I INTRODUCTION

Employment relationships in Hong Kong are primarily governed by the Employment Ordinance (Cap. 57), which provides the minimum statutory protection for employees. It is a comprehensive piece of legislation that sets out the statutory framework for the rights and liabilities of the parties in an employment relationship, in addition to the terms and conditions laid down in any employment contracts made between employers and employees. Any term or condition in any employment contract that purports to extinguish or reduce any right, benefit or protection conferred upon the employee by the Employment Ordinance is void. In addition, as Hong Kong is a common law jurisdiction, much of the development in employment law has been driven by the ever growing body of case law, the latest developments of which are the focus of Section IV of this chapter.

Apart from employment contracts and the application of the Employment Ordinance, employment law in Hong Kong also covers a broad range of other matters, including health and safety, compensation for employees for work-related injuries, and discrimination in the workplace. Thus, it is no surprise that there is a wide variety of employment disputes in Hong Kong. The majority of these are resolved by conciliation or at the Labour Tribunal, which is a specialised tribunal established to provide an informal and efficient means for employers and employees to resolve their monetary disputes. There are also high-end court cases concerning team moves that are in breach of restrictive covenants or confidentiality and injunctive relief (including springboard injunctions in relation to the setting up of new competitive businesses), and enquiries as to damages. An account could also be sought from the formal courts against an employee who makes a secret profit out of an employment relationship.

II PROCEDURE

The forum and procedures established to assist employers and employees engaged in labour and employment disputes of a monetary nature under an employment contract and governed by the Employment Ordinance are in general informal, cost-effective and efficient, and they are primarily dealt with by the Labour Tribunal. Parties in disputes that involve claims for non-monetary relief, such as injunctions, specific performance or damages, need to apply to the formal courts. As regards discrimination claims (on the grounds of gender, disability, family status or race), special procedures apply and the District Court has exclusive jurisdiction to hear such cases.

i Labour Relations Division

The Labour Relations Division is often the first point of contact for an intended claimant to advance a claim arising from an employment contract governed by the Employment Ordinance. It is a division under the Labour Department that is responsible for providing consultancy services to employers and employees regarding their rights and obligations under their employment contracts and the Employment Ordinance. It also provides voluntary conciliation services to help employers and employees settle their disputes and claims. Claims that cannot be resolved by conciliation by the Labour Relations Division may then be referred to the Labour Tribunal or the Minor Employment Claims Adjudication Board, depending on the monetary amount involved.

ii Labour Tribunal

The Labour Tribunal is the main forum in Hong Kong for resolving employment disputes governed by the Employment Ordinance. It has exclusive jurisdiction to hear monetary claims exceeding HK$8,0002 arising from the breach of a term of an employment contract or apprenticeship, or arising from non-compliance with the provisions of the Employment Ordinance or the Apprenticeship Ordinance (Cap. 47). The Labour Tribunal does not have jurisdiction to hear claims for non-monetary remedies.

Parties are encouraged to attempt conciliation before filing a claim. The Labour Tribunal will not normally hear a claim until a certificate of conciliation has been signed. Should conciliation fail and a claim be filed, a hearing date will be fixed that will normally be between 10 and 30 days after the date of filing. The tribunal officer will then issue notice for the defendant to submit a defence and relevant documentary evidence.

Hearings at the Labour Tribunal are heard by a presiding officer or deputy presiding officer. They are conducted in public and in an informal manner. No legal representation is allowed and the usual civil court procedures do not apply (e.g., the rules of evidence do not apply and the Labour Tribunal is entitled to receive any evidence that it considers relevant). There will be several call-over hearings, at which the presiding officer will try to identify the issues in dispute, and direct for the filing of witness statements and supporting evidence before the formal trial is conducted; a decision will normally be made immediately after the formal trial. In more complicated employment disputes, judgment may be reserved and delivered later, on an appointed day, following the closing submissions by the parties as directed by the presiding officer.

