In This Issue:   EOC successfully appeals decision to pay gratuity to former employee who lobbied against expansion of anti-discrimination laws Court of First Instance allows appeal from Labour Tribunal for Presiding Officer\u27s failure to investigate relevant documentary material Employer who wrongfully dismissed an employee without notice required to pay only one month’s damages, despite 12 month notice period Chief Executive announces plans to enhance retirement protection system Statutory Minimum Wage to rise to HKD 34.50 per hour Standard Working Hours Committee submits report to government Increased compensation for employees injured at wor

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Hong Kong Employment Law Update - April 2017 
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Hong Kong Employment Law Update - April 2017 
Abstract 
In This Issue: 
• EOC successfully appeals decision to pay gratuity to former employee who lobbied 
against expansion of anti-discrimination laws 
• Court of First Instance allows appeal from Labour Tribunal for Presiding Officer's failure to 
investigate relevant documentary material 
• Employer who wrongfully dismissed an employee without notice required to pay only one 
month’s damages, despite 12 month notice period 
• Chief Executive announces plans to enhance retirement protection system 
• Statutory Minimum Wage to rise to HKD 34.50 per hour 
• Standard Working Hours Committee submits report to government 
• Increased compensation for employees injured at work 
Keywords 
Hong Kong, employment law, Baker & McKenzie, labor law, labor rights 
Comments 
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Copyright by Baker & McKenzie. Document posted with special permission by the copyright holder. 
This article is available at DigitalCommons@ILR: https://digitalcommons.ilr.cornell.edu/lawfirms/136 
   
 
Hong Kong 
Employment Law Update 
April 2017 
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In This Issue: 
EOC successfully appeals decision 
to pay gratuity to former employee 
who lobbied against expansion of 
anti-discrimination laws 
Court of First Instance allows appeal 
from Labour Tribunal for Presiding 
Officer's failure to investigate 
relevant documentary material 
Employer who wrongfully dismissed 
an employee without notice required 
to pay only one month’s damages, 
despite 12 month notice period 
Chief Executive announces plans to 
enhance retirement protection 
system 
Statutory Minimum Wage to rise to 
HKD 34.50 per hour 
Standard Working Hours Committee 
submits report to government 
Increased compensation for 
employees injured at work 
Case Review 
EOC successfully appeals decision to pay gratuity to 
former employee who lobbied against expansion of 
anti-discrimination laws  
Chok Kin Ming v Equal Opportunities Commission HCLA 
42/2015 
In brief 
The Equal Opportunities Commission has successfully appealed the Labour 
Tribunal's decision requiring it to pay a former employee a HKD 867,021.25 
gratuity following the expiry of the employee's contract. The EOC 
successfully claimed that the gratuity, which was payable on "satisfactory" 
completion of the employment agreement, was not automatically payable at 
the end of the term and the EOC was entitled to consider the employee's 
behaviour when deciding whether to award the gratuity. The matter has been 
remitted to the Tribunal. 
Background and Decision 
Mr C was employed as Chief Equal Opportunities Officer from 1 November 
2011 to 31 October 2014. His employment contract provided for a gratuity 
upon “satisfactory completion” of his employment contract. The EOC’s Code 
of Conduct applied to his employment contract and required him to avoid any 
circumstances where a conflict of interests may arise.  
Mr C was involved in the EOC’s Discrimination Law Review, a 
comprehensive review of all anti-discrimination legislation which involved 
public consultation. Mr C was responsible for explaining the objectives and 
proposals of the DLR to the public in consultation forums. One of these 
forums took place on the 16 August 2014 at a local church, which Mr C 
attended. Mr C gave a talk at the forum where he urged church goers to 
object to the DLR's proposals to expand same-sex relationship protections 
and support the proposals to expand exceptions to discrimination for religious 
purposes. Mr C also criticised the EOC and the way it had conducted the 
DLR. 
When Mr C’s employment contract lapsed, the EOC did not renew his 
contract and did not pay him a gratuity.  
Mr C brought a claim in the Labour Tribunal for his contract end gratuity of 
HKD 867,021.25. In the first instance, the Labour Tribunal decided Mr C was 
owed the gratuity, finding that he had satisfactorily completed his 
employment per the contract and the conditions of service. The Labour 
Tribunal understood "satisfactory completion" to mean the contract had 
actually been completed in the specified time frame, and did not apply to Mr 
C's work performance.  
The Court of First Instance disagreed  and found the Labour Tribunal had 
taken too narrow a view of the meaning of "satisfactory completion". The 
phrase included scope for judgment by the employer. The fact that the EOC 
was able to recover the gratuity from the employee if it mistakenly believed 
  
