Frontline: APAC Employment Law Update January 2018

In this issue of Bird & Bird's Frontline APAC, we will look back at the significant changes that came into effect in the last quarter across Australia, Hong Kong, the People's Republic of China (PRC) and Singapore.

Our Case Updates look at Australian rulings which provide some insights as to the interpretation of:

  • the termination of maximum term contracts
  • limitations on discretionary bonus clauses

We will also look at:

  • recent Hong Kong cases which seem to demonstrate a shift towards greater recognition and protection of LGBT rights

Our Legal Updates include changes to statutory entitlements and benefits across the APAC region such as:

  • proposed new protections for whistleblowers in the private sector in Australia
  • an overview of new Tripartite Standards released in Singapore
  • changes in the criteria to qualify for accompanying dependants of S Pass and Employment Pass holders in Singapore
  • changes to the Workplace Safety and Health Act in Singapore
  • status of the Employment (Amendment) Bill 2017 in Hong Kong
  • revisions to the Anti-Unfair Competition Law in the PRC

Case Updates


Interpreting the termination of Maximum term contracts- More protection for employees?

In the case Saeid Khayam v Navitas English Pty Ltd [2017] FWCFB 5162, the plaintiff, Mr Khayam, was employed by Navitas English Pty Ltd ("Navitas") on a series of maximum term contracts (i.e. contracts with a fixed end date, but which were terminable earlier in accordance with the provisions of the contract).

At the end of the term of the last of these contracts, Navitas decided not to offer a further contract due to concerns regarding Mr Khayam's performance. Mr Navitas made an unfair dismissal application to the Fair Work Commission ("FWC").

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The limitations on discretionary bonus clauses

Employment contracts, particularly for senior or executive employees, often contain discretionary bonus clauses. Such clauses are generally drafted to give employers absolute discretion in respect of determining the amount of and entitlement to bonuses. However, the recent decision of Crowe Horwath (Aust) Pty Ltd v Loone [2017] VSC 163 confirms this decision is in no way absolute or unfettered.

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Accountant found accessorily liable for underpayment of client's employees

In the case Fair Work Ombudsman v Blue Impression Pty Ltd & Ors (No.2) [2017] FCCA 2797, the defendant, Blue Impression Pty Ltd, operated a Japanese fast food outlet and used Ezy Accounting 123 Pty Ltd ("Ezy") for accounting services which included book keeping, data entry and processing of wage payments. In February 2017, Blue Impression engaged a third party employment specialist to audit the restaurant. The specialist also provided advice to Ezy and as a result, Ezy was made aware it was paying incorrect rates to its employees. Ezy subsequently admitted that due to the setup of the payment system after the audit finding, it was likely that there were further underpayments to the employees. Despite this acknowledgement, no changes were made to the system. As a result, Blue Impression underpaid two of its employees a total of $9,549.47.

In this decision, the Federal Circuit Court of Australia ("FCCA") ultimately found Ezy to be an accessory to its client's breach of the Fair Work Act.

Third party service providers such as accountants, auditors, lawyers and consultants have a responsibility to uphold the law in the course of their work and importantly in the services they provide their clients. A failure to do so will likely result in penalties being awarded against them.

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Hong Kong

Striving towards greater equality?

Despite the current lack of specific legislation covering discrimination on the ground of sexual orientation in Hong Kong, the Hong Kong courts have shown a shift towards greater recognition and protection of LGBT rights. In a recent landmark case of QT v. Director of Immigration CACV 117/2016, the Court of Appeal ("CA") concluded that the differential treatment based on sexual orientation in determining dependant visa application is unjustified.

QT entered into a civil partnership with her same-sex partner, SS, in England. When QT was later employed with an employment visa to work in Hong Kong, she applied to the Immigration Department for a dependant visa with SS as her spouse. The Director of Immigration rejected QT's application on the ground that she was not a "spouse" within the meaning of Hong Kong Immigration Policy, and thereby failed the Eligibility Requirement for a dependant visa.

