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Legal Update

Labour Tribunal Given Expanded Power to Order Security for Payment

12 January 2015
Mayer Brown JSM Legal Update

On 24 December 2014 the Labour Tribunal Ordinance ("LTO") was amended to give the Labour Tribunal the general power to order a party to give security for payment of an award or order. To learn more about the previous position of the Labour Tribunal's jurisdiction, please see our earlier legal update, "On a Sticky Wicket Against Naughty Litigants".

What is the Labour Tribunal's power after the change?

The amended sections 30 and 31 of the LTO have expanded the Labour Tribunal's power to order a party to provide security for the payment of an award or order, either of its own motion or on the application of a party.

The possible circumstances for ordering security from a party include the following:

i. where there is a real risk that payment of the award will be obstructed or delayed because of dissipation of assets;
ii. where a party unreasonably delays or abuses the Tribunal process;
iii. where a party fails to comply with any award, order or direction without reasonable excuse; or
iv. where an application for a review of the Tribunal award or order is devoid of merit or is made to delay the process.

What are the consequences of non-compliance?

Sanctions for failing to comply with a section 30 or section 31 security order include the dismissal of a party's claim, staying of the proceedings, entering judgment on the claim against a party or dismissing a review application of an award or order (as the case may be).

What should employers do?

If a security order is made against an employer, timely compliance of the order is crucial. An employer involved in Tribunal litigation should also review on an ongoing basis whether an application for a security order is necessary or will give any strategic advantage.


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