The economic downturn has resulted in an increasing number of people losing their jobs. Economists have predicted that many more will join the ranks of the unemployed during 2009. This article considers the implications and risks, both to employees and employers, of termination of employment in the current economic climate. It also examines emerging trends, particularly in the financial sector.

While Hong Kong does not have the most employee-friendly laws when compared to other jurisdictions, employers should still tread carefully. Mistakes made during the termination process can give rise to expensive claims, unwanted media attention and poor morale in the workplace.

Time Periods and Statutory Benefits/Protection

The Employment Ordinance (Cap 57) (EO) sets out certain qualifying criteria that, once satisfied, give rise to particular statutory benefits and protection. An employee employed under a continuous contract of employment (ie a minimum duration of four weeks for at least 18 hours per week) is entitled to rest days, paid statutory holidays, paid annual leave and sickness allowance. Upon completion of two years' continuous employment, an employee becomes entitled to severance payment upon redundancy and protection from unreasonable dismissal pursuant to Part VIA of the EO. Subject to certain further conditions, upon completion of five years of service, an employee is entitled to a long service payment.

Manner of Termination

The EO provides that an employee may be dismissed with or without contractual notice and, in appropriate circumstances, summarily and for cause. There is no obligation upon an employer in Hong Kong to give an employee a reason for the termination of their employment. However, failure to do so can, in certain circumstances, increase the risks of being accused of dismissing an employee either for discriminatory reasons or in order to avoid paying that employee a benefit to which they would otherwise have been entitled had they remained in employment. In the absence of grounds to summarily dismiss an employee for gross misconduct, pursuant to s 9 of the EO, an employer can choose to give the employee notice of termination of employment and have them serve their notice (or place them on garden leave) or pay them wages in lieu of notice, bringing an immediate end to their employment.

Calculation of Payments

Upon termination, employers must pay their employees any wages due from the last wage payment to the date of termination, wages in lieu of notice of termination (if appropriate), accrued but unused annual leave entitlements, any statutory pro rata end of year bonus for the current bonus year (which is not of a discretionary nature) and any other sum due to the employee upon termination under the terms of the employment contract. Those payments must be paid to the employee within seven days of the termination date (EO s 23). Failure to pay all monies contractually and statutorily due to an employee on termination will expose the employer to a potential wrongful dismissal claim. There is a statutory presumption that an end of year payment payable under the employment contract, unless the contract specifically states that such bonus is discretionary, is payable as a contractual entitlement.

If an employee has completed two years of continuous employment there is a statutory presumption that the reason for dismissal is redundancy (EO s 31Q). If dismissed by reason of redundancy, employees in Hong Kong are entitled to a redundancy payment calculated as two-thirds of their monthly wages (or HK$15,000, whichever is less) for each year of service they have completed, and a payment of that sum on a pro rata basis for each incomplete year of service.

Employers and employees in Hong Kong have the luxury of making a payment in lieu of notice to an employee even where it is not provided for in the contract (EO s 7). The EO excludes from the definition of wages (see s 2) any attendance allowance, attendance bonus or commission which is of a 'gratuitous' nature or which is payable only at the discretion of the employer (eg a sign-on bonus), and any annual bonus or proportion thereof which is gratuitous or payable only at the discretion of the employer.

As a result of the decision in Lisbeth Enterprises Ltd v Mandy Luk (2006) 9 HKCFAR 131 (in which the Court of Final Appeal held that commission payments were not to be included in the definition of wages), the Labour Department proposed a legislative amendment, and in 2007 the Employment (Amendment) Ordinance came into effect. The position is now that one must use the average of the total wages paid to an employee in the last 12 months of wages to calculate statutory entitlements under the EO and, in doing so, include contractual commission payments are to be included, as they fall within the statutory definition of 'wages'. Contractual year end payments are covered by the EO.

Managing Bonuses

Many of the disputes arising from the economic downturn are related to employees making claims for bonuses. One can hardly read a newspaper these days without seeing a headline including the word 'bonus'. The value of bonuses is both a common dinner party topic and a subject of controversy.

Bonuses are a fundamental component of remuneration in the finance sector. Banks traditionally pay bonuses to reward good performance and to attract and preserve talent. They incentivise distinction and help banks to keep the best people in the market. In principle, employers can pay whatever bonuses they like. The bonus system is a flamboyant expression of a free-market economy.

