3 February 2012
The government has recently submitted proposed amendments to the Employment Ordinance (the "EO") to the Legislative Council.
The current position
An employee may claim remedies against his employer in cases of "unreasonable" dismissal under Part VIA of the EO. The remedies available are increased where the dismissal is also "unlawful".
A dismissal is "unreasonable" where an employer is unable to give a "valid reason" for the termination.
A dismissal is considered "unlawful" when an employer terminates the employee in contravention of certain specified statutory provisions. Broadly speaking these are:-
- where the employee is pregnant or on maternity leave,
- where the dismissal was due to the employee engaging in union activities outside working hours,
- where the employee is entitled to statutory sick pay,
- where the employee has given evidence against the employer,
- where the employee has brought an unresolved claim under the Employment Compensation Ordinance.
The proposed changes
Under the existing legislation the Labour Tribunal (the "LT") may only make an order requiring the employer to re-employ the employee with the consent of the employer. For obvious reasons this is not an order which is often made!
The proposed legislative changes will alter the position as follows.
Where the LT determines that an employee has been unreasonably and unlawfully dismissed, then the LT may, if it considers practicable and appropriate, make a reinstatement order without the employer's consent.
In determining whether to make such an order, the LT may take into account :-
- the relationship between the employee and the employer,
- the circumstances of the dismissal, and
- whether the employer would face any genuine difficulties in complying with the order.
If an employer fails to comply with such an order, then the employee would be entitled to additional compensation equivalent to three times his monthly wage. However, the maximum additional compensation is only HK$50,000.
Failure to pay such additional compensation would be a criminal offence, which could result in a maximum fine of HK$350,000 and 3 years' imprisonment on conviction.
This change still gives employers the option not to re-employ an individual, but instead to pay increased compensation of HK$50,000 (maximum). In practice therefore, we are of the view that this change should be viewed as a backdoor increase to the maximum compensatory order, which a court can award on an unlawful termination, from HK$150,000 to HK$200,000.
The amending legislation is not yet final. Should it change in the course of its transit through the legislative process then we will, of course, keep you informed.
For inquiries related to this Legal Update, please contact Duncan Abate, Hong Tran, or your usual contacts with our firm.
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