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Global employment briefing: Hong Kong, June 2018

  • Hong Kong
  • Employment law

12-06-2018

A round-up of recent and upcoming Hong Kong employment law developments:

1. Avoiding reinstatement in Hong Kong is about to get more expensive

The Employment Ordinance will soon be amended to give employees the right to be reinstated or reengaged even if the employer objects. Currently, these remedies are available only if both parties agree, effectively giving employers the right to veto a decision by the Labour Tribunal. If an employer does not comply with the Tribunal’s order, it can be fined three times the employee’s monthly wage, up to HK$72,500. If the employer does not pay the fine, it can be prosecuted and convicted of a criminal offence.

2. Taskforce works overtime – and still no legislation on Standard Working Hours

Currently, there is no statutory provision regarding minimum or maximum working hours, overtime limits or overtime pay in Hong Kong. Despite two decades of meetings and consultations, the result is not a change to legislation, but merely a promise that by 2020 we will have non-binding guidelines for 11 labour-intensive industries. Unsurprisingly, unions have criticized the government and accused it of offering no protection for employees. It is unclear how useful these guidelines will be and whether they will be voluntarily adopted.

3. Competition Commission warns employers on non-poaching agreements

Hong Kong’s Competition Commission (the “Commission”) has issued a warning bulletin to employers not to coordinate with each other when hiring employees and determining their employment terms and conditions. Where the Commission has reasonable cause to suspect that a business is engaged in certain practices, they will take appropriate enforcement action, such as informing the Commission Tribunal and requesting them to impose a penalty. Cartels who are involved in the above misconduct may also self report and agree to cooperate in the investigation and any enforcement action, thereby obtaining immunity from a penalty.

4. Court case: Is continued employment valid consideration for a change in terms?

In the case of Wu Kit Man (胡潔敏) v Dragonway Group Holdings Ltd (龍威集團控股有限公司) [2018] HKCA 107, the parties executed an addendum to the employment contract, rewarding Ms Wu with a cash bonus of HKD350,000 if Dragonway Group Holding’s Limited ceased the listing plan or if Wu left Dragonway for any reason before 31 December 2016.

She left in 2015 and did not receive the bonus. The issue to decide was whether her continued employment was valid consideration for the promise to pay her the bonus. The matter went to the Court of Appeal, which held that the ultimate test for consideration for variation of employment terms is one of real benefit. The court must assess the overall circumstances to conclude that continuance in employment did provide a real benefit to the employer which can amount to consideration for the variation. It then remitted the case back to the Labour Tribunal for retrial on the basis that it was the correct venue since it had heard all of the facts.

5. Court case: High threshold for summary dismissal

It is relatively easier to dismiss in Hong Kong than in other jurisdictions. However, it is quite difficult to summarily dismiss an employee for “cause”. This was confirmed in the case of Cheung Chi Wah Patrick v Hong Kong Cement Co Ltd [2017] HKCU 2291. The employee has been instructed to obtain external legal advice concerning rights shares of the parent company of his employer. However, the legal advice was poorly given over the phone and the employee misunderstood, ultimately resulting in the parent company being in breach of the Listing Rules and an irrevocable undertaking to its underwriters.

The employee was summarily dismissed for serious misconduct. He successfully disputed this in the Labour Tribunal and his employer appealed to the Court of First Instance (“CFI”). The CFI dismissed the appeal. It held that to justify summary dismissal on the ground of misconduct, it is relevant to consider why the employee had committed the conduct in question to identify whether the misconduct is inconsistent with the due and faithful discharge of his duties. If he or she has manifested an intention not to be bound by the essential terms and conditions of his or her employment contract, the employer can summarily dismiss him.

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