Year in Review: Employment Law 2020

In this Review, we provide a summary of the most significant developments in employment law in Hong Kong throughout 2020 that you should be aware of. It also covers an outlook for 2021 in respect of the likely changes in employment law.

Jan 2020
Proposed reform to the Personal Data (Privacy) Ordinance

On 20 January 2020, the Legislative Council debated over the paper on ‘Review of the Personal Data (Privacy) Ordinance’ prepared by the Constitutional and Mainland Affairs Bureau (CMAB) based on the recommendations put forward by the Office of the Privacy Commissioner for Personal Data (Commissioner).Six key directions for reform of the Personal Data (Privacy) Ordinance (PDPO) have been proposed:

  1. establishing a mandatory mechanism for data breach notification;

  2. strengthening the obligations on personal data retention;

  3. increasing the enforcement powers of the Commissioner;

  4. introducing direct regulation of data processors;

  5. amending and expanding the PDPO’s definition of “personal data”; and

  6. strengthening the regulation of improper disclosure of personal data of other data subjects.

In line with global trends and practices, the burden of data protection and privacy compliance in Hong Kong will increase and continue to be one of the most important areas of compliance for all companies. In particular, the calling for direct regulation of data processors for the first time in the history of the PDPO means that data processors in Hong Kong will need to plan ahead and review their existing practices in preparation for compliance.

For more details on the proposed amendments to the PDPO, please see our client alert dated 30 March 2020.

June 2020
Anti-discrimination laws taken forward

The Discrimination Legislation (Miscellaneous Amendments) Ordinance 2020 (Discrimination Amendment Ordinance) came into effect on 19 June 2020. The Ordinance introduced amendments to Hong Kong’s four anti-discrimination legislations, namely the Sex Discrimination Ordinance (SDO), the Disability Discrimination Ordinance (DDO), the Family Status Discrimination Ordinance (FSDO), and the Race Discrimination Ordinance (RDO). Filling the gaps in the existing laws, the Discrimination Amendment Ordinance allows broader scope of legal protection against the following discrimination and harassment:

Breastfeeding

  • Express provisions have been introduced in the SDO to prohibit direct and indirect discrimination on the ground of breastfeeding. The definition of ‘breastfeeding’ includes expression of breast milk and covers women breastfeeding any child, not just limited to their own child.

  • Note that the provisions in the SDO prohibiting harassment on the ground of breastfeeding will come into effect on 19 June 2021.

Harassment in the workplace

  • New provisions have been added in the SDO, the DDO and the RDO to make it unlawful for a workplace participant to harass another workplace participant at their common workplace.

  • The DDO and RDO have been amended to protect service providers from disability and racial harassment by customers which also cover disability and racial harassment between service providers and customers where the acts of harassment are committed on local ships or aircraft outside Hong Kong.

  • The DDO and SDO have been amended to protect members or applicants for membership of a club from harassment by the management of the club.

Scope of racial discrimination

  • References to ‘near relative’ in the RDO are replaced with references to ‘associate’ so that it is unlawful to discriminate or harass a person on the ground of the race of an associate of the person. ‘Associate’ includes a spouse, a relative and a carer, of the person; another person living with the person on a genuine domestic basis; and another person who is in a business, sporting or recreational relationship with the person.

  • The meanings of ‘race’ and ‘racial group’ are expanded to include a race, colour, descent or national or ethnic origin that is imputed to a person to provide protection from direct and indirect racial discrimination and harassment by imputation.

Award of damages

  • In determining an award of damages in claims in respect of an act of indirect discrimination, ‘no intention to discriminate’ is no longer a defence for the respondent under the SDO, FSDO and RDO.

The passing of the Discrimination Amendment Ordinance is a big step forward in fostering more comprehensive protection against discrimination and harassment. As the amended laws have wider interpretations and expanded scopes of protection as well as liability, employers should review their existing policies to ensure compliance with the changes. Employees should be made aware of what relief or protection might be available in case of discrimination or harassment in the workplace.

