defendant during the course of the hearing. (ii) Ex turpi causa Ex turpi causa of limited application. For similar reasons, the defence of ex turpi causa171 will not be available in a case where both the worker and the employer are in breach of a statute or regulations, because such a breach by a worker is unlikely to be characterised by a court as a serious illegality attracting the censure of the court. Ex turpi causa may be available, however, if the defendants illegal behaviour consisted not merely in a breach of statute or safety regulations but a more serious criminal offence such as burglary. (iii) Contributory negligence Defence of contributory negligence available but reluctantly applied. The defence of contributory negligence172 will be available in appropriate circumstances.173 However, the courts are reluctant to apply this defence in the context of industrial safety legislation. In Tsang Kwun Chiu v Yuen Hoi Sang,174 involving regulations pertaining to the hoisting of platforms, the court reminded itself to be careful not to 10.074 10.073 10.072
168 169 170 171
172 173
174
Ibid, at 233234. For a more complete discussion, see Glofcheski R, Tort Law in Hong Kong (fn 1 above), pp 245251. Fn 130 above. A legal doctrine that prevents a claimant from pursuing a cause of action if it arises in connection with his own illegal act. For a more complete discussion, see Glofcheski R, Tort Law in Hong Kong (fn 1 above), pp 254266. For a more complete discussion, see Glofcheski R, Tort Law in Hong Kong (fn 1 above), pp 225244. See e.g. Raineld Design & Associates Ltd v Siu Chi Moon (fn 18 above), where the plaintiff was found 50% contributorily negligent. (unrep., HCA 4730/1988, 2703/1988, 4614/1987, 2306/1986, [1990] HKLY 522).
432
emasculate the protection given by the regulations by a sidewind of apportionment.175 In Chung Kei v So Yiu,176 involving the failure to properly guard a moulding machine contrary to the Factories and Industrial Undertakings (Guarding and Operation of Machinery) Regulations (Cap.59Q), the plaintiff worker suffered personal injuries while attempting to thread the defendant employers plastic injection moulding machine, an action that required the plaintiff to neutralise the machine before reaching in with his arm. The plaintiff neglected to neutralise the machine. In deciding that the plaintiff was not contributorily negligent, Hunter J said: These defendants here were in effect saying to this plaintiff: You should have done by hand what we were required to do by Statute and twice failed to do. I must therefore guard against emasculating these regulations by that route.177 The judge added that the plaintiffs behaviour was the shop practice and well known to the defendant who did nothing about it. 10.075 Contributory negligence assessed less severely than in an ordinary negligence action. In Li Man Yuen v Li Chung I,178 the trial judge had found the defendant liable in negligence for allowing the use of an unguarded press machine, and determined the plaintiffs contributory negligence for his injuries to be in the amount of 35 per cent. On appeal, where the court found a breach of statutory duty in addition to negligence, the plaintiffs contributory negligence was reduced from 35 per cent to 20 per cent on the basis that where the defendant is charged with breach of statutory duty, the standard by which the plaintiffs contributory negligence was judged appeared to be less exacting than that used for ordinary negligence.179 No or reduced contributory negligence in cases of momentary inadvertence. In Leung Lai Yin v Yeung Kei Chi (t/a Shun Hing Furniture Decorating Construction),180 Deputy Judge To said that momentary inadvertence is not enough, and something like disobedience to order, or reckless disregard by a workman for his own safety, must be proved before he can be held contributorily negligent. In Mak Woon King v Wong Chiu,181 the Court of Appeal substituted the trial judges apportionment of 40 per cent contributory negligence with a smaller apportionment of 15 per cent. Commenting on the repetitive and monotonous nature of the work that the plaintiff was required to do (operating a circular saw), Ribeiro JA said: It is therefore clear that where a breach of statutory duty by an employer is a substantial cause of injury to an employee, the fact that the employee contributed causally to the accident by his own momentary inadvertence or lack of care, if in the context of a repetitive, distracting or fatiguing work environment, may well be
10.076
175
176 177 178 179
180 181
On this point, Fleming, The Law of Torts (Sydney: The Law Book Company, 9th edn, 1998) comments that it would be bizarre that anyone should forfeit his right to redress when the very contingency of his carelessness was the principal reason why the defendant was put under statutory duty to safeguard him against its consequences: to allow that would be tantamount to stultifying the statute (at 572573). [1987] 1 HKC 373. Ibid. [1991] 2 HKC 230. Ibid. The same principle was adopted by Deputy Judge Woolley in Tang Shau Tsan v Wealthy Construction Co Ltd (unrep., HCPI 1092/1998, [1999] HKLRD (Yrbk) 374), where he said that the employee should not be expected to do what the employer has failed to do, and thereby defeat the object of the regulations. See also Bhim Bahadur Rai v Fung Shing Hong, Hong Kong (unrep., HCPI 776/2007, [2009] CHKEC 1582). Fn 147 above. Fn 134 above.
EMPLOYERS LIABILITY AS OCCUPIER OF THE WORK PREMISES
433
regarded as an excusable lapse and not as contributory negligence at all ... The abovementioned principle has been extended to apply to the process of apportioning liability where the employee is found guilty of some contributory negligence. The principle applies to lessen the percentage by which the award is reduced.182 Moreover, in Chan Yu Chau v Fong On Construction & Engineering Co Ltd,183 where a worker slipped on a oor covered in debris that accumulated from his wood-cutting activities, the court cited Denwood v Harrod184 to the effect that: When the accident is held to be caused primarily by a breach of statutory duty it has to be borne in mind that the protection afforded by the statutory requirement is one which is intended to cover inadvertence and even negligence and that it is important not to judge the actions of an honest workman too harshly.185 Where worker disregards employers express safety instructions. Where express instructions regarding safe use of machinery are given by the employer and not followed by the employee, the defence of contributory negligence is more likely to succeed. In Chan Ming Yat v Youh Eng Lai Michael,186 the defendants instruction to turn off the moulding machine before undertaking any repair work was not followed, resulting in hand injuries. The defendant was found in breach of statutory duty for having failed to install a suitable guard as required by the regulations, but contributory negligence was assessed at 30 per cent. Where statutory non-compliance the fault of the plaintiff. Where the employer has been shown to be in breach of the legislation, but the employer can prove that he used due diligence to full the statutory duties and that the only act or default of anyone that caused or contributed to the non-compliance [of the legislation] was the act or default of the plaintiff himself, he establishes a good defence.187 However, this defence will not be easy to prove.188 10.077
10.078
5. EMPLOYERS LIABILITY AS OCCUPIER OF THE WORK PREMISES

