The Labour and Employment Disputes Review: Hong Kong

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.

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 has no power to grant interim reliefs or injunctions. Further, the Labour Tribunal does not have jurisdiction to hear claims founded in tort or mixed claims founded in both contract and tort, as well as mixed claims for monetary and non-monetary remedies.3 The Labour Tribunal also has the discretion to decline jurisdiction and transfer the claim to other courts at any stage of the proceedings if it is of the opinion that for any reason the claim should not be heard and determined by it.4

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 an 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 & Ors5 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.6

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.7

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.

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.8

Year in review

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

i Jurisdiction of the Labour Tribunal and its discretion to transfer

Though the Labour Tribunal offers a means for employers and employees for speedy and informal resolution of their disputes in a costs efficient manner, as mentioned above, its jurisdiction is only limited to monetary claims for breach of employment contracts or for non-compliance with the Employment Ordinance. Issues relating to the jurisdiction of the Labour Tribunal often arise, especially where it involves mixed claims or counterclaims.

In Woo Kwok Ping v. Incorporated Management Committee of Tsuen Wan Trade Association Primary School (No 2),9 the employee school principal brought a claim in the High Court against the employer, the management committee of a primary school for wrongful dismissal, claiming that the employer failed to comply with statutory provisions under the Education Ordinance (Cap 279) concerning the termination procedures of school principals. The employment contract in this case specifically incorporated by reference to the said Education Ordinance as well as its subsidiary regulations. The employee thus claimed for a breach of employment contract in her original writ filed at the High Court. A jurisdiction issue then arose as to whether the employee's claims were really a simple breach of employment contract, or were, in essence, founded in tort. The latter case would bring her claims outside the Labour Tribunal's jurisdiction. The Court held that the proper approach is to look at the substance of the claims and also consider whether any other claims brought by the claimant are merely for 'window dressing' such that the real claim left is one that falls within the jurisdiction of the Labour Tribunal. The court held that an indispensable part of the employee's case turns on whether the employer was in breach of the statutory provisions concerning the termination of a school principal, which in essence a claim for breach of statutory duty founded in tort regardless of the fact that such statutory duty was specifically incorporated in the employment contract. On this basis, it was held that the claims fell outside the Labour Tribunal's jurisdiction.

Cases involving various mixed claims may not be as clear cut. In Lee Yiu Hong v. Well-in Hotel Supplies Company Limited,10 the employer sought leave to appeal against a Labour Tribunal judgment in favour of its former employee on unpaid commission. The employer argued that the Labour Tribunal erred in law by failing to discharge its statutory duty to investigate and take into account its complaints against the former employee's breaches or misconduct which the employer argued would have allowed it to defence of set-off to extinguish or reduce the unpaid commission payable to the former employee. Upon a closer examination of the employer's claims of breaches or misconduct by the former employee, which includes failure to return important employer's documents, misuse of employer's confidential information, disruption of the employer's business, among others, it was held that these claims are either grounded in tort or are mixed claims grounded in both tort and contract, thus bringing them outside the jurisdiction of the Labour Tribunal. The court referred to the Schedule of the Labour Tribunal Ordinance, which expressly provides that all claims in tort and all mixed claims in both contract and tort are excluded from the jurisdiction of the Labour Tribunal. Accordingly, the Labour Tribunal was not at fault for not investigating or taking into account these alleged breaches by the employee, and the employer's application for leave to appeal was dismissed.

The Labour Tribunal has the discretion to transfer the claim to other courts.11 The recent case of Kuok Chung Fai & Anor v. EBP Global Limited & Anor,12 the employer company appealed against the Labour Tribunal's decision not to transfer the employees' claims to another court. The employee's claims include arrears of wages and end-of-year payments, while the employer counterclaimed against the employee for breach of fiduciary duties and/or employment duties for alleged misappropriation and sought injunctive and other reliefs. The Labour Tribunal declined jurisdiction to adjudicate the employer's counterclaims as they are founded in tort and other areas of law. As regards the employee's claims, the Labour Tribunal held that they fell within the Labour Tribunal's jurisdiction. Further, the Labour Tribunal took the view that the employee's claims were straightforward and did not involve any complex issues of fact or law and refused to exercise its discretion to transfer the claims to another court.

The employer's appeal was dismissed on the grounds that the Labour Tribunal's refusal to exercise its discretion to transfer the claim was not plainly wrong or wrong in principle or resulted in injustice. The court affirmed that the Labour Tribunal's discretion is wide and unfettered and the decision as to whether to exercise such discretion is ultimately a case management decision, which an appellate court will be slow to interfere with.

ii Termination before commencement of employment

In Law Ting Pong Secondary School v. Chen Wai Wah,13 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, which are 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.

iii 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 case of McLarens Hong Kong Ltd v. Poon Chi Fai Corey & Or,14 the issue of whether a springboard injunction should be granted was considered. 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 more than 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'.15 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.

