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In 张强 v. 思科系统有限公司 [2021] HKCFI 694, the Hong Kong Court of First Instance found that a typographical error in an agreement rendered the entire agreement void and dismissed the employee's claim that his summary dismissal was a wrongful termination. 

Background

The plaintiff employee was appointed to work for the defendant employer in Beijing in 2002. In 2005, the employee was told to relocate to Hong Kong and a relocation allowance as well as payment of certain expenses would be paid to him for that purpose. The relocation allowance was paid.

In September 2005, the employee wrote to the employer complaining about alleged incorrect grading, salary, job title and compensation from 2002 to 2005. To resolve the complaint, the employer provided a settlement offer to the employee who signed it (the “Settlement Agreement”). The employer later discovered that the Settlement Agreement stated a sum of “HK$64,4910.46” (rather than “HK$64,491.46” which was what the parties had agreed). Upon discovering the typo the employer sent a subsequent letter with updated terms to the employee to correct the stated sum but the employee did not sign this letter.

By April 2009 the employee had not relocated to Hong Kong and the employer directed the employee to do so, failing which he would be considered to be in breach of his employment contract. The employee made excuses and did not relocate as directed. In September 2009, the employee reported to the Hong Kong office for three days but left Hong Kong on the same day on all three occasions. In October 2009, the employer wrote to the employee to ask for his whereabouts and directed he attend online meetings. 

In November 2009, the employee told the employer that he was sick. The employer then asked him to provide a medical certificate and reminded him to contact his direct manager in relation to his absence. The employer told the employee that his medical certificate had been received on 6 January 2010. The employee's case was that he had submitted his medical certificate on 4 December 2009 but this evidence was rejected by the court.

On 8 December 2009, the employer sent a letter to the employee saying he had committed serious misconduct by being absent from work without authorisation and was liable to summary dismissal. The employee was eventually summarily dismissed on 11 December 2009. 

Claims

The employee claimed a number of items against the employer including the original amount stated in the Settlement Agreement of HK$644,910.46 (based on a typo in the Settlement Agreement) and damages for wrongful termination of the employment contract.

Discussion and Decision

The two interesting issues for employers arising from the case are:

  1. Whether the employee could recover the amount stated in the Settlement Agreement, and
  2. Whether the employer had grounds to summarily dismiss the employee.

Dealing with each of these in turn.

1. Whether the employee could recover the amount stated in the Settlement Agreement

The Court found that, based on the evidence, the figure of “HK$64,4910.46” written into the Settlement Agreement was a mistake made by the employer when preparing the Settlement Agreement, and that the employer had no intention of making any offer with the sum of HK$644,910.46 included. The Court also found that the employee was aware of the misplaced comma in the amount stated in the Settlement Agreement, and should have known that the sum of “HK$64,4910.46” did not reflect the employer's intentions, and that this was a mistake.

A contract will not be concluded unless the parties agreed on its material terms. If the offeree knows that the offeror did not intend the terms of the offer, they cannot bind the offeror to a contract by purporting to accept the offer. The Court found that the effect of the employer's unilateral mistake was that there was never a contract at all because there was an absence of consensus of the parties.

In the present case, the Court found that as the employee was aware of the mistake, there was no "meeting of the minds" to form a binding agreement and therefore the Settlement Agreement was unenforceable.

2. Whether the employer had grounds to summarily dismiss the employee

The employer relied on the cumulative effect of the following four series of events to justify the employee's summary dismissal:

  1. The employee ignored the employer's instructions to relocate from Mainland China to Hong Kong,
  2. The employee failed to comply with the employer’s instructions to attend online meetings,
  3. The employee failed to answer questions relating to his whereabouts from a manager in his reporting line, and
  4. The employee failed to show any reasonable excuse for his absence of more than a month.

The Court found that:

  • The employer had given clear instructions to the employee that he had no role in Mainland China and had to relocate back to Hong Kong. However, the employee only spent short periods in Hong Kong before leaving and establishing a temporary home in Shenzhen.
  • There were two meetings where the employee failed to comply with instructions to attend (online) Telepresence meetings.
  • The employee's refusal to answer his manager's questions about his whereabouts demonstrated "wilful defiance".
  • The reasons that the employee gave for his absence were not believable. Those reasons included that he was ill, he could no longer access his Gmail account, he did not notice the four emails from his employer and that he had no way of contacting his employer at all. The employee had been absent from work for an entire month, and although knowing that he was expected to contact his direct manager and provide medical certificates, he did nothing.

In deciding whether summary dismissal is justified, “[what] must be looked for … is whether what has been done by an employee is something which is expressly or implied a repudiation of the fundamental terms of the contract such as to justify an instant dismissal”.

In the Court's view, the employee's absence of more than one month without reasonable excuse (i.e. item (d) above) would have been sufficient to justify summary dismissal. However, all four matters taken into consideration rendered the employee's conduct even more serious, were impliedly repudiatory in nature, and justified the summary dismissal.

Lesson for Employers

Naturally no one wants to make a mistake by inserting the wrong amount into a settlement agreement. However, where it is clear that there has been a genuine mistake, then there may be recourse available such as in the present case.

We do not get many reported cases dealing with summary dismissal since employers tend to choose to terminate by notice (even where they may have the right to summarily dismiss the employee). This is because:

  • Summary dismissal is a very serious step to take and the Courts have said it is a capital punishment in that if the dismissal is justified the employee will be deprived of all the protection under the Employment Ordinance as well as the usual termination payments. As such, there will usually need to be cogent evidence to justify summary dismissal,
  • From a practical perspective, summarily dismissing an employee will in essence force the employee to sue the employer to clear their name and recover their usual termination payments, and
  • Commercially, the cost of defending a claim (both in terms of time and money) and also potentially having to deal with adverse publicity will perhaps in many instances likely be greater than giving the required notice and paying the employee their usual termination entitlements. In the case discussed above, the employee was summarily dismissed in 2009 and the judgment was only handed down by the Court of First Instance earlier this year, and so this demonstrates that a case can drag on for a very long time!

However, from time to time an employer may decide to summarily dismiss an employee, as in the present case.

The judgment is available in the following link: https://legalref.judiciary.hk/lrs/common/search/search_result_detail_frame.jsp?DIS=134269&QS=%2B&TP=JU