Either party may apply to the Labour Tribunal for a review of the decision within seven days of its issuance date. Alternatively, either party in pursuing an appeal shall first apply to the Court of First Instance for leave to appeal against the decision within seven days of the date on which the award of the Labour Tribunal was served on them, or within such extended time as may be allowed by the Registrar of the High Court with good cause. Upon obtaining leave from the Court of First Instance, a formal appeal could then be submitted to and be heard by a judge of the High Court.

iii Minor Employment Claims Adjudication Board

While most employment claims are resolved by the Labour Tribunal, small monetary claims will be heard by the Minor Employment Claims Adjudication Board (MECAB). MECAB adjudicates claims that involve not more than 10 claimants and for a sum of money not exceeding HK$8,000 per claimant. Hearings before MECAB are heard by an adjudication officer. As with Labour Tribunal hearings, MECAB hearings are conducted in an informal manner without legal representation.

Any award or order made by MECAB is legally binding. Any party who is dissatisfied with the award or order may apply for review or apply to the Court of First Instance for leave to appeal before formally lodging an appeal.

iv High Court

The High Court has jurisdiction to hear labour and employment claims for non-monetary remedies and equitable relief (e.g., a claim for an injunction to prevent a breach of post-employment restrictive covenants, a determination or adjudication on an employee's entitlement to a bonus or incentive scheme outside the scope of the Employment Ordinance). Further, as mentioned above, the High Court also has jurisdiction to hear appeals from the Labour Tribunal and MECAB.

v Equal opportunities-related claims

The Equal Opportunities Commission (EOC) was established to implement the four anti-discrimination ordinances, namely the Sex Discrimination Ordinance (Cap. 480), the Disability Discrimination Ordinance (Cap. 487), the Family Status Discrimination Ordinance (Cap. 527) and the Race Discrimination Ordinance (Cap. 602). There is no legislation in Hong Kong relating to age discrimination. Once a complaint has been lodged with the EOC, the EOC may then investigate the matter and assist parties to resolve their disputes by conciliation.

The claimant on his or her own initiative, or with the assistance of the EOC, could also initiate legal proceedings at court. The District Court has clarified in the case of Cheuk Kit Man v. FWD Life Insurance Co Ltd & Ors3 that although the District Court would be the natural forum to commence discrimination-related claims, it does not have exclusive jurisdiction over such claims and a claim may be transferred to the Court of First Instance where appropriate. Special rules and procedures have been set up to simplify and improve the cost-effectiveness of the procedure in adjudicating such claims. Parties are also encouraged to attempt settlement negotiations or alternative dispute resolution at all stages of the proceedings.

vi Arbitration

If a dispute arises from a contract of employment containing a valid arbitration clause, provided that the dispute involves a claim that is within its jurisdiction, the Labour Tribunal may, upon a party's request, refer the parties to arbitration if it is satisfied that (1) there is no sufficient reason why the parties should not be referred to arbitration, and (2) the party requesting arbitration was ready and willing at the time the action was brought to do all things necessary for the proper conduct of the arbitration, and remains so.4

In exercising its discretion, the Labour Tribunal may consider various factors, including whether the dispute can be resolved more efficiently by arbitration or by litigation, and the financial position of the parties. Where the parties are referred to arbitration, any existing litigation proceedings covering the same subject matter will be stayed.5

Given its cost-effective and efficient procedures, the Labour Tribunal may be more inclined to assume jurisdiction than to refer the parties to arbitration. It may be beneficial for the parties to resolve their disputes promptly at the Labour Tribunal instead of having to endure the arbitration process, which is often more costly and time-consuming.

III TYPES OF EMPLOYMENT DISPUTES

Employment disputes commonly arise from a breach of a term under the contract of employment (e.g., breach of restrictive covenants, breach of confidentiality clauses, misuse of a trade secret or confidential information to further oneself or for the benefit of a third party, for non-payment of wages or discretionary bonuses, or termination of employment without proper terminal payment and compensation).

Other types of employment disputes arise from a failure to comply with the provisions of the Employment Ordinance (e.g., claims for statutory entitlements, such as severance payment, and claims for damages arising from wrongful or unlawful termination of an employment contract). Part VIA of the Employment Ordinance also provides specific protection for employees in relation to unreasonable dismissal and unreasonable variation of employment contracts. An employee who has been continuously employed for at least 24 months may bring a claim for unreasonable termination or variation of employment contract if the termination or variation was carried out by the employer without a valid reason and with a view to extinguishing or reducing the employee's rights, benefits or protections under the Employment Ordinance. As of 19 October 2018, there is a new remedy under the Employment Ordinance that gives the Labour Tribunal the power to make an order for reinstatement of an employment contract without the need to secure the employer's agreement if the Tribunal considers that the order is appropriate.