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Ascertaining an employee's intention behind misconduct in summary dismissal cases

In the case of Cheung Chi Wah Patrick v Hong Kong Cement Co Ltd [2017] HKCU 2291, upon the employer's appeal of the Labour Tribunal's decision, the Hong Kong Court of First Instance ("CFI") considered whether an employer was entitled to summarily dismiss an employee on the ground that the employee had committed gross misconduct.

Mr Patrick Cheung ("Mr Cheung") was the Financial Controller of TCC International Limited ("TCCIL"), which is the main shareholder of TCC International Holdings Limited ("TCCIH"), a company that wholly owned Hong Kong Cement Co Ltd ("Appellant"). When assisting TCCIL to determine the quantity of excess right shares to apply on behalf of TCCIL in a rights issue exercise, Mr Cheung sought legal advice following his supervisor's instructions. However, Mr Cheung honestly misunderstood the legal advice and made a wrong decision, the rectification of which caused loss to TCCIL. Mr Cheung was subsequently summarily dismissed on the basis that he had committed gross negligence in carrying out his duties. Mr Cheung commenced a claim against the employer in the Labour Tribunal for wrongful termination, claiming that the summary dismissal was not justified.

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Legal Updates


Proposed New Protections for Whistleblowers in the Private Sector

The Australian Government has introduced the Treasury Laws Amendment (Whistleblowers) Bill 2017 ("Bill"), which creates broader protections for whistleblowers in the private sector (primarily corporate and financial organisations including banks, building societies, credit unions, insurance companies and superannuation companies).

The Bill seeks to amend the Corporations Act 2001 (Cth) as well as the Taxation Administration Act 1953 (Cth) to extend the scope of protection for whistleblowers in the private sector and clarify the offence of victimisation of whistleblowers.

The proposed changes will require public and large proprietary companies to create a whistleblower policy detailing the statutory protections that are available to employees who disclose dishonest or illegal conduct within the company by 1 January 2019.

Read more >

Hong Kong

Status of the Employment (Amendment) Bill 2017

The Employment (Amendment) Bill 2017 (the "1st Amendment Bill") and the Employment (Amendment) (No. 2) Bill 2017 (the "2nd Amendment Bill") were gazetted on 5 May 2017 and 16 June 2017 respectively.

There have been several meetings of the Bills Committee in the Legislative Council in relation to the Amendment Bills in the past months. At the meeting held in November 2017, the Bills Committee had undergone clause-by-clause examination of the Bill.

After the exercise, the Government was requested to provide further information on: (i) the reporting of information obtained in connection with conciliation or mediation to the court in other legal proceedings; and (ii) employees' entitlement to wages and employment benefits/compensation during the period between the date of dismissal and the date of reinstatement or re-engagement.

The Chairman of the Bills Committee took the view that pending the Government's provision of a written response to the outstanding issues, the Bills Committee had completed scrutiny of the Bill. Where necessary, the Bills Committee may schedule a further meeting with the Government after the provision of its response.


Repeal of "Measures on Economic Remedies for Breach and Termination of Employment Contracts"

Recently, the Ministry of Human Resources and Social Security decided to abolish several measures, including the "Measures on Economic Remedies for Breach and Termination of Employment Contracts" (MHRSS [1994] No. 481, which are referred to within the industry as "Document No. 481").

Document No.481's repeal has a number of important consequences:

  • The provision concerning economic compensation for violating and terminating labour contracts without reasonable cause is now invalid. Previously, the work unit was supposed to pay an additional 25% or 50% (as stipulated in the document) on top of base salary to employees in certain situations. Now, however, the amount of economic compensation will be determined by Article 85 of the Labour Contract Law of the People's Republic of China. Accordingly, employees could now receive an additional 50%-100% on top of their salary if the work unit breaches or terminates their employment contract without reasonable cause.
  • The current status of the medical subsidy system is unclear. Document No. 481 stipulates that when the employment contract is terminated, any employee who is ill or is suffering from non-work related injuries shall benefit from medical subsidies. Such a medical subsidy should not be less than 6 months' salary, rising to not less than 9 months' salary in the case of serious illness and not less than 12 months' salary for terminally ill employees. Since Document No. 481 has been abolished and the Labour Contract Law does not address the subsidy system, disputes on whether the medical subsidy system is still valid are likely. Although Document No. 481 has been repealed, there are still some enforceable documents which include provisions requiring payment of the medical subsidy, such as Notice on Several Issues in Implementing the Labour Contract System (1996). This point requires further clarification from the Government.