It is unlawful to use bonuses to discriminate on grounds such as sex, disability, or race. Most employers are well aware of this fundamental moral and legal prohibition, and understand that any acceptable justification for paying one employee a higher bonus than the other should be based solely on performance-based criteria.

When the criteria for apportioning bonuses lack transparency, problems arise and employers become exposed to claims. Aside from claims for guaranteed bonuses, most bonus claims arise where an employee has been paid a lower discretionary bonus than a colleague. To avoid the risk of such claims, employers should circulate objective written criteria as to bonus awards and explain to individuals the basis of bonus decisions. If employers are not prepared to do this, then they must be prepared to defend any disparities. Aside from the obvious nuisance of defending bonus claims, an employer will be obliged, if such a claim is brought, to disclose to the court the bonuses that have been paid to employees to whom the claimant is comparing him or herself. This is an embarrassing prospect to many employers; such information is sensitive even at the best of times.

Hong Kong Law on Bonuses

Decisions in the Hong Kong courts provide some guidance to employees and employers as to how far an employer's duty extends in respect of payment of discretionary and contractual bonuses.

Employers should not assume that labelling a bonus 'discretionary' will necessarily protect them from claims for a contractual bonus. For a bonus to be properly discretionary, the discretion must be exercised. Payment of a fixed amount on fixed dates over a period of years, for example, can change the nature of a bonus from discretionary to a contractual expectation. In Wong Huey Lan v Colgate-Palmolive (HK) Ltd [2002] HKCU 296 (unreported, HKLA 77/2001), Deputy Judge Lam held that a bonus scheme which was described as discretionary was in fact contractual and therefore fell within s 11A of the EO, entitling the claimant to a pro rata payment. For an employee to show that a bonus falls within the scope of s 11A, he or she must show: (a) that the entitlement under the bonus scheme is contractual; and (b) that the payment is not payable only at the discretion of the employer. On a close examination, it was held that the scheme operated by the employer was not purely discretionary where the discretion could only be exercised with regard to clearly objective targets. The employer was therefore answerable to the employee with regard to payment under the bonus plan, when the employee could demonstrate that the objective targets had been achieved.

In Post Vanessa Jane v Nomura International (Hong Kong) Ltd [2001] HKCU 410 (unreported, HCA 7259/1997), S Kwan J considered a claim by an employee for an unpaid bonus which included a discretionary element. Nomura's employee handbook contained a clause which provided that the employee was entitled to be considered in the discretionary award of a bonus. The court looked at what the employer's obligation was and how far it extended in respect of discretionary bonuses, adopting the test set down by Burton J in the English case of Clark v Nomura International plc [2000] IRLR 766. Burton J found in that case that an employer's discretion in deciding whether to award any bonus is generally subject to a test of irrationality or perversity (ie that no reasonable employer would have exercised his discretion in this way). A court will not therefore find that an employer has breached its duty to exercise its discretion properly unless the decision as to the award of a bonus is capricious or unreasonable taking into account the surrounding circumstances.

Valid Reasons for Dismissal - Unreasonable Dismissal

In Vincent v South China Morning Post Publishers Ltd [2003] 4 HKC 119, the plaintiff brought a claim under s 32A(1) of the EO. That section provides that an employee who has at least 24 months' service will be entitled to remedies where he has been dismissed by his employer in order to extinguish or reduce any right, benefit or protection conferred upon him under the EO. The plaintiff complained that he was dismissed because his employer wanted to avoid a long service payment to which he would become entitled upon the fifth anniversary of his commencement.

Pursuant to s 32K, an employer can defend such a claim by showing that there was a 'valid reason' for the employee's dismissal including: (a) the conduct of the employee; (b) the capability or qualifications of the employee; (c) the redundancy of the employee; (d) the employment is unlawful; or (e) any other reason of substance which warrants dismissal. Failure to demonstrate a valid reason for dismissal upon termination of employment will expose employers to claims under this section. More such claims of this nature will be made in the current climate, particularly where employees perceive that they are being dismissed in order to avoid paying contractual bonuses which fall due on a certain date, or to extinguish any other rights or benefits.

