30 May, 2018
The Employment (Amendment) (No. 2) Ordinance 2018 (Amendment Ordinance) was published in the Gazette on 25 May 2018 and will take effect on a date to be further appointed by the government by notice in the Gazette.
Current position
Currently, under the Employment Ordinance, if an employee is unreasonably and unlawfully dismissed, the court or Labour Tribunal hearing or adjudicating claims can only make an order for reinstatement or re-engagement with the mutual consent of the employer and the employee.
Amendments to the Ordinance
Pursuant to the Amendment Ordinance, if an employee is unreasonably and unlawfully dismissed, the employer’s agreement is no longer a pre-requisite for the court or Labour Tribunal to make an order for reinstatement or re-engagement.
In addition, if the employer does not reinstate or re-engage the employee as required by the order, the employer must, in addition to the monetary remedies payable as ordered by the court or Labour Tribunal, also pay a further sum, being three times the employee’s average monthly wages up to a maximum of HK$72,500 (Further Sum), to the employee.
The employer may apply to the court or Labour Tribunal for relief from paying the Further Sum if it is no longer reasonably practicable for the employer to reinstate or re-engage the employee because of reasons attributable to the employee, or because there is a change of circumstances beyond the employer’s control after the court or Labour Tribunal has found that reinstatement or re-engagement of the employee is reasonably practicable. Such application must be made by the employer no later than 7 days after the date by which the employee must be reinstated or re-engaged pursuant to the order (unless further extension has been allowed).
An employer who wilfully and without reasonable excuse fails to pay any such sum payable under an order made by the court or Labour Tribunal commits a criminal offence and is subject to a maximum fine of HK$350,000 and 3 years of imprisonment on conviction.
Implications to employers
The amendments under the Amendment Ordinance are only relevant if the court or Labour Tribunal has held that the employee has been unreasonably and unlawfully dismissed and that the order is appropriate and the reinstatement or re-engagement by the employer is reasonably practicable taking into account the circumstances of the employee’s claim.
If the court or Labour Tribunal has decided to grant a reinstatement or re-engagement order, under the Amendment Ordinance, it will need to specify in the order the terms that will apply if the employee is not reinstated or re-engaged, including the following payments that have to be made:
(a) terminal payments that would have been awarded if neither a reinstatement nor a re-engagement order had been made;
(b) a compensation not exceeding HK$150,000 that would have been awarded if neither a reinstatement nor a re-engagement order had been made; and
(c) the Further Sum. There will also be criminal liability on the employer if he fails to pay the Further Sum.
For further information, please contact:
Elsie Chan, Partner, Deacons
elsie.chan@deacons.com.hk
