Introduction
On 2 March 2016, the Employment (Amendment) Bill 2016 (the “Bill”) was introduced to the Legislative Council. The Bill seeks to empower the Labour Tribunal to make an order for reinstatement or re-engagement as requested by an employee in a case of unreasonable and unlawful dismissal without the need to first secure the employer’s agreement. The Bill does not change the current framework in regards to unreasonable dismissals that are not unlawful.
Current Framework
The Employment Ordinance (Cap 57) (“EO”), as it currently stands, provides that if an employee is dismissed unreasonably and unlawfully, an order for reinstatement or re-engagement can only be made if the Labour Tribunal finds that:-
- the order is appropriate; and
- both parties agree to such an order.
If the employer does not agree to an order of reinstatement or re-engagement, the Labour Tribunal can only make an award of terminal payments and/or, in the case of certain unlawful dismissals, an award of compensation not exceeding HK$150,000 under the current framework.
Proposed Changes
The Bill, if enacted, will remove the need for the employer to agree to an order for reinstatement or re-engagement. This means that, if an employee is found to have been unreasonably and unlawfully dismissed, an order for reinstatement or re-engagement can be made if the Labour Tribunal finds that:-
- the order is “appropriate” and “reasonably practicable” after considering all the circumstances of the case; and
- the unlawfully dismissed employee agrees to reinstatement or re-engagement.
An order for reinstatement treats the employee as if he/she had not been dismissed. An order for re-engagement requires the employer to re-employ the employee in other suitable employment or on terms comparable to the original employment terms.
Penalty
If an employer fails to comply with an order to reinstate or re-engage the unreasonably and unlawfully dismissed employee, the Bill further proposes that the employer shall be liable to pay to the employee:-
- monetary remedies as currently provided for in the EO (i.e. terminal payments plus compensation up to HK$150,000 under certain circumstances); and
- a sum equivalent to 3 times the employee’s average monthly wage, subject to a maximum of HK$50,000.
Failure to pay these sums within 14 days will be a criminal offence.
Conclusion
Employers need to be aware of the proposed changes and the full extent of their obligations and liabilities under the law. If passed, the Bill will provide unreasonably and unlawfully dismissed employees with additional remedies against their employers. From an employer’s perspective, having such employees return to work may lead to further complications and conflicts at the workplace (such as low morale, lack of motivation and the possibility of misconduct) if the employee is still harbouring ill feelings towards the employer.
Contacts
Nick Gall, Senior Partner
Tel +852 3405 7666
nickgall@gallhk.com
Andrea Randall, Senior Associate
Tel +852 3405 7630
andrearandall@gallhk.com
Mandy Cheng, Associate
Tel +852 3405 7680
mandycheng@gallhk.com
