Increasing number of cross-boarder employment

The rapid economic growth in the Mainland and the relocation of production base from Hong Kong into the Mainland have given rise to more cross-border employments.Nowadays, many Hong Kong employees have to travel to and/or station in the Mainland for their work.

The cases decided by the courts of Hong Kong as discussed below show that employers are under more onerous duty of care towards its employees working in the Mainland.However, if an employee committed a wrongful act in the Mainland, the employer’s vicarious liability would depend on whether the wrongful act has sufficiently close connection with his employment.Moreover, an employer may not be liable for the injuries or death of the employee in the Mainland if the relevant event did not occur in the course of his employment.

More onerous duty of care –
safe accommodation for employees

If an employer provides accommodation or quarters for his employees, the law imposes a duty of care on the employer to ensure that the accommodation he provides is a proper accommodation for the employees to live in.The basic requirement of an accommodation is to provide shelter from the weather and security for the employee’s safety.However, such duty of care will be more onerous if the employee is caused to work and reside out of Hong Kong, in particular, “in a place like mainland China which is renown for its level of criminal activities especially in small cities where the employee is unfamiliar with the local circumstances and has no knowledge of the level of public security there.” Such comments were made by the Judge of the Court of First Instance in the case, Li Hoi Shuen V Man Ming Engineering Trading Co. Ltd. [2006] 1 HKC 349.

Warehouse – a safe accommodation?

The Li Hoi Shuen case was a tragic case whereby the Deceased (an employee of the Defendant) was murdered by his subordinates who resided in the same warehouse with the Deceased in the Mainland.The Deceased was employed by the Defendant as an air-conditioning technician to reside and work in Jeiyan City in the Mainland to supervise some “out of province workers” regarding some air-conditioning projects.At the time of the murder, the Deceased lived in a warehouse leased by the Defendant (for storing of equipments) with his subordinates (i.e.two “out of province workers”).In this case, the Defendant’s obligation is the same as if he had provided accommodation or quarters to the employees.

The Court commented that “a foreigner makes a good and vulnerable target for criminal activity.On the other hand, the employer who is doing business in mainland China is more familiar with the local circumstances and has the resources to ensure his employee’s safety.The employer must see to it that his employee is reasonably safe in using the accommodation which he provides for the employee whom he causes to work in a place which the employee is not familiar with and where his personal safety is at risk.The duty of care which an employer has to discharge for his employee working in the Mainland is more onerous than that owed to his employee working in Hong Kong.”

Sharing of accommodation with subordinates –
a reasonable arrangement?

The Defendant connived at the accommodation arrangements (whereby there was no partitioning and security protection for the Deceased) though the Defendant knew that the Deceased was not satisfied with the work performance of the two out of province workers who resided with the Deceased.The Court took the view that “the risk of violence was a vey real one as the out of province workers came from poor and remote areas in the Mainland where people may have different ideas as to moral and social values.Their behaviour may be unpredictable, they might resort to violence while residing in the warehouse with the Deceased.Moreover, such out of province workers had no family tie in Jieyan City.Once they were out of the place of work, their whereabouts would be unknown.The risk of violence could be avoided by the employer by instructing the Deceased not to reside in the warehouse or prohibiting the two out of province workers from residing there with the Deceased or installing locks and partitions in that part of the warehouse occupied by the Deceased.The costs of those measures were minimal”.

As the employer had not taken any steps or given any guideline or warning as to the employee’s personal safety in sharing accommodation with the out of province workers, the employer was held to be in clear breach of its duty of care and is liable to pay compensation to the Plaintiff (the Deceased’s father).

Vicarious liability for acts
committed by the employees?

The two murderers in the Li Hoi Shuen case mentioned above are also the employees of the Defendant.Is the Defendant vicariously liable for their acts?

Close connection test

It is necessary to see whether the wrongful act is so closely connected with their employment that it would be fair and just to hold the employer vicariously liable.This is the so-called “close connection test”, a new test developed by the English case, Lister V Hesley Hall Ltd. [2002] 1 AC 215. It was approved by the Court of Final Appeal in the case, Ming An Insurance Co. (HK) Ltd. and Ritz-Carlton Ltd.[2002] 3 HKLRD 844.

The “close connection test” is applicable for considering all torts committed by an employee during an unauthorized course of conduct whether it was an intentional wrongdoing or merely arising from inadvertence.In determining whether there is close connection between the wrongful act and the employment, the Court will consider various factors such as the nature of the employment, duties of the employee at the time when the tort was committed, whether the employee was acting in the interests of the employer or solely for himself, the business activities of the employer and whether the risk which gave rise to the damage was created by those activities.When considering the scope of employment, the Court will take a broad approach.The Court will consider more factors such as how the business activities were actually carried out and how that exposed the public to the risk of tortuous harm caused by the employees.

In the Li Hoi Shuen case, the two out of province workers were off-duty and they were advancing their own interests (to rob the Deceased’s properties) and were taking revenge on the Deceased.They were not acting for the benefit of the employer nor under the employer’s express or implied authority.The only connection between the crime and their employment are that the motives of the attack were their grievance at work and the crime took place in the warehouse leased and used by the employer.Therefore, the Court held that there was no close connection between the wrongful act and the employer.As such, the employer was not vicariously liable.

When there will be a break
“in the course of employment”?

A cross-border employee did not remain continuously in the course of employment from the moment he crossed the boarder to the Mainland until the moment he returned to Hong Kong.

