WONG YUK LING v. EAST EAST FOOD PRODUCTS LTD AND ANOTHER

HCLA 95/2002

IN THE HIGH COURT OF THE

HONG KONG SPECIAL ADMINISTRATIVE REGION

COURT OF FIRST INSTANCE

LABOUR TRIBUNAL APPEAL NO. 95 OF 2002

(ON APPEAL FROM LABOUR TRIBUNAL CLAIM NO. 5326 OF 2002)

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J U D G M E N T

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1. This is an appeal from the order of Mr Winston Leung, Presiding Officer of the Labour Tribunal, made on 17 September 2002.

2. The Defendants are part of a group that runs fast food chain shops. The three Claimants were their employees. They all worked at the Lok Fu branch. By April 2002, they had worked for the Defendants in that branch for ten years, eleven years and eight years respectively. Two of them were workers and one of them was a washer. All three of them were only "half-timers". They worked from 7 am to 12 noon daily and these working hours fitted their family commitments. They chose a working place close to their homes not only for their families but also to save transportation expenses. They earned a relatively humble sum of $2,300.00 per month by way of salary.

3. In April 2002, the Defendants gave the Claimants notices to transfer them from the Lok Fu branch to the Aberdeen branch. The transfer would cost each of the Claimants about $1,000.00 in additional transportation expenses in order to attend work at the Aberdeen branch. Understandably, they objected to the proposed transfer, but despite their protests, the Defendants insisted on transferring them to the Aberdeen branch. Eventually, the Claimants regarded themselves as having been constructively dismissed by the Defendants. With the assistance of a trade union, they took the Defendants to the Labour Tribunal, claiming wages in lieu of notice, annual leave pay, end of year pay and severance pay/long service pay.

4. The learned Presiding Officer found that the Defendants had abused their power to transfer the Claimants to the Aberdeen branch, and their action amounted to misconduct that could be regarded as constructive dismissal. He therefore held that the three Claimants were all constructively dismissed by reason of redundancy. He went on to award wages in lieu of notice, annual leave pay, end of year pay and severance pay in favour of each of the Claimants.

5. The disputes between the parties in this appeal, brought by the Defendants, essentially boil down to two matters, namely whether the Claimants were constructively dismissed, and whether the end of year pay was discretionally in nature.

6. On the question of constructive dismissal, Mr Chung, counsel for the Defendants, argues two points: first, the Defendants were entitled to transfer the Claimants from the Lok Fu branch to the Aberdeen branch pursuant to clause 4 of their standard-term contracts of employment; secondly, even if the Defendants were not so entitled to transfer the Claimants pursuant to clause 4, their action did not amount to a repudiation of the contracts and therefore there was no constructive dismissal.

7. Clause 4 of each of the contracts of employment reads as follows:

"4.	工作地點：
	如有需要，公司有權合理地將閣下調職往本公司其他業務地點。"

8. In my judgment, on a proper construction of the contract of employment in general and clause 4 in particular, clause 4 which provides for an express power on the part of the employers to transfer the employee to another place of work is predicated upon the presence of a "need" (如有需要). In other words, the employers may only exercise the power to transfer if there is a need to do so. Moreover, as a matter of construction, I would construe the word "need" to mean a genuine business, administrative or operational need of the employers.

9. Further, in my judgment, on a fair reading of the judgment of the learned Presiding Officer, that was also his construction of clause 4.

10. In seeking to transfer the Claimants from the Lok Fu branch to the Aberdeen branch, the only reason given by the Defendants was as follows:

"為配合業務發展及人手調配措施，公司將安排閣下由原來的樂富分店調至香港仔分店工作，而僱傭條件及工作範圍則維持不變。"

11. This was essentially the reason repeated before the Tribunal.

12. It is important to note what the Tribunal had to say about the reason given for the attempted transfer. This can be found on pages 2 and 3 of the judgment of the learned Presiding Officer:

" Mr Kan [of the Defendants] refers me to the contract of employment. By Clause 4, the Defendants have the rights to transfer any staff to another place of business. Mr Danny Chu is the Operation Manager from 1 March 2002. He explains to the court that there were operation needs for such transfers. However he could not explain how such needs arose and what they were. He admits when he arranged such transfers, the inconvenience of the staff never crossed his mind and he never consulted them beforehand. Having considered the evidence of the Defendants as a whole, I find that the explanation for the transfer of Mr Kan and Mr Chu is only perfunctory and they simply rely on Clause 4 of the contract of employment.

