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Lam Siu Wai v Equal Opportunities Commission

Judgment Cited authorities 5 Cited in 1 Precedent Map Related
Vincent
Judgment Date15 October 2021
Neutral Citation[2021] HKCFI 3092
Judgement NumberHCLA21/2020
Citation[2021] 5 HKLRD 30
Year2021
Subject MatterLabour Tribunal Appeal
CourtCourt of First Instance (Hong Kong)
HCLA21A/2020 LAM SIU WAI v. EQUAL OPPORTUNITIES COMMISSION

HCLA 21/2020

[2021] HKCFI 3092

IN THE HIGH COURT OF THE

HONG KONG SPECIAL ADMINISTRATIVE REGION

COURT OF FIRST INSTANCE

LABOUR TRIBUNAL APPEAL NO 21 OF 2020

(ON APPEAL FROM LABOUR TRIBUNAL

CLAIM NO 2371 OF 2018)

____________________

IN THE MATTER of the determination of Mr David CHUM, Presiding Officer of the Labour Tribunal dated 4 December 2020

AND
IN THE MATTER of Order 55 of the Rules of High Court (Cap. 4A)

AND
IN THE MATTER of Section 35 of Labour Tribunal Ordinance (Cap. 25) and Rule 9 of Labour Tribunal (General) Rules (Cap. 25A)

______________________

BETWEEN
LAM SIU WAI Claimant
and
EQUAL OPPORTUNITIES COMMISSION Defendant

____________________

Before: Hon Anthony Chan J in Court

Date of Hearing: 15 October 2021

Date of Judgment: 15 October 2021

________________

JUDGMENT

________________

1. This is the appeal of the Defendant (“EOC”) against an Award/Order made by the Labour Tribunal on 4 December 2020 in LBTC 2371/2018 by which the claim of the Claimant (“Lam”) against the EOC was upheld. The Reasons for Decision of the Presiding Officer was given on 18 January 2021 (“Decision”).

2. On 17 March 2021, this court granted leave to appeal against the Decision on 4 points of law. They had since been set out in the Notice of Originating Motion filed on 31 March 2021. They will be referred to as Grounds 1 to 4 below.

Issue

3. Grounds 1 to 3 are underpinned by the legal arguments on whether the termination of Lam’s employment by the EOC in accordance with the terms of the employment contract (“Contract”) by payment in lieu of notice, as well as payment of all the accrued entitlements, to Lam was subject to the common law implied duty of mutual trust and confidence (“Duty”).

4. It will be seen below that Ground 4 is of little significance in this appeal.

Background

5. The material facts can be succinctly stated as follows. Lam began her employment with the EOC in September 1996. The last renewal of her employment was in February 2016 for 3 years from 1 March 2016. The letter of appointment was dated 3 February 2016. At the time, Lam was employed as a Chief Equal Opportunities Officer.

6. The terms and conditions of Lam’s employment were, in addition to the letter of appointment, also set out in a document entitled “Memorandum on Conditions of Service in the Equal Opportunities Commission Office” (“MCS”). Clause 11.3 of the MCS provided for the EOC’s right to terminate Lam’s employment without cause as follow[1] :

“For an employee who has passed the trial period or who has been appointed without the requirement to serve a trial period, his/her service may be terminated by the employer by giving him/her a minimum of three months’ notice or by paying him/her three months’ salary in lieu of notice.”

7. Further, there was a document entitled “Human Resources & Administration Policies & Procedures” (“Manual”) which contained various policies of the EOC. Two chapters in Part II of the Manual were relevant and produced before the Tribunal, namely, (i) Section A, Chapter A6 (“Termination of Agreement”); and (ii) Section E, Chapter E3 (“Disciplinary Policy & Procedures”).

8. Clause 11.3 of the MCS was echoed under Chapter A6, Clauses A6.3.1 and A6.3.4. It should be added that the right to terminate a contract of employment, which applied to both employer and employee, was also provided under ss.6 (termination of contract by notice) and 7 (termination of contract by payment in lieu of notice) of the Employment Ordinance, Cap 57 (“Ordinance”).

9. On 15 May 2018, Mr Michael Chan, EOC’s then Chief Operations Officer, told Lam that her employment had been terminated with immediate effect. The first paragraph of the letter of termination, signed by Mr Alfred Chan, the Chairperson of the EOC, stated as follows :

“This letter serves to inform you that we have arrived at the decision that it would be in the best interest of the Commission for your employment to be terminated by the Commission. We come to this decision after full consideration given to your job requirements, including personal attributes needed of your Chief Equal Opportunities Officer post. Our conclusion is that your recent attitude and behaviour do not closely match with the requirements of this senior position and hence it is regrettable that we have to terminate your employment contract with the Commission.”