Extent of Employer’s control

Whether an employee is in the course of his employment depends on various factors e.g.whether the employee has the freedom to go where he pleases and do what he pleases, whether the employer is concerned with how the employee disported himself during the off duty hours or whether he was required to go and stay at a particular place for standby duty or on call.Basically, if the employee has more freedom in terms of the above, that period of time may not fall within “the course of his employment”.For instance, sleeping or resting does not fall within the course of employment unless the employee is required by the employer to sleep or rest at a particular place.

The Deceased in the Li Hoi Shuen case was murdered on a Sunday morning when he was not on duty (i.e. not in the course of his employment).

Activities are for the benefit of the employers

In Chan Ho Yuen v Multi Circuit Board (China) Limited [2010] HKCU 1927, a recent case relating to a claim under the Employees’ Compensation Ordinance, the District Court ruled that the employer is not liable to pay employees’ compensation to the applicants because the traffic accident which caused the death and injuries of the employees did not happen in the course of their employment.However, on 30^th September 2011, the Court of Appeal (“CA”) reversed the decision of the District Court.

The employees in that case attended an annual dinner held in the Defendant’s factory in Shenzhen.It was not strictly compulsory for the employees to attend the annual dinner but there was some pressure for them to do so in order to show loyalty to the Defendant.The purpose of the annual dinner was also for employee appreciation and moral boosting which was clearly of benefit to the Defendant.Up to that stage, the journey to and from the venue in Shenzhen should be treated as falling within the course their employment.

Employee’s “deviation” from
the employer’s transport arrangements

After the annual dinner, the employees decided not to take the transport provided by the employer to return to Hong Kong.They told the CEO of the employer that they were goingto stay behind and will leave with their colleague, Mr. Lee.The employer did not object to their proposal.The employees then went to a karaoke parlour for entertainment before travelling in a car driven by Mr. Lee to the boarder when the accident happened in Guang-Shen Highway.

Express or implied permission of the employer to
take alternative transport arrangements?

Mr. Lee had express permission from the employer to travel in his own car between his workplace in Mainland and the Customs Port at the boarder.Therefore, if Mr. Lee were driving back to the boarder, other employees may travel in his car in order to return to Hong Kong after the annual dinner.The employer had not made the transport provided by it compulsory or issued any directives prohibiting the taking of any other form of transport.Therefore, the CA concluded that the employees had the implied permission of the employer to travel from the hotel (where the annual dinner took place) back to the boarder by means of Mr. Lee’s car.

Whether detour to the karaoke parlour turned the whole
of the return journey out of the course of employment?

The employees spent about 2.5 hours in the karaoke parlour before embarking on the journey back to Hong Kong in Mr. Lee’s car.The CA ruled that the detour to the karaoke parlour did interrupt the journey back to Hong Kong on a temporary basis until the return journey was resumed.The resumed journey was on precisely the same route that Mr. Lee’s car would have taken if he had driven the employees straight from the hotel to the boarder.Therefore, the CA ruled that the resumed journey was undertaken in the course of the employment and compensation should be given to the employees.We have to wait and see if this case will be appealed to the Court of Final Appeal and if so, the final decision in respect of the matter.

In aother case in relation to claims under the Employees’ Compensation Ordinance, Hsu Shu Chiao v Lung Cheong Toys Limited [2002] HKC 479, the deceased was employed to work at Dongguan. The employer provided transportation for that employee on Monday morning to take him from Shenzhen Railway Station to Dongguan, and in the afternoon on Saturday to take him from Dongguan to Shenzhen to catch the train to Hong Kong. If that employee worked late and missed the employer's bus, he would arrange his own transport to Shenzhen and be reimbursed the cost by the employer. On the day in question, he worked overtime on a Saturday and hired a taxi to go from Dongguan to Shenzhen to meet his girlfriend, but was killed in a road accident in the suburbs of Shenzhen.

Thetrial Court held that the accident did not arise out of and in the course of the deceased's employment.The Court of Appeal reversed that decision and held that since Shenzhen was the place in the Mainland where the employee's course of employment began and ended, the deceased remained in the course of employment whilst en route to Shenzhen until he left Shenzhen for Hong Kong and it made no difference that the deceased had arranged to meet his girlfriend on the way because the route taken by the deceased did not deviate from the route normally taken by the transport provided by the employer. Therefore, whether any event happens during the course of the employee’s employment really depends on the specific work or transport arrangements between the employer and the employee.

A new social dimension

Notwithstanding the specific facts of the case, the Court in Chan Ho Yuen case took the view that in the future, the Court should take into account the new social dimension in cross-border employment cases in deciding what falls within the course of employment.For instance, the Court mentioned that employees may have to entertain their clients in karaoke parlour or even night-clubs to discuss business matters under the particular business culture in the Mainland.Such gatherings are practically for the benefit of their employers and the employees may have to attend such gathering without any choice.In such circumstances, for the protection of the employee, the Court should give a liberal interpretation as to what is incidental to the course of employment.If so, more situations will be regarded as falling within the course of employment.

Conclusion

In view of the above, the Court will take into account the vulnerability of Hong Kong employees working in the Mainland and the particular business culture in the Mainland.Therefore, employers should take extra steps to ensure sufficient protection of their employees in terms of their work environment, accommodation, business related social activities and journey to and from the Mainland.