(a) Occupiers liability in general Occupiers liability for workplace injuries. Occupiers liability is a branch of negligence law which imposes on the occupiers of premises a duty of care to their 10.079
182 183 184 185
186 187 188
Ibid, at 302. Fn 163 above. (unrep., Court of Appeal of England, 22 Oct 1997). Ibid. On this basis, the court held the employers largely responsible for the workers injuries resulting from the employers breach of regulations requiring them to keep the oor clear of debris, and found the worker to be only 15% contributorily negligent. (unrep., DCPI 201/2003, [2004] HKEC 672). As per Lord Diplock in Boyle v Kodak [1969] 1 WLR 661 at 6723. In Raineld Design & Associates Ltd v Siu Chi Moon (fn 18 above), the Court of Final Appeal rejected this defence on the basis that the defendant could not establish that it had used due diligence.
434
visitors. An occupier who fails to maintain the premises in a condition that is safe for visitors will be held liable for the injuries or damage to property suffered by visitors. Since most employers are occupiers of the workplace premises, occupiers liability can represent an alternative basis of liability for some workplace accidents causing injury.189 10.080 Rules of occupiers liability codied in statute. In Hong Kong, the rules applying to occupiers liability are codied in the OLO.190 The OLO consolidates the common law rules, achieves certain reforms, and removes some of the undue technicalities that had developed in the common law of occupiers liability. For example, the OLO preserves the common law rules regarding the conditions for visitor status and occupier status,191 and for what constitutes premises. However, on the issues of what is the common duty of care and whether or not it has been breached, the common law rules have been superseded by s.3 of the OLO.192 Occupiers liability as alternative to negligence and breach of statutory duty. An action for occupiers liability can be brought in addition to, or as an alternative to, an action for negligence or breach of statutory duty. An employee injured at work is more likely to bring an action for negligence and/or breach of statutory duty, before pursuing a remedy in occupiers liability. However, occupiers liability, where available on the facts, is likely to be pleaded, especially when there are difculties in identifying the employer or in establishing a contract of employment, or where the fault lies not with the employer but with the principal contractor in charge of the work site.193 Occupiers liability or general negligence? A person injured at work will have an action in either occupiers liability or negligence depending on how the injury or damage came about. Did the injury occur because of the employers breach of duty as an occupier to keep persons safe while using the premises, or as a result of a general negligence duty to take reasonable care in the conduct of some activity being carried on there? Occupiers liability is only concerned with the occupancy duty, that is, injuries arising from the defective state of the premises,194 and not with the activity duty, which is governed by general negligence law.195 Unsafe work premises or unsafe system of work? Whether the appropriate cause of action lies in occupiers liability or general negligence can be expressed as follows:
10.081
10.082
10.083
189
190 191 192 193 194
195
Where someone other than the employer is the occupier, a breach of statutory duty action may be available to an injured worker under the OSHO (Cap.509), in addition to occupiers liability as explained in this section. See paras 9.019 to 9.022 above. OLO (Cap.314). See OLO s.2(2). These issues will be discussed in greater detail in the paragraphs that follow. As in Koah Ming Ming v Secretary for Justice (unrep., HCPI 180/2005, [2010] HKEC 906). OLO s.3(2). In Revill v Newbury [1996] QB 567, the English Court of Appeal held that the Occupiers Liability Act, on which the OLO is based, adopted the view of the Law Commission (Law Com No. 75) that the Act covers conduct on the premises which causes a continuing source of danger, thereby rendering it unsafe. In Ali Rafaqat v Wise Security Ltd (fn 26 above), the OLO action failed because the court found that the injury resulting from the assault by intruders had nothing to do with the state of the premises. See also Waan Chuen Ming v Lo Kin Nam (fn 6 above) and Chung Ping Wai v Pedder Logistics Godown Ltd (fn 1 above), afrmed by Court of Appeal at (unrep., HCMP 1551/2009, [2009] HKEC 1790).
435
Did the injury arise from the use of unsafe work premises, or from an unsafe system of work?196 Hong Kong courts extending the reach of OLO. In recent years, there is a perceptible trend in the Hong Kong cases to extend the reach of the OLO to workplace injuries that arise from activities, including the system of work. For example, in Wong Kwok Tung v Tsang Hin Ping,197 the occupier, who was not the employer, was found liable under the OLO for injuries to a scaffolding worker caused by the absence of safety harnesses. Such cases tend to blur the intended function of the OLO, applying the OLO to situations that ought to be argued and analysed as negligence actions.198 Note that this often occurs when the worker is unable to identify an employer against whom a negligence action can be brought or when a contract of employment is difcult to establish.199 Both negligence and occupiers liability may apply. In some cases, actions may be available in both negligence and occupiers liability, and, under those circumstances, plaintiffs are best advised to sue in both.200 Whether the court treats the action as one of occupiers liability or negligence, there will be little or no substantive difference in the outcome. There is even precedent for succeeding in both.201 (b) Who is an occupier? Who is an occupier? The employer owes a duty of care under the OLO only if the plaintiff can show that the employer is an occupier of the premises in question. 10.086 10.084
