CHEUNG WAN SHING v. KING WIN DYEING WORKS LTD.

LABOUR TRIBUNAL APPEAL NO. 101 OF 1994

IN THE SUPREME COURT OF HONG KONG

HIGH COURT

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JUDGMENT

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The Appeal

1. On 20 April 1994, Mr Cheung Wan Shing (the respondent) was dismissed from his employment by King Win Dyeing Works Limited (the appellant). He was paid seven days' pay in lieu of notice. He applied to the Labour Tribunal for a severance payment, and, on 17 October 994, he was awarded the sum of $12,150 for this. The appellant applied for leave to appeal against this decision.

2. On 2 December 1994, the appellant was given leave to appeal on the following ground -

"The Claimant was not dismissed by reason of redundancy. In finding that the Claimant was dismissed by reason of redundancy, the Presiding Officer erred in law in holding that the presumption of redundancy under section 31Q of the Employment Ordinance, Cap. 57, can only be displaced or rebutted by the Employer proving that the Employee was dismissed with cause justifying summary dismissal under section 9."

3. This ground of appeal is somewhat narrow, and it does not really reflect what the Presiding Officer held in the case. Not surprisingly, Mr Anderson Chow, who appeared for the appellant, went somewhat beyond this ground, as will appear later. In fact, Mr Johnson Lam, who appeared for the respondent, complained about this. There is only a need to consider whether additional leave should be given if Mr Chow's argument might succeed if leave were granted.

The Reasons for Decision

4. The relevant parts of the Presiding Officer's reasons for his decision are as follow -

". . . The only issue I had to consider was whether the Respondent was entitled to severance payment.

The relevant part of section 31B of the Employment Ordinance, Cap 29 (sic) spelt out the rights of employees to severance payment provided -

• he had been employed under a continuous contract for 24 months
• he was dismissed by reason of redundancy.

. . . Section 31C provided for the general exclusions from rights to severance payment. Briefly put its effect was that if the employee was dismissed with cause (i.e. summary dismissal under section 9) he was not entitled to severance pay.

There was no dispute as to the duration of employment. Nor was any dispute concerning the amount of monthly wages received by the Respondent during the course of employment. The only issue left therefore was whether the dismissal was under section 9 or it was a dismissal under [other] circumstances.

[The Presiding Officer then outlined the circumstances under which the appellant was dismissed and the steps the "proprietor" and his son said that they took to find a replacement for the appellant. He then went on to say -]

I was not impressed by the witnesses for the Applicant. I found for a small factory like the Applicant's, the 2 Mr Chus were remarkably unfamiliar with the recruitment exercise. I did not trust them. I also had my doubt as to their entitlement to dismiss the Respondent under section 9 but I did not consider it appropriate to make any finding on this point. Having had the benefit of the observing the 2 witnesses for the Applicant in court and by reasons of the matters stated above, I was not satisfied that the Applicant had succeeded in tilting the balance in their favour and discharge the burden of proof in showing that the dismissal was not by reason of redundancy."

The Appellant's Argument

5. Mr Chow argues that the Presiding Officer erred in holding that the only issue ". . .was whether the dismissal was under section 9 or it was a dismissal under [other] circumstances". He suggests that the Presiding Officer fell into this error because he focused his attention on section 31C. Mr Chow says that the Presiding Officer failed to direct himself on the real issue in the case: whether the dismissal was by reason of redundancy within the meaning of section 31B (2). He further argues that the Presiding Officer's statement that he did not consider it appropriate to make any finding as to the respondent's entitlement to dismiss under section 9 was a direct contradiction of his earlier statement that the ". . . only issue left therefore was whether the dismissal was under section 9 or it was a dismissal under [other] circumstances".

6. Mr Chow submits that there are two conditions to be satisfied before an employee is entitled to a severance payment -

a) the employee was dismissed by the employer within the meaning of section 31D (1); and

b) the dismissal was by reason of redundancy within the meaning of section 31B (2).

The Legislation

7. Section 31D (1) says -

"(1). . . an employee shall be taken to be dismissed by his employer if, but only if -

(a) the contract under which he is employed is termi- nated by the employer with or without notice or payment in lieu thereof other than in accordance with section 9 . . .".

Section 9 provides -

"An employer may terminate a contract of employment without notice or payment in lieu . . ."[essentially where the employee breaches his contract].

8. Section 31B(2) provides -

"(1). . . an employee who is dismissed shall be taken to be dismissed by reason of redundancy if the dismissal is attributable wholly or mainly to the fact that -

(b) the requirements of that business for employees to carry out work of a particular kind, or for employees to carry out work of a particular kind in the place where the employee was so employed, have ceased or diminished or are expected to cease or diminish."

9. Section 31C (1) reads -

". . . an employee shall not be entitled to a severance payment by reason of dismissal where his employer, being so entitled by reason of the employee's conduct, terminates his contract of employment without notice or payment in lieu in accordance with section 9."

10. Section 31Q reads -

". . . an employee who has been dismissed by his employer shall, unless the contrary is proved, be presumed to have been so dismissed by reason of redundancy."

Construction of the Legislation

11. From section 31D (1), one would conclude that, if the contract is terminated in accordance with section 9, there is no dismissal for the purposes of this case.

12. Reading sections 31D (1) and 31B (2) together, if an employee has his contract terminated in accordance with section 9, the conclusion seems to be that he cannot be taken to be "an employee who is dismissed" by reason of redundancy.