The more recent case of AB Club Limited and Others v. Chan Yin Ki Cubie and Others16 acts as a useful reminder that any delay without adequate reasons by the employer in applying for a springboard injunction may result in refusal of such application. In this case, the employers commenced action and applied for interim injunctive reliefs against a group of former employees who were involved in setting up a competing business carrying out the business of marketing and selling overseas properties to buyers in Hong Kong. The interim injunctive reliefs sought include: (1) a springboard injunction to restrain these former employees from carrying on the competing business for six months from date of termination of their employment; and (2) an injunction to restrain solicitation of the employers' clients and employees for a one-year period. The latter non-solicitation injunction application was based on a corresponding contractual term in the employment contracts which restrict solicitation for one year. The court granted the non-solicitation injunction on the grounds that there appears to be a good arguable case for the alleged breaches of such contractual term and the court sees very little prejudice to hold the former employees to their contractual obligations.

As for the springboard injunction application, it was refused by the court on the grounds that there had been a delay of three weeks that the employers failed to adequately explain. The court goes further to note that a period of two weeks would be sufficient to refuse such springboard injunction. In refusing the application, the court also took into account that damages are not necessarily difficult to assess in this case.

iv Joint employment by parent and subsidiary company

It is very common for corporate groups to have one company within the group named as the employer under the written employment contracts with its employees working for the group and for such employer company to pay the salary and other payments for its employees.

However, this does not prevent another company within the group from being a joint employer of such employees and be held jointly responsible for the employees' entitlements. In the case of Yung Wai Tak Abraham William v. Natural Daily (NZ) Holdings Ltd,17 the written employment contract was between the employee and a wholly-owned subsidiary of a listed company. Even though the wholly-owned subsidiary was the named employer under the contract and was the entity paying for the employee's salary and making contributions to the employee's mandatory provident fund, the court was prepared to look beyond that by adopting an 'overall impression' approach to assess whether the listed parent company should also be seen as an employer at the same time and be held liable for the unpaid salary and other payments.

In this case, the undisputed facts were that most of the employee's job duties concern the affairs of the listed parent company as he was the company secretary and a member of the management committee of the listed parent company. The court also considered the recruitment process (e.g., job advertisement was published in the name of the parent company and interview conducted by the parent company) and the parent company's subsequent conduct (e.g., the parent company was the one issuing notice regarding salary adjustment for the employee). Further, the evidence showed that the subsidiary employer company merely acted as a 'treasury centre' of the entire group and had no actual business. It would receive funds from the parent company or other companies within the group and paid for the group's expenses, including, but not limited to, advertising fees, operational expenses, legal expenses as well as the salary of the group's employees. The court also rejected the argument that the employee was only assigned or outsourced to the parent company.

The court held that the written employment contract signed with the subsidiary company does not preclude the possibility that he was at the same time an employee of the parent company. Based on the facts, the overall impression was that the subsidiary and parent company were both employers and so both were liable for the unpaid salary and other payments.

v 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 landmark Court of Appeal's decision in Tadjudin Sunny v. Bank of America, National Association,18 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 thus it was found that the dominant intention in dismissing the employee was to avoid her being eligible for her annual 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.19 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 that 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 owing 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'.20

vi Employers not entitled to make deductions from payments due to employees

In the case of Xu Yi Jun v. GF Capital (Hong Kong) Ltd,21 the Court of Appeal clarified that the fact an employer has pending claims against an employee for negligent work or other misconduct does not allow the employer to withhold any wages or payments due to the employee for setting off with the employer's claims.

In this case, there was a clause under the employee's employment contract that provides that the employee would be entitled to a guaranteed bonus for the calendar year ending 31 December 2016. Payment of the guaranteed bonus was due on 31 March 2017. This clause goes on to say that any outstanding payments for such guaranteed bonus will be forfeited if the employee voluntarily terminated the employment or if the employee has been found guilty of any gross misconduct before the due date of 31 March 2017.

While an investigation into the alleged gross misconduct of the employee was ongoing prior to the due date, there was no finding before the due date and the investigation report that identified certain failings of the employee was only available and provided to the employee sometime in May 2017. No payment of the bonus was made by the due date as the employer claimed that payment would only be made pending the completion of the investigation into the employee's conduct. The employee then commenced legal proceedings against the employer for their failure to pay the bonus by the due date.

The court held that the natural and ordinary meaning of the guaranteed bonus clause is clear; namely, that it is necessary for there to be a finding of gross misconduct before the due date. The employer's contention that the finding of gross misconduct could be made before or after the due date so long as the gross misconduct had occurred before the due date was rejected by the court.