10.085
196
197
198
199
200
201
Thus, an occupier who had subcontracted demolition work to a contractor was not liable for the injury of a workman resulting from dangerous demolition techniques: see Ferguson v Welsh [1987] 1 WLR 1553. In Kwan Chu Kwong v Cheng Shui Hung & Yin Tse Ping (Third Party) (unrep., DCPI 164/2004, [2005] HKEC 1235), the plaintiff, an air conditioner installation worker, was killed when the bracket which he had welded as part of the hoisting device broke, causing the air conditioner to fall on him. The court found no occupiers liability because there was nothing inherent in the [occupiers] property that was dangerous the danger was the insecure bracket which was external to and distinct from the premises itself . But an action in negligence may be available, as in Waan Chuen Ming v Lo Kin Nam (fn 6 above). See also fn 23 of Chapter 2 above. (unrep., HCPI 725/1997, [2000] HKEC 92). See also Lam Cheuk Leung v Erawan Co Ltd [2004] 1 HKLRD 778, in which a cement contractor on a construction site was found liable under the OLO for injuries to the plaintiff, a cement worker who fell from defective scaffolding and who was not wearing a safety harness because there was no suitable anchorage for one. The court held that the cement contractor should have known that the plaintiffs employer was adopting an unsafe system of work, and the common duty of care required the defendant to take measures to remedy the situation. As in Lam Shui Ngan v Global Cheer Ltd (fn 54 above), where the property manager was held liable in occupiers liability for the failure to provide sturdy garbage bags to cleaning workers employed by the cleaning contractor. See Tam Hon Leung v Ng Wai Hing [2006] 1 HKLRD 923, where the defendant contractors were found in breach of the common duty of care under the OLO for failing to provide a checker on the ground to direct the drivers of vehicles used to lift containers under repair, in order to keep the vehicles clear of repair workers such as the plaintiff. Also see Chan Cheung v Leung Kwok Wai (unrep., HCPI 917/2001, [2003] HKEC 24), where the plaintiff truck driver was injured in a collision with the defendants truck driver on the defendants container terminal service road. The defendant was found in breach of its common duty of care as occupier for allowing U-turns at a place and in circumstances in which it was unsafe: afrmed by CA at (unrep., CACV 107/2003, [2005] HKEC 669); leave to appeal refused by CFA at (unrep., FAMV 1/2006, [2006] HKEC 416). Consider, for example, Lau Kam Tai v United Soundfair Engineering Co Ltd (fn 87 above), where a worker who, without his employers knowledge, constructed a wooden ramp on which to unload concrete; the ramp became slippery resulting in injury to the worker. In this case, the action succeeded in negligence and was not argued in occupiers liability, but an OLO case could have been argued if the ramp in question had been constructed by the employer or was otherwise part of the premises. See Ting Kam Yuen v Hong Kong Buddhist Association (unrep., HCPI 1203/1996, [1999] HKEC 241).
436
Occupier is not dened in the OLO. Section 2(2) of the OLO states that the previous common law will apply. The common law test to determine whether the defendant is an occupier is one of control.202 A legal interest in the land is not necessary. Most but not all employers will qualify as occupiers. 10.087 Occupier must have some degree of control over premises. Control normally implies the power to admit and exclude visitors, but something less than this can constitute control for the purposes of the OLO. According to the leading UK authority, the defendant is an occupier if he has some degree of control associated with and arising from presence in and use of or activity in the premises.203 Complete or exclusive control is not required.204 Multiple occupiers possible. There can be two or more occupiers at one time.205 This can occur, for instance, where an employer or contractor allows a subcontractor onto the premises to do renovation or repair work. In Wong Ching Wa v East Asia Entertainment Ltd,206 both the promoter of a pop concert and the concert organiser engaged by the promoter were found to be occupiers of the stage and the adjacent unfenced platform from which the plaintiff- technician fell in the course of repair work. Similarly, in Tam Hon Leung v Ng Wai Hing,207 the principal contractor, the subcontractor and the sub-subcontractor were all found to be occupiers of the container repair site where the plaintiff was injured.208 Broad, purposive approach widens the scope of occupiers. Cases concerning construction-site accidents in Hong Kong reveal a marked judicial willingness to treat a wide range of contractors as occupiers. The tendency to impose occupiers liability broadly stems from a judicial desire to provide remedies for injured workers by identifying a defendant who is in a duty relationship with the victim and who is capable of paying. This purposive, dynamic approach has widened the scope of persons who can be held liable for a workers injuries as occupiers under the OLO. In Ma Hui Tung Kuk v Cheong Hing Ha Kee Construction Co Ltd,209 the deceased was a labour only subcontractor, appointed to remove old partitioning from an external wall. The scaffolding on which he worked contained no working platform. He stood on planks, many of which were in bad condition, having been installed 18 months earlier. He fell and was killed when the plank on which he was standing suddenly collapsed. The
10.088
10.089
202 203
204
205 206 207 208
209