2    Hong Kong Employment Law Update  April 2017 
the contract had been satisfactorily completed suggests that the employer 
was entitled to consider the nature of the employee's service and not just the 
length. The Court held that the EOC had not been irrational or perverse in 
deciding not to award Mr C the gratuity, and that the Labour Tribunal had not 
applied this objective test (as set out in case law such as Clark v Nomura 
[2000]) and had instead substituted its own opinion as to whether the EOC 
should have awarded the gratuity.  
Pursuant to this, the Court allowed the EOC's appeal and the matter was 
remitted to the Labour Tribunal. 
Takeaway points 
1. Clarity in your bonus clauses: if you want to include a contractual 
bonus in employment contracts, ensure that any requirements the 
employee must fulfil and the employer's discretion as to whether the 
requirements have been met are set out clearly. 
2. Watch out for conflicts of interests: the case demonstrates the 
damaging effect an employee can have on an employer's reputation if the 
employee has a conflict of interests. Ensure that you have a  robust code 
of conduct addressing conflicts of interest or that such obligations are 
expressly included in the employment contract.  
Court of First Instance allows appeal from Labour 
Tribunal for Presiding Officer's failure to investigate 
relevant documentary material 
Vermeerbergen Peter Alfred v Swisstribe Ltd [2016] HKCU 2902 
In Brief 
The Court of First Instance recently allowed an employee, Mr V, to appeal 
against a Labour Tribunal decision in favour of the employer, Swisstribe, on 
the basis that the Labour Tribunal Presiding Officer  failed to exercise his 
statutory duty to investigate relevant matters and order discovery of relevant 
documents.  
Background and Decision 
Swisstribe designs and produces display fixtures for  jewellery and watch 
brands. Mr V was employed as a Custom Relations Manager from 1 
February 2013 to 1 April 2014. Following termination of his employment, Mr V 
filed a claim at the Labour Tribunal for, amongst other things, unpaid 
commission. 
Mr V was entitled to 3% commission on any sales resulting from accounts 
that were "managed", "co-managed" or "approached" by him and any future 
sales from these accounts for a period of 24 months after termination of 
employment. Mr V's claim related to three accounts. The holder of these 
accounts (Account Holders) preferred to use their agents as middlemen (the 
Agents) to acquire the products from Swisstribe rather than buying them 
directly.  
Mr V claimed he "approached" the Account Holders directly resulting in 
Swisstribe making a sale to the Account Holder's Agents, which entitled him 
to commission. The sale invoices were in the name of the Agents rather than 
the Account Holders but the products sold were ultimately acquired on behalf 
of the Account Holders.  
  
3    Hong Kong Employment Law Update  April 2017 
The Labour Tribunal Presiding Officer ("PO") dismissed the claimant's claim 
on the basis that Mr V "failed to support his claim with solid evidence" and 
that a "substantial part of the claim is based purely on speculation".  
Mr V filed a notice of appeal claiming: 
(a) the PO failed to investigate claims made by Mr V that certain invoices 
crucial to his claim were missing from the documents disclosed by 
Swisstribe;  
(b) the PO adopted the wrong criteria in deciding what commission Mr V was 
entitled to, as the PO disregarded any sales that came from customers 
who were not direct customers of Mr V, whereas Mr V's employment 
contract specified he was entitled to commission from any sales resulting 
from his "approach" even if the sales were not made directly with Mr V 
(as was the case with the Account Holders); and  
(c) pursuant to the above, the PO failed to make any proper inquiry or finding 
as to whether the accounts listed in Mr V's claim were accounts 
"managed" or "co-managed" or "approached" by Mr V.  
The Court allowed the appeal based on the fact that the PO did not take an 
active inquisitorial role and failed to exercise his statutory power to 
investigate crucially relevant matters. The Court stated that the PO had 
misunderstood his powers of discovery and failed to order discovery of 
important documents, such as the invoices detailed above. The PO is able to 
order production of documents under section 20 of the Labour Tribunal 
Ordinance (similar to the principles applicable in High Court proceedings). 
Take-away points  
1. No positive obligation to disclose: as there are no rules imposing an 
obligation of discovery on parties to a Labour Tribunal dispute, if you 
believe the other side holds relevant documents you must ensure the PO 
exercises his duty to order discovery of documents. 
2. Failure to order discovery can lead to appeal: a failure by the Labour 
Tribunal to discharge its positive statutory duty to investigate relevant 
matters and order discovery of relevant documents may constitute valid 
grounds for appeal. As the Labour Tribunal does not allow legal 
representation, and as there are no rules imposing an obligation of 
discovery on parties to a Labour Tribunal dispute,  the PO's duty to 
investigate and order discovery of documents where applicable may be 
more open to scrutiny.  
Employer who wrongfully dismissed an employee 
without notice required to pay only one month’s 
damages, despite 12 month notice period  
Chung Tin Shun Caesar v The Hong Kong Football Academy 
Ltd HCLA 26/2016 
In Brief 
The Court of First Instance recently dismissed an appeal made by an 
employee against a Labour Tribunal decision ordering payment of one 
month's wages in lieu of a 12 month notice period. 
  