Further, the court also clarified that it is not permissible for the employer to set-off against the bonus based on the employee's alleged breaches for poor performance of work and confirmed that such set off is prohibited under the legislation. This is the protection for employees conferred by Section 32(1) of the Employment Ordinance that provides that: 'No deductions shall be made by an employee from the wages of his employee or from any other sum due to the employee otherwise than in accordance with this Ordinance'. The court was satisfied that the guaranteed bonus would be a 'sum due to the employee' and granted judgment in favour of the employee for the guaranteed bonus.

vii 'Standby duty' time cannot be counted as rest days

In Breton Jean v. HK Bellawings Jet Limited,22 the court ruled that the days on which the employee (a business jet pilot) was on standby duty could be counted towards the employee's statutory rest day entitlements. The Employment Ordinance provides that an employee is entitled to not less than one rest day in every period of seven days. Further, a rest day is defined as a continuous period of not less than 24 hours during which an employee is entitled to abstain from working.23

In this case, after being summarily dismissed by the employer, the employee claimed against the employer for, inter alia, his unpaid rest days. The employee also relied on the guideline published by the Hong Kong Civil Aviation Department, which provides that a day off means periods free of all duties and available for leisure and relaxation and argued that this guideline was implied into his employment contract. The employee claimed that he was never given any rest day during his employment as he was either on flight duty or on standby duty.

However, the employer argued that there was an alleged unwritten understanding that the days on which the employee pilot was not flying amounted to rest days. This argument was rejected by the court. It was found that during the entirety of the employment, except where the employee was on annual leave, he was either on flight duty or standby duty and during which he was required to be accessible on his work phone and answer calls within a certain period of time. The court held that the time in which the employee was on standby duty could be counted towards the rest day because if the employee was truly on a rest day, he should be entitled to abstain from working. On this basis, the court allowed the employee's claim for unpaid rest days.

viii High threshold for summary dismissal

In Cheung Chi Wah Patrick v. Hong Kong Cement Company Limited,24 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 for his or her 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 this case, 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. The employee 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.

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,25 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.

ix Discrimination Legislation (Miscellaneous Amendments) Ordinance 2020

The latest Discrimination Legislation (Miscellaneous Amendments) Ordinance 2020, which came into force on 19 June 2020, enhances anti-discrimination protection in the employment context.

The key employment-related amendments include: extending protection from sexual, racial and disability harassment in common workplaces to 'workplace participants' even where there is no employment relationship (e.g., to cover volunteers and interns); prohibiting discrimination of an employee based on the race of his or her 'associate', which replaced the previous term of 'near relative'; protection from racial discrimination and harassment by imputation, prohibiting discrimination and victimisation on the grounds of breastfeeding.26

Outlook and conclusions

There were continued developments in the area of employment law concerning team moves in 2020. 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 other injunctive reliefs such as springboard injunctions, though the circumstances in which the courts are prepared to grant such relief may be limited. 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.

There is no dispute that the past year has been an extremely challenging one for the world globally, as the pandemic not only severely affected people's health and well-being, but also has far-reaching impacts on every aspect of our lives and places unprecedented pressure on businesses and the labour market. Hong Kong was no exception. The unemployment rate in Hong Kong increased across almost all major economic sections and reached a record high by January 2021.27 In view of the increasing unemployment rate, it is foreseeable that this will inevitably lead to an increase in employment-related disputes arising from and as a consequence of the pandemic.

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 See sections 7(1)-(2) and paragraph 3 of the Schedule, Labour Tribunal Ordinance (Cap 25).

4 See section 10(1)-(2), Labour Tribunal Ordinance (Cap 25).

5 [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.

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

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

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

9 [2020] 1 HKLRD 717 (date of judgment: 14 January 2020).

10 HCLA 9/2020, [2020] HKCFI 2760 (date of judgment: 2 November 2020).

11 See section 10(1)-(2), Labour Tribunal Ordinance (Cap 25).

12 [2020] HKCFI 3070; HCLA 1/2019 (date of judgment: 17 December 2020).

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

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

15 See paragraph 55 of the judgment.

16 HCA 1644/2020, [2020] HKCFI 2769 (date of judgment: 5 November 2020).

17 HCLA26/2018 (date of judgment: 17 August 2020), judgment only available in Chinese.

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

19 [2019] 3 HKLRD 455, CACV 181/2015, [2019] HKCA 697 (date of judgment: 24 June 2019).

20 id., paragraph 66 of the judgment.

21 CACV 502 & 577/2019; [2020] HKCA 663 (date of judgment: 6 August 2020).

22 DCCJ 3612/2017; [2021] HKDC 46 (date of judgment: 22 January 2021).

23 See Section 17(1), Employment Ordinance (Cap 57) in respect of the rest day entitlement; see Section 2, Employment Ordinance (Cap 57) for the definition of 'rest day'.

24 [2017] 5 HKC 515.

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

26 The provisions prohibiting discrimination and victimisation in relation to breastfeeding will come into force on 19 June 2021.

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