Previously in “Can an Employer Consider an Employee’s Work Performance in Deciding Whether to Pay Contract-end Gratuity to the Employee?”, the application of a contractual term in relation to whether gratuity payment can be subject to the employer’s opinion of an employee’s “satisfactory completion” of an employment contract is discussed in light of the case in Chok Kin Ming v Equal Opportunities Commission HCLA 42/2015. Following the decision of the Court of First Instance, the case was remitted back to the Labour Tribunal (“Tribunal”) for determination. At the second trial, the Tribunal ruled in favour of the Equal Opportunity Commission (“EOC”), the employer. Mr Chok Kin Ming (“Claimant”), the employee concerned, appealed against the Tribunal’s decision to the CFI.
To recap, this case has arisen from a dispute concerning what the Claimant said and did at a forum organised by a church on 16 August 2014 during his employment with the EOC.
The Claimant began his employment with the EOC in 1996. The last renewal of his employment contract was to end on 31 October 2014. The contract incorporated terms contained in a “Memorandum on Conditions of Service in the Equal Opportunity Commission Office” (“Conditions of Service”).
The letter offering the Claimant’s appointment stated, among other things:
“Subject to the terms as set out in the attached [Conditions of Service], you will receive a gratuity for the period of service upon satisfactory completion of the agreement in the opinion of the EOC….” (emphasis added)
Clause 13 of the Conditions of Service governed the payment of the contract-end gratuity. Clause 13.1 stated, among other things:
“On satisfactory completion of the agreement in the opinion of the employer… the employee will receive a gratuity in respect of the actual period of service, including periods of vacation leave earned and taken….” (emphasis added)
Towards the end of the Claimant’s employment, the EOC was conducting a 3-month public consultation on discrimination law review (“DLR”) to be concluded on 7 October 2014. The Claimant was one of the key members of the EOC’s DLR taskforce, and was responsible for explaining DLR’s objectives and proposals to the public in four consultation forums scheduled in August 2014. He attended the first public consultation meeting on 9 August 2014 as the EOC’s representative and speaker and, following the forum in issue in the morning of 16 August 2014, he attended the second public consultation meeting in the afternoon on the same day.
Prior to the commencement of the public consultation forums, the EOC informed the Claimant on 22 July 2014 of its decision not to renew the Claimant’s employment contract upon its expiry in October 2014.
On 16 August 2014, the Claimant attended and gave a talk at a forum organized by Tsung Tsin Mission of Hong Kong (香港崇真會) (“Church”) to introduce and explain the DLR consultation (“Forum”). The Forum was open to members of the branches of the Church and the schools run by it. Members of the media had not been invited. At the Forum, the Claimant, among other things, suggested the participants of the Forum to give particular responses to certain questions in the consultation to the effect that was to oppose same-sex marriage. The Claimant also criticized the actions of the EOC on sexual orientation discrimination as pointless and the way the EOC had conducted the DLR.
After a newspaper reported what the Claimant said at the Forum, the Claimant and the EOC came under a great deal of criticism in the media. The EOC discharged the Claimant from his DLR duties immediately and conducted an internal investigation on the matter. At a disciplinary action, the Chairperson of the EOC (“EOC’s Chairperson”) issued a formal warning notice to the Claimant, which set out the details of the misconduct found including, among other things, the Claimant had breached the EOC’s internal code of conduct in that he placed himself in a position of conflict by expressing his personal views rather than remaining impartial in the consultation process. The Claimant did not agree with the outcome of the internal investigation but did not lodge any appeal. Upon the termination of the Claimant’s employment contract, the EOC decided not to grant the contract-end gratuity under clause 13.1 of the Conditions of Service based on unsatisfactory completion of his employment contract.
The Tribunal and the CFI’s initial decision
The Claimant commenced proceedings against the EOC in the Tribunal, which found in favour of the Claimant. The Tribunal’s main reason was that as a matter of construction the phrase “satisfactory completion” in clause 13 of the Conditions of Service refers to temporal completion of the contract, and the EOC could not take into account of the Claimant’s work performance in deciding whether to pay him gratuity pursuant to clause 13. The EOC appealed.
