Introduction

The Employment (Amendment) Ordinance (the “EAO”) which added new provisions (Section 43N to Section 43S) to the Employment Ordinance (“EO”) came into effect on 29 October 2010.  The newly added provisions created an offence relating to an employer’s failure to pay any “specified entitlement” awarded by the Labour Tribunal (“LT”) or Minor Employment Claims Adjudication Board (“MB”) within the prescribed time.  This article will highlight the importance of the relevant new provisions of the EO.

Specified Entitlement

“Specified entitlement” is defined to include wages and other statutory entitlements which an employee is entitled to under the EO, e.g. end of year payment, maternity leave pay, severance payment, long service payment, sickness allowance, holiday pay, annual leave pay, payment for rest days as well as terminal payments and compensation for unreasonable and unlawful termination awarded under the EO.

New Offence Under the New Section 43P of the EO

The new Section 43P of the EO provides that it is an offence for an employer to willfully and without reasonable excuse fail to pay any part of an award/order (comprised of any specified entitlement) of the LT, MB or a settlement approved by the LT or MB within 14 days of the award or the date specified in the award. 

If a sum under the award is payable by installments, the offence applies to the default on any installment or part of an installment. 

An employer who has committed the offence under Section 43P of the EO is liable on conviction to a fine of HK$350,000 and imprisonment for 3 years.

Criminal Liability of Directors of a Body Corporate and Partners of a Firm

Pursuant to the new Section 43Q of the EO, where an offence under Section 43P of the EO is committed by an employer which is a body corporate, if it is proved that the offence is committed with the consent or connivance of, or is attributable to any neglect of any director, manager, secretary or other similar officer, such director, manager, secretary or similar officer commits the like offence under Section 43P of the EO.  The penalties are a fine of HK$350,000 and imprisonment of 3 years. 

Where an offence under Section 43P of the EO is committed by a partner in a firm and is proved to have been committed with the consent or connivance of, or is attributable to any neglect of other partner in the firm or other person concerned in the management of the firm, that other partner or other person concerned in the management of the firm commits the like offence under Section 43P of the EO.  The penalties are a fine of HK$350,000 and imprisonment for 3 years.

Rebuttable Presumption of the Directors’ / Partners’ Consent, Connivance, Neglect

An offence under Section 43P of the EO committed by a body corporate is presumed to have been committed with the consent or connivance of, or to be attributable to the neglect of any of its director, manager, secretary or other similar officer if it is proved that, at the time the offence was committed, such director, manager, secretary or other similar officer was concerned in the management of the body corporate or he/she knew or ought to have known that an award had been made against the body corporate by the LT or MB.

A similar presumption applies in the context of a firm.  An offence under Section 43P of the EO committed by a partner in a firm is presumed to have been committed with the consent or connivance of, or to be attributable to the neglect of any other partner in the firm if it is proved that, at the time of the offence was committed, the other partner was concerned in the management of the firm or he/she knew or ought to have known that an award had been made against the firm by the LT or MB.

The presumption of the directors’, managers’, secretaries’ or other similar officers’ or partners’ consent, connivance and neglect would only be rebutted if the following factors are satisfied:

(i)      there is sufficient evidence to raise an issue that the offence was committed without their consent or connivance and was not attributable to their neglect; and

(ii)     the contrary is not proved by the prosecution beyond reasonable doubt.

In fact, it is not easy to satisfy the above criteria if the relevant person is responsible for the management of the body corporate or the firm.

Conclusion

The EO as amended by the EAO imposes greater obligation on the employer, its director, manager, secretary or similar officer or the partners of a firm to ensure that payment ordered by or settlement approved by the LT or MB are made within the prescribed time (i.e. within 14 days of the award or the date as specified in the award).  Failure to observe the new provisions of the EO may give rise to serious implications i.e. a fine of HK$350,000 and imprisonment of 3 years for the corporate, the relevant director, manager, secretary or similar officer or the partners of a firm (as the case may be).  Therefore, it is advisable to arrange payment promptly soon after the award was made or settlement approved by the LT or MB.