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Employment (Amendment) Bill 2016

The Employment (Amendment) Bill 2016 (“the Bill”) was gazetted on 12 February 2016 and has been presented to the Legislative Council on 2 March 2016, with a view to amending the current Employment Ordinance (Cap.57) (“the Ordinance”).

The gist of the Bill is to remove the employer’s agreement as the pre-requisite for ordering the reinstatement or re-engagement of an employee who has been unreasonably and unlawfully dismissed. As mentioned in the Legislative Council Brief, the aim of the Bill is to enhance employment protection to those vulnerable employees, including those who are pregnant, taking sick leave or injured at work, and to prevent the potential discrimination against them.

A.       Making order for reinstatement or re-engagement without employer’s agreement

The current position under the Ordinance is that the Labour Tribunal may make an order for reinstatement or re-engagement of the employee provided that there is a mutual agreement between the employer and the employee. The Bill proposes an amendment to s.32N of the Ordinance, to empower the Labour Tribunal to make

such an order in respect of an employee unreasonably and unlawfully dismissed without the need to secure the employer’s agreement if the making of such an order is reasonably practicable.

This applies to the situations where the following 2 conditions are fulfilled:-

  1. the employee is dismissed without a valid reason as specified under the Ordinance. Valid reasons include the conduct of the employee, his/her capability/qualification for performing the job, redundancy or other genuine operational requirements of the business, compliance with legal requirements, or other reason of substance; and
  2. the dismissal is unlawful. Such unlawful dismissals include dismissal during pregnancy and maternity leave, during paid sick leave, after work-related injury and before determination/settlement and/or payment of compensation under the Employees’ Compensation Ordinance (Cap. 282) or by reason of the employee exercising trade union rights or giving evidence for the enforcement of relevant labour legislation.

B.      Consequences of failure to reinstate or re-engage

Protection to the employees is further enhanced by imposing on the employer a liability to pay to the employee a further sum that is the lesser of $50,000 or 3 times the employee’s average monthly wages, if the employer fails to reinstate or re-engage the employee. This payment is in addition to the terminal payments and compensation that would have been awarded under s.32O and s.32P of the Ordinance.

An employer who wilfully and without reasonable excuse fails to pay this additional payment commits a criminal offence. However, the criminal liability is imposed based on the failure to pay the additional payment, rather than the failure to comply with the order.

C.       Alternative compliance by successor or associated company of the employer

The Bill also seeks to clarify that, if the Labour Tribunal makes an order for re-engagement by the employer, the employee can apply to vary the order such that the engagement of the employee by a successor or associated company of the original employer is to be treated as re-engagement by the original employer.

Such application could only be made by the employee and there must be a written agreement among the original employer, the employee and the successor or associated company. The following terms have to be specified in the written agreement:-

  1. the nature of the employment;
  2. the remuneration of the employment;
  3. the rights and privileges;
  4. a term to the effect that the employee’s period of employment with the original employer is to be counted as a period of employment with the successor or associated company; and
  5. a term to the effect that the continuity of the employment is not broken by the change of employer to the successor or associated company.

Further, the terms under the new agreement must be comparable to the terms on which the original employer is to re-engage the employee.

D.            Implications on the employers

Although the Bill seeks to strengthen the protection for employees, it also strikes a balance between the right of the employees and the interest of the employers.

First of all, according to the Explanatory Memorandum of the Bill, the removal of an employer’s agreement as the pre-requisite would only apply in situations mentioned under s.32A(1)(c), i.e. those circumstances mentioned in Part A above. However, the employer’s agreement is still needed for ordering reinstatement or re-engagement in circumstances mentioned in s.32A(1)(a) or s.32A(1)(b), i.e. if the employee is dismissed or its contract of employment is varied because the employer intends to extinguish or reduce any right, benefit or protection conferred or to be conferred upon the employee by the Ordinance. Therefore, the Bill is not a blanket removal of the employer’s agreement in all circumstances.

Secondly, even if it is a situation under s.32A(1)(c), the employer still has an opportunity to present their case to the Labour Tribunal. The Labour Tribunal must take into account various circumstances of the case. The relevant considerations include the circumstances of the employee, circumstances of the employer, circumstances of the dismissal, the difficulty the employer might face, the relationship between the employer and employee and between the employee and other persons in relation to the employment. The Labour Tribunal would only make such order as is reasonably practicable.

Thirdly, as mentioned above, the Bill provides an avenue for the employer to discharge its duty under the order through its successor or associated company. This gives more flexibility to the employer in complying with the order.

In addition, although as mentioned in Part B, an employer who fails to comply with the reinstatement or re-engagement order will be subject to a further monetary punishment, the employer may apply for relief from paying the further sum if it is no longer reasonably practicable for the employer to reinstate or re-engage the employee due to change of circumstances or reasons attributable to the employees. This conduces to strike a balance between the interests of the employees as against the interest of the employers.

E.             Conclusion

Regardless of any amendments, it should have been the duty of every employer to comply with the Ordinance and refrain from dismissing any employee without a valid reason and in violation of the law. The proposed amendments reinforce the current protection and increase the penalty for non-compliance. Employers shall continue to be alert not to subject itself to any unreasonable or unlawful dismissal allegations. Should an employer be approached by the Labour Tribunal in respect of an order for reinstatement or re-engagement, the employer may consider exercising its right to present its case to the Labour Tribunal. In particular, the employer may highlight the special circumstances in the case which makes such an order not reasonably practicable.

However, the significance of such an amendment remains to be seen, given that the number of cases of unreasonable and unlawful dismissal of the employees seeking reinstatement or re-engagement has been very small. The deterrent effect brought by the amendment is also doubted, given that the failure to comply with the reinstatement or re-engagement order would only result in a further payment which is 3 times of the employee’s monthly salary and subject to a maximum of $50,000. This may not offer adequate protection to employees, in particular the professional and high-salaried employees, against unreasonable and unlawful dismissal.

Key Contacts

Cynthia Chung

Partner | Corporate Commercial | Employment and Pensions

Email or call +852 2825 9297

Related Services and Sectors:

Employment and Pensions

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