At the appeal, the CFI overturned the Tribunal’s decision based on several reasons, including: (i) the phrase “satisfactory completion of the agreement in the opinion of the employer” in clause 13 of the Conditions of Service plainly includes the manner in which the agreement has been completed by the employee, and introduces an element of discretion of judgment on the part of the employer; (ii) the meaning of “satisfactory completion” should not be confined to simply sitting out the appointment / employment, but implied discharge by performance of various obligations required based on the Claimant’s position; and (iii) it was inappropriate for the Tribunal to conclude that the EOC’s decision not to pay gratuity to the Claimant must be perverse or irrational because of the deficiencies in the EOC’s investigation without testing the evidence of the EOC’s Chairperson.
The Tribunal’s second decision
The case was remitted to the Tribunal. The Tribunal considered the two core issues, namely: (i) whether the attendance by the Claimant at the Forum without prior report or application to the EOC and the content of his talk at the Forum conflict with the proper and loyal discharge of his duty at work for the EOC (“Conflict Issue”); and (ii) whether the EOC’s conclusion that the Claimant has failed to satisfactorily complete his employment agreement, and thus the decision not to pay his contract-end gratuity is irrational or perverse (“Gratuity Decision Issue”).
On the Conflict Issue, it was found that the evidence shows what the Claimant did clearly conflicted with his duty of loyal discharge of his duties at work for the EOC and the Code of Conduct. On the Gratuity Decision Issue, it was accepted that the EOC considered various factors before forming the opinion that the Claimant has failed to satisfactorily complete his employment agreement, including the undisputed fact that it was the Claimant’s voice at the Forum and the content of his talk at the Forum, and the Claimant’s attitude during the EOC’s investigation. The Claimant’s claim was therefore dismissed.
CFI’s subsequent decision
The Claimant appealed to the CFI on several major grounds: (i) the Tribunal failed to take into account all the errors and deficiencies made during the EOC’s investigation, which if done so, should have rendered the gratuity decision irrational and/or perverse; (ii) the Tribunal erred in accepting the EOC’s Chairperson’s evidence as it failed to conduct any or proper assessment on its relevance, weight and credibility; (iii) the Conflict Issue should not have been accepted as a core issue, as it would be tantamount to the Tribunal conducting its own investigation on whether the Claimant’s conduct amounted to breach of duty or misconduct.
On the first and second questions, the CFI noted that the EOC’s investigation and disciplinary process per se did not lead to termination of the employment or the employment benefits of the Claimant. It was the subsequent exercise by the EOC of its contractual discretion upon consideration of various factors, including the investigation and its result that led to its decision. It was held that the Claimant was aware of the investigation results and was advised that the same would be taken into consideration by the EOC in determining his satisfactory completion of his employment contract, which might have repercussions on his gratuity. The Claimant could have lodged an appeal against the now alleged “insecure investigation results” of the EOC but he did not do so.
The CFI held that the Claimant’s criticisms of the Tribunal’s decision were unfounded as the Tribunal’s consideration and conclusion was based upon and within what the evidence permits. There was no dispute as to the speaker and content of the Forum, and it cannot be said that any reasonable tribunal would have interpreted the content of the recording of the Forum materially differently from that of the EOC. Moreover, the Tribunal was entitled to take into account the Claimant’s attitude and approach during the EOC’s investigation in deciding whether the Claimant had satisfactorily completed his employment.
On the third question, the CFI found that Conflict Issue and the Gratuity Decision Issue are intertwined. The Conflict Issue was featured as one of the factors taken into account by the EOC when forming the opinion that the Claimant failed to satisfactorily complete his employment contract. The basis on which the conflict was said to exist must be examined to answer whether the opinion and conclusion of the EOC was formed irrationally or perversely. The Tribunal’s decision based in context of the circumstances of the case was upheld. The Claimant’s appeal was dismissed.
The CFI’s ruling in favour of the EOC clarifies that, depending on the construction of the terms of the employment contract, an employer is entitled to take into account an employee’s work performance and potentially actions taken in the employee’s personal capacity outside the course of work if it conflicts with the proper and loyal discharge of his duty at work in determining whether to grant contract-end gratuity to the employee.
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