From November 2001 to April 2002, 40/50 workers of the Defendants went to seek assistance from Ms. Lee. It is admitted that during this period of time, the number of branches reduced from 8 to 5. There are now 26 cases before the Labour Tribunal. From the information provided by the workers, Ms Lee has prepared a chart showing that 4 staff including the 3 claimants were transferred from Lok Fu branch to Aberdeen branch and 3 staff were transferred from Aberdeen branch, 2 to Lok Fu branch and one to Tai Kok Tsui branch. 2 staff were transferred from Shatin branch to the Aberdeen branch and 2 staff were transferred from Tai Kok Tsui branch to Shatin branch. Mr Chu simply explains that there were operational needs and points out that some staff being transferred were assistant or branch managers.

From the available evidence, I do not see any need for transferring the 3 claimants. They were only factotums, and as Operation Manager who is responsible for human resources, Mr Chu should be well aware that workers like the 3 claimants only worked for convenient times that fit them and at places near their homes. They would not go from Lok Fu area to work in Aberdeen area by spending $1,000.00 out of their income of $2,300.00 on travel expenses. Such transfers as arranged must force them to quit their jobs. Looking at the case as a whole, I am satisfied that the Defendants were using the transfers to force the claimants to leave their employments so that no compensation for long service was necessary. They have a power under Clause 4 but such power must be used reasonably for honest purpose. I am fully satisfied that the Defendants abused such power and for illegitimate purpose. This action amounted to misconduct of the employer that could be regarded as constructive dismissal. I hold that all 3 claimants were constructively dismissed by the Defendants and that it was for redundancy purpose. Mr Kan admits liabilities on the claims of annual leave and end of year pay."

13. It is clear from the judgment extracted above that the Presiding Officer did not accept the purported reason given by the Defendants for the transfer. He obviously found that there was no genuine need for transferring the 3 Claimants. He was satisfied that the Defendants were using the transfer to force the Claimants to leave their employments so that no compensation for long service would be necessary.

14. All this constitutes findings of fact. In this appeal, leave was never sought or obtained to challenge these findings of fact. Nor can this be done given that in the absence of any error of law in the fact-finding process, the findings of fact of the Tribunal cannot be challenged on appeal: see sections 32(1)(a) and 35(2)(i) of the Labour Tribunal Ordinance (Cap. 25). Mr Chung does not suggest that there was any error of law involved, and to be fair, he does not challenge the findings of fact in the appeal.

15. Given those findings of fact, I am of the view that clause 4 was simply not engaged. In other words, based on those findings of fact, there was no genuine need for the transfer. In other words, the Defendants had no power under clause 4 to make the proposed transfer.

16. Of course, this is a case concerning an express mobility clause dealing with transfer. That is all that the Court is concerned with. Given the presence of an express mobility clause, there is no question of the law implying any mobility clause into the contract, and the Court is not concerned with any implied mobility clause. (On an implied mobility clause, see Jones v. Associated Tunnelling Company Ltd [1981] IRLR 477; Yan Kwok Tung v. Napoleon Restaurant Ltd LT 15 of 1990 Keith J (21 November 1991).)

17. Mr Chung further argues that even if the Defendants could not invoke clause 4 to justify the respective transfers, they were not acting in repudiatory breach of the contracts of employment by insisting on the transfers. The short answer to this fallback argument of Mr Chung is that leave was never sought or obtained to appeal against the order of the learned Presiding Officer on this ground.

