Frontline: APAC Employment Law Update September 2017

Welcome to the first edition of Bird & Bird's APAC Frontline, our brand new quarterly newsletter that gives you the low down on the significant changes to have come into effect across Australia, Hong Kong, the People's Republic of China (PRC) and Singapore.

In this issue we provide a case summary on an Australian ruling which provides insight on the enforceability of restraints and highlights some of the issues new employers need to consider when recruiting employees from competitors.

Our Legal Updates include changes to statutory entitlements and benefits across the APAC region, amendments to the civil code and the new work permit application process in the PRC, and the introduction of new legislation in Hong Kong, as well as the establishment of the new Employment Claims Tribunal in Singapore.

We also provide you with details of our upcoming seminars/events taking place across our APAC offices.

Case Updates


What new employers need to consider when hiring a competitor's employees

In situations where key employees join a competitor, the recent decision of Lifeplan Australia Friendly Society Ltd v Ancient Order of Foresters in Victoria Friendly Society Limited [2017] FCAFC 74 (12 May 2017) provides important insights regarding the enforceability of restraints and poaching of employees from competitors, as well as the potential consequences if a company is knowingly involved in an employee's breach. This appeal decision has implications for both current and prospective employers.

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Legal Updates - Australia

By Kristy Peacock-Smith and Leila Moddel

Minimum wage decision

The Annual Wage Review for 2016-17 was issued on 6 June 2017. The Fair Work Commission's Expert Panel awarded an increase of 3.3 per cent to the national minimum wage ("NMW"). This brings the NMW to $694.90 per week or $18.29 per hour. This is an increase of $22.20 per week. Modern award minimum wages were also increased by 3.3 per cent.

In publishing its decision, the Fair Work Commission noted generally favourable economic conditions over the year, despite growth falling short of initial projections and a slight increase in the unemployment rate. Taking into account social and other considerations, the determination is expected to improve the relative living standards of over 2.3 million employees in Australia.

Australia - Amendments to the Fair Work Act 2009 (Cth) in relation to franchises

Partly in response to the ongoing community dialogue about the Inquiry into 7-Eleven report released by the Fair Work Ombudsman on 9 April 2016, the Government recently passed a Bill that will make extensive changes to the Fair Work Act 2009 (Cth). These changes relate exclusively to franchise organisations and the affected employers (franchisees) and their employees.

The changes are broad and far-reaching, including a drastic increase in the maximum civil penalties for serious breaches of the legislation, an increase in the liability of franchisors for the actions of their franchisees, and a strengthening of the investigative powers of the Fair Work Commission in relation to alleged breaches by franchisees and franchisors.

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Legal Updates - Hong Kong

By Pattie Walsh and Stephanie Wong

Introduction of statutory claw back order of remuneration from officers of financial institutions in resolution process

The Financial Institutions (Resolution) Ordinance (Cap 628) ("FIRO") and the Financial institutions (Resolution) (Protected Arrangements) Regulation came into operation on 7 July 2017.

Under the FIRO, the Monetary Authority, the Insurance Authority and the Securities and Futures Commission are given the necessary powers to resolve financial institutions ("FI") in Hong Kong which have become non-viable.

To align with international standards and practices, Part 8 of the FIRO sets out clawback provisions which enable resolution authorities to make applications to the court to clawback received and deferred fixed and variable remuneration from officers of FI (e.g. a director or shadow director; the chief executive officer or deputy chief executive officer; a person who is employed by, or acts for or on behalf of the FI and who: (i) is principally responsible (alone or jointly with others) for — (a) the management of part of the business of the FI; or (b) the performance of one or more of the control functions of the FI; or (ii) has the potential to have a material impact on the risk profile of the FI).

The Court may make a clawback order against an officer if satisfied that:

a) the officer, in performing his/her functions, acted or omitted to act in a way that caused, or materially contributed to, the FI ceasing, or being likely to cease, to be viable; and

b) the act was done, or the omission was made, intentionally, recklessly or negligently.

A clawback order is an order that provides for either or both of the following:

a) that the officer repays or returns all or a specified part of the fixed or variable remuneration received by the officer in respect of services provided to the FI during the controlled period of three years (or any longer period of up to three years fixed by the Court) immediately before the date on which the resolution of the FI was initiated ("Controlled Period"); and/or

b) that the officer ceases to be entitled to receive all or a specified part of any fixed or variable remuneration that the FI had agreed during the Controlled Period to give, but had not yet given, to the officer.

Currently, the provisions regarding clawback of remuneration are not yet in force. It is considered that this part should come into operation after the Chief Justice has made rules regulating the Court's practice and procedure in connection with applications made.

The new Apology Ordinance

On 13 July 2017, the Apology Ordinance (Cap 631) ("AO") was passed at the Legislative Council ("LegCo"). The AO will come into operation on 1 December 2017.

The AO reforms the legal consequences of making an apology (where such expression may be oral, written, or by conduct). Under the AO, "apology" has a broad meaning and refers to an expression of the person's regret, sympathy or benevolence in connection with the matter and includes an expression that the person is sorry about the matter.

The AO provides that even if an apology includes an admission of fault, it will not constitute an admission of fault or liability. Making an apology in connection with a matter does not void or otherwise affect any insurance cover, compensation or other form of benefit for any person in relation to the matter under a contract of insurance or indemnity.

