CATHY PACIFIC AIRWAYS LTD v. TAM WAI MEI

HCLA95/2004

IN THE HIGH COURT OF THE

HONG KONG SPECIAL ADMINISTRATIVE REGION

COURT OF FIRST INSTANCE

LABOUR TRIBUNAL APPEAL NO.95 OF 2004

(ON APPEAL FROM LBTC 3372 OF 2004)

-----------------------------------------

---------------------

------------------------

J U D G M E N T

------------------------

Background

1. The respondent Ms May Tam (“Ms Tam”) was an employee of the appellant (“Cathay”) as a ground crew member between 16 September 1998 and 16 February 2004.  After the termination of Ms Tam’s employment, she claimed compensation for not granted the statutory holidays as provided under section 39 of the Employment Ordinance, Cap.57 (“the Ordinance”). 

2. The employer Cathay appeals to this court against the decision of the Presiding Officer, Mr George Own, who awarded the sum of $25,069.90 with interest for the outstanding statutory holidays according to the claim of Ms Tam.

3. According to two rosters produced to the court in respect of the periods between 28 December 2003 to 31 January 2004 and 1 February 2004 to 28 February 2004, Ms Tam, as usual, was required to work 44 hours a week.  They were designated in the rosters on five days of the week ranging from eight hours to nine hours a shift.  Accordingly, there would be two days off each week which were marked “off”.  Ms Tam received the rosters a few days before the commencement of the rosters.  Invariably she received it more than 48 hours before she started the duty as stated in the rosters.

4. Ms Tam said as a ground crew member the practice was that she would have to work in shifts but this would be spread over five days of the week and consequently she would be entitled to two rest days a week. 

5. As a result of the shift duty, chances are for the public holidays or the 12 statutory holidays as stipulated under the Ordinance, she would have to work on those days from time to time as other ground crew members’ term of employment.

6. After her contract of employment was terminated, she enquired at the Labour Department and she was advised that she should be entitled to statutory holidays and therefore she lodged the claim in the Labour Tribunal.

The Statutory Requirements

7. I would like to state the relevant provisions and effect of the Ordinance which is applicable to this case herein below :

(1)	Section 17 requires that employees be granted a minimum of one rest day in every period of seven days in additional to any statutory or alternative or substituted holiday falling in that period.
(2)	Section 39(1) requires that employees be granted 12 statutory holidays as stipulated therein.
(3)	Section 39(2) permits an employer to designate by oral or written notice an alternative holiday 48 hours before the statutory holiday.
(4)	Section 39(3) permits an employer and employee to agree on the provision of a substituted holiday for a statutory holiday.
(5)	Section 40A(1) provides that holiday pay may not be paid in lieu of the grant of a holiday.
(6)	Section 40A(2) provides that where a contract of employment of an employee is terminated, holiday pay in respect of a holiday granted as an alternative holiday or substituted holiday prior to the termination of the contract of employment but falling after such termination shall be paid to that employee as calculated in accordance with section 41, notwithstanding anything in subsection (1).
(7)	Section 41(1) provides that holiday pay shall be a sum equivalent to the wages of the employee would have earned on a full working day.
(8)	Section 42 provides that where an employee is paid ordinary wages in respect of any holiday, the employee shall not be entitled to be paid holiday pay in addition to such ordinary wages.

The Employer’s 1^st Defence

8. The employer’s first defence to the claim that the employee was not given any statutory holidays as provided under the Ordinance is that the 2^nd rest day in each of the week should be taken as compensation for any statutory holiday which the employee is entitled under the Ordinance.  They said that :

“Shifted staff are rostered to work 5 days in each 7 day period.  As such they receive on average 52 days without work each year over and above statutory rest days.  Such additional days operate in practice as alternative holidays for statutory holidays for the purpose of the Employment Ordinance.”

