Employment Update, Hong Kong – February 2009

19 February 2009

Roberta Chan

Legislation

Follow-up on the Race Discrimination Ordinance

Background

In the September 2008 edition of our International Employment Update, we reported that the Legislative Council passed the Race Discrimination Ordinance on 18 July 2008.

New legislation

Since the passing of the Ordinance, the Equal Opportunities Commission has released a draft Code of Practice on Employment for public consultation. The consultation period ended on 19 January 2009 and it is expected that the Code will be presented to the Legislative Council during the first quarter of 2009. The final version of the Code will be released once it is ratified by the Legislative Council. In addition, some administrative provisions have since come into effect in October 2008, with the substantive provisions i.e. those provisions making race discrimination unlawful – expected to come into effect sometime in mid-2009.

Effect on employers

As reported previously, it should be noted that an employer will be vicariously liable for an employee’s contravention of the Ordinance in the course of his employment, irrespective of whether those acts are done without the employer’s knowledge or approval. In light of this, it is prudent for employers in Hong Kong to provide proper training to their employees regarding the provisions of the Ordinance, develop and issue appropriate company policies and also review their recruitment practices.

 

Case law

Exclusive jurisdiction of labour tribunal over certain employment-related matters

Background

In Hong Kong, the Labour Tribunal enjoys exclusive jurisdiction over certain employment claims. Pursuant to Section 7 of the Labour Tribunal Ordinance and the Schedule to the Ordinance, the Tribunal shall have jurisdiction over, among other things, “a claim for a sum of money which arises from the breach of a term, whether express or implied, of a contract of employment”. Section 7(2) of the Ordinance provides that no claim within the jurisdiction of the Land Tribunal can be pursued in any court in Hong Kong.

Facts

In Universal Property Agency (H.K.) Limited v Chik Chi Lun and others DCCJ 99/2006, the Plaintiff was an estate agency company and the Defendants were its former employees. Under a clause in the standard employment contracts entered into between the Plaintiff and the Defendants, the Defendants were obliged to observe and to follow orders, instructions and circulars from the Plaintiff.

The Defendants, acting on behalf of the Plaintiff, agreed to pay a property purchaser a commission rebate.  A memorandum issued by the Plaintiff meant that the rate of the rebate proposed would require the approval of the Plaintiff’s executive director. However, no such approval had been obtained by the Defendants. The property purchaser commenced an action against the Plaintiff for the sum of commission rebate promised by the Defendants. The Plaintiff settled her claim in full, and then brought an action against the Defendants for all sums incurred in handling and settling the property purchaser’s claim. The Defendants applied to strike out the Plaintiff’s claim on the ground that this case was within the exclusive jurisdiction of the Labour Tribunal.

The Plaintiff relied on Lucullus Food & Wines Company Limited v Ng Pui-Yee (DCCJ 4767/2001) and argued that “a sum of money must be referring to the benefit conferred upon the employees by the Employment Ordinance or the contract as protected by the Employment Ordinance.”  This argument was however rejected by Judge Chow as he considered that “[t]here is no qualification to the term ‘a claim for a sum of money’. There is no requirement that the ‘sum of money’ claimed must be liquidated or unliquidated, quantified or otherwise, or in what form the claim must appear.”  In his view, so long as there is “a claim for a sum of money” and the claim arises from the breach of a term of an employment contract, the case would fall within the exclusive jurisdiction of the Labour Tribunal. In view of this, he ruled that the Plaintiff’s case fell within the exclusive jurisdiction of the Labour Tribunal and accordingly dismissed the Plaintiff’s claim against the Defendants for want of jurisdiction in the District Court.

Effect on employers

It should be noted that the Labour Tribunal in Hong Kong has exclusive jurisdiction to hear and determine several types of employment-related claims or questions. Therefore, before filing an action in respect of an employment dispute in a court in Hong Kong, it is always advisable to check whether the matter should go to the Labour Tribunal instead. Failure to appreciate this jurisdictional issue will not only lead to the action being struck out, but will also give rise to unnecessary legal costs.