In relation to admissibility, unless the person making the apology wishes it to be admitted, such apology is not admissible in evidence to the detriment of the person. However, the AO contains an exception that where there is an exceptional case in the applicable proceedings (e.g. where there is no other evidence available for determining the issue), the decision maker may exercise his/her discretion to admit a statement of fact in an apology as evidence in the proceedings, but only if the decision maker is satisfied that it is just an equitable to do so.

Given the broad exception and the unclear scope as to how decision makers will exercise their discretion, this has created some uncertainty in the degree of protection extended to the person making the apology.

While the AO aspires to facilitate and encourage the early resolution of civil disputes in Hong Kong, as it has not yet come into force, it is currently unknown whether it will achieve its objectives. In principle, as the AO will be applicable to Labour Tribunal proceedings, this could be helpful in certain employment disputes where employees feel aggrieved by the employer's actions and demand for an apology. Under the new regime, employers may be more open to make an apology without the fear of making a concession that could be used against them in subsequent legal proceedings at the Labour Tribunal or the civil courts.

Current status regarding the Employment (Amendment) Bill 2017 ("2017 Bill")

The 2017 Bill is largely similar to the Employment (Amendment) Bill 2016 ("2016 Bill") introduced into the LegCo in March 2016, but lapsed following the end of the 2012-2016 LegCo term. The 2017 Bill aims to amend the Employment Ordinance (Cap. 57) to provide the Labour Tribunal with the power to order reinstatement or re-engagement in cases involving unreasonable or unlawful dismissal, without the need for the employer's agreement. This will change the status quo where any order for reinstatement or re-engagement requires the employee and the employer's consent.

The main difference between the 2017 Bill and the 2016 Bill is that the 2017 Bill provides that if an employer fails to reinstate or re-engage the employee following the Labour Tribunal's order, the employer will need to pay to the employee a further sum set at three times the employee's average monthly wages, subject to a cap of $72,500 (the proposed cap was HK$50,000 in the 2016 Bill). Such sum will be in addition to other remedies awarded to the employee.

Legal Updates - PRC

By Ying Wang and Lorraine Sun

New Amendment to the Civil Code

On 15 March 2017, the General Rules of the Civil Law of the People's Republic of China ("General Rules") were adopted and promulgated at the Fifth Session of the 12th National People's Congress and widely attracted the public's attention. The General Rules will be effective from 1 October 2017. These General Rules are seen as an amendment to the General Principles of the Civil Law ("General Principles"), which took effect in 1986 and were amended on 27 August 2009. The General Rules signify the first step for China in establishing the Civil Code. In addition to its evidently profound impact on the civil law landscape, the General Rules will bring certain implications for the employment law regime, which are discussed in more detail below.

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New Work Permit Application Process for Expats

To better serve the implementation of national major strategy and the development of social economy, China has introduced new policies on work authorisations for foreign employees.

Before the formal implementation, in 2016 China had released the Pilot Implementation Plans for Foreigners' Work Authorization Policy (the “Plans”), which were restricted to 10 locations in China. On 1 April 2017, the new work authorization policy - Circular on the Implementation of Work Permit Service Guidelines for Foreigners in China (the "Guidelines") - issued by the State Administration of Foreign Expert Affairs (SAFEA) came into effect nationwide. The Guidelines provide further details and highlight the specific regulations of the Plan.

The Guidelines have introduced key changes such as introducing a new online application system to complete the relevant application forms and upload supporting documents for the labour bureau's prior approval; creating a unique identification number to identify every foreign employee; and classifying foreign employees into three different categories under a Point-Based System etc.

Application Procedures are also simplified and significant effort has been dedicated to improve the permanent residency ("Green Card") System to attract overseas talent.

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Legal Updates - Singapore

By Seow Hui Goh, Susan de Silva, Rachel Lim and Shu Yi Chye

New Employment Claims Tribunal effective 1 April 2017

The new Employment Claims Tribunal ("ECT") has been established within the Singapore court system and has started handling salary-related disputes from 1 April 2017.

  • All levels of employees, including managers and executives, may bring claims regardless of salary or seniority.
  • Mediation through approved mediation processes is mandatory before claims will be heard by the ECT.
  • HR claims at the ECT will be capped at S$20,000. If the dispute is filed through a trade union or with union assistance, the cap will be a higher S$30,000.

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Changes to shared parental and adoption leave effective from 1 July 2017

New and enhanced leave entitlements in the Child Development Co-Savings Act ("CDCA") have taken effect from 1 July 2017. The key changes include increase of shared parental leave for fathers; increase of adoption leave for adoptive mothers; and new entitlement of 4 weeks' adoption leave for adoptive fathers.

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Fair Consideration Framework "Watchlist" – What it means for Employers

The Fair Consideration Framework Watchlist ("Watchlist"), announced in 2016, has been described as a "negative measure taken against "unfair" employers" (i.e. employers who have not given fair consideration to the recruitment and development of Singaporeans in their workforce).

Being placed on the Watchlist will negatively affect an employer's Employment Pass ("EP") applications, including a longer processing time of 3 months or more and the possibility of rejection of EP applications if the employer does not manage to get off the Watchlist within 6 months.

As at the end of February 2017, at least 250 employers in Singapore are reported to have been placed on the Watchlist. Of these, about 50 employers have not shown enough improvement after 6 months resulting in their work pass privileges being curtailed by MOM "until they improve" with more than 500 EP applications rejected or withdrawn. As the Manpower Minister has said, curtailment of work pass privileges will have serious consequences on their continued operation and growth in Singapore.

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Classified Post

You can read Hong Kong-based Partner Pattie Walsh's contributions to the Classified Post here:


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