Wheat v Lacon [1966] AC 552. As per Lord Pearson in Wheat v Lacon (ibid) at 589. In general this means that an owner or general contractor who appoints subcontractors to execute works will still be regarded as an occupier: Wan Tsz Nok v Hung Fai Electrical Engineering Ltd (unrep., HCPI 1117/2004, [2008] HKEC 1939). Thus, in Wong Wing Ho v Hong Kong Housing Authority (unrep., HCPI 558/2004, [2006] HKEC 2355), a contractor temporarily working on the premises was found to be an occupier. Moreover, in Li Hoi Shuen v Man Ming Engineering Trading Co Ltd (fn 16 above), the defendant companys ofcers had never even seen the premises (a warehouse in Mainland China), yet the defendant was still found by the court to be an occupier. See Wheat v Lacon (fn 202 above). (unrep., HCPI 1165/2004, [2006] HKEC 249). Fn 199 above. In Sze Che Sau v Dragages et Travaux Public (HK) Ltd [2007] 4 HKLRD 890, an action brought by construction workers injured and killed when a working platform collapsed, the principal contractor was found to be an occupier, but so too were the structural engineers because they were in a position to stop the work from proceeding. They had a sufcient degree of control over the Site to be able to ensure the safety of the plaintiffs and the Deceased who came on to the Site as visitors (at para 128). See also Koah Ming Ming v Secretary for Justice (fn 193 above). [1992] 2 HKC 391.
437
defendant, a formwork subcontractor who appointed the deceased, was on-site only occasionally, for the purpose of checking on the progress of the deceaseds work and to take up any complaints from the general contractor with the deceased. However, the defendant was entitled by virtue of his contract ... to authorise others, including the deceased, to enter and remain on the premises for the purposes of, inter alia, carrying out work thereon. On this basis, he was found to be an occupier of the scaffolding.210 (c) Who is a visitor? OLO retains common law denition of visitor. To bring an action under the OLO, a worker must show that he was a visitor to the premises where and when the injury or damage occurred. Section 2(2) of the OLO retains the denition of visitor as understood in the common law of occupiers liability. Visitors are persons permitted by the occupier to be on the premises. Persons not permitted to be on the premises are trespassers and are owed no such duty of care. Employees and independent contractors are visitors on work premises. In general, employees on work premises for work purposes can be deemed to have express permission to be there. The same would apply to independent contractors on a construction site. Permission can be express or implied. Permission to be on the premises can be express or implied. It matters not whether the permission is express or implied as the legal effect is the same. Mere knowledge of an intruders presence does not imply permission. Mere knowledge of the presence of an intruder is normally insufcient to constitute implied permission. According to Devlin J in Phipps v Rochester, There must be something more than casual trespassing by individuals who come once and perhaps never again. There must be a class of people who form something of a habit; and then one must ask oneself whether a reasonable owner would feel that, unless he acted to stop the trespass, the belief would naturally be induced in those who used the land that they had his tacit permission to do so.211 On the other hand, in some Hong Kong cases, permission has been implied on the basis of minimal evidence. In Ting Kam Yuen v Hong Kong Buddhist Association,212 the defendant had retained a contractor to do decoration and repair work on the premises. Scaffolding was erected for that purpose. The defendants knowledge that one of the contractors workmen had gone onto the unfenced roof to do some construction 10.090
10.091
10.092
10.093
210
211 212
See also Ta Xuong v Incorporated Owners of Sun Hing Building [1997] 4 HKC 171, where incorporated owners were found to be occupiers in circumstances where they failed to remove scaffolding erected on the building by a contractor some years earlier. Moreover, in some cases, permission to use the site, or to use the piece of equipment in question, has been found sufcient to constitute control for the purpose of imposing occupiers liability: see Cheung Hung Yuk v Chiu Chai (unrep., HCA A7600/1985, [1990] HKLY 514), and Wong Chi Shing v Argos Engineering & Heavy Industries Co Ltd (fn 130 above). [1955] 1 QB 450 at 456. Fn 201 above.
438
work, and his failure to prevent that usage, constituted sufcient evidence of implied permission to use the roof, and the injured workman was found to be a visitor under the OLO. 10.094 Visitor status dened in respect of particular aspects of premises. For liability to attach under the OLO, one must be a visitor to the premises that proved defective or unsafe and that caused the injury or damage. Visitor status can be dened in respect of specic aspects of premises. Thus, a worker injured by the defendants refuse chute that collapsed and fell from above was not a visitor in respect of the refuse chute, although the defendant was nonetheless found liable in negligence.213 (d) Meaning of premises 10.095 Premises not explicitly dened in OLO. To qualify for an action under the OLO against an occupier of premises, a plaintiff must show that he was injured while on the premises and that the injury arose from the defective state of the premises (as opposed to an activity carried on there). Premises is not explicitly dened in the OLO. Premises include buildings, land and structures. Premises is understood to include all variety of buildings and land, and structures normally attached to buildings or land, that a visitor is permitted to visit. Section 2(3) of the OLO afrms that the same liability at common law regarding such premises shall also apply to any xed or movable structure, including any vessel, vehicle or aircraft. Premises in Hong Kong occupiers liability cases. In Hong Kong work-accident cases, premises has been interpreted exibly to include, for example, a skip hoist,214 a shearing machine,215 scaffolding,216 the hold of a cargo ship,217 a mini-van used in a lm stunt,218 a lift,219 an escalator,220 a ladder221 and an unstable stool on an uneven oor.222 (e) Extent of the common duty of care (i) Common duty of care in general 10.098 Occupier owes common duty of care to all visitors. Section 3(1) of the OLO stipulates that An occupier of premises owes the same duty, the common duty of care, to all his visitors, except in so far as he is free to and does extend, restrict, modify or exclude his duty to any visitor or visitors by agreement or otherwise.