4    Hong Kong Employment Law Update  April 2017 
The employee, Chung, was employed by the Hong Kong Football Academy 
under a written employment contract which provided for either party to give 
12 months’ notice on termination. There was no provision for a payment in 
lieu of notice. The Football Academy later dismissed Chung with immediate 
effect without making any payment in lieu.  
The Labour Tribunal held that Chung was not entitled to 12 months’ wages 
as compensation but that he should be given damages to put him back into 
the position he would have been in had the agreement not been breached. 
Chung was required to mitigate his loss. The Labour Tribunal held that 
Chung would have been able to secure a new job one month after 
termination by the Football Academy and would be able to earn a monthly 
income of around HKD 15,000 (based on his earnings at a previous job 
Chung had at a health management company). The Labour Tribunal 
assessed damages as HKD 15,000, being the difference between the 12 
month salary under his employment contract and the 11 month salary he 
would have earned at the hypothetical new job.  
The employee was unhappy with the award and sought leave to appeal to the 
Court of First Instance. The Court agreed with the Labour Tribunal, stating 
that in the absence of any specified remedy in the employment contract for a 
breach of contract, damages will apply to place the employee in the same 
position as if the contract had been performed. 
Commentary 
1. Payment in lieu notice not implied: the Labour Tribunal and CFI may 
not imply any payment in lieu of notice obligations if they are not included 
in the contract – this appears to wholly ignore section 7 of the 
Employment Ordinance, which allows either party to make a payment in 
lieu of an agreed notice period, even if the clause is not included in the 
employment contract; 
2. Damages may apply in absence of express provisions: in the 
absence of any express provisions in the employment contract governing 
remedy for breach of contract, the normal rules regarding damages will 
apply; and  
3. Duty to mitigate loss: an employee has a duty to mitigate his/her loss if 
an employer breaches the employment contract and the employee claims 
for damages at common law. There is no such obligation to mitigate if 
damages for wrongful termination are claimed under section 8A of the 
Employment Ordinance. It is unclear from the judgment whether a claim 
was made at common law or under section 8A, but it must be assumed it 
was the former otherwise the duty to mitigate would not have applied.  
Legislative Developments 
Chief Executive announces plans to enhance 
retirement protection system  
CY Leung has proposed to progressively abolish the Mandatory Provident 
Fund set-off mechanism, which allows employers to use the money they put 
into workers’ retirement funds to off-set severance and long service 
payments. 
To assist employers with the financial burden of the proposals, the 
government has stated: 
  
5    Hong Kong Employment Law Update  April 2017 
 the abolition will have no retrospective effect, so that MPF contributions 
made by employers before the implementation date will be exempted; 
 employers may be subsidised for a portion of the costs in the first ten 
years following the implementation date; and 
 the amount of severance payments and long service payments that 
employers are required to pay may be reduced from two-thirds to half of 
the employee's monthly wages. Currently, severance and long-service 
payments are calculated by taking two-thirds of an employee's last 
monthly salary and multiplying it by his or her years of service. 
Statutory Minimum Wage to rise to HKD 34.50 per hour  
The Minimum Wage Commission has by consensus recommended that the 
current Statutory Minimum Wage rate of HKD 32.50 per hour be raised to 
HKD 34.50 per hour, an increase of 6.2 per cent.  
To correspond with the increase, employers will be exempted from the 
requirement under the Employment Ordinance to record the total number of 
hours worked by an employee in a wage period if wages payable are not less 
than HKD 14,100 per month (the exemption amount is currently set at HKD 
13,300 per month). The increase will come into effect from 1 May 2017.  
Standard Working Hours Committee submits report to 
government 
The Standard Working Hours Committee ("SWHC") submitted its report on 
standard working hours to government on the 27 January 2017. The SWHC 
recommended that legislation be introduced for low-income employees only, 
with any legislation ensuring that low-income employees are paid overtime 
compensation at a rate no less than their agreed wage. Low-income 
employees are not defined.  The SWHC also recommended the government 
form sector specific guidelines for working hours standards and review the 
effectiveness of any measures taken after two years.   
Increased compensation for employees injured at work 
The levels of compensation for employees injured at work or suffering from 
prescribed occupational diseases under the Employees' Compensation 
Ordinance have increased with effect from 1 April 2017. 
 
This Update has been prepared for clients and professional associates of Baker & McKenzie. Whilst every effort has been made to ensure accuracy, no responsibility can be accepted for errors and omissions, 
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