9. Mr Adrian Huggins, SC appearing for the appellant together with Mr Robin McLeish submitted that the 2^nd paid off-duty day given to Ms Tam each week should be capable of constituting an alternative holiday under section 39(2) of the Ordinance.  However, the presiding officer considered that the roster did not specify which of the “off” days given to Ms Tam in the roster was designated as the alternative holiday for any statutory holiday on which she was required to work.  Say for instance, in the 1^st roster produced, 22 to 24 January 2003, being the first three days of the Chinese New Year were all statutory holidays and Ms Tam was required to work on 22 and 23 January 2003, it was never stated in what way and what days were designated as the exact alternative holiday or in substitution thereof. 

10. The appellant submitted that the employee was given a choice of freedom to designate any date 60 days before or 60 days afterwards from any one of the two rest days of each week as the alternative or substituted holiday.

11. Section 39(2) provides that there should be oral or written notice for the alternative or substituted holiday.  However Ms Tam’s contention is not just on the formal requirement of an agreement or a notice, oral or written, as to the exact designated alternative or substituted holiday.  She said that she was only required to work 44 hours a week.  The rosters disclosed that she was required in each shift to work for eight to nine hours and, therefore, the five working days in shifts would fulfill the 44 hours as required.  (The fact that the administration of the employer sometimes designated 43½ hours was not her responsibility.)   It is true that in most of the week she would have to work 44 hours or at least 43½ hours.  Thus she would be entitled to two full rest days each week, and these two days could not be taken as an alternative or substituted holiday for any statutory holiday.

12. I accept Ms Tam’s submission.  The difficulty faced by the employer is not just the lack of formal strict compliance of the statute to designate the exact date as an alternative or a substitution for the statutory holiday by oral or written agreement.  Without stating the alternative or substituted holiday specifically, the employer, with the benefit of hind sight, just quoted the rest days which the employee was entitled to have, and take half of them as a substitution.  They submitted that they are more than enough since 52 rest days would be enough to substitute for 12 statutory holidays.  But the employee was entitled to two rest days a week after she had worked for 44 hours.  In other words, ground staff are working five days a week only. 

13. In Hong Kong, generally speaking, some employees are required to work 44 hours a week for five and a half days, and they are designated as fixed hours of work between nine and five, from Monday to Friday, and between nine and one on Saturday.  They will then be entitled to a rest day on Sunday and half a day on Saturday.  One cannot say therefore that the half day on Saturday can then be taken as a half day rest day as an alternative or substituted holiday for any statutory holiday.  This is beyond dispute. 

14. However, some employees are required to work 44 hours a week for five days only.  They are therefore given two rest days a week.

15. The reason why the employee here was entitled to two rest days a week was because her shift roster was designed in such a way that she was only required to work eight to nine hours on each shift, and five days would be enough.  In other words, the two rest days were only rest days.  Although the statute requires the minimum provision of one rest day per week under section 17, it does not prohibit an employer granting one day more over and above the minimum requirement of one rest day a week.  Accordingly, the argument of the employer to take some of the rest days as substitution or alternative holidays for the statutory holidays cannot be accepted.

16. The fact that there was no oral or written agreement as to the substitution according to the Ordinance is not just a matter of formality.  If Cathay were to give notice to their ground crew members that 12 designated rest days would be taken as substitution for the 12 statutory holidays, this would certainly create some unrest amongst their ground crew staff and their workers’ Association.

The Employer’s 2^nd Defence

17. The second front of the defence of the employer is that the shift staff, regardless of whether they are required to work on statutory holidays, are entitled to receive an extra remuneration for any statutory holiday falling within a certain month.  This is equivalent to 1/20.5 of the basic monthly salary.  This extra remuneration is known as “Public Holiday Pay” (“PHP”).  It is paid in the following month along with their monthly salary.  The employer contended that it has fulfilled its responsibility by adequately compensating its employee working on statutory holidays.