10.096
10.097
213 214 215 216 217 218 219 220 221
222
Yip Suen Pun v Wong Ka Kee (unrep., HCPI 848/2003, [2006] HKEC 1246). Cheung Hung Yuk v Chiu Chai (fn 210 above). Wong Chi Shing v Argos Engineering & Heavy Industries Co Ltd (fn 130 above). Ta Xuong v Incorporated Owners of Sun Hing Building (fn 210 above). Cheng Pik Kin v Allied Marine Consultants Ltd (unrep., HCPI 748/2000, [2002] HKLRD (Yrbk) 569). Ip Kin Kok v Film Power Co Ltd (unrep., HCPI 473/2004, [2005] HKEC 732). Tang Chin Ming v Lucky Bakery House Ltd (unrep., DCPI 185/2003, [2004] HKEC 600). Kam Wai Ming v MTR Corp Ltd (unrep., DCPI 408/2002, [2003] HKEC 1497). Chong Yiu Tat v Fong Man Chi & Ping Kai Engineering Co Ltd (Third Parties) (unrep., HCPI 742/2001, [2003] HKEC 1543). Khan Amar v Cheung Ying Construction Engineering Ltd (unrep., HCPI 231/2005, [2006] HKEC 496).
439
Duty one of reasonable care in the circumstances. Section 3(2) of the OLO states that The common duty of care is a duty to take such care as in all the circumstances of the case is reasonable to see that the visitor will be reasonably safe in using the premises for the purposes for which he is invited or permitted by the occupier to be there. The occupier is not an absolute guarantor of safety, but is only required to take reasonable care to see that visitors are reasonably safe in their permitted use of the premises. In general, the standard of care will be determined according to principles similar to those used in the tort of negligence, and all the circumstances of the case are to be taken into account. Common duty of care requires active measures. The common duty of care is an afrmative one, requiring the occupier to take active measures to ensure that visitors will be reasonably safe in using the premises for the purposes for which they have been invited or permitted to be on the premises.223 Duty may extend to controlling conduct of others. The duty may, in appropriate circumstances, extend to controlling others, where the harmful conduct of those others is a foreseeable result of the occupiers breach of duty. In Wong Tung Ming v Kwok Chiu Hung,224 the common duty of care was found to be breached when active steps were not taken to prevent risks to workers caused by third parties over whom the defendant /employer had control. System of periodic inspection and cleaning can satisfy duty of care. Given that the duty is one of reasonable care only,225 the common duty of care can in appropriate cases be satised by the implementation of a system of periodic inspections, cleaning and maintenance.226 Occupier not responsible for criminal acts of third parties. In general, an occupier is not responsible for injuries to visitors caused by the criminal acts of third parties. The exceptions would be cases where the criminal conduct was reasonably foreseeable and where the defendant had control over the conduct of the third party. In Li Hoi Shuen v Man Ming Engineering Trading Co Ltd,227 where an employee/visitor was killed by co-workers, the court held that the defendant was not liable because it did not have control over the criminals.228 All the circumstances to be considered. Section 3(2) of the OLO stipulates that all the circumstances of the case are to be taken into consideration in determining what is reasonably to be expected of the occupier in the circumstances. Sections 3(3) and 3(4) provide some specic examples and further guidance, but these provisions are in no
10.099
10.100
10.101
10.102
10.103
10.104
223
224 225 226
227 228
OLO s.3(2). Also see s.2(1) which refers to the duty which an occupier of premises owes to his visitors in respect of dangers due to the state of the premises or to things done or omitted to be done on them. (unrep., PI 928/1995, 88/1997, [2000] HKLRD (Yrbk) 371). OLO s.3(2). See also Wheat v Lacon (fn 202 above). As occurred in Lau Sau Yee v Hong Kong Ballet Ltd (unrep., HCPI 772/1997, [2002] HKEC 185), concerning a ballet dance oor, appeal to Court of Appeal dismissed at (unrep., CACV 171/2002, [2004] HKEC 214); Kam Wai Ming v MTR Corp Ltd (fn 220 above), concerning an escalator; and Tang Chin Ming v Lucky Bakery House Ltd (fn 219 above), concerning a lift. Fn 16 above. This result is questionable given that the criminals were the defendants employees.
440
way exhaustive of the kinds of circumstances to be taken into account. Overall, s.3 of the OLO provides a common-sense framework to assist the court in the determination of the breach of duty issue. (ii) Section 3(3): particular types of visitors 10.105 Type of visitor a relevant consideration. Section 3(3) of the OLO stipulates that: The circumstances relevant for the present purpose include the degree of care and of want of care, which would ordinarily be looked for in such a visitor The section goes on to provide some examples of relevant circumstances in determining breach.229 Visitors exercising a calling should guard against incidental risks. Under s.3(3)(b) of the OLO, an occupier may expect that a person, in the exercise of his calling, will appreciate and guard against any special risks ordinarily incident to it, so far as the occupier leaves him free to do so. On this basis an occupier was held not liable when chimney cleaners were killed by carbon monoxide fumes while cleaning the occupiers chimney.230 For s.3(3)(b) to apply, it must be shown that the special risks are ordinarily incidental to that particular calling.231 (iii) Section 3(4)(a): warning of danger 10.107 Warnings can discharge the common