Moreover, discrimination, harassment and victimisation disputes often arise in the employment context. Under anti-discrimination legislation, it is unlawful to discriminate directly or indirectly in employment on the grounds of gender, marital status, pregnancy, disability, family status or race. Employees are also given statutory protection from sexual, disability and racial harassment in the workplace under specific provisions of the anti-discrimination legislation.6 The Discrimination Legislation (Miscellaneous Amendments) Bill 2018, which was gazetted in November 2018, introduces new employment-related provisions to extend anti-discrimination protection in the employment context, such as extending protection to service providers from disability and racial harassment, and to persons working in a common workplace even if there is no employment relationship between them. This Bill is currently being considered by the relevant bills committee.

IV YEAR IN REVIEW

This section discusses some of the more significant cases and developments concerning employment law in recent years.

i Termination before commencement of employment

In Law Ting Pong Secondary School v. Chen Wai Wah,7 the court held that the employee (a teacher) was not liable to make payment in lieu of notice to his employer (the school) for backing out of his employment contract before the employment commencement date. This case demonstrates the potential problems when the employment relationship is governed by various documents with differing terms and conditions.

In this case, there were three documents in question, namely the offer of appointment, the conditions of service and the letter of acceptance. The conditions of service and the letter of acceptance were both signed by the employee on 17 July 2017, but these documents contained contradictory terms regarding the employment commencement date. The former specified 1 September 2017 as the employment commenced date whereas the latter provided that the 'conditions of the new contract will come into immediate effect'. The employee sought to terminate the employment contract in August 2017 and he was initially ordered by the Labour Tribunal to make payment in lieu of three months' notice. When the case went to appeal before the Court of First Instance, upon proper construction of the employment documents, the Court reached the conclusion that the letter of acceptance, which specified that the contract would come into immediate effect, did not form part of the employment contract as the offer of appointment only specified that the employment offer was subject to the conditions of service and made no mention of the terms under the letter of acceptance. Consequently, the Labour Tribunal decision was overturned and the Court of First Instance held that the employee was not liable to make any payment in lieu of notice as his employment had not commenced.

ii Restrictive covenants and injunctive reliefs

Cases relating to enforcement of restrictive covenants are highly fact-sensitive and the court is entitled to take into account all facts and circumstances in balancing the interests of the parties. In the Court of First Instance's decision in Greater China Appraisal Ltd v. Tsang Kang Po,8 the principles concerning injunctive reliefs to protect an employer's confidential information were considered. In this case, the employer applied for, inter alia, an interlocutory injunction based on restrictive covenants to restrain three former employees from using the employer's confidential information, and a springboard injunction to ensure that the ex-employees would not get an unfair start in their new competing business with that confidential information.

The employer alleged that the ex-employees diverted a maturing business opportunity with a client to their new competing business and took away confidential documents, namely certain billing records and a company manual, which the employer alleged were used by the ex-employees to give them a head start in their new business. The employer sought to enforce restrictive covenants in the employment contracts relating to confidentiality and non-competition and the confidentiality agreement signed by the ex-employees.

It was held that when enforcing a restrictive covenant, the confidential information that the covenant seeks to protect need only be sufficiently particularised and that the covenant ought to be read with common sense to see whether a person of ordinary honesty and intelligence would recognise the information to be the property of the employer and that he or she is not entitled to do as he or she likes with it. The Court agreed with the employer that the confidential information in question was covered by the confidentiality clause and that the ex-employees were bound by the clause. An injunction against the ex-employees to use the confidential information was therefore granted.

As regards the springboard injunction, the Court took the view that it was not warranted as the precise ambit of the confidential information had yet to be clarified and there was no evidence that the information had been divulged to anyone or in any way misused by the ex-employees. The employer's claim for diverting business opportunities also failed as there was no evidence of solicitation by the ex-employees.

In the case of McLarens Hong Kong Ltd v. Poon Chi Fai Corey & Or,9 the issue of whether a springboard injunction should be granted was considered again. The application for a six-month springboard injunction by an employer was dismissed as the Court was not satisfied that the employer had demonstrated either the precise nature of how the confidential information taken by the ex-employees had been used as a springboard or the period of the alleged competitive advantage enjoyed by the ex-employees.