For more details, please see our client alert dated 16 June 2020.

June 2020
Amendments to ORSO passed: regulatory control on retirement schemes strengthened

The Occupational Retirement Schemes (Amendment) Ordinance 2020 (ORSO Amendment Ordinance) came into force on 26 June 2020. The ORSO Amendment Ordinance introduced amendments to the Occupational Retirement Schemes Ordinance (ORSO) with a view to preventing the misuse of schemes for purposes unrelated to employment and improving the regulatory governance of ORSO schemes under the Mandatory Provident Fund Schemes Authority (MPFA).

Key amendments

  • New Criteria - ORSO schemes must limit membership to eligible persons, namely employees (whether past or present), transferred individuals in case of business transactions and the beneficiaries of deceased members.

  • ORSO exempted schemes - The Registrar may only issue an exemption certificate in respect of a scheme which is an acceptable registered/approved offshore scheme. The criterion that the scheme has not more than either 10% or 50 of that scheme’s members (whichever is less), who are Hong Kong permanent identity card holders, is abolished. Furthermore, new grounds that allow the Registrar to withdraw exemption certificates are added.

  • ORSO registered schemes - The Registrar is empowered to impose, amend or revoke conditions for registration of a scheme. It also has the power to cancel the registration of a scheme if it no longer meets, among other new grounds, the New Criteria.

  • Bona fide transfer-in payments - Employers of registered schemes or exempted schemes are only permitted to accept a transfer of benefits from another scheme if it meets certain conditions, to minimise the risk of the schemes being misused or abused for holding monies of unknown source.

The ORSO Amendment Ordinance allows the ORSO to more truly reflect the original policy intent that ORSO schemes should be employment-based. The strengthened regulatory control on ORSO exempted schemes, which had been subject to less stringent regulatory requirements than ORSO registered schemes and thus more susceptible to misuse as investment vehicles for non-employees, will help to prevent the increasing misuse of ORSO schemes.

For more information on the key amendments, please see our client alert dated 18 June 2020.

July 2020
New documentation & notification requirements under ORSO

The ORSO Amendment Ordinance stipulates certain new documentation and reporting requirements for registered and exempted schemes under ORSO to ensure they are genuinely employment-based.

New documents required for submission

  • ORSO registered schemes - A new form ‘Annual statement on membership for registered scheme’ is required to be submitted within one month after the end of a financial year to confirm that (a) the scheme has by its terms limited its membership to eligible persons; and (b) all members of the scheme are eligible persons.

  • ORSO exempted scheme - A new form ‘Annual report (annual return and written statement)’ is required to be submitted within one month after the expiration of each 12-month period beginning on the date of the exemption certificate or an anniversary of the date or such longer period as the MPFA may allow.

Notification of reportable events (for ORSO registered schemes)

Employers or administrators of ORSO registered schemes who become aware of any ‘reportable event’ which occurred on or after 26 June 2020 must give written notice to the MPFA providing particulars of such event within 7 working days and keep a record of the particulars.

Employers / Administrators should review the terms of the existing ORSO schemes (including the trust deed or insurance policy) and ensure compliance with the new requirements.

For more information on the new documentation and notification requirements, please see our client alert dated 23 September 2020.

July 2020
Increase in statutory maternity benefits 

On 9 July 2020, the Employment (Amendment) Ordinance 2020 (EAO) was passed at the Legislative Council and will come into operation on 11 December 2020. The EAO introduces amendments to the Employment Ordinance (EO) to extend the statutory maternity leave period from 10 weeks to 14 weeks, and technical amendments to rationalise the current statutory maternity leave regime.

Key amendments

  • The statutory maternity leave period is extended to 14 weeks.

  • The current statutory rate of maternity leave pay is maintained for calculating the maternity leave pay in respect of the additional 4 weeks’ maternity leave, subject to a cap of $80,000 per employee.

