The Employment (Amendment) (No. 2) Ordinance 2018 (“Ordinance”), was passed by the Legislative Council on 17th May 2018 and gazetted on 25th May 2018. The Ordinance amends the Employment Ordinance (Cap. 57) (“EO”) by removing the pre-requisite of employer’s consent for ordering reinstatement or re-engagement in a case of unlawful and unreasonable dismissal. It mainly seeks to reinforce the employment protection to those who are pregnant, sick or injured at work.
This article discusses the legal and practical implications of the Ordinance for employers.
Current law
Under the existing framework as provided by Part VIA of the EO, where employees who have been unlawfully and unreasonably dismissed claim for reinstatement or re-engagement, the Labour Tribunal (“Tribunal”) has no power to make such an order without first securing the employer’s consent. This is the case even where the Tribunal considers the making of such an order appropriate.
In practice, this remedy available to the Tribunal is rarely used. By the time the employee brought the dispute to court, employer-employee relationship would usually have broken down to a point where it would unlikely be agreeable to the employer to reinstate or re-engage the employee. Monetary award is therefore more commonly granted.
Amendments
The Ordinance now gives the Tribunal greater flexibility in that it is allowed to make an order for reinstatement or re-engagement of an employee unreasonably and unlawfully dismissed as long as it considers it appropriate and reasonably practicable, notwithstanding that the employer does not consent.
According to the Ordinance, should the employer fail to reinstate or re-engage the employee, he must pay the employee a sum equal to three times the employee’s average monthly wages subject to a maximum of HK$72,500. This sum is payable on top of any monetary awards as ordered by the Tribunal under the EO, such as terminal payments and compensation.
Non-compliance with the order is not of itself a criminal offence. However, failing to pay the sanction willfully and without reasonable excuse would constitute an offence. If convicted, the employer would be liable to a fine of HK$350,000 and to imprisonment for 3 years.
It is worth noting that the scope of compulsory reinstatement or re-engagement is limited to cases of unreasonable and unlawful dismissal only, i.e. dismissal without valid reason and in contravention of the law. For employees unreasonably, but not unlawfully, dismissed, mutual consent would still be required.
Practical implications
The number of cases on employee to seek an order for reinstatement or re-engagement due to being unreasonably and unlawfully dismissed has always been low in Hong Kong, so we expect the amendments may not necessarily mean that the option of reinstatement or re-engagement would be used more frequently. However, disgruntled employees in exit negotiations may use this for leverage to press their employers to settle or demand more desirable termination packages.
It is often easier for employers to demonstrate to the Tribunal that it is not reasonably practicable to reinstate or re-engage senior employees. Therefore, the Ordinance may be more relevant to the claims of less senior staff, given the difficulty of gathering evidence to prove impracticability of having them reinstated or re-engaged.
From the employers’ perspective, they can still exercise their right to present their cases to the court or Labour Tribunal, which will consider the circumstances of the claim, including (i) the circumstances of the employer and of the employee, (ii) the circumstances surrounding the dismissal, (iii) any difficulty that the employer might face in the reinstatement or re-engagement of the employee, and (iv) the relationship between the employer and the employee, and between the employee and other persons with whom the employee has connection in relation to the employment.
Conclusion
The Ordinance will take effect on 19 October 2018. Although there are ways to mitigate the impact of the reinstatement or re-engagement order, such as applying for variation, it is important for employers to avoid dismissing an employee unreasonably or unlawfully in the first place. Employers should be careful not to dismiss employees other than for valid reasons, which include the conduct of the employee, his/her capability or qualification for performing the job, redundancy or other genuine operational requirements of the business and compliance with legal requirements. They should also note the following situations which constitute dismissal in contravention of the law: 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, or by reason of the employee exercising trade union rights or giving evidence for the enforcement of relevant labour legislation.
