12 June 2008
The Court of Appeal in Lam Pik Shan v Hong Kong Wing On Travel Service Limited confirmed the decision of the Court of First Instance which held that tips for a tour guide fall within the definition of "wages" in the Employment Ordinance ("EO").
The claimant, Lam Pik Shan ("Lam"), was a tour guide employed by the respondent, Hong Kong Wing On Travel Service Limited ("Wing On") since April 1997. Wing On terminated Lam's contract of employment in February 2003. Lam commenced proceedings against Wing On for her outstanding statutory entitlements which she alleged should be calculated including the tips she received.
It was accepted that, in the 12 months preceding February 2003, Lam's basic monthly salary was HK$2,200 while the amount of tips and service charges she received varied from a few thousand to HK$10,000 per month.
The Court of First Instance ("CFI") held that tips and service charges were part of the wages of tour guide for the purpose of determination of statutory benefits under the EO. Please refer to our previous Legal Update: "Hong Kong: More about 'Wages' - When Are Tips included? (20 August 2007)". The employer appealed to the Court of Appeal.
The Court of Appeal agreed with the CFI that the tips received by Lam fell within the statutory definition of "wages" under the EO.
The only issue the Court of Appeal was required to consider was whether a workable mode of calculation exists for working out the net tips and whether it can be said to accrue daily. Since both the rate of recommended tips for each tour and the duration for each tour were determined by Wing On, the Court held that net tips received by Lam were readily calculable and could be said to "accrue" on a daily basis.
The Court of Appeal dismissed Wing On's appeal with costs to Lam. It should be noted that this case dealt with sections of the EO before the changes introduced by the Employment (Amendment) Ordinance.
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