  • The period of pregnancy is shortened to 24 weeks in the amended definition of ‘miscarriage’.

  • A female employee is entitled to sickness allowance if she is able to produce a certificate of attendance issued by a professionally trained person, i.e., a registered medical practitioner, registered Chinese medicine practitioner, registered midwife or registered nurse, as proof.

  • The period in which an eligible male employee may choose to take paternity leave begins 4 weeks before the expected date of the delivery of his child and ends 14 weeks from the actual date of the delivery of his child.

Employers should make corresponding adjustments to cater for the needs of their employees and ensure compliance with the Ordinance as amended. Apart from the above changes, employers are reminded that the other maternity protection provisions under the Ordinance continue to operate.

For more details on the amendments, please see our client alert dated 10 July 2020.

September 2020
How far will the rainbow stretch?

In 2020, two more cases went before the Court seeking determination on issues relating to foreign same-sex marriage. In one case, the applicant applied for judicial review of a government’s decision refusing to recognise foreign same-sex marriage for the purpose of probate, inheritance and intestacy, while the other case sought the Court’s recognition of foreign same-sex marriage in Hong Kong. The Court of First Instance handed down the decisions on both cases on 18 September 2020.

A.         Inheritance rights

Ng Hon Lam Edgar v Secretary for Justice

Issue: Whether the exclusion of spouses to foreign same-sex marriages from legal entitlements and benefits under the Intestates’ Estates Ordinance (IEO) and the Inheritance (Provision for Family Dependants) Ordinance (I(PFD)O) constitutes unlawful discrimination on the ground of sexual orientation contrary to the Basic Law.

Held: The Court found in favour of the applicant and held that the classes of eligible beneficiaries whom the deceased was under a legal obligation to maintain under the IEO and the I(PFD)O are not confined only to husband and wife under a valid marriage. Opposite-sex married couples and same-sex married couples are relevantly comparable for the purpose of the IEO and the I(PFD)O. Further, it is illogical to suggest that the denial of benefits under the IEO and I(PFD)O to same-sex couples would promote the traditional institution of marriage, encourage heterosexual marriage or maintain the coherence, consistency and workability of Hong Kong legislations on the institution of marriage recognised under the Basic Law. The differential treatment is accordingly held to be unjustified, and the Court granted a declaration and remedial interpretation of the expressions ‘valid marriage’, ‘husband’ and ‘wife’ in the IEO and I(PFD)O.

B.         Right to lawfully get married in Hong Kong

Sham Tsz Kit v Secretary for Justice

The applicant sought a declaration that the laws of Hong Kong, insofar as they do not recognise foreign same-sex marriage, constitute unlawful discrimination on the ground of sexual orientation which therefore constitute a violation of the relevant provisions of the Hong Kong Bill of Rights Ordinance and the Basic Law.

The Court dismissed the application, holding that the applicant’s approach of using the four-step justification test to establish his legal proposition is fundamentally flawed and accordingly his application for a general declaration cannot be supported. In order to succeed, the Court must determine whether there is differential treatment on a prohibited ground and, only if this can be demonstrated, then, to examine whether it can be justified. The question of whether there is unlawful discrimination is therefore context- and fact-specific, and cannot be addressed in the abstract. The applicant’s attempt to achieve equal legal recognition of foreign same-sex marriages and foreign opposite-sex marriages or local opposite-sex marriages, regardless of the subject matter under consideration and its context, is too ambitious and cannot be supported. 

It is unknown at this stage whether the applicant will appeal the decision of the Court of First Instance. In any event, it seems likely that there will be more cases in the future seeking to challenge decisions (based on a policy or statutory provision) that give rise to differential treatment based on sexual orientation as a violation of a person’s constitutional right to equality. How far the rainbow can stretch remains to be seen.

For more detailsabout the cases, please see our client alert dated 21 September 2020.

Oct 2020
Hold on, did my employee just resign…? 