duty of care. The common duty of care does not require the occupier to make the premises safe, but to take reasonable care to ensure that the visitor is reasonably safe when using the premises. In appropriate cases, the occupiers warning of a danger may be sufcient to discharge the common duty of care.232 Section 3(4)(a) of the OLO stipulates that where damage is caused to a visitor by a danger of which he had been warned by the occupier, the warning is not to be treated without more as absolving the occupier from liability, unless in all the circumstances it was enough to enable the visitor to be reasonably safe. Specic danger must be identied and possible to avoid. For the warning to be sufcient, the specic danger must be identied, and it must be possible for the visitor to avoid the danger. The warning will be insufcient to discharge the duty if it offers no safe alternative, or where the notice is posted in an unsuitable place.233 Moreover, warnings that have become part of the xture of the premises will not sufce.234
10.106
10.108
229 230 231
232 233 234
OLO s.3(3)(a) concerning child visitors is not considered here. Roles v Nathan [1963] 2 All ER 908. In Hsu Li Yun v Incorporated Owners of Yuen Fat Building [2000] 1 HKLRD 78, a electrician/plumbers death by electrocution while standing on a shtank to reach a switch box was found to be a risk not ordinarily incident to his calling. Similarly, in Poon Chi Kwong v Poon Wing Kee (Metal Work) (unrep., HCPI 1340/2003, [2005] HKEC 2156), the defendant general contractors reliance on s.3(3)(b) was rejected where the plaintiff welder fell off the retaining wall on which he was working, not because of any special risk incidental to welding work, but because of the absence of a rail to guard the edge of the retaining wall. This provided an additional argument against the liability of the occupier in Roles v Nathan (fn 230 above). Chan Kwai Ngor v Leung Fat Hang [1992] 1 HKC 408. Hau Kit Ho v Starway International Development Ltd (unrep., DCPI 329/2002, [2003] HKEC 1166).
441
Warning must direct the visitor to the specic danger. To be sufcient to discharge the duty of care, the warning must direct the visitor to the specic danger in question. In Wood v Wah Tung (E&M) Ltd, where a worker was injured after falling into an uncovered hole on the Chek Lap Kok airport construction site, Deputy Judge To, in nding a breach of the common duty of care under the OLO, stated: General notices reminding workers of safety at site are in my view not adequate. They have to be such as to draw the workers attention to the presence of holes, which might be uncovered or unfenced ... adequate notice should be displayed at the entrance warning workers of the existence of these pits which may be uncovered or unfenced in a chaotic construction site.235 Warning unnecessary where danger obvious and expected. Where the danger is obvious and to be expected, for instance in the very nature of constructions sites, a warning may be unnecessary for the discharge of the common duty of care.236 Section 3(4)(a) warning is not a disclaimer. A warning, as contemplated in s.3(4)(a), is not to be confused with a disclaimer or exclusion of liability. A warning provides information to enable a visitor to be safe. It is a means for the occupier to satisfy the common duty of care, not a means to avoid the duty imposed by the OLO.237 (iv) Section 3(4)(b): reasonable care in hiring independent contractors Reasonable care in hiring independent contractors can discharge duty. Under s.3(4)(b) of the OLO, where injury to a visitor is caused by the faulty work of an independent contractor, the occupier may be held to have discharged the common duty of care if he acted reasonably in the hiring of the independent contractor and took what steps were reasonably necessary to ensure that the independent contractor was competent and that the work was properly done.238 Occupier possesses expertise or knowledge of special risks. An occupier will not be held to have discharged the common duty of care under s.3(4)(b) where the work involves expertise which the occupier possesses,239 or where the special risks are not within the expertise of the independent contractor but are within the knowledge of the occupier.240 Four requirements under section 3(4)(b). Assuming that the delegated functions were within the reasonable competence of the independent contractor and not the occupier,
10.109
10.110
10.111
10.112
10.113
10.114
235
236 237
238
239 240
Wood v Wah Tung (E&M) Ltd (unrep., HCPI 1004/1998, [2000] HKEC 277). See also Hau Kit Ho v Starway International Development Ltd (ibid). See Ratcliff v McConnell [1999] 1 WLR 670 and Tomlinson v Congleton Borough Council [2004] 1 AC 46. Properly drafted, a warning should not violate the prohibitions in the Control of Exemption Clauses Ordinance (Cap.71). OLO s.3(4)(b) reads: where damage is caused to a visitor by a danger due to the faulty execution of any work of construction, maintenance or repair by an independent contractor employed by the occupier, the occupier is not to be treated without more as answerable for the danger if in all the circumstances he had acted reasonably in entrusting the work to an independent contractor and had taken such steps (if any) as he reasonably ought in order to satisfy himself that the contractor was competent and that the work had been properly done. Thomson v Cremin [1953] 2 All ER 1185. Mak Kwai Yin v USA Fur Processing Ltd [1994] 2 HKLR 120.
442
