Introduction

Summary dismissal is a serious disciplinary action. If you are being summarily dismissed by your employer, what are your rights and entitlements under the law? Can your employer make deductions on your wages on the ground that you have breached the employee handbook or failed to discharge your duties properly at work?

Statutory entitlements after summary dismissal

Even when you are being summarily dismissed by the employer, that does not mean your employer can force you to leave immediately without payment of wages. Under the Employment Ordinance (the “Ordinance”), you are still entitled to be paid for certain accrued, but unused entitlements. These include any accrued wages for your work performed up to the date of termination, end of year payment, annual leave pay, holiday pay, etc. However, by reason of the summary dismissal, you would not be entitled to payment in lieu of notice, pro rata un-accrued annual leave pay, severance payment; and long service payment.

Apart from the above statutory entitlements, there could be contractual entitlements payable upon the termination of employment, pursuant to the contractual terms under your employment letter and employee handbook.

Duty of the employer to pay after termination of employment

After the dismissal of employment, it is the duty of the employer to pay all the applicable termination payments to the dismissed employee as soon as practicable after the date of termination. If your employer wilfully or without reasonable excuse fails to pay termination payments within seven days after the termination, he is liable to prosecution under the Ordinance. Even if the employer is of the opinion that you have performed badly and therefore caused loss to him or his business, the employer still bears the responsibility under the Ordinance to pay the termination payment in a timely manner.

Permitted categories of deduction from an employee’s wages

What if your employer claims that you have breached the employee handbook and thereby deducts your wages in order to “compensate” his loss, is that permissible under the law?  In general, the employer is not allowed to make deductions against your wages. However, there could be circumstances where deduction is permissible under the Ordinance. The most common situations are, for example, employee’s absence from work, employee causing damage or loss of the employer’s goods, and deductions of advances or over-payment of wages made by the employer. Hence, whether or not the set-off on wages is permissible under the law depends on the reasons of deduction, and your employer is not allowed to set-off or to deduct any sum against your wages, unless the intended deduction falls within the scope of permitted categories under the Ordinance. In particular, the employer is not, as of right, to set off your wages merely on the basis that you have performed badly at work.

Offence of unlawful deduction

If your employer made wrongful deductions from your wages, the employer has committed an offence and could be liable to a fine and imprisonment under the Ordinance. You may bring a claim in the Labour Tribunal on the basis that your wage has been wrongfully deducted. The court would have the power to order the employer to repay to you the amount of the unlawful deduction.

Conclusion

While the employer may have the right to summarily dismiss an employer for gross misconduct, it is clear that an employee’s entitlements to their termination payments under the Ordinance cannot be neglected, or side-stepped. However, the rights of an employee could be jeopardized if one does not lodge his wage claims promptly. It is noteworthy that the amount of entitlements is decided on a case-by-case basis, and employees are strongly advised to take all necessary actions, including consulting the Labour Department and seeking competent legal advice, as soon as practicable if the employer fails to pay wages and entitlements after termination of employment.