In the context of employment relationships, employers and employees often say or do things in the heat of the moment without really meaning what they have said or done. This is what happened in the recent case of Lam Sin-Yi Sindy v. Leung King-Wai William t/a William KW Leung & Co which involves an employer who concluded that his employee had resigned, after taking the employee’s words and actions expressed impulsively in a moment of anger at face value.

Background

An employee who was still on probation applied  for no pay leave so she could take her mother to see the doctor the following day. The employer refused to approve the leave application and informed the employee accordingly by a WhatsApp message. In the next message, the employer said that he was considering whetherthe employee had been absent from work without causeand if so,she would have to leave immediately.

The employee asked the employer by WhatsApp if he was treating her as being absent without cause such that she was to leave immediately. She also said that she would return to work in the afternoon, but “it did not matter” if she should just pack up and collect her final pay cheque (Employee’s Message). The employee returned to the office in that afternoon, but was told that the employer was not in the office. The employee was then asked to pack up and leave without given an opportunity to seek clarification.

The employee did not return to work after that. Subsequently, the employee received her terminal payments but a sum equivalent to payment in lieu of the 7 days’ notice was deducted (Deduction) from it.

The Minor Employment Claims Adjudication Board (Board) dismissed the employee’s claim for the reason that she had terminated her employment by resignation. Accordingly, the employer was entitled to make the Deduction.

CFI decision

The employee appealed to the Court of First Instance (CFI). The CFI opined that the Board should have considered not only what words were used in the Employee’s Message, but also the entire context in which the WhatsApp messages were exchanged between the employer and the employee, and whether that evinced a clear intention to resign and terminate the employment. The CFI found that the employee was aggrieved and her messages and statements were impulsive and made in a moment of anger. There was no resignation by the employee, she was simply told to leave, which effectively meant she was dismissed.

Takeaways

Acrimonious exchanges between an employer and an employee uttered impulsively and emotionally in the heat of the moment give rise to doubt as to whether the parties really mean what they say. Therefore, an employer who receives a termination notice in the heat of a moment should take time before accepting it at face value, and ascertain if termination was really intended by the employee or not. If the employer does not do so and simply accepts an employee’s purported resignation at face value and treats the employment as terminated, the employer may find itself falling foul of the law.

For more detailsabout the case, please see our client alert dated 14 October 2020.

Nov 2020
Long hair or short hair? That’s the question…finally answered by the Court of Final Appeal!

In the recent judgment of Leung Kwok Hung (also known as “Long Hair”) v. Commissioner of Correctional Services, the Court of Final Appeal (CFA) ruled in favour of Leung Kwok Hung (Leung) in his fight against the Commissioner of Correctional Services (Commissioner). After being convicted and sentenced to imprisonment, Leung, the appellant, was required to have his hair cut at Lai Chi Kok Reception Centre. Leung applied for judicial review against such decision on the ground of sex discrimination contrary to the Sex Discrimination Ordinance (SDO), contending that he had been treated less favourably than female prisoners, in that female prisoners had a freer choice that their hair could not be cut shorter than the style on admission to prison without their consent.          

Leung won in the Court of First Instance (CFI), but lost in the Court of Appeal. Leung then appealed to the CFA, which handed down its judgment on 27 November 2020, allowing Leung’s appeal. 

The dispute was whether less favourable treatment has been accorded to male prisoners like Leung. At the CFA hearing, the Commissioner explained the difference in treatment by reference to the policy of custodial discipline which required the imposition of reasonable uniformity and conformity in appearance among inmates. The difference in treatment was in turn explained as a reflection of the conventional standards of appearance in society for men and women. 

The CFA took the view that it is necessary to demonstrate that the difference in treatment is logically and reasonably connected to the articulated objective, policy or reason, and only then will it be possible to determine whether or not there has been less favourable treatment. The CFA criticised the evidence adduced by the Commissioner which fails to demonstrate any real link between the length of a prisoner’s hair and the asserted risks said to threaten the individual rights of prisoners while in custody, or explain why male and female prisoners should be treated differently.