it must be considered whether the occupier has: (1) acted reasonably in entrusting the work to the contractor;241 (2) used reasonable care in selecting the contractor; (3) taken reasonable steps to supervise the carrying out of the work; and (4) used reasonable care to verify that the work had been properly done.242 All four requirements must be met for the occupier to discharge the common duty of care under s.3(4)(b). Moreover, the burden to satisfy these conditions is on the employer.243 10.115 Contracting the work and selecting the contractor. The rst of these requirements poses few problems, because the use of subcontractors to assist in construction or industrial undertakings is a reasonable and generally accepted way of getting work done. The second also rarely poses problems, unless the employer is aware of facts that suggest incompetence. A reasonable employer should conrm that the contractor is a registered member of the relevant trade or profession and possesses the necessary experience to do the work competently. Supervision of the work and verication of the results. It is the third and fourth requirements, to supervise the work and to verify that it has been properly done, that may be more problematic. The employer may lack the technical expertise to make such a determination, as for instance in the case of a repair of a lift,244 in which case liability does not attach. It will be otherwise, however, where the work is one of ordinary maintenance, 245 and verication is within the occupiers abilities. In Kristan Bowers Phillips v Initial Environmental Services Ltd,246 the plaintiff/musician suffered injuries after inhaling toxic pesticide sprayed by the contractor hired by the defendant/occupier, the Academy for Performing Arts. The defendants argument under s.3(4)(b) that its appointment of reputable exterminators discharged its common duty of care was rejected. The spraying of insecticides involved serious risks to health that would be known to any reasonable occupier, but unknown to visitors who have had no notice of the fumigation or of the insecticide used. (f ) Defences 10.117 Contributory negligence applies. The defence of contributory negligence is available according to the same principles as in the tort of negligence,247 and is regularly applied in occupiers liability cases.248 This defence may require, for instance, that a worker move more slowly and pay more attention than usual when entering a worksite,249 whether or not warning signs are posted. Moreover, s.3(3)(a) and (b) are relevant in the
10.116
241
242 243 244 245 246 247 248 249
There must be an entrusting. The provision will have no application where the occupier retains control and supervision of the work, as in Li Moon Chai v Leung Shu Man (fn 71 above). Yeung Kam Fuk v Len Shing Construction Co Ltd [1986] HKC 160. Wan Tsz Nok v Hung Fai Electrical Engineering Ltd (fn 203 above). Haseldine v Daw [1941] 2 KB 343. Woodward v Mayor of Hastings [1945] 1 KB 174. Fn 15 above. See paras 10.036 to 10.039, above. For example, see Hsu Li Yun v Incorporated Owners of Yuen Fat Building (fn 231 above). As in Tse So Kam v Guardian Property Management Ltd (unrep., DCPI 856/2005, [2006] HKEC 925), involving a building where the podium was wet due to rainfall.
443
determination of whether or not the plaintiff was contributorily negligent.250 However, in the employment context, contributory negligence will be more difcult to prove than in occupiers liability generally. Volenti non t injuria also available. Under s.3(1) and (5) of the OLO,251 the defence of volenti non t injuria is available according to the same principles as in negligence.252 However, as in negligence, and in particular, in the employment context, this defence will be very difcult to prove. Trespassers owed a limited duty of care. If an employee ventures to a place where he is plainly not permitted, he may be found to no longer be a visitor, but rather a trespasser. The duty of care that occupiers owe to trespassers is extremely limited. Trespassers are not covered by the OLO, but by the principle expressed in British Railways Board v Herrington.253 In Chan Yan Nam v Hui Ka Ming, where a plumbing subcontractor ventured out onto an illegal canopy, Deputy Judge Muttrie described an occupiers duty to trespassers as follows: to become liable [the owner] would have to know that the condition of the platform was such that it would be dangerous to a trespasser who went on to it and it would have to know or expect that someone would go on to it. 254 10.118
10.119
250
251
252
253
254
See Wong Shek Hung v Pentecostal Lam Hon Kwong School (unrep., DCPI 48/2000, [2001] HKLRD (Yrbk) 643); also see paras 10.105 to 10.106 above. For OLO s.3(1), see para 10.098 above. OLO s.3(5) states: The common duty of care does not impose on an occupier any obligation to a visitor in respect of risks willingly accepted as his by the visitor (the question whether a risk was so accepted to be decided on the same principles as in other cases in which one person owes a duty of care to another). For an example in a non-employment context, see Titchener v British Railways Board [1983] 1 WLR 1427. This defence was rejected out of hand in Ting Kam Yuen v Hong Kong Buddhist Association (fn 201 above), where the only evidence against the deceased worker who fell off the edge of the rooftop was that he was trying to listen to instructions shouted at him from below. It was also rejected in Poon Chi Kwong v Poon Wing Kee (Metal Work) (fn 231 above), where the only evidence against the plaintiff/worker who fell from an unfenced retaining wall was that the plaintiff knew the retaining wall was unguarded. [1972] AC 877. Herrington did not concern employment. It was a case of a child trespassing on a railway line. Nonetheless it is taken as the general law on trespassers, creating the duty of common humanity, requiring an occupier of sufcient resources who knows of dangers and of the presence of trespassers to take reasonable steps to allow trespassers to avoid the danger. Herrington has since been overtaken in the UK by the Occupiers Liability Act 1984. For a Hong Kong application of the Herrington principle in a non-employment context see Wong Wing Ho v Hong Kong Housing Authority (unrep., HCPI 558/2004, [2006] HKEC 2355), afrmed by the Court of Appeal at [2008] 1 HKLRD 352. (unrep., HCPI 1169/2000, [2002] HKEC 837), at para 39.

