TSANG MING AND OTHERS v. HONG NIN SECURITY CO. LTD.

IN THE SUPREME COURT OF HONG KONG

LABOUR TRIBUNAL APPEAL NO. 40/91

(CLAIMS NO. ST-165-7/91)

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J U D G M E N T

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1. This is an appeal from the decision of a Presiding Officer of the Tenancy Tribunal (the Tribunal) given on the 9th August 1991 in which he made awards in Claim No.ST165/91 in favour of six claimants, in Claim No.ST166/91 eight claimants and in Claim No.ST167/91 five claimants. In each case, the award was for wages in lieu of notice for 19 days and double pay. Claims for severance pay were dismissed. Also a number of claimants in these proceedings had their claims for similar relief dismissed on the basis that they had resigned by signing resignation letters to that effect.

2. The only appellant before me is Hong Nin Security Co. Ltd., the defendant in the proceedings before the Tribunal and the admitted former employer of the claimants (respondents). There is no cross appeal by any claimant (respondent) in respect of the dismissal of the whole or part of his claim. I am only, therefore concerning with those cases of the claimants (respondents) for whom awards were made for wages in lieu of notice and double pay.

3. There are a number of grounds of appeal but the appellant's counsel Mr Fung (without objection from the respondents representatives) has argued ground 3 first on the basis that the result of this could be decisive of the appeal as a whole.

4. Ground 3 is that the presiding officer erred in law in finding constructive dismissal for all or any of the following reasons:-

"(1)    The mere communication of employment prospect and/or encouragement to join successor company cannot be sufficient act(s) for constructive dismissal;

(2)    Constructive dismissal cannot be established when there is no evidence that the Appellant would not be reallocating their duties as allowed by contract;

(3)    No or no proper consideration was given to whether the claimants concerned had impliedly resigned by voluntarily joined and took up employment with another employer; or

(4)    No or no proper consideration was given to whether the claimants concerned, by joining and took up employment with another employer, were themselves in breach of their duties in their employment to the Appellant and/or leave the employment of the Appellant without notice."

5. Mr Fung who represents the appellant on this appeal has referred me to a decision of the National Industrial Relations Court in England in Sutcliffe v. Hawker Siddeley Ltd. (NIRC) [1973] ICR 560, where an employee's appeal that he was dismissed by reason of redundancy was dismissed.

6. In that case an employee who contracted to work at his employer's request as an aircraft electrician at any station within the United Kingdom, was so employed for some two years at a station near his home in Norfolk and at other stations in England. Thereafter his employers stated that no work would be available for him at the station near his home and requested him to work as an aircraft electrician at a station in Scotland. He did not wish to leave his home and gave notice terminating his contract of employment which the employers accepted. His claim for a redundancy payment and for compensation for unfair dimissal was dismissed by an industrial tribunal. He appealed on the ground that, since he had been employed at the station near his home and no more work was available for him there, he was dismissed by reason of redundancy within s.1(2)(b) of the Redundancy Payment Act 1965.

7. The relevant parts of that Act were as follows:-

"(2)    ... an employee who is dismissed shall be taken to be dismissed by reason of redundancy if the dismissal is attributable ... to

...

(b)    the fact that the requirement of that business for ... employees to carry out work of a particular kind in the place where he was so employed, have ceased ..."

8. It was held dismissing the appeal that the words "where he was so employed" in s.1(2)(b) of the Act meant "where under his contract of employment he could be required to work". Accordingly, since the employee could be required under his contract of employment to work at any station in the United Kingdom and was required to work in Scotland, ample work of the relevant kind being available, he was not dismissed by reason of redundancy. However, where an employor places his employee in a position where he has no option but to tender his notice, a court or tribunal ought to find that he is dismissed and a constructive unfair dismissal can exist for the purposes of s.23(2) of the Industrial Relations Act of 1971.

9. That decision was followed in the United Kingdom Atomic Energy Authority v. Claydon [1974] ICR 128, where the employee, a draughtsman, was engaged by the employers under a contract the terms of which included a provision that the employers reserved the right to require any member of their staff to work at any of their establishments. In April 1969, the employers decided to move the work in which the employee was engaged