The employer in this case was an insurance claims and loss-adjusting service provider and the case concerned a team move by a group of employees to a competitor company. Before the employees resigned from the company, they removed a wide range and volume of documents in electric form amounting to over 200,000 data files containing a variety of confidential information, such as client lists and ongoing project files. It should be noted that the ex-employees had already given interim undertakings up until trial not to use the confidential information and to deliver up and destroy the information in their possession.

The remaining issue was then whether an additional six-month springboard injunction should be granted to restrain these ex-employees from joining a competitor and soliciting customers and suppliers. An important factor here was that the ex-employees' employment contracts did not contain a restrictive covenant. In refusing the springboard injunction, the Court specifically noted that 'a springboard injunction will not be granted as a substitute to assist an ex-employer who has not troubled to take an express covenant to protect his confidential information'.10 Further, there was no evidence that the alleged advantage was still being enjoyed by the ex-employees as the relevant information and documents had already been returned and the Court was satisfied that the employer's interests would be sufficiently protected by the interim undertakings given by the ex-employees.

iii Dishonest assistance and procuring breach of employment contract

In South China Media Ltd v. Kwok Yee Ning & Ors,11 the employer company claimed against an ex-employee for breach of fiduciary duties and for breach of non-solicitation clause by diverting business opportunities to competitors and by using the employer's logo and name without authorisation. More interestingly, though, the employer company joined the ex-employee's husband and his two companies as a co-defendant for dishonest assistance and for procuring the breach of contract.

The ex-employee was the advertising director of the employer company and was subject to a 12-month non-solicitation clause in her employment contract. In deciding whether or not she owed fiduciary duties to the employer, the District Court found her to be a de facto director given the extensive powers she had over the employer's clients and held that she owed fiduciary duties to her employer. The Court was satisfied on evidence that the ex-employee had used the employer's logo and name without consent and diverted maturing business opportunities to the competitor companies controlled by her husband, which amounted to a breach of fiduciary duties of loyalty and good faith and a breach of the non-solicitation clause in her employment contract.

Having established the ex-employee's liability, the Court then considered the employer's claims against the other co-defendants (i.e., the husband and his companies). For dishonest assistance, the Court helpfully summarised the four elements for the imposition of liability for dishonest assistance, namely (1) breach of trust or fiduciary duty by someone other than the defendant, (2) assistance, (3) dishonesty, and (4) resulting loss. The Court held that the co-defendants had dishonestly assisted the breaches by the ex-employee as they ought to have been aware of the ex-employee's position and responsibilities as advertising director and ought to have known that it is unlawful for such a high-level employee to divert business opportunities to a competitor, but they had nonetheless carried out negotiations with the clients and potential clients of the employer company and participated in discussions that resulted in the unauthorised use of the employer's logo. The co-defendants' relationship as husband and wife and the nature and timing of the business set up by the husband were also factors the Court took into account when drawing an adverse inference against the husband for dishonest assistance.

For procuring the breach of contract, the Court was satisfied on evidence that by agreeing to provide their services, the competitor companies had procured the breach of the non-solicitation clause. It was held that the co-defendants had turned a blind eye to the existence of the clause and that they must have realised that their conduct would induce a breach of contract. As a result, the ex-employee, her husband and his companies were found to be jointly liable to compensate for the employer's loss of business opportunities and loss of profits.

iv Employers' implied duty of good faith in exercising discretionary powers

Apart from some long-recognised implied terms in employment contracts (such as an employer's implied duty to provide a safe working environment and that of mutual trust and confidence), there is also now judicial support for implying into the contract an anti-avoidance term to the effect that employers cannot dismiss employees to avoid the obligation to make bonus payments and the power to terminate or demote an employee should be exercised in good faith.

In the Court of Appeal's decision in Tadjudin Sunny v. Bank of America, National Association,12 the employee claimed that the termination of her employment was orchestrated by her employer to avoid paying her an annual bonus. In upholding the lower court's decision, the Court of Appeal affirmed that the employer was in breach of an implied anti-avoidance term in the employment contract by dismissing the employee to avoid paying her the discretionary annual performance bonus. It was held that the termination could not have been for genuine reasons as the performance evaluation of the employee was not carried out in good faith this it was found that the dominant intention in dismissing the employee was to avoid her being eligible for her annual bonus.