ELPHK - Chapters 6-10

Hochgeladen von

Dokumentinformationen

Originalbeschreibung:

Copyright

Verfügbare Formate

Dieses Dokument teilen

Dokument teilen oder einbetten

Freigabeoptionen

Stufen Sie dieses Dokument als nützlich ein?

Sind diese Inhalte unangemessen?

Copyright:

Verfügbare Formate

ELPHK - Chapters 6-10

Hochgeladen von

Copyright:

Verfügbare Formate

CHAPTER 6

97 98 99 100 101 102 103 104 105 106 107

108 109 110 111 112 113

114 115 116 117 118 119

127 128 129

132 133 134 135 136

139 140 141 142 143 144

153 154 155 156 157

159 160 161 162 163 164 165

166 167 168

169 170 171

173 174 175 176

177 178 179 180

186 187 188 189

190 191 192 193

194 195 196 197 198 199

201 202 203 204 205

210 211 212

226 227 228 229

231 232 233 234

239 240 241

243 244 245 246

249 250 251

259 260 261

263 264 265 266 267 268 269

272 273 274

275 276 277 278

281 282 283 284 285 286 287

298 299 300 301

304 305 306 307

309 310 311 312 313 314

3. DISCIPLINARY MEASURES FALLING SHORT OF TERMINATION

DISCIPLINARY MEASURES FALLING SHORT OF TERMINATION

329 330 331 332 333

336 337 338

342 343 344

347 348 349

350 351 352 353

EMPLOYMENT PROTECTION, REMEDIES AND ENTITLEMENTS UPON TERMINATION

2. EMPLOYMENT PROTECTION AND REMEDIES FOR WRONGFUL TERMINATION

EMPLOYMENT PROTECTION, REMEDIES AND ENTITLEMENTS

EMPLOYMENT PROTECTION AND REMEDIES FOR WRONGFUL TERMINATION

EMPLOYMENT PROTECTION, REMEDIES AND ENTITLEMENTS

EMPLOYMENT PROTECTION AND REMEDIES FOR WRONGFUL TERMINATION

EMPLOYMENT PROTECTION, REMEDIES AND ENTITLEMENTS

EMPLOYMENT PROTECTION AND REMEDIES FOR WRONGFUL TERMINATION

EMPLOYMENT PROTECTION, REMEDIES AND ENTITLEMENTS

EMPLOYMENT PROTECTION AND REMEDIES FOR WRONGFUL TERMINATION

EMPLOYMENT PROTECTION, REMEDIES AND ENTITLEMENTS

EMPLOYMENT PROTECTION AND REMEDIES FOR WRONGFUL TERMINATION

EMPLOYMENT PROTECTION, REMEDIES AND ENTITLEMENTS

EMPLOYMENT PROTECTION AND REMEDIES FOR WRONGFUL TERMINATION

EMPLOYMENT PROTECTION, REMEDIES AND ENTITLEMENTS

EMPLOYMENT PROTECTION AND REMEDIES FOR WRONGFUL TERMINATION

EMPLOYMENT PROTECTION, REMEDIES AND ENTITLEMENTS

(2005) 8 HKCFAR 605. Under s.32A(1)(a) of the EO.

EMPLOYMENT PROTECTION AND REMEDIES FOR WRONGFUL TERMINATION

EMPLOYMENT PROTECTION, REMEDIES AND ENTITLEMENTS

100 101 102

EMPLOYMENT PROTECTION AND REMEDIES FOR WRONGFUL TERMINATION

EMPLOYMENT PROTECTION, REMEDIES AND ENTITLEMENTS

109 110 111 112 113 114 115

EMPLOYMENT PROTECTION AND REMEDIES FOR WRONGFUL TERMINATION