Also, with respect to the argument that there exist conventional standards of appearance regarding hair length, the CFA took the view that some factual basis is required to support what is asserted to be a convention or conventional standards. The burden lies with the Commissioner to prove the conventional standards he sought to rely on, yet the evidence was far from establishing such belief. As such, the CFA found it unnecessary to deal with the point whether the asserted conventional standards regarding the length of men and women’s hair in society involved stereotyping, though the court noted that whilst generally speaking, there will be found discriminatory conduct if there has been stereotyping. The CFA considered the point capable of many nuanced arguments and is not without difficulty both conceptually and as applied in practice.  

Comment

The judgment of the CFA is in line with the judiciary’s continual determination in upholding the SDO as a social legislation for protecting civil rights. At the same time, this case reminds us of the well-established legal principle that ‘he who asserts, must prove’. In the present case, the Commissioner’s argument was premised on the fact that there exist conventional standards of appearance for men and women in society in relation to the length of hair. The Commissioner had also contended before the CFI that security risks are higher in the case of male inmates than female inmates. Yet, the Commissioner had failed to discharge the burden of proof required in establishing either argument. If the evidence adduced had been sufficient to establish a conventional standard of appearance, or that real risks do exist which is higher in the case of male inmates, one wonders if it might then lead to a different finding. 

For more detailsabout the cases, please see our client alert dated 30 November 2020.

Outlook for 2021

Proposed amendments to PDPO

The CMAB and the Commissioner have expressed their eagerness to move forward quickly with the reform proposals. On 4 November 2020, the CMAB indicated that the government targeted to complete the draft Bill amending the PDPO by the end of this year.

Employers should keep a close watch of the legislative development and ensure compliance with the new amendments when they come into force.

Minimum wage

According to the Minimum Wage Ordinance, the Minimum Wage Commission (MWC) must report to the government its recommendation about the amount of the prescribed minimum hourly wage rate at least once every two years. The current minimum wage is HK$37.5 per hour and the next review of the statutory minimum wage will be no later than 2021.

However, with the current economic uncertainty caused by the COVID-19, the chairwoman of the MWC indicated in a press conference on 13 October 2020 that the MWC could not guarantee an increase in the rate of the statutory minimum wage, and also dismissed calls for annual review.

We will continue to monitor the development and provide an update on any changes in this area.

Abolition of MPF offsetting mechanism

In the 2018 Policy Address, the Chief Executive proposed to abolish the Mandatory Provident Fund (MPF) offsetting mechanism and targeted to secure the passage of legislative amendments by the Legislative Council by 2022, and fully abolish the MPF offsetting mechanism two years thereafter.

In a recent response to the media, the Labour Department indicated that the government would not introduce an amendment bill to the Legislative Council this year as the government needs more time to study the issue and work out a simplified implementation plan. Subsequent to the release of the 2020 Policy Address, the government pledged to introduce an amendment bill to abolish the MPF offsetting mechanism to the Legislative Council by the end of next year, indicating that part of the proposal has already been completed. It is expected that the legislative process would be completed by the end of July 2022.

Employers should keep watch on further developments in this area and make appropriate plans to mitigate the potential impacts of any future changes. 

Statutory holidays

Under the Employment Ordinance, an employee, irrespective of his length of service, is entitled to 12 statutory holidays. In the recent meeting of the Labour Advisory Board, the government proposes that statutory holidays be increased by one day in every two years until the total number of statutory holidays matches that of general holidays. The government aims to designate the first additional statutory holiday in 2022 and achieve alignment of the number of statutory holidays and general holidays by 2030.

The government would discuss the proposal further with representatives of both employers and employees, and then consult the Legislative Council to work towards introducing the legislation within 2021. We will provide an update on any development in this matter.