In a recent judgment, the Court of First Instance dismissed claims that a group of senior employees had breached their contractual and fiduciary duties by resigning and signing contracts to work for the same employer on the same day. The Court also confirmed that an employee working in Hong Kong is entitled to exercise rights under the Employment Ordinance (EO) even if his or her contract is stated to be governed by a foreign law. (Cantor Fitzgerald Europe and Cantor Fitzgerald (Hong Kong) Capital Markets Limited -v- Jason Boyer and Others  HKEC 301 (Unreported, Reyes J, 29 February 2012).)
The case involved a number of claims by Cantor Fitzgerald against four former employees, all but one of which were dismissed by the Court. It addresses a number of issues that often arise in Hong Kong when one or more employees leave to join the same employer and is likely to be of interest to both employers and employees, particularly in the financial services sector in which Cantor Fitzgerald operates.
Key findings in the case include:
Freedom of choice of occupation is protected under Hong Kong law and an employee or director has the right to resign from his or her employment to work elsewhere; "Kiss-and-tell" clauses requiring an employee to disclose approaches by a competitor will be construed strictly. Any ambiguity will be decided against the drafter of the clause. The term "competitor" may not encompass a business which is a start-up company; Under sections 6 and 7 of the EO employees have the right to terminate employment by giving notice at any time or by agreeing to make a payment of wages in lieu of notice (PILN). These rights form part of the mandatory employment laws of Hong Kong and can be exercised by employees working in Hong Kong even if their contract is stated to be governed by foreign law; Contractual terms which provided a narrow window for the employees to give notice and to pay liquidated damages higher than sums provided for in the EO for leaving before the end of the term reduced the employee's rights under the EO and were not enforceable; Restrictive covenants, including a 12 month non-poaching of employees clause, were unenforceable as there was no evidence to justify the length or scope of the restraints; Cantor Fitzgerald was ordered to repay monies wrongly deducted from employee's commission without his agreement. The circumstances in which these findings were made is discussed in greater detail below.
The Plaintiff employers were Cantor Fitzgerald Europe (CFE) and Cantor Fitzgerald (Hong Kong) Capital Markets Limited (Cantor HK). The four Defendants were all former executives who had held senior roles within Cantor Fitzgerald in Asia: Boyer was seconded from CFE to Cantor HK, where he was a director of Cantor HK and one of two leading resident executives in Asia. Ainslie and McGonegal were top revenue generators and co-heads of Cantor HK's Cash Equities Desk who held the title of Managing Director. Von Parpart was Managing Director, Chief Economist and Strategist (Asia) and was responsible for providing research support.
On 30 May 2011 the four executives resigned from their employment with Cantor Fitzgerald and signed contracts with a new employer, Mansion House. The executives all terminated their employment by agreeing to make PILN the same day but did not begin work for Mansion House until September and October 2011.
Cantor Fitzgerald claimed that the four executives had breached their duties by procuring the others to resign to join a competitor, acting in concert to leave together to join a competitor and failing to disclose their intention to leave or the approaches made by their new employer.
CFE and Cantor HK had refused to accept the PILN tendered by Boyer, Ainslie and McGonegal, claiming that Boyer was not entitled to terminate by PILN because his employment contract was governed...