Previous Page
OCTOBER 2013
Legal Focus
79 Employment Law dismissals and terminations
Employment is always a vitally important aspect of any country’s economy; but this is never more so than when a nation is experiencing a period of economic uncertainty and financial crisis – as has recently happened across the world. To find out about employment law in Hong Kong and in particular, dismissals and terminations and the issues that surround them, Lawyer Monthly speaks to Cynthia Chung, an experienced employment lawyer and partner at Deacons.
What are the main challenges you face when dealing with unfair dismissal cases?
The concept of unfair dismissal actually does not exist in Hong Kong. Under Hong Kong law, employers and employees are generally free to give notice of termination to the other party to terminate the employment contract. Where the employee has worked for the employer for two years or more, the employer must have a valid reason for terminating an employee. The valid reasons are set out in the Employment Ordinance to include general restructuring or redundancy, misconduct, capabilities and qualifications of the employee and other illegal grounds. When an employer does not have a valid reason for terminating the employee, the employer will be deemed to terminate the employee unreasonably with the view to reduce or avoid payment of certain benefits to the employees. Furthermore, employees are also protected from being terminated if they are pregnant or on maternity leave, sick and are entitled to a sickness allowance by law, are injured at work and have not yet had their employee compensation assessed. Dismissing an employee under the above circumstances will be unlawful. Finally, if one of the reasons for dismissing an employee is due to his/her gender, marital status, pregnancy, race, disability (whether physical or mental) or family status, the employer may be subject to claim of discrimination.
Since under Hong Kong law, there is no concept of unfair dismissal, most of the litigation arising out of dismissal cases is where the employee claims that there is no valid ground for the employer to dismiss him/her or the employer has dismissed the employee under one of the unlawful or discriminatory grounds. The major challenges sometimes faced by lawyers include the collection of supporting evidence. If there is insufficient written evidence to support an employer's claim for fair dismissal, we find that the dispute of facts is the most challenging for us. Another challenge is that some employees, particularly expats from some countries, do not understand the protection offered by Hong Kong law and they very often apply their own laws and
expectation in their home countries which sometimes could be unrealistic for Hong Kong. Once a relationship turns sour between the employee and the employer due to different expectations, then the parties are mostly likely unable to come to a compromise.
obviously, redundancy has become more of an issue since the beginning of the financial crisis, as companies look to cut costs. What are the main legal implications when looking to structure a redundancy procedure that protects against claims of unfair behaviour?
We do understand that some companies are looking to cut costs but others may be trying to restructure manpower in a more efficient manner.
In our
experience, recently, instead of mass redundancies, companies tend to lay off more senior employees who are unable to achieve targets.
In effecting
redundancy, it is important to make sure that the genuine reason for termination is redundancy.
In
selecting who should be made redundant, employers should only look at the requirement of the jobs and also base their decisions on a fair assessment of the employees' performance. The termination should not be based on a person's gender, marital status, pregnancy, race, disability or family status. Accordingly, the selection criteria must not fall foul of Hong Kong anti-discriminatory laws. In addition, as mentioned above, there are a number of grounds under which an employer cannot terminate the employee's employment even by reason of redundancy. This should be noted. Very often in situations when you have no choice but to make a pregnant woman or somebody who is sick redundant, then it is best to negotiate an amicable separation with those employees rather than terminating them.
How, if at all, do you feel the law should be altered for the best outcome in dismissal and termination-related disputes?
As you can see, Hong Kong law is still quite employer-friendly. Even if employees are able to succeed in their claim for wrongful dismissal or
unreasonable dismissal, at the moment, they are only entitled to their statutory entitlements which are quite modest. They will also be entitled to their contractual entitlements.
It is therefore important to have a
water-light contract at the beginning and the parties should agree upfront as to the arrangement on termination. As Hong Kong is known to be a free economy and commercial friendly, I believe the current law is adequate.
Is there anything else you would like to add?
I can envisage that in the next 12 to 18 months or so, redundancy exercises will continue. I believe it is important to set out the expectations of both parties clearly at the beginning of an employment arrangement.
In particular, I see that people from
overseas may not have expected that Hong Kong employment law is less protective generally than other foreign laws. Therefore, employers should manage the expectations of the employees as early as possible in cases of dismissal. LM
contact:
cynthia cHUnG Partner
tel +852 2825 9297 Email: cynthia.chung@deacons.com.hk
deacons 5th Floor, alexandra House, 18 chater Road, central, Hong Kong tel +852 2825 9211 | Fax +852 2810 0431 | www.deacons.com.hk