18. The appellant said that :

“Where an employee is rostered to work on a statutory holiday then such employee is paid an amount equal to 1/20.5 of monthly salary as Public Holiday Pay.  This is in addition to the days without work mentioned above.  As such the company more than compensates employees for any requirement to work on statutory holidays.”

19. Accordingly, the employer contended that the PHP paid to the employee throughout her six odd years of employment amounted to a total of $35,132.60, which is $9,000.00 more than the amount she claimed herein. 

20. However, Ms Tam contended that this is not a kind of compensation nor even a gratuity as found by the Presiding Officer.  She contended that it was a way of calculating her remuneration.  In other words, she was remunerated for having to take shift and some of the shifts fell within the statutory holidays and Sundays.  Thus she, as with every ground crew member, would be given PHP to compensate that irrespective of whether a ground crew member was actually required to work during a statutory holiday.  For example, on 24 January 2003, which was referred to as the 3^rd day of the Chinese New Year previously, she was given another rest day.  Irrespective of the fact that she was given a rest day right on the statutory holiday, she was given PHP making a total of three days of PHP in that week.  This was not a kind of compensation for the statutory holiday on which she had to work.  Therefore it could not be taken as the compensation she claimed for not being given a statutory holiday under section 39 of the Ordinance.

21. As aforesaid, the Ordinance prohibits payments of holiday pay under section 40 in lieu of the grant of a holiday during a contract of employment.  It is inconceivable that a reputable employer such as Cathay would make payments to their employees in lieu of their entitlement to statutory holiday in blatant breach of the Ordinance.  The defence of adequate compensation already paid to Ms Tam is again just a hind-sight argument.

22. As aforesaid, payment of the holiday pay would only be payable upon termination of a contract of employment under section 40A(2) and this will be in accordance with section 41(1).  In the case of Ms Tam, she should be paid the sum equivalent to wages which the employee would have earned on a full working day.

23. It is unfortunate for the presiding officer to use the word “gratuity” designated for the payment under the PHP.  In my view Ms Tam is correct in contending that this is just a way of calculating her additional remuneration for having to work shift and some of the shifts are on public holidays.  She would be paid PHP whether she was required to work on that very public holiday or not.  I am sure a reputable employer like Cathay would not take a course of action which is in blatant breach of the Ordinance.

24. Accordingly, after Ms Tam’s termination she is entitled to claim under section 39 of the Ordinance that she was never given any statutory holidays in accordance with the Ordinance after I have decided that PHP could not be taken as part and parcel of the compensation to her for the statutory holidays.  The amount of compensation should be calculated according to the wages she would have earned on a full working day pursuant to section 41 of the Ordinance.  There is no dispute that the calculation would give rise to the amount she claimed in the Labour Tribunal.

The Jurisdiction of the Labour Tribunal

25. The appellant further submitted that the Labour Tribunal does not have the necessary jurisdiction for the case to award compensation to Ms Tam.  Mr Huggins submitted that the cause of action of Ms Tam is either a breach of an implied term of a contract or a breach of statutory duty.  In respect of a breach of an implied term, Mr Huggins submitted that the statute could not be taken as an implied term in the contract of employment between Ms Tam and Cathay.  Secondly, if Ms Tam was pursuing the claim as a breach of statutory duty, then the Labour Tribunal would not have the necessary jurisdiction.

26. However in respect of the Tribunal’s jurisdiction, the Schedule to the Labour Tribunal Ordinance provides that the Tribunal shall have jurisdiction for :

“1.   A claim for a sum of money which arises from
	….
	(b)	the failure of a person to comply with the provisions of the Employment Ordinance …”

That will be sufficient to enable the Labour Tribunal to have the necessary jurisdiction to entertain the claim of Ms Tam, i.e. that the employer had failed to comply with the provisions of the Ordinance in granting her the necessary statutory holidays.

Conclusion

27. For the aforesaid reason, I would dismiss the appeal with an order nisi for costs to the respondent.  Since the respondent appeared in person, I would on a gross sum assessment basis award her with $1,000.00 as her costs in this appeal.