Separation Agreements

If an employee is terminated and the employer wants to bring a conclusion to the relationship between the parties, a separation agreement is advisable. Upon a payment in excess of the employee's contractual and statutory entitlements (commonly referred to as an ex-gratia payment), the employer can ask the employee to waive all his or her future rights against the employer arising out of the employment and the termination thereof. Separation agreements should contain a breakdown of the payment of benefits, any post-termination restrictions that the employer wants to enforce against the employee, a confidentiality clause, a non-disparagement clause and any other matters that need to be addressed. The Court of Appeal in Commissioner of Inland Revenue v Elliott [2007] 1 HKLR 297 held that an ex-gratia payment for consideration of the cessation of employment will not be taxable to the extent that it does not comprise consideration for works conducted (garden leave, payment in lieu of notice etc). Employees should therefore also be advised as to the tax implications of how payments are calculated when they are offered an ex-gratia payment, and every effort made to ensure that it is correctly described in the separation agreement so as to facilitate and ensure tax efficiency.

Dismissals and Claims: Current Trends

Pressure to reduce head-count and costs in today's economic climate has resulted in employees being treated in a manner that they never anticipated would be possible when they entered into their employment contracts. Many finance companies and banks are exploiting contracts to find means to justify non-payment of bonuses, including guaranteed bonuses, or simply terminating employees. As the market is flooded with talent, employees are complaining of having been dismissed as 'redundant' and being replaced almost immediately by a less expensive employee. There has been a marked increase in claims filed with the Labour Tribunal, which has exclusive jurisdiction over all employment claims, no doubt as a result of employers doing what they can to reduce head count.

Employers will at the very first opportunity apply for certain claims to be transferred to the High Court, to try to dissuade a former employee from pursuing their claim. Unless the sums concerned are particularly significant, most claimants will not be prepared or will not have the financial means to risk an adverse costs order by pursuing their claim in the High Court. Employers should be aware, however, that only complex claims will be transferred to the High Court and the fact of a claim being for a significant amount of money in itself will not guarantee that the Tribunal will transfer it.

International Employees and Cross-Jurisdictional Issues

Many employees who work for large multi-national corporations in Hong Kong are employed on contracts which are governed by the laws of their home jurisdictions. The ease with which employers can terminate a Hong Kong-based employee does not extend to such cases. To make someone redundant under English law, for example, requires a consultation period and a statutory dismissal procedure. Failure to comply with such procedures can increase the amount of compensation payable to that employee. It is imperative for employers to check the employment contracts of such employees to ensure that they are complying with the relevant law when they terminate such employees. Other considerations for international employees are repatriation entitlements, such as relocation allowances, flights, shipment of household goods and tax considerations.

What Does the Future Hold?

The emotional and psychological implications of the waves of redundancy and terminations will have a continuing effect on the employment landscape. Many people who have lost their jobs in Hong Kong have no protection for their ancillary costs. Having believed that their jobs were safe, they may now find themselves burdened with long and expensive leases, with children enrolled in schools, and other financial commitments that they cannot easily unwind. Individuals may feel betrayed by their employers, bitter and let down by management. This is not how people expect their careers to work out - particularly lawyers, who may have spent the vast proportion of their career with one firm and who expected to one day reach partnership, but find themselves having to start all over again at another firm.

As the tide turns and the recruitment drive begins, employers can expect employees to negotiate much harder at the outset on the terms of their employment contracts. Those who feel that they have been badly treated as a result of the economic crisis will be asking for guaranteed bonuses without any conditions, longer notice periods and guaranteed employment for a set period of time up-front. Whether employers will feel compelled to concede to these terms will be a function of demand and supply, but it certainly appears that, from the current low watermark, the tide will turn again to the benefit of employees.

