Employers must think twice before summarily dismissing an employee

If an employer wants to dismiss an employee without notice or paying wages in lieu of notice, there needs to be a good cause. In the Court of First Instance case Grant David Vincent Williams v Jefferies Hong Kong Limited [HCA 320/2011], the Defendant paid a dear price for summarily dismissing the Plaintiff without valid grounds.

Facts
The Defendant is a Hong Kong subsidiary of a New York-based international investment banking firm. The Plaintiff joined the Defendant in August 2010 as Head of Equity Trading Asia with a title of Managing Director. The Plaintiff suggested issuing the Daily Newsletter under the Defendant's name as a marketing tool. The Defendant agreed and set approval procedures for the publication of the Daily Newsletter. Under the approval procedures, the Plaintiff was required to send the daily issue to his London-based supervisor for approval before the newsletter can be sent out to its subscribers.

On 7 December 2010, the Plaintiff sent an email to a personal assistant in New York and to the London-based supervisor enclosing the draft newsletter, requesting the personal assistant to send out the Daily Newsletter when it had been approved. However, the newsletter was mistakenly published without the knowledge of the Plaintiff before approval came through. The personal assistant acknowledged fault of it.

In less than 24 hours of the publication, the Plaintiff was summarily dismissed for gross misconduct. The Plaintiff claimed against the Defendant for wrongful dismissal and for breach of the implied term of trust and confidence.

The Court of Appeal's ruling

The newsletter in question referred to a YouTube video clip depicting Hitler, with subtitles that mocked the CEO of JPMorgan. The judge ruled that the Plaintiff did not create the video and referring to it in the newsletter is not tantamount to promoting it. The mistaken publication was only a result of human error or a defect in the approval system, or a combination of both, but not the fault of the Plaintiff. The Plaintiff was also offered no reasons for the dismissal and no opportunity of discussion when he was fired. Accordingly, the judge concluded that the dismissal was wrongful and unfair.

The judge also concluded that the Defendant breached the implied duty of trust and confidence it owed the Plaintiff for the way it handled the dismissal and its attempt to distance itself from the Plaintiff. Shortly after the publication, the Defendant sent an explanatory email to the subscribers stating that the Defendant had inadvertently distributed "Grant Williams' 7 December 2010 edition of [the newsletter]". This was seen by the judge as an effort to shift the overall responsibility of the publication onto the Plaintiff by denying the newsletter as a corporate publication.

Decision on costs

The Plaintiff sought costs on an indemnity basis, which is higher than the standard basis (i.e. party and party basis). In this case, when deciding whether an unusual order for indemnity costs should be made, the judge took into account the conduct of the Defendant such as for: (1) dismissing the Plaintiff on the misconception that the Plaintiff was the author of the subtitles to the video, (2) shirking accountability onto the Plaintiff when the publication was apparently not his fault, (3) making no constructive efforts to settle the action, and (4) pressing for security for costs from the Plaintiff in order to overawe him. In the end, the Plaintiff was awarded over HK$15.8 million in damages covering his loss of income and bonuses plus costs to be paid to him on an indemnity basis.

This case serves as an important reminder to employers who wish to summarily dismiss an employee of the need to ascertain whether there is any misconduct on the part of the employee and even if there is, whether the misconduct is so serious that a summary dismissal is warranted. Dismissing an employee summarily without supporting grounds can be costly to employers.

Key Contacts

Elsie Chan

Partner | Employment and Pensions

Email or call +852 2825 9604