The Court of Appeal made it clear that it was not called upon to decide if an anti-avoidance term should be implied into employment contracts generally, only whether an anti-avoidance term ought to be implied in the particular case, given the facts and circumstances. In doing so, it took into account various factors, including the performance bonus forming a substantial part of the employee's overall remuneration package13 and that the employer had made it clear to its employees that their performance was key in determining their remuneration. Accordingly, the Court of Appeal held that an implied anti-avoidance term was necessary to give effect to the common, reasonable expectation of the parties that the employer could not exercise the power of termination to avoid the employee being eligible for the performance bonus.

An employer's implied duty of good faith was further considered by the Court of Appeal in FWD Life Insurance Co (Bermuda) Ltd v. Poon Cindy.14 In this case, an insurance agent's employment was terminated by the employer insurance company after around six months of employment. Various sums had been paid to the employee, including a lump-sum signing fee, monthly special bonus and performance bonus. There was a term under the employment contract which provided that the employee would have to repay the employer the signing fee and monthly special bonus if the employment was terminated within 30 months of the starting date, and repayment of the performance bonus if the employment was terminated within 12 months. After terminating the employment, the insurance company claimed against its ex-employee for the repayment of these sums.

The Court of Appeal accepted the trial judge's finding that the real reason the employee was terminated by the employer was her refusal to accept a demotion and it upheld the trial judge's rejection of the employer's contention that the termination was due to the employee's failure to meet her performance target. It was argued on appeal by the employee as a counterclaim that the employer had breached its implied duty to exercise its power of termination and power of demotion in good faith and rationally. As this implied-term argument had not been raised in the lower court, the Court of Appeal remitted the case back to it.

These cases confirm that any unqualified power of discretion given to an employer under an employment contract (e.g., in determining discretionary bonuses, power to terminate or demote) should be construed as being subject to some implied restrictions and not completely unfettered, such that it 'can only be exercised in good faith, rationally and for a proper purpose, and not arbitrarily or capriciously or in a manner which is not bona fide'.15

v High threshold for summary dismissal

The courts have recently clarified the employer's right to summarily dismiss an employee under Section 9 of the Employment Ordinance. In Cheung Chi Wah Patrick v. Hong Kong Cement Company Limited,16 the Court of First Instance held that unless it is a case of serious neglect of duty or breach of confidence or incompetence, an employer can only summarily dismiss an employee if the employee manifested an intention not to be bound by the employment contract. To do so requires consideration of the employee's intention to ascertain the employee's reasons for the conduct in question and where the employee has acted faithfully and without the intention not to be bound by the employment contract, summary dismissal is not justified and the employer can only terminate the employment contract by giving the necessary notice or paying wages in lieu of notice.

In Cheung Chi Wah Patrick, the employee was the financial controller of the employer company and had 15 years of professional experience in the field. It was his duty to assist the parent company of his employer, a listed company in Hong Kong, in relation to its issuance of rights shares. Although the employee did consult the employer's then legal advisers, he misinterpreted the legal advice and applied for the issuance of a number of rights shares that would have the effect of causing the public holding of the parent company to fall below 25 per cent, which would be a violation of the Hong Kong Listing Rules. Subsequently, this matter was rectified by the parent company, which sold extra shares to maintain the 25 per cent public holding. The employee was summarily dismissed and he claimed against the employer for his wages in lieu of notice and end-of-year payment.

In upholding the Labour Tribunal's decision in favour of the employee, the Court of First Instance held that, despite the prima facie case shown by the employer to support its decision for summary dismissal, the Court was not satisfied that this was a case of serious neglect of duty in which the employee's intention need not be considered. Upon consideration of the employee's intention, the Court held that he had acted faithfully and had made an honest mistake. It was not a case of wilful disobedience and did not justify summary dismissal.

In Sarniti v. Lee Suk Ling,17 the District Court took the view that the employee's habitual neglect and failure to perform her basic duties justified summary dismissal. This case concerned a dispute between a domestic helper and her employer and was originally commenced as a discrimination claim. The employee claimed that she had been unlawfully dismissed on account of her pregnancy and the dismissal amounted to a discriminatory act under the Sex Discrimination Ordinance. Conversely, the employer claimed that the employee's pregnancy was irrelevant to her dismissal as the employer was unaware of her pregnancy, but rather the dismissal was due to the employee's repeated disregard for basic instructions, failure to properly perform her duties, and her unsatisfactory attitude.

