PAK YUK KAY t/a MEI HOUSE v. TSANG YUK SIM

IN THE SUPREME COURT OF HONG KONG

HIGH COURT

LABOUR TRIBUNAL APPEAL NO. 47 OF 1991

(LABOUR TRIBUNAL CLAIM NO. 1144 OF 1991)

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J U D G M E N T

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1. This is an appeal from the Labour Tribunal in relation to one part of an order made by the learned Presiding Officer, Mr Henry W.C. Wong, on 21st October 1991, whereby the applicant was ordered to pay to the respondent the sum of $4,000, respresenting 11/12ths of two months basic pay less a sum of $1,500 already paid to the respondent at Christmas 1990 which the learned Presiding officer characterised as "triple pay". This was so characterised because such pay is normally made at the end of the year in addition to the monthly salary payable. Since two months' salary was claimed in this case to be the year end payment, the learned Presiding Officer had referred to the payment as "triple pay". For the sake of brevity I shall refer to the claim as the "end-year payment".

2. It is not in dispute that the respondent gave a month's notice of termination of her employment on 5th January 1991. In the normal course of events, she would have left employment on 5th February 1991. However, a complication set in. By her statement to the Labour Tribunal, admitted into evidence as Exh. "C1", she said that after having served the applicant for slightly over three years, she had decided to quit her employment and gave notice on 5th January 1991. During that month she was given 4 days' marriage leave from 24th January to 28th January 1991. However, she felt ill and a doctor gave her 4 days' sick leave, namely from 29th January 1991 to 1st February 1991. The respondent rang up one Cheung Ming Mei of the applicant on 31st January 1991 saying that she, the respondent, might go back to work on 1st February 1991. However, the said Cheung Ming Mei told the respondent that she need not come back to work again. The respondent went back to the applicant's office on 8th February 1991 to get her salary.

3. The applicant's case is that the respondent is only entitled to the year end payment when she had served the full period of one year, and that would only have taken place if the respondent had served till 5th March 1991.

4. The learned Presiding officer has, however, found that the applicant should make the year end payment in proportion to the time served, i.e. since she had served 11 months she was entitled to 11/12ths of the year end payment.

5. The applicant, through the able advocacy of miss Cissy Lam, submits:

(1) that there was no evidence upon which the learned Presiding Officer could find that the contract of employment permitted a proportional payment;

(2)that insofar as the respondent may wish to rely on section 11F of the Employment Ordinance, though the learned Presiding Officer made no reference to this section, the section avails her not since it does not apply to a termination of employment by an employee under s.6 or s.7 of the Employment Ordinance.

6. As to the terms of the contract, I find the learned Presiding Officer's findings less than clear. He states that he "accepts the claimant's, (i.e. the respondent's) version". Her evidence (in Exhibit C-1) was that she was paid a quarter of the year end payment on 20th December every year, half before the 30th day of the Chinese Lunar year and the balance of 1/4, together with the first salary payment of March. As for the year 1990, the learned Presiding Officer found that the respondent was paid 1/4 of the year end payment on 5th January 1990, 1/2 on 20th January 1990 and the balance of 1/4 on 5th March 1990. He then concludes that "as there was no agreement on the condition concerning that triple pay, claimant, (i.e. the respondent) should be given a proportionate payment thereof".

7. The court is left with the task of interpreting this statement. If the learned Presiding officer meant that there was no agreement that the year end payment was only payable upon completion of a full year service, I can well understand the conclusion, since there were in 1990, indeed every year according to the respondent's statment, part payment prior to the completion of the whole year's service. However, it does not follow, and the evidence certainly does not justify, that proportional payment is payable. For example, the payment before Christmas was only 1/4 and just before Chinese New Year, another half. This being the pattern of payment, it is open to the Tribunal to draw the inference that such pattern may constitute a term of the contract. But the evidence does not enable it to find proportional payment as a term of the contract since the pattern of payment is anything but proportional to the time served. Thus, insofar as the learned Presiding Officer finds proportional payment as a term of the contract of employment, I find that such conclusion is unjustified. I shall later deal with the appropriate order that I should make.

8. But, of course, s.11F of the Employment Ordinance may have been in the learned Presiding Officer's mind. The relevant portion of s.11F reads as follows :-

"(1)  Where in the case of an employee to whom this part applies who has not been employed by the same employer for the whole of a payment period but has been so employed for a period of not less than 26 weeks in the payment period

(a)     the contract for employment is terminated-

(i)    at any time during the payment period; or;

(ii)    on the-expiry of the payment period;

otherwise than by the employee under s.6 or 5.7 or by the employer under s.9.

(b)    ...

The employee shall be paid a proportion calculated in accordance with subsection (2).

...

9. Miss Lam draws my attention to the exception in s.11F(1), namely, that the section does not apply to the situation where an employee terminates the employment under s.6 or s.7 of the Ordinance. Section 6 of the Ordinance deals with termination of the contract by an employee giving notice and s.7 deals with the situation whereby the employee may make payment in lieu of notice. It is not in dispute in this case that the respondent gave a month's notice.

10. Section 11F 'of the Ordinance, in my view, offers protection to employees who, through no fault of their own, are forced to leave employment, namely where they have been wrongfully dismissed. There is at least an arguable case here of wrongful dismissal since on 31st January 1991 when the respondent called back, she was told by her employer not to come back to work. Although the respondent had given a month's notice, she was entitled to serve out her period of notice and any curtailment of this period of employment, without her agreement or fault, amounts to a breach of contract. When Madam Cheung told the respondent not to come back to work, such action arguably amounted to a denial of the respondent's right to remain in employment and thus the relationship of master and servant, albeit for the remaining five days.

11. If these facts were established, there would have been a fundamental breach of contract which the respondent was entitled to accept. In this case, the respondent did not come back to work and it was open to the Tribunal, if it had directed the mind to the issue, to have found that she accepted the repudiation.

12. Although the Presiding officer had allowed he applicant's counterclaim to the extent of four days' wages in lieu of notice, he has not directed his mind at all as to the issue of wrongful dismissal. This issue is of fundamental importance if s.11F of the Ordinance is to be relied upon. In the circumstances, I feel that the only just order that I could make is to set aside the order of the learned Presiding Officer to the extent of $4,000 representing the triple pay, as he characterised it, and to remit the following issues back to the Presiding Officer for determination upon rehearing -

(1)    whether it is a term of the contract of employment that payment of the year end payment is conditional on completion of a full year's service, and if not, what are the terms of the contract;

(2)    whether there was a wrongful dismissal of the respondent and whether the     respondent accepted the repudiation of the applicant.

13. It remains for me to thank Miss Lam for her able assistance in this case and I will now hear arguments as to costs if any.

(Submissions on Costs)

14. The costs of this appeal should be the Appellant's costs in the cause of the re-hearing as the merits are. uncertain at this stage but the appellant had been put to the expense of prosecuting this appeal.