In the Court of Appeal case Kwan Siu Wa Becky & others vs Cathay Pacific Airways Limited [CACV 92/2010], the claimants alleged that various payments including “Line Duty Allowance”, “Ground Duty Allowance”, “Outport Allowance” and “Duty Free Sales Commission” should be included in calculating holiday pay and annual leave pay under section 41 and 41C of the Employment Ordinance prior to the Employment (Amendment) Ordinance.
The Court ruled that save and except the Outport Allowance, the other allowance/commission shall be included in calculating holiday pay and annual leave pay. We do not aim to discuss the reasoning of the aforesaid ruling here.
The defendant did not have objection on holiday pay under the Employment Ordinance but argued that even if the various allowance and commission should be included in calculating annual leave pay, they should only apply to statutory annual leave and not those contractual annual leave on top of the statutory minimum.
However, the Court considered that there was nothing in any of the contractual documents to suggest that annual leave pay might vary depending on whether it was part of the statutory annual leave or the contractual annual leave. Therefore, when the contract did not provide to the contrary, the parties had to be taken to have intended that the employee would be paid at the same rate of the entitled annual leave.
In view of this case, it appears that if there are no clear contractual provisions to the contrary, the Employment Ordinance will have implication on those contractual benefits on top of statutory benefits. If an employer does not prefer the Employment Ordinance to have any implication on the contractual benefits granted on top of the statutory benefits, it has to set out very clearly in the employment contract or staff handbook regarding the different treatments between the contractual benefits and the statutory benefits.