- China Practice
- Corporate and Commercial Law
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by Jade Tang
The amendments under the Employment (Amendment) (No.2) Ordinance 2018 (the “Amendment”) to the Employment Ordinance (Cap.57) (“EO”) came into effect on 19 October 2018 which imposes more stringent actions on the employer who unreasonably and unlawfully dismisses its employee.
Some examples of unlawful dismissal are if an employee is dismissed:-
Before the Amendment, if an employee had been unreasonably and unlawfully dismissed, subject to the mutual consent of the employee and the employer, the court or the Labour Tribunal had the power to make an order for reinstatement or re-engagement of the employment of such employee by the relevant employer.
If no reinstatement or re-engagement order was made, the court or Labor Tribunal, might make an award of terminal payments and an additional award of compensation not exceeding $150,000 to the employee.
The significant part of the Amendment is that the court or Labour Tribunal now no longer needs to seek consent from the employer before making an order of reinstatement or re-engagement if it is of the view that the implementation of such order is reasonably practicable.
If the employer fails to comply with the reinstatement or re-engagement order, the employer shall pay to the employee a further sum on top of the abovementioned monetary awards and such sum can amount up to three times of the employee’s average monthly wages, subject to a cap of HK$72,500.
Irrespective, can a compulsory reinstatement or re-engagement order really assist an employee being unreasonably and unlawfully dismissed?
Under the Amendment, the court or the Labour Tribunal must make a compulsory order if it finds that reinstatement or re-engagement of the employee by the employer is reasonably practicable provided that the employee has been dismissed both unreasonably and unlawfully (as detailed above). The factors, without limitation, to be taken into account by the court or the Labour Tribunal, when making such a finding include:-
(i) the circumstances of the employer and the employee;
(ii) the circumstances surrounding the dismissal;
(iii) any difficulty that the employer might face in the reinstatement or re-engagement of the employee; and
(iv) the relationship between the employer and the employee, and between the employee and other persons with whom the employee has connection in relation to the employment.
The Amendment grants the court and the Labour Tribunal the power to request and obtain a report prepared by the Commissioner for Labour containing details of the conciliation between the parties and information relating to the circumstances of the claim with the agreement of the employer and the employee in relation to both the preparation and the content of such report.
It is very likely that the relationship between the employer and the employee has already broken down severely by the time the matter is put forward to the court or the Labour Tribunal.
It is also not uncommon that cases being heard at the Labour Tribunal might not have gone through any or a complete conciliation process between the relevant employer and employee at the Labour Department.
The prospect of obtaining an optimistic report to the effect that the court or Labour Tribunal can rely on and therefore make a finding that the compulsory order is reasonably practicable is plainly low.
Even if a compulsory order is ordered and the employer acts on that, there can be chances that the employer would not be on good terms with the employee and thus issues relating to promotion, job allocation and performance appraisal which is usually in connection with pay rise and are all subject to the discretion of the employer are bound to arise after the reinstatement or re-engagement.
Having said that, the employee (not the employer) can take an application to the court or the Labour Tribunal to vary the first re-engagement order (the “principal order”) under which the employee will be engaged by the successor of the original employer or its associated company (the “alternative employer”) rather than the original employer.
The application must be accompanied with a written agreement among the original employer, the employee and the alternative employer. Furthermore, the written agreement must expressly state that the varied re-engagement is to be treated as compliance with the principal order and must contain specified terms stipulated in the Amendment. An order of variation may only be made if the court or Labour Tribunal is satisfied with the terms of the written agreement as comparable to the terms of agreement under the principal order.
To this end, how the employee can liaise with the original employer and through it, with an alternative employer, for a written agreement for the varied re-engagement before the same can be presented to the court or the Labour Tribunal for an application to vary the principal order remains questionable. We believe that directions from the court or the Labour Tribunal to facilitate such liaison may be necessary and the employee is encouraged to seek independent legal advice when negotiating such terms.
OLN provides a full range of employment related services. If you have any questions regarding the above or any other employment issues, please contact one of the members of our employment team.