18. In any event, I see no merit in this argument. It is clear from the judgment extracted above that the proposed transfers, which according to my judgment constituted a breach of the respective contracts of employment, caused serious consequences in that the Claimants were left with no alternative but either to expend about $1,000.00 per month on transportation expenses (out of their meagre monthly salary of $2,300.00) to attend work at Aberdeen or to quit. They could not return to work at the Lok Fu branch as they were simply not wanted there. Mr Chung is unable to suggest any other alternative at the hearing of the appeal. In my judgment, the breach of contract involved was a serious breach, amounting to a repudiation of the contract. That was also, in substance, the conclusion of the learned Presiding Officer, and his further conclusion that in those circumstances, the Claimants were constructively dismissed by the Defendants cannot be flawed.

19. In conclusion, on the question of constructive dismissal, I reject the Defendants' arguments. Mr Chung accepts that in that event, the Defendants' appeal regarding wages in lieu of notice, annual leave pay and severance pay would fail.

20. Lastly, turning to the question of the end of year pay, Mr Chung argues that the pay was discretionally in nature, and therefore the Claimants are not entitled to them.

21. It is true that in the papers filed with the Labour Tribunal in opposition to the Claimants' claims, the Defendants did raise the point that the end of year pay was discretionally in nature.

22. However, it is clear from a fair reading of the transcript (i.e. pages 33-35 of the bundle of documents) that both the liability and quantum in respect of the end of year pay were eventually conceded and agreed by the Defendants' representative at the hearing before the learned Presiding Officer, before whom the only live issue was whether the Claimants were constructively dismissed.

23. Furthermore, the concession of the Defendants was, in my view, quite inevitable given the provisions in the Employees' Handbook of the Defendants. Clause 3 in Chapter 3 of the Handbook clearly provides as follows:

"	3.	年終酬金
	3.3.1	年終酬金將會於農曆新年前發放予仍然在職之僱員。所有於十二月三十一日為止服務滿十二個月之僱員將可獲得相等於一個月底薪之年終酬金。至十二月三十一日為止而服務未足一年，但已滿試用期成為本集團之長期僱員及繼續為本集團服務者，其年終酬金將按服務日數比例計算。
	3.3.2	僱員如於過去一年內曾放取超過十二天無薪事假（服務未滿一年者，將按一整月一天計算），其年終酬金將按比例扣除。
	3.3.3	在任何年份中，無論任何理由下導致之員工自行辭職，或根據僱傭法例第九條執行之解僱，僱員將不獲派發年終酬金。"

24. In my judgment, it is clear from the above provisions that the end of year pay was not discretionally in nature, but was a contractual entitlement of the employee.

25. In respect of clause 3.3.3, an employee would only lose his right to the end of year pay in any particular year if for whatever reason, the employee should "resign of his own accord" (自行辭職). It does not apply if the employee is constructively dismissed by the employer. In my judgment, it does not assist the Defendants at all.

26. In conclusion, I see nothing in the Defendants' argument in relation to the end of year pay.

27. In conclusion, this appeal must be dismissed.

28. Both counsel agree that costs should follow the event and that the costs of the Claimants in this appeal are in the sum of $10,000.00.

29. I therefore make the following order:

(1) the appeal be dismissed;

(2) the costs of the appeal in the agreed sum of $10,000.00 be paid by the Defendants to the Claimants.

30. I understand that the Defendants have paid the awards made by the Presiding Officer into the Tribunal. Following the dismissal of their appeal, the money paid into the Tribunal should now be released to the Claimants in satisfaction of the awards in their respective favour. I trust that this will be done in due course.

31. Lastly, I would like to thank counsel for their helpful assistance. In particular, if I may do so with respect, I would commend Mr Yau, appearing for the Claimants in this appeal, and his team for agreeing to take up this case at a substantially reduced fee, through the introduction of the Bar Free Legal Service Scheme. Despite the almost nominal fee charged by counsel and his team, the Court has been rendered first-rate assistance in this appeal, for which as I said, I am grateful.