Revision to the Anti-Unfair Competition Law of the People's Republic of China

Due to rapid development, the existing PRC Anti-Unfair Competition Law was not fully capable of responding to various acts of unfair competition. In addition, the interrelation of the articles governing unfair competition with other laws and regulations created the urgent need to revise the Anti-Unfair Competition Law. In order to conform to the trend of market development, the new revision to the Anti-Unfair Competition Law was adopted at the 30th Session of the Standing Committee of the 12th National People's Congress on 4 November 2017. The revision focused on detailed methods and investigation procedures relating to acts of unfair competition as well as the corresponding punitive measures, which came into effect on 1 January 2018.

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Five Tripartite Standards released since July 2017

More Tripartite Standards are expected to be released in 2018, in addition to the five released in 2017 on term contract employees, flexible work arrangementsgrievance handling, recruitment practices and procurement of services from media freelancers.

S Pass and Employment Pass holders – increase in salary criteria to qualify for accompanying dependants, from 1 January 2018

Effective 1 January 2018, S Pass and Employment Pass holders will need to earn at least:

  • S$6,000 per month (an increase from the previous salary criteria of S$5,000 per month) to bring their spouse or children to Singapore on a Dependant's Pass; and
  • S12,000 per month (an increase from the previous salary criteria of S$10,000 per month) to bring their parents to Singapore on a Long Term Visit Pass.

New work passes with QR code and SGWorkPass app

Quick Response (QR) codes will be printed on new work passes, which can be read using the new SGWorkPass mobile app. This system is to facilitate verification of variable employment information on the work pass.

The new system will be implemented in phases:

Phase 1 (from 15 September 2017) • Work Permit (Marine Shipyard sector)

  • Work Permit (Construction sector)

Phase 2 (January 2018) • Work Permit (Manufacturing sector)

  • Work Permit (Process sector)
  • Work Permit (Services sector)

Phase 3 (March 2018) • Work Permit (Domestic sector)

  • S Pass
  • Employment Pass
  • Related Dependant's Pass / Long Term Visit Pass

The new card with the QR code will be implemented for issuance, renewal or replacement of work pass cards from the start of the relevant implementation phase for that work pass. For other employees who are already on a work pass and who have received a card before the implementation phase, the existing cards are still valid and can continue to be used until the next issuance, renewal or replacement.

Changes to the Workplace Safety and Health Act

  • On 6 November 2017, several changes to the Workplace Safety and Health Act (Cap. 354A) ("WSH Act") were passed in Parliament with the intention of achieving safer and healthier workplaces by strengthening the culture of preventing harm. The changes are outlined below:
  • From 1 January 2018, a company will face a maximum fine of S$50,000 (up from S$20,000), if (a) it is found to have committed an offence that may cause or result in any death or serious bodily injury, or (b) there is any dangerous occurrence in the workplace.
  • From 1 January 2018, the Ministry of Manpower ("MOM") can share with the public the recommendations and learning points from accidents before the conclusion of criminal proceedings with a view to helping prevent the recurrence of similar accidents. Learning reports are not intended to and will not apportion blame or liability, and will not be admissible in civil, criminal, arbitral or disciplinary proceedings.
  • The scope of personal liability protection to the MOM Commissioner, Deputy Commissioner, inspectors and authorised officers (collectively, "MOM officers") will now be extended to all acts done in good faith and with reasonable care in the carrying out of their duties under the WSH Act. Previously, the personal liability protection for MOM officers under the WSH Act was limited to equipment damage due to a prescribed examination or test, and acts done by the Commissioner and Deputy Commissioner in relation to remedial or stop-work orders.
  • To ensure that workplace safety and health courses remain relevant to the industry and are constantly kept up to date, their accreditation will be shifted from MOM to SkillsFuture Singapore. The accreditation change will be completed by 2019. 

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