In concluding that summary dismissal was justified, the Court accepted the evidence given by the employer and took into account the numerous complaint messages sent from the employer to the employee regarding her work performance, and a previous warning letter issued to the employee, as well as a video recording of an incident showing the employee's poor attitude.

vi Labour Tribunal's power to order a party to provide security

Pursuant to Section 30(1) of the Labour Tribunal Ordinance (Cap. 25), the Labour Tribunal has the power to order a party to give security for the payment of an award or order that has been or may be made if it considers just and expedient to do so. The Court of First Instance decision in Hon Sau Har v. Lo Woon Bor Henry T/A Henry Lo & Co Solicitors18 gives some helpful guidance as to how this statutory power should be exercised.

In this case, the employee, who had been employed as a secretary at a law firm for less than two years, was dismissed by her employer. After her dismissal, she commenced proceedings at the Labour Tribunal to claim against her former employer for payment of annual bonus, unused annual leave and termination payment. Before the case went to trial, the employer applied for security to cover its costs. When considering whether or not to grant security, the presiding officer of the Tribunal took the view that the employee's claim did not have strong merits and ordered the claimant to pay into the Tribunal a sum of HK$10,000 as security for the employer's costs (after taking into account the time already spent by the employer in handling the claim and the estimated time yet to be incurred), failing which the employee's claim may be dismissed. The employee failed to make payment by the deadline and her claim was consequently dismissed by the Tribunal. The employee appealed to the Court of First Instance against the Tribunal's decision to order security and to dismiss her claim.

The Court of First Instance affirmed that the Tribunal was entitled to make a preliminary assessment of the merits of the parties' cases to decide whether or not security should be granted. Further, the Court of First Instance agreed with the presiding officer's view that the employee did not have a strong case and that an order of security should be made to protect the employer's costs.

It would seem that the Tribunal is prepared to make an order for security against a party where that party's claim or defence appears to the Tribunal to be weak or groundless. It should also be noted that while, in this case, the employer made an application to the Labour Tribunal for security, the Tribunal has the statutory power to make an order for security on its own motion as well,19 though the power is only exercised sparingly.

vii Employers cannot ask employees to take a pregnancy test

Issues concerning direct sex and pregnancy discrimination involving a foreign domestic helper were discussed in Waliyah v. Yip Hoi Sun Terence.20 In this case, the District Court reaffirmed that anti-discrimination legislation in Hong Kong is social legislation that should be interpreted purposively and that a generous and liberal interpretation should be adopted.

The employee, an Indonesian domestic helper, was requested by her employer's wife to take a home pregnancy test. The employee did so voluntarily and the result was positive. The employee then asked the employer's wife about having an abortion in Hong Kong and the employer's wife accompanied her to see a doctor, from where she was referred to a government hospital. However, the employee was unable to obtain an abortion and the employer found out about her pregnancy and terminated her employment with one month's notice. He later made the employee move out of the home about one week before expiry of the notice period.

The employee claimed against her employer for damages for discrimination, breach of contract, breach of statutory maternity protection and unlawful dismissal. Although the District Court found that the employee took the pregnancy test voluntarily, as she too was eager to know whether she was pregnant, it held that the act of requesting the employee to take the pregnancy test in a supervised manner and without giving the employee the option not to inform the employer of the result, amounted to direct sex discrimination under the Sex Discrimination Ordinance (Cap. 480) as the act constituted 'less favourable treatment' on the ground of her gender. The District Court emphasised that whether or not a female employee is pregnant is a private matter that her employer does not have the right to know.

This case highlights that an employee's response is not determinative in deciding whether the employer's act is discriminatory. Even though the employee took the pregnancy test voluntarily, the District Court noted that the employee's consent is not determinative as the spirit of the anti-discrimination legislation in Hong Kong calls for a look into the nature of the employer's conduct rather than the employee's response. One relevant factor in this case was that, as the employee was a foreign domestic helper, her consent or compliance could have been the result of her general servile and subservient character or ignorance of her legal rights. This case also confirms that for an act to be discriminatory, the employer does not need to have the subjective intention or motive to discriminate, although that may be relevant to the assessment of damages.

