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Legal Update

Employment (Amendment) Bill 2009 - Criminal Consequence for Non-Payment of Tribunal Awards

14 October 2009
Mayer Brown JSM Legal Update

Summary

The Employment (Amendment) Bill 2009 was introduced to the Legislative Council in June this year. It will, if passed, make it a criminal offence for an employer to ignore an award by the Labour Tribunal or the Minor Employment Claims Adjudication Board (MECAB).

Full Update

On 16 June 2009, the Employment (Amendment) Bill 2009 was introduced to the Legislative Council. It is designed to deal with unscrupulous employers who ignore awards by the Labour Tribunal or MECAB. Currently an award simply creates a debt due which needs to be enforced by the employee. However, with the new legislation, a failure to comply with such award will be a criminal offence.

Background

There has been increasing concern in the community over certain employers' failure to pay their employees even after the Labour Tribunal had made an award in favour of such employees. Currently, where a judgment debtor (the defaulting employer) refuses to settle such award in full or at all, the judgment creditor (the employee) may enforce the award by:

  • a charging order against the property of the judgment debtor;
  • a garnishee order to satisfy the award by monies held by a third party (i.e. a bank); or
  • a writ of fiere facias to seize the goods and chattels on the premises of the judgment debtor.

Alternatively, an employee may file a winding-up or bankruptcy petition against the defaulting employer. Despite the wide range of options available, enforcement of awards remain an issue as it hinges greatly on the employees' knowledge of the availability and whereabouts of the assets and properties of the judgment debtor. In short, the current regime is too complex to enable employees to enforce favourable judgments and so many employers have simply ignored Labour Tribunal and MECAB judgments.

The amendment

The amendment aims to deter any non-payment of Labour Tribunal and MECAB awards by incorporating criminal elements in its penalty. Under the proposal,

  • an employer may be liable for a maximum penalty of $350,000 and three years' imprisonment if it wilfully and without reasonable excuse fails to pay the awarded sum within 14 days of its due date; and
  • if an offence committed by a corporate body is proved to have been committed with the consent or connivance of, or attributable to any neglect on the part of any director or responsible person, as a rebuttable presumption, the director or the responsible person commits the same offence.

In short, the amendment exposes employers who ignore Labour Tribunal and MECAB judgments (as well as directors and responsible persons) to greater risk.

Conclusion

Employers are advised to make payment of an award granted by the Labour Tribunal or MECAB within 14 days of its due date, or to request a stay of judgment as soon as possible (for example, if the employer is appealing).

The Bills Committee is set to meet shortly, so stay tuned for further developments!

For inquiries related to this Client Alert, please contact:

Duncan Abate ( )

Learn more about our Hong Kong office and Employment & Benefits practice.

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