Emily Duncan
Senior Litigation Assistant
Laracy Gall
duncan@laracygall.com

終止合約的困難時期
正當裁員及其他終止僱傭合約的情況大量湧現之際， Emily Duncan 探討了最容易引起僱員索償問題的法律和實務。

經濟低迷令越來越多人失去他們的工作。經濟學家預料在2009年會有更多人加入失業大軍。本文探討了在目前的經濟環境當中，終止僱傭合約對僱員及僱主雙方所造成的影響及風險。

雖然相對於其他司法體系而言，香港並沒有訂立最能保障僱員的法例，但僱主仍然應該謹慎行事。在終止合約過程中所犯的錯誤可能會引起大額索償、不必要的媒體關注以及破壞工作間的士氣。

時間及法定福利／保障

《僱傭條例》（第57章）列出明確的資格準則，一旦滿足該等準則，即產生特定的法定福利及保障。按連續性僱傭合約受僱（亦即受僱最少四週，每週最少工作 18 小時）之僱員，有權享有休息日、帶薪法定假期、帶薪年假及疾病津貼。連續受僱兩年屆滿，僱員即享有裁員遣散費，以及按照《僱傭條例》第VIA 部享有不合理解僱保障。若符合進一步條件，僱員服務 5 年屆滿即可獲長期服務金。

終止合約的方式

《僱傭條例》規定，僱主可給予或無須給予合約通知而解僱僱員，並且在合適情況下，可即時及因理由而予以解僱。在香港，僱主沒有義務在終止僱傭合約時向僱員提供理由。然而，在某些情況下，未能提供有關理由會增加被指控為因歧視性因素而解僱員工，又或以解僱員工為手段從而逃避支付員工如繼續留任所應得的福利等種種風險。在不具備因嚴重行為不當而即時解僱員工的情況下，根據《僱傭條例》第 9 條，僱主可以選擇給予僱員終止合約的通知，並要求僱員服務至通知期滿（或給予他們 「過冷河期」）又或是支付工資以代替通知，從而立即終止他們的僱傭。

工資支付的計算

在終止僱傭時，僱主必須支付自上次發薪日起至終止合約期間的所有工資，任何用以代替終止合約通知的代通知金（若適用），累積但未用完的年假的享有權利，在該花紅分發年中任何按法定比例計算的年終花紅 (並非為酌情性質) 以及任何在僱傭合約細則下訂明在終止合約時需向僱員發放的金額。此等欠薪須於僱傭合約終止後七天內向僱員付清（《僱傭條例》第23條）。僱主若未能在僱傭合約終止後付清僱員應得的所有合約及法定款項，將會面臨潛在的不當解僱索償。有關的法定推定是，若僱傭合約中包含年終花紅，則除非合約特別訂明該花紅乃屬於酌情性質，否則須作為合約賦予的權利而須予以支付。

假如僱員按連續性合約服務滿兩年，則有關的法定推定是，該僱員是因裁員而遭解僱（《僱傭條例》第31Q條）。若終止僱傭合約的原因為裁員，則香港僱員在公司服務滿兩年後，便有權享有裁員補償，計算方法是每服務滿一年便可取得相當於該年內月薪的三分之二（或港幣15,000，以金額較低者為準），以及按比例計算未完成服務年期的補償金額。

香港的僱主及僱員可以享有以支付通知金，代替向僱員發出終止合約通知的做法，即使在合約中並沒有訂明有關情況（《僱傭條例》第7條）。《僱傭條例》中的工資定義 （參見第2條）不包括任何勤工津貼、勤工酬金或任何「賞贈性質」或純粹由僱主酌情決定是否發放的佣金（例如簽約獎金），以及任何賞贈或純粹由僱主酌情決定是否發放的年終花紅之全額或其中按比例計算部分。

基於2006年一宗勞資個案 (Lisbeth Enterprises Ltd v Mandy Luk (2006) 9 HKCFAR 131) 的裁決 （終審法院裁定佣金不包括在薪金的定義內），勞工處提出一項法例修訂，並在《 2007 年僱傭（修訂）條例》正式實施。現時的情況是，僱主必須運用僱員最近12個月內的總工資之平均數來計算《僱傭條例》下的法定享有權益，而由於合約訂明的佣金亦為法定定義所述的「工資」，所以這亦須包括在法定享有權益內。《僱傭條例》同時亦涵蓋了合約訂明的年終酬金。

花紅的管理

很多在經濟低迷時出現的糾紛，均與僱員就花紅提出的索償有關。我們每天閱讀報章都會看到有關「花紅」的頭條報導。花紅的金額多少不但經常是茶餘飯後的話題，亦是矛盾的焦點。