As for the subsequent termination of employment by the employer and making the employee move out one week before expiry of the notice, the District Court held that the employer would not have done so but for the employee's pregnancy. Not only did the act amount to pregnancy discrimination, it also constituted a breach of the implied term of mutual trust and confidence under the employment contract, a breach of the Employment Ordinance regarding pregnancy protection and unlawful dismissal.

viii Discrimination on the grounds of sexual orientation

Although Hong Kong does not currently have specific legislation against discrimination on the grounds of sexual orientation, there have been significant developments in this area. Hong Kong's top court recently delivered a unanimous decision in Leung Chun Kwong v. Secretary for Civil Service,21 ruling that the government's decision not to grant spousal and tax benefits to a same-sex couple was unjustified and that such differential treatment based on sexual orientation amounts to unlawful discrimination. This decision by the Court of Final Appeal overturned the previous Court of Appeal decision in which it was held that such differential treatment was justified by the need to uphold the status of marriage accepted in the local context and to do otherwise would undermine the community's prevailing view that the only acceptable form of marriage is heterosexual marriage.

The applicant in this case was a Chinese national and a permanent resident of Hong Kong who was employed by the government as a senior immigration officer. As same-sex marriages are not allowed in Hong Kong, the applicant married his same-sex partner in New Zealand in 2014. The applicant launched a judicial review against two decisions by the government: (1) not to extend certain spousal medical and dental benefits for civil servants to same-sex marriage (the Benefits Decision); and (2) that he and his spouse were not entitled to opt for joint assessment of taxes, on the basis that they were not 'married' for the purposes of the Inland Revenue Ordinance (Cap. 88) (the Tax Decision).

The applicant's challenge was based primarily on constitutional grounds; in particular, that the decisions infringed his right to equality or the right not to be discriminated against. The difference in legal treatment was accordingly based on the applicant's marital status as well as his sexual orientation.

In considering whether the local legal landscape and societal circumstances, including prevailing socio-moral values of society on marriage, would justify the differential treatment, the Court of Final Appeal ruled that such considerations were irrelevant. It was held that the absence of majority consensus could not be a reason to reject a minority's claim as this would be a threat to fundamental rights, especially minority rights. The Court further rejected the argument that the differential treatment was rationally connected with the aim of promoting the concept of a 'traditional family' constituted by heterosexual marriage, and rejected the notion that heterosexual marriage would be undermined by extending employment and tax benefits to same-sex married couples.

By way of procedural background, the Court of First Instance had held that the differential treatment in the Benefits Decision was not justifiable and amounted to indirect discrimination, and it took the view that granting spousal benefits to such couples would not undermine the integrity of the institution of marriage (as understood in Hong Kong) or the traditional family. As regards the Tax Decision, the Court of First Instance held that it was a matter of statutory construction as to whether the applicant's marriage fell under the definition of marriage under the Inland Revenue Ordinance (Cap 88). The Court of First Instance held that this definition accorded with the well-established meaning given to it for common law and constitutional purposes (i.e., marriage was the voluntary union for life of one man and one woman to the exclusion of all others). Therefore, to construe marriage as covering same-sex marriages would be contrary to established law.

When the case came before the Court of Appeal, the Court took the opposing view and held that the differential treatment in the Benefits Decision and the Tax Decision was justified by the need to uphold the status of marriage as understood and accepted in the local context. The Court held that the grant of spousal benefits to same-sex couples would undermine or be perceived to undermine the status of marriage, and that both the law and the community's prevailing views on marriage remain that the only acceptable form of marriage is heterosexual marriage and thus there is immense public interest in protecting the institution in this form. The differential treatment was held to be proportional and rationally connected to the legitimate aim of protecting the traditional concept and institution of marriage.

In another landmark case – QT v. Director of Immigration22 – a judicial review challenge was brought by a British national against the Director of Immigration in Hong Kong for unlawful discrimination on the grounds of sexual orientation in administering its dependant visa policy. The applicant's same-sex partner (with whom she entered into a civil partnership in England under the Civil Partnership Act 2004) was offered employment in Hong Kong and was granted an employment visa to work in Hong Kong. The applicant then applied for a dependant visa, but her application was refused as she was not considered a spouse under Hong Kong law.