13. It is to be noted that section 31C (1) refers to termination of a contract of employment without notice or payment in lieu in accordance with section 9. It is common ground that the respondent was paid seven days' wages in lieu of notice. It is difficult to understand why the words "without notice or payment in lieu" were included in this provision. One would have thought it sufficient to use words to the effect that the employee would not be entitled to a severance payment by reason of dismissal where his employer, being so entitled by reason of the employee's conduct, terminates his contract of employment in accordance with section 9.

14. One must say that an employee whose contract has been terminated in accordance with section 9 is not "an employee who has been dismissed" for the purposes of section 31Q. It would seem, on the face of it, that one must read section 31Q as saying that the presumption only arises where an employee has been dismissed by his employer without a cause provided for by section 9, or, where there is such a cause, without notice or payment in lieu.

15. Is one to conclude that where an employer is entitled to terminate a contract of employment without notice or payment in lieu under section 9, but terminates with payment in lieu of notice, he, by this act of generosity, exposes himself to liability for a severance payment? This would be very strange, and difficult to accept as the real intention of the legislature, but Mr Chow concedes that there is no dispute that the respondent was dismissed within the meaning of section 31D (1); in his skeleton submission, he put the matter this way: ". . . because on the evidence before the Tribunal, there is no doubt that [the respondent] was not dismissed 'without notice or payment in lieu' in accordance with section 9. . . .[the respondent] was in fact paid seven days wages in lieu of notice pursuant to his contract of employment." I would be reluctant to come to the conclusion that where an employer is entitled to terminate a contract without notice or pay in lieu, but does not do so, and gratuitously pays wages in lieu or gives notice, he takes himself out of the protection of the legislation. Thankfully, I have concluded that the problem does not arise in this case.

Was the Respondent "dismissed?

16. The difficulty is there only if the Presiding Officer had found that there was cause for dismissal under section 9, but there had been payment in lieu of notice. If, of course, the Presiding Officer had found that a cause for dismissal had not been established under section 9, there is no problem on this aspect of the matter.

17. Unfortunately, the Presiding Officer specifically avoided making a finding as to whether the appellant was entitled to terminate the contract under section 9. What am I to do in these circumstances?

18. I am reluctant to remit the case to the Tribunal, which is already overburdened, if I am able to resolve the difficulty myself. I am also reluctant to order a further hearing before this court, either on whether leave should be given to amend the grounds of appeal or for further argument on other aspects of the matter. The sum in dispute is small compared to the costs already incurred, and it would not be conducive to the ends of justice to make an order that would incur further costs.

19. Under section 35 of the Labour Tribunal Ordinance (Cap. 25), I have the power to draw any inference of fact, but may not reverse or vary any determination made by the tribunal on questions of fact. As I have said, the Presiding Officer did not make any determination on the question of the appellant's entitlement to terminate under section 9, although he said he had doubt about it. There cannot be any doubt as to what determination he would have made if he had decided to do so. Clearly, he did not believe the witnesses for the appellant; he says he did not trust them. I adhere to the view I expressed in Chow Koon Sing v. Fan Kok Choy (Unreported; LTA 26 of 1989) and agree with that stated by Rhind J. in Wan Hung Shu v. Li Chun Yam [1993] 2 HKC 714 that there is no onus on an employee to show that he was not dismissed for cause; if an employer dismisses an employee, it is for the employer to justify that action. It is a fact that the Presiding Officer found that he could not trust the witnesses for the appellant, and he makes it clear he did not believe them. If the Presiding Officer did not believe the witnesses for the appellant, he could not have concluded other than that the appellant had not justified the dismissal, and, therefore, that section 9 did not apply. If section 9 did not apply, the presumption contained in section 31Q applied squarely to the case.

20. I believe I am quite able to come to these conclusions, as matter of inferences from the facts, without remitting the matter. Accordingly, I conclude that the respondent was dismissed within the meaning of sections 31B, 31C, 31D and 31Q.

Presumption under Section 31Q

21. Assuming that section 31Q does apply, Mr Chow's main point is that the Presiding Officer failed to direct himself on the real issue; whether the dismissal was by reason of redundancy. I cannot agree with this submission. The reasons for his decision are a little confusing in places, but there can be no doubt that they get to the right place in the end. This aspect of the matter was certainly considered by the Presiding Officer, and he directed himself properly. He questioned the appellant's witnesses about filling the vacancy left by the respondent's departure. The purpose for this could have been only an exploration of the issue of redundancy. Having done this, he considered the evidence and concluded that he did not trust what the appellant's witnesses said. He held that he was not satisfied that the appellant had succeeded in tilting the balance in their favour and discharge the burden of proof in showing that the dismissal was not by reason of redundancy. He had adequate grounds for doing so. The only niggle is the figures appearing at page 29 of the appeal bundle. This indicates that, after the respondent's departure, the "extra hours" worked by the respondent's colleagues increased. The Presiding Officer did not make a specific finding of fact regarding this, but this evidence emanated from the appellant, and, if he did not trust the appellant's witnesses, there was no reason why he should trust this evidence.

The Result

22. It follows from I have said that the Presiding officer's finding that the presumption arising under section 31Q had not been rebutted cannot be disturbed.

23. In the result, the appeal is dismissed with costs.