[emphasis added]

10. The underlined sentence was referred by the Tribunal as the “Dismissal Reason”[2]. At the time of termination, Lam had worked for the EOC for 22 years.

11. It would be fair to point out that the EOC had never indicated (nor was it part of its case before the Tribunal) that the termination was due to any deficiency in work performance or misconduct on Lam’s part.

12. The EOC made all necessary payments to Lam arising from the termination of her service without cause, in accordance with the Contract – she was paid 3 months’ wages in lieu of notice and all benefits due to her, including cash allowance, pro rata gratuity and payment in lieu of leave.

13. On 7 August 2018, Lam filed a claim in the Labour Tribunal seeking :

(1) an order of her reinstatement or re-engagement pursuant to s.32K of the Ordinance. This claim was dismissed by the Tribunal[3];

(2) damages at common law for loss and damage resulting from a wrongful termination by the EOC of her employment in breach of the Duty in the amount of HK$1,308,283.06 (consisting of loss of income, loss of gratuity and loss of employer’s MPF contributions calculated up to the end of the 3-year term). This claim was upheld by the Tribunal resulting in an Award of HK$1,294,783.06 in total with interest and costs.

Respective case

14. In paras 11 and 12 of the Decision, the Tribunal summarised the contentions of the parties :

“11. [Lam] alleged that since her termination (sic) was in bad faith, and not for a valid reason under s.32K, Employment Ordinance, the [EOC] had deprived [Lam] of the opportunity to complete her fixed term contract and to be paid in full the gratuity upon the completion of the fixed term contract. [Lam] further alleged that the [EOC’s] wrongfully termination of her employment in bad faith amounted to serious breaches of its implied obligation of mutual trust and confidence contained under her employment terms. As a result of the [EOC’s] breach of the implied duty of mutual trust and confidence, [Lam] was entitled to claim her loss and damages, including loss of her income, loss of the [EOC’s] MPF contributions and loss of remaining gratuity for her remaining period of the fixed terms contract.

12. The [EOC] contended that the reason of termination of [Lam’s] employment was valid and a good reason. The [EOC] also contended to [Lam’s] allegation (sic) by relying on [its] statutory right under s.6 and s.7 of the [Ordinance] to terminate [Lam’s] employment. Upon the termination, all termination payment due to her … had duly paid (sic). Thus, [Lam] was not entitled to claim any loss and damages.”

15. I note that the position of the EOC before the Tribunal was that there was no obligation to provide any reason or valid reason for the termination of Lam’s employment without cause[4]. However, it appears that the EOC felt obliged to defend the reason stated in the letter of termination because it was challenged by Lam.

Decision

16. It is evident from the Decision that the hearing before the Tribunal spanned a number of days. Insofar as the factual issues were concerned, the Tribunal noted that important witnesses with first-hand knowledge of the termination were not called by the EOC (neither Mr Michael Chan nor Mr Alfred Chan was called to testify before the Tribunal)[5]. The Tribunal accepted the evidence of Lam and her witnesses.

17. In respect of the EOC’s reliance on s.7 of the Ordinance, the Tribunal took the view that those provisions only established a “mode of termination” and did not override the “duty to maintain no breach of any terms of employment contract”. Paras 14 and 15 of the Decision stated as follows :

“14. Thus, employers can terminate their employees (sic) unilaterally under section 7 of Employment Ordinance. Employers also do not bind (sic) to give reason for dismissal under section 7 of Employment Ordinance, but just need to satisfy the requirement of notice and payment in lieu of notice. However, section 7 only establishes a mode of termination. In exercising the statutory right to adopt the said mode under section 7, the duty to maintain no breach of any terms of employment contract cannot be override. In other words, if the employer terminates the employment contract under section 7, he/she should make sure there be no breach of any express terms or implied terms of the employment contract.

15. In this case, the [EOC] did not just terminate [Lam] (sic) unilaterally by given payment in lieu of notice but they had stated they were relying on the Dismissal Reason in order to dismiss [Lam]. In lights (sic) of the parties’ argument and contention, I am of the view that the most critical issue is whether there was a good and valid reason to terminate [Lam’s] employment. If the [EOC] did have a good reason to terminate, there would not be any breach of mutual trust and confidence implied in [Lam’s] employment terms, [Lam] will not be entitled to any loss and damages.”

18. The Tribunal went on to hold that the EOC had the onus to prove that the reason for dismissing Lam was “good and valid”, and also to “prove the Dismissal Reason” (Decision, §§16-19).

19. Having set out the evidence given by the witnesses for the EOC and Lam, the Tribunal concluded (Decision, §§20-37) that :

(1) the EOC had failed to discharge the...

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