The Court of Final Appeal (the highest court in the Hong Kong court hierarchy) held that there was indirect discrimination by the director in exercising the policy as the differential treatment could not be justified. The Court took the view that such differential treatment was not rationally connected to the legitimate aims of attracting foreign talents to Hong Kong and maintaining strict immigration control and noted that the refusal of dependant visas to same-sex spouses or partners is in fact counter-productive to achieve that aim. As to the second aim of administering immigration control, the Court of Final Appeal noted that same-sex couples are just as conveniently able to produce their civil partnership certificates and would not cause any inconvenience and it was therefore irrational to treat same-sex couples differently on the basis of administrative convenience. This landmark decision of the Court of Final Appeal has led to an official change in Hong Kong's immigration policy in relation to same-sex dependant visas.23 The principles in this case were also considered in the Court of Final Appeal decision in the Leung Chun Kwong case mentioned earlier.

The Court of Final Appeal left open the question of whether differential treatment of same-sex couples may be justified if the legitimate aim of the policy is to uphold the traditional concept of heterosexual marriage, and this was subsequently considered in its decision in the Leung Chun Kwong case, as discussed above.

V OUTLOOK AND CONCLUSIONS

This year has seen some development in the area of employment law concerning team moves. Given the highly competitive employment scene in Hong Kong, employees often leave an employer in groups to set up a new business in competition with their former employer. It is also common for a competitor company to hire an entire team from another company for their specialised skills and knowledge in a particular field. Employers have been relying on various means to protect their interests, including reliance on the implied duty of fidelity, the enforcement of any restrictive covenants and clauses against the misuse of trade secrets provided under employment contracts, and applications for injunctive reliefs, including springboard injunctions. It is expected that the relevant law concerning the potential rights and liabilities of employers and employees involved in team moves will continue to develop as, increasingly, employers seek better protection for their businesses.


Footnotes

1 Paul Kwan is a partner and Michelle Li is an associate at Deacons.

2 For monetary claims under HK$8,000, see Section II.iii.

3 [2018] 6 HKC 129. In this case, the claim was transferred to the Court of First Instance because there was a related contractual dispute at the Court of First Instance that essentially covered the same factual disputes; the transfer was made to ensure fairness and for a speedy and cost-effective disposal of the matter.

4 Section 20(2), Arbitration Ordinance (Cap. 609).

5 Section 20(5), Arbitration Ordinance (Cap. 609).

6 See Part 3, Sex Discrimination Ordinance (Cap. 480), Part 3, Disability Discrimination Ordinance (Cap. 487) and Part 3, Race Discrimination Ordinance (Cap. 602).

7 HCLA 22/2018, [2019] HKCFI 2236 (date of judgment: 12 September 2019).

8 HCA 1849/2018, [2018] HKCFI 2552 (date of judgment: 29 November 2018).

9 [2019] 3 HKLRD 403, HCA 514/2019, [2019] HKCFI 1550 (date of judgment: 14 June 2019).

10 See paragraph 55 of the judgment.

11 DCCJ 1751/2015, [2018] HKDC 194 (date of judgment: 15 February 2018).

12 CACV 12/2015; unreported (date of judgment: 28 September 2016).

13 id. The Court of Appeal noted at paragraph 63(5) of the judgment that the employee's bonuses for the years from 2002 to 2006 were between two and three and a half times her annual salary and that the basic salary was the 'sauce' while the performance bonus was the 'meat'.

14 [2019] 3 HKLRD 455, CACV 181/2015, [2019] HKCA 697 (date of judgment: 24 June 2019).

15 id., paragraph 66 of the judgment.

16 [2017] 5 HKC 515.

17 DCEO 2A/2018, DCEO 2/2018, [2019] HKDC 11458.

18 HCLA 17/2018, [2018] HKCFI 2509 (date of judgment: 14 November 2018).

19 Section 30(2), Labour Tribunal Ordinance (Cap. 25).

20 [2017] 1 HKLRD 1082.

21 For the Court of First Instance judgment, see [2017] 2 HKLRD 1132. For the Court of Appeal judgment, see [2018] 3 HKLRD 84, [2018] HKCA 318.

22 (2018) 21 HKCFAR 324, [2018] HKCFA 28.

23 See Government Press Release dated 18 September 2018 at https://www.info.gov.hk/gia/general/201809/18/P2018091800579.htm.