Introduction

In January 2021, the Government launched the Greater Bay Area Youth Employment Scheme (“Scheme”) to create employment opportunities for young people and help them pursue careers in Hong Kong and the Mainland cities of the Greater Bay Area (“GBA”). GBA, also known as the Guangdong-Hong Kong-Macao Greater Bay Area, includes Hong Kong, Macao and nine municipalities of Guangzhou, Shenzhen, Zhuhai, Foshan, Huizhou, Dongguan, Zhongshan, Jiangmen and Zhaoqing of the Guangdong Province (“GBA Mainland cities”). The Government had recently announced that as of the end of April 2021, over 320 firms have created around 2,400 job openings under the Scheme in which around 1,300 posts were related to Innovation and Technology (“I&T”). These figures are about 20% higher than the Government’s original projection when it first launched the Scheme. With the Scheme running at full throttle, what are the potential employment issues that employers and employees participating in the Scheme may face?

The Scheme

Under the Scheme, companies with operations in Hong Kong and GBA Mainland cities are provided with incentives to offer job vacancies to eligible local Hong Kong graduates. For up to 18 months or until the first quarter of 2023, whichever is earlier, the Government will grant the participating companies a monthly allowance of HK$10,000 per graduate being employed under the Scheme.

For I&T posts, participating companies must station the graduates to work and receive training in both Hong Kong and GBA Mainland cities, with each location taking up about 6 to 12 months. For general posts, participating companies must station graduates to work in GBA Mainland cities.

The graduates employed must be Hong Kong residents and holding a bachelor’s degree or above issued from 2019 to 2021. The graduates must start employment on or before 31 August 2021 and be paid a monthly salary of no less than HK$18,000. The participating companies and graduates are required to enter into written employment contracts that set out all the employment terms, stipulating that the contracts should be under the protection of the Laws of Hong Kong.

Employment issues

Resolving disputes

Generally speaking, the Labour Tribunal has exclusive jurisdiction in respect of a claim for a sum of money that arises from the breach of a term of the employment contract. The Labour Tribunal offers a quick, informal and inexpensive way of settling monetary disputes between employers and employees, where no legal representation is allowed and the parties are required to conduct the case themselves. However, similar to disputes concerning cross-border employment contracts (i.e. the law of the employment contract differs from the law of the place in which the employee predominantly performs work), there is a possibility that the Labour Tribunal may not have jurisdiction to hear a case concerning disputes over an employment contract notwithstanding the fact that it is governed by Hong Kong law.

Section 7 of the Labour Tribunal Ordinance (Cap 25) (“LTO”) provides that:

“(1)  The Tribunal shall have jurisdiction to inquire into, hear and determine the claims specified in the Schedule.”

Schedule of the LTO provides that:

“1.    A claim for a sum of money which arises from:

(a)        the breach of a term, whether express or implied or… of a contract of employment, whether for performance in Hong Kong or under an overseas contract as defined in the Contracts for Employment Outside Hong Kong Ordinance (Cap 78) …”.

In Matheson PFC Ltd v Jansen [1994] 2 HKC 250, the Court of Appeal held that the jurisdiction of the Labour Tribunal is limited to the two types of specified contracts of employment, namely (1) a contract to be performed in Hong Kong or (2) an overseas contract under Contracts for Employment Outside Hong Kong Ordinance (Cap 78) (“CEOHKO”).

Employment contracts under the Scheme may not fit under the two types of contracts specified in Matheson. An employee under the Scheme may serve the whole or substantial part of his employment in one of the GBA Mainland cities.  In such case, the Tribunal may not consider his contract of employment as being “performed” in Hong Kong. CEOHKO only applies to contracts of employment entered into in Hong Kong whereby the employee is to provide service for another person who is not in Hong Kong and not carrying on a business in Hong Kong; under the Scheme, the employer must be a Hong Kong company. 

In William Barry Preen v Industries Polytex Ltd [1996] HKEC 1649, the Court of First Instance held that the Labour Tribunal may retain jurisdiction over disputes of a contract of employment even if the performance of the contract was to take place partly outside Hong Kong if the employers and employees remained substantially connected to Hong Kong. Relevant considerations on whether employers and employees remained substantially connected to Hong Kong includes many factors such as the following:

1. time spent overseas during the employment;
2. whether the employer is a Hong Kong company and whether the employee is a Hong Kong resident;
   
3. the place where the employment contract was executed; and
   
4. mode of payment. 

Under the Scheme, all employers are Hong Kong companies and all employees are Hong Kong residents. Depending on whether it is a general post or an I&T post, the time spent by an employee outside Hong Kong varies. Graduates being employed for I&T posts will work for at least 6 months or more in Hong Kong. Thus, graduates employed for I&T posts who entered into their employment contracts in Hong Kong and being paid in Hong Kong will likely be considered as having a substantial connection with Hong Kong.

Duty of care

In general, under common law, the employer owes employee a non-delegable duty of care. This duty applies regardless of whether an employee is working within or outside Hong Kong’s jurisdiction as long as the employee is engaging in activities that are in the course of the employment.

Employees compensation

Section 30B of the Employees’ Compensation Ordinance (Cap 282) (“ECO”) provides that:

“(2)  This Ordinance also applies where personal injury by accident arising out of and in the course of employment is caused to an employee outside Hong Kong where the employee’s contract of employment is entered into in Hong Kong with an employer who is a person carrying on business in Hong Kong.” (emphasis added)

According to section 2(1) of the ECO, “employee” is defined as follows:

“any person who has … entered into or works under a contract of service … with an employer in any employment, whether by way of manual labour, clerical work, or otherwise, and whether the contract is expressed or implied, is oral or in writing.”

In other words, if, during the course of his employment, an employee has an accident in one of the GBA Mainland cities, the participating company still owes a duty of care towards that employee and could be held liable in case of accidents arising out of and in the course of the employment. The participating company should monitor and ensure that the work environment provided to the graduates are safe and free of hazards to avoid any unexpected legal liabilities. Generally speaking, subject to the actual circumstances and job natures, 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. Employers have to take extra steps to ensure sufficient protection of their employees in terms of their work environment, accommodation and journey to and from Mainland China, which may vary for each particular employee. 

Takeaways

While the Scheme may assist participating companies in sourcing talents for their Mainland operations, companies should also be mindful of the underlying legal obligations and duties continued to be owed by them towards the graduates before joining the Scheme. Even though graduates are not performing their tasks within the jurisdiction of Hong Kong, their contracts are nevertheless under the protection of Hong Kong laws. Participating companies should therefore vigilantly monitor their Mainland operation to guard against any unwanted legal repercussions.