Introduction

On 2 November 2015, the Labour Tribunal handed down judgment against the Equal Opportunities Commission (the “EOC”) for its refusal to pay its former officer a contract gratuity of HK$867,000, being the first case of EOC’s defeat at the Tribunal. The publicity of the EOC as well as of the dispute leading to the hearing had put the case under the spotlight, but the basic legal principles applied in the case by the Tribunal are equally noteworthy.

Dispute arising from the EOC’s Discrimination Law Review
The claimant is a former officer of the EOC, who was also the person in charge for the Discrimination Law Review (the “Review”) last year. The claimant is a Christian who is against homosexual marriage. During the public consultation of the Review, The claimant attended a forum at a church, in which he gave a speech asking the attendees to submit opposing opinions to those amendments to the equality laws proposed by the EOC in the Review which are in favour of sexual minorities.

After the claimant’s speech was disclosed to the public by the media, the EOC suspended the claimant’s role in the Review and conducted an internal investigation on the matter. Finding the claimant in breach of the internal code of conduct and damaging the organisation’s credibility, the EOC requested from him an apology for his speech, upon the refusal of which his contract gratuity were withheld. The claimant sought help from the Labour Department, mediation failed, and the case was eventually heard in the Labour Tribunal between July and August 2015.

Wordings of the employment contract determine
The EOC’s argument is that the contract gratuity has been rightly withheld because the claimant had committed a serious breach of the internal code of conduct and caused conflicts of interest; the payment of contract gratuity depends on the employee’s job performance, so the claimant’s bad performance has justified the withholding of the gratuity. However, this argument is rejected by the Labour Tribunal, in addition to its finding that the internal investigation against the claimant which led to the conclusion of the claimant’s breach of code of conduct was procedurally improper.

The Tribunal ruled that performance does not have any effect on whether the contract gratuity should have been paid, because the employment contract between the EOC and the claimant prescribed the fulfillment of the whole term of employment as the only condition for the payment of contract gratuity. Quality of work or level of performance was never mentioned in the contract with respect to contract gratuity. It was on this reason that the Tribunal found the EOC not entitled to withhold the contract gratuity, notwithstanding any allegation of the claimant’s breach of code of conduct.

Termination would be a more appropriate response for bad performance
The EOC has relied heavily on the allegation that the claimant had breached the internal code of conduct and put himself into conflicts of interest. One may wonder why the EOC had not terminated the employment of the claimant upon his serious misconduct but chosen to wait until the end of the employment contract to withhold the contract gratuity. This is actually what the Labour Tribunal had asked during the hearing.

The answer given by the EOC was, perhaps not quite surprisingly, that the claimant had had a long working relationship with the organisation. The reason may be understandable enough, but the Tribunal did not find it satisfactory. Instead, the Tribunal’s view is that the EOC should have fired the claimant if it really considered the misconduct serious; withholding contract gratuity is not the right way to respond.

Learn from the EOC’s lesson
Although the EOC has still been insisting on its rightfulness in its treatment of the claimant, and said that it may take further action with respect to the Labour Tribunal’s judgment, both employers and employees should take notice of a basic legal principle highlighted by the case: if you want to have a right, it is desirable to write it down in the contract to avoid future arguments or disputes. An employer cannot create a penalty or punishment on his own even if his employee commits misconduct or performs badly. Misconduct or bad performance may of course render the employee in breach of the employment contract, and entitles the employer to terminate the employment, but the employer risks becoming the wrongdoer if the way of response he takes is not stated in the contract.