花紅是金融業支付薪資的一個基本組成部份。銀行傳統上會發放花紅以獎勵良好的表現，以及吸引和挽留人才。花紅能鼓勵傑出的表現，並協助銀行留住市場中最出色的人才。理論上，僱主可以隨他們的意願發放花紅。花紅制度是自由經濟市場的一種輝煌表現形式。

透過花紅而作出與性別、殘障或種族等有關的歧視是不合法的。大部份僱主深深明白這基本道德及法律的限制，並且明白給予一位僱員較高花紅的唯一可接受理據，應該是僅以表現為基礎準則。

當發放花紅的準則缺乏透明度，問題便會出現，而僱主亦會面對索償。除了對保證花紅提出索償外，大部份的花紅索償出現於當僱員所得的花紅比其他人低的時候。要避免出現此等索償的風險，僱主應該向僱員傳閱有關花紅獎勵的客觀書面準則，並向個別員工解釋作出有關花紅決定背後的原因。假如僱主不打算這樣做，便必須準備就任何不一致的情況作出解釋。除了為花紅索償進行辯解所帶來的明顯麻煩外，在僱員提出有關索償時，僱主亦有責任向法院公開原告用以作為比較的員工所獲發的花紅。對於很多僱主而言這是件極為尷尬的事；因為即使在最暢旺的時候，有關資料仍然極為敏感。

與花紅相關的香港法例

香港的法庭裁決，為僱員及僱主就僱主在支付酌情性質花紅及合約性花紅上的責任作出了若干指引。

僱主不應假定把花紅稱為「酌情性質」，便必定能保障他們免受就合約性花紅提出的索償。花紅要真正成為酌情性質，便必須運用酌情權。例如，假如在若干年內在固定日期支付固定金額之花紅，此做法可將花紅的性質由酌情決定變為合約期望。在Wong Huey Lan v Colgate-Palmolive (HK) Ltd [2002] HKCU 296（未經報導, HKLA 77/2001）案件中 ，Deputy Judge Lam裁定一項被稱之為酌情性質的花紅計劃實質為合約性，而因此根據《僱傭條例》第11A條，原告有權獲按比例計算的花紅。作為僱員，如需證明花紅屬於第11A條中所列明的範疇，則必須証明： (a) 有關花紅計劃下的權益為合約性；及 (b) 有關款項並非純粹由僱主酌情決定是否發放。法官再仔細分析後裁定，由於酌情發放之準則實質是以明確客觀的目標為依歸，所以僱主提供的花紅計劃並非純粹為酌情性質。因此，當僱員能夠證明客觀目標已經達成時，僱主便需要支付僱員按花紅計劃所應得的款項 。

在Post Vanessa Jane v Nomura International (Hong Kong) Ltd [2001] HKCU 410（未經報導, HCA 7259/1997）案件中，S Kwan J接納了一個由僱員就未支付的花紅所提出的索償，而該花紅帶有酌情性質。Nomura 公司的員工手冊中的其中一項列明，僱員有權被列入酌情性質花紅的考慮之列。法院查閱了僱主的義務及在酌情性質花紅上的義務範圍，並採用了Burton J在英國案例（Clark v Nomura International plc [2000] IRLR 766）中所定的驗證。Burton J 在該案中裁定，僱主決定是否發放任何花紅的判斷，一般可進行不合理或反常的驗證（即沒有任何理性的僱主會作出此方式的判斷）。因此，除非發放花紅的決定反覆無常，又或是在相關情況下為非合理的決定，否則法院不會認定僱主違反其須正確行使判斷的義務。

解僱的有效理由 ─ 不合理解僱

在 Vincent v South China Morning Post Publishers Ltd [2003] 4 HKC 119一案中，原告人根據《僱傭條例》第32A(1)條提出索償。該條文規定，具有最少24個月服務年資的僱員，當僱主將其解僱乃是為了終絕或縮減任何在《僱傭條例》下賦予僱員的權利、福利或保障時，僱員將有權獲得補償。原告投訴稱，僱主為避免他在工作中服務滿五週年後有權獲得長期服務金，因而將他解僱。

根據第32K條，僱主可以透過說明僱員被解僱是出於「合理原因」而為索償進行辯護，理由包括：(a)僱員的行為；(b)僱員的能力或學歷資格；(c) 僱員人手重疊；(d) 僱傭關係並不合法；或 (e) 任何可支持解僱的合法理由。若僱主未能在終止僱傭合約時提供合理解僱原因，則僱主有機會遭受按此條文提出的索償。在當前的環境下可能會出現更多此類型性質的索償，尤其是當僱員認為自己被解僱是為避免在某日期屆滿時所需支付的合約性花紅，又或是被終絕任何其他權利或福利。

終止關係協議

當僱員被終止僱傭而僱主希望結束雙方關係時，簽署終止關係協議是一個可取的做法。僱主可透過支付超乎僱員的合約及法定權益以外的金額（通常被稱為恩恤金），要求僱員放棄今後對僱主就其僱傭關係及終止合約所擁有的權利。終止關係協議應包括所支付的福利之細項，任何僱主希望對僱員施行的終止合約後限制，一項保密性條款，一項不得惡意中傷條款，以及任何其他需要列明的事項。上訴法庭在Commissioner of Inland Revenue v Elliott [2007] 1 HKLR 297一案中裁定，作為終止僱傭之代價而支付的恩恤金無須課稅，只要款項不包含為提供之工作（過冷河期、代通知金等等）而支付的代價。所以，當向僱員提供恩恤金款項時，僱主應告知款項計算方式之稅務影響，並且盡力確保在終止關係協議中對其作出正確描述，以便利及確保稅務效益。

解僱及索償：當前趨勢

目前的經濟環境所造成縮減人手及成本的壓力，令僱員面對一些在簽署僱傭合約時從未預料會發生的遭遇。很多金融機構及銀行正利用合約來找尋方法以求無須支付包括保證花紅在內的各種酬金，或乾脆把僱員辭退。由於市場上人才濟濟，僱員投訴被僱主以「裁員」的理由解僱，而同時其職位差不多馬上就被另一個較為便宜的員工所取代。現時向勞資審裁處提出的索償個案明顯增加，原因無疑是由於僱主正施展渾身解數以求減少員工人數。在所有僱傭索償上，勞資審裁處擁有專屬司法管轄權。

僱主會首先嘗試申請把某些索償轉介至高等法院處理，以圖勸阻前僱員繼續進行索償。除非涉及的金額非常龐大，否則大部份的原告人並不準備或並無經濟能力承擔一旦向高等法院提出索償失敗後而需要支付訟費的風險。但僱主亦須留意，只有複雜的索償才會被轉介至高等法院，而即使索償涉及的金額很高，這事實的本身也不能保證勞資審裁處必然會將該宗索償個案轉介。

國際僱員及跨境司法管轄權問題

很多在本港的大型跨國企業工作的僱員，其合約均受其國家的法例所規管，僱主並不能輕易用解僱香港僱員的方式來解僱這些人。例如，在英國法例下，要裁員便需要經過一個諮詢期及法定的遣散程序。未能遵守有關程序，將會導致向該僱員所須作出的補償增加。僱主必須查看有關僱員的僱傭合約，以確保他們在解僱有關僱員時已遵守相關的法例。其他有關國際僱員的考慮包括遣送回國的權益，例如搬遷津貼、機票、家具船運費用以及稅務考慮。

未來將會怎樣？

裁員及解僱潮的情緒及心理影響，會對就業情況產生持久的作用。在香港，很多失去工作的人並沒有任何保障以幫補其各項開支。他們一直相信自己的工作非常穩妥，但現在卻可能發現自己需要負擔長遠而昂貴的租金，子女的教育，以及其他他們無法輕易卸下的財務承擔。部份人士會覺得被僱主出賣，充滿憤恨及對管理層感到失望。這並非人們對工作的期望-特別是對那些可能花了大半生在同一律師事務所工作，並希望終有一天成為合伙人，但最終發覺自己需要在另一所律師事務所從新做起的律師而言。

當解僱潮退去而招聘意欲開始出現時，僱主可以預計僱員在一開始定立僱傭合約時，便會更積極地討價還價。那些覺得因為經濟危機而遭到不合理對待的僱員會要求無條件的保證花紅，更長的通知期，以及預先承諾一個保證的僱用期。僱主會否覺得有必要應允該等條件，須視乎供求情況而定，但以目前的低水位情況來看，似乎很明顯在未來將會再度回到對僱員有利的光景。



Emily Duncan
Senior Litigation Assistant
戴高律師行
duncan@laracygall.com