Overview of major changes made by the Government on employment law

Major changes that have become effective in 2020 include:

• With effect from 19 June 2020, harassment in the workplace and racial discrimination by imputation and against “associates” (including family and relatives) were prohibited.
• With effect from 11 December 2020, maternity leave under the Employment Ordinance (Cap. 57) (“EO”) was increased from 10 to 14 weeks.
• On 24 July 2020, the Mandatory Provident Fund Schemes Ordinance (Cap. 485) was amended to empower the Mandatory Provident Fund Schemes Authority to establish a subsidiary to operate an electronic system to help cut administration fees of MPF schemes and save more costs for employees.

Employers’ duties and Government’s support during the COVID-19 pandemic

Statutory and common law duties

The COVID-19 pandemic has struck an unprecedented blow to Hong Kong’s public health and economy. Working from home and social distancing have become the new normal since March last year. Some reports have suggested that the pandemic will continue until Q3 or Q4 of 2021. Employers need to bear in mind they are under both a statutory duty and a common law duty to ensure their employees’ safety and health at work.

The Occupational Safety and Health Ordinance (Cap. 509) provides that employers are under a statutory duty to, in so far as reasonably practicable, ensure the safety and health at work of all their employees. This includes a duty to provide and maintain a work environment that is safe and without risks to their employees’ health.

Employers are also under a common law duty to act reasonably in all the circumstances in providing a safe place of work for all their employees.

To discharge their duties, employers should adopt, where appropriate and reasonably practicable, measures and arrangements specified in the guidelines and announcements made by the relevant government departments and authorities. Employers are encouraged to be flexible with work arrangement and social distancing. If an employee has contracted COVID-19 at work, it is not necessarily a breach of duty on the part of the employer but it depends on whether the employer has done what is reasonably practicable in discharging its statutory and common law duties.

Know more about Hong Kong employers’ duties in handling COVID-19 here.

Employment Support Scheme (“ESS”)

In May and June 2020, the Government launched a HK$137.5 billion Anti-epidemic Fund to alleviate the financial burdens of individuals and businesses. The ESS is a financial support provided to employers to retain employees who may otherwise be made redundant amid the COVID-19 pandemic. An important feature of the ESS was that employers were required to undertake that they would maintain the number of employees during the subsidy period and would spend all the government wage subsidies on paying wages to their employees.

To ensure that the subsidies were spent properly by the employers, if the Government considered that an employer engaged in conduct which directly or indirectly violated the objective of retaining employment under the ESS, or was contrary to public interest during the subsidy periods, the Government might reject the employer’s application or require the employer to return the subsidies received (in full or in part) within a specified period.

Know more about the first tranche of the ESS here and the second tranche of the ESS here.

Exclusive jurisdiction of the Labour Tribunal

The Labour Tribunal offers a quick, informal and inexpensive way of settling monetary disputes between employers and employees. However, in the recent case of Lee Yiu Hong v Well-in Hotel Supplies Company Limited 2020 HKCFI 2760, the Court of First Instance (“CFI”) reiterated that claims in tort, including mixed claims founded in both contract and tort, fall outside the exclusive jurisdiction of the Labour Tribunal.

Facts

The employee claimed against the employer for unpaid commission at the Labour Tribunal and obtained judgment. The employer sought leave from the CFI to appeal against the judgment on the ground that the Tribunal failed to discharge its statutory duty to investigate and to take into account relevant facts in issue raised by the employer, which included the employee’s breach of duties of fidelity and good faith.

Decision

The CFI held that all claims in tort are expressly excluded from the Labour Tribunal’s jurisdiction under the Labour Tribunal Ordinance (Cap.25). Since the employee’s breach of duties of fidelity and good faith were founded in both contract and tort,the Labour Tribunal did not have the jurisdiction to investigate. The CFI also held that the Labour Tribunal had no duty to transfer the claims to other court venues.

Takeaway points: Labour Tribunal has no jurisdiction to hear claims that are found in both contract and tort. If an employee commences Labour Tribunal proceedings and the employer has counterclaims that fall outside the Labour Tribunal’s jurisdiction, the employer may apply for the case to be transferred to or commence a separate action against the employee in the District Court or the CFI.

Know more about the case here.

Employers may not set off bonus against potential liability owed by employees

Bonuses may take many different forms, including contractual and discretionary bonuses. In Xu Yi Jun v GF Capital (Hong Kong) Ltd [2020] HKCA 663, the Court of Appeal (“CA”) unanimously held that an employer cannot set-off an employee’s guaranteed bonus by reason of the employee’s misconduct committed prior to the contractual cut-off date for entitlement against any potential liability owed by the employee.

Facts

The employment contract in issue provided that the employee would receive a bonus irrespective of her performance. The bonus would be payable in full on a specified date but could be forfeited if the employee had been found guilty of any gross misconduct before that date.

In May 2017, the employer found the employee guilty of gross misconduct. The employee resigned in June 2017 and the employer refused to pay the bonus to the employee. The employee brought proceedings against the employer for breach of the employment contract and section 32 of the EO for deducting the bonus from her wages.

Decision

The CA held that it was necessary for there to be a finding of gross misconduct before the due date for the bonus to be forfeited under the relevant clause. Otherwise, the employer could simply declare that there were allegations of gross misconduct and withheld payment for an indefinite period.

The CA also held that section 32 prohibits any deduction from “wages of his employee or from any other sum due to the employee”, including contractual bonuses. The CA allowed the employee’s appeal and entered final judgment against the employer.

Takeaway points: If an employer has a claim against an employee for negligence or misconduct but the amount has yet to be determined by the court, the employer should consider first paying any relevant sum to the employee, then instigate an independent claim against the employee for damages regarding such negligence or misconduct.

Know more about the case here.

“Live-in” requirement for foreign domestic helpers upheld by the CA

Under Hong Kong’s immigration and labour policy, the Director of Immigration would only grant employment visas to foreign domestic helpers (“FDHs”) if they undertake to reside at their employer’s residence (“Live-In Requirement”). The CA in Lubiano Nancy Almorin v Director of Immigration(unreported, CACV 112/2018, 21 September 2020) upheld the CFI’s decision to dismiss the application for judicial review challenging the constitutionality of the Live-in Requirement.

Decision

The Hong Kong Bill of Rights Ordinance (Cap. 383) (“BORO”) and the International Covenant on Economic, Social and Cultural Rights (“ICESCR”) provide for the right to safe and healthy working conditions, adequate rest and limitation on working hours as well as the right to the opportunity to gain a living by work which one freely chooses or accepts.

The CA held, among other things, that the Live-In Requirement fell within the scope of reservations provided for in the BORO and the ICESCR and therefore the applicant was precluded from relying on those rights to establish her case. The CA also held that the right to safe and healthy working conditions, adequate rest and limitation on working hours under ICESCR (“ICESCR 7 Right”) is not domesticated in Hong Kong and thus is not enforceable under domestic law.

Given the ruling by the CA, the status quo that FDHs have to stay at their employers’ residence under the controversial Live-In Requirement remains intact.

Know more about the case here.

Recent development in the UK on vicarious liability

Under the common law doctrine of vicarious liability, a person may be liable for the negligence or other torts committed by another person given that two requirements are satisfied: (1) the relationship between the two parties makes it proper for the law to make one pays for the fault of the other; and (2) there is a sufficient connection between the relationship and the fault by the wrongdoer.

Two recent cases of the UK Supreme Court considered each of the two requirements for establishing vicarious liability regarding an employer.

Barclays Bank plc v Various Claimants [2020] UKSC 13

In Barclays Bank plc v Various Claimants, the UK Supreme Court considered the circumstances in which an employer may be held liable for the wrongdoings of someone who is not an employee.

Facts

As part of its recruitment process, the employer, Barclays Bank, required job applicants to pass a medical examination as a prerequisite for job offers and arranged medical appointments with one Dr Bates, who allegedly had sexually assaulted the claimants during examinations. The claimants brought a group action to seek damages from the employer on the ground of vicarious liability.

Decision

The UK Supreme Court held that an employer can be held vicariously liable for the acts of someone who is not its employee, provided that the relationship between them is sufficiently akin or analogous to employment to make it fair, just and reasonable to impose vicarious liability. The question is whether the tortfeasor is carrying on business on his own account, or whether he is in a relationship that is akin to employment with the person who had assigned him the relevant work.

On the facts of the case, the UK Supreme Court found that Dr Bates was conducting business on his own account as a medical practitioner.

Takeaway points: Employers should bear in mind that they can be vicariously liable for the wrongdoing of non-employees engaged by them if their relationships with the non-employees are sufficiently close to employment to make it fair, just and reasonable for the court to impose vicarious liability.

Know more about the case here.

WM Morrison Supermarkets plc v Various Claimants [2020] UKSC 12

In the case of WM Morrison Supermarkets plc v Various Claimants, the UK Supreme Court considered the second element for establishing vicarious liability, i.e. whether the wrongdoing was closely connected with the employment relationship in light of the tortfeasor’s motive.

Facts

The claimants, a group of former and existing employees, claimed against the employer for the wrongdoing of another employee, Andrew Skelton.

After being subject to disciplinary proceedings and having received a verbal warning from the employer, Skelton, who was assigned with the task of collating and transmitting payroll data to the employer’s auditor for annual external audit, uploaded highly confidential and sensitive payroll data of other employees to a publicly accessible file-sharing website as an act of retaliation against the employer. The claimants brought proceedings against the employer on the ground of vicarious liability.

Decision

The UK Supreme Court overturned the lower courts’ decision that the employer was liable for Skelton’s wrongdoing. The question was whether Skelton’s disclosure of the data of other employees was so closely connected with acts he was authorised to do that his wrongful disclosure might fairly and properly be regarded as done by him while acting in the ordinary course of his employment.

On the facts of the case, the UK Supreme Court held that no such close connection existed mainly because Skelton was pursuing a personal revenge on the employer instead of acting on the employer’s business when he committed the wrongdoing.The UK Supreme Court has restated that the employee’s motive matters.

Takeaway points: Although employers can be vicariously liable for negligence or other torts committed by their employees, the employee’s motive is highly relevant. The mere fact that an employment gave an employee the opportunity to commit a wrongful act will not be in itself be sufficient to warrant vicarious liability on the employer. The UK position is that the courts should consider whether the employee was acting on the employer’s business or for purely personal reasons. If the employee’s wrongful act cannot be fairly and properly be regarded as done by the employee while acting in the ordinary course of employment, then the employer is not vicariously liable for the employee’s wrongful act against a third party. English precedents are persuasive and Hong Kong courts have very often sought guidance from them even though they are not binding. It is therefore likely that the decision in Morrison Supermarkets will be adopted by Hong Kong courts.

Know more about the case here.

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Important: The law and procedure on this subject are very specialised and complicated. This article is just a very general outline for reference and cannot be relied upon as legal advice in any individual case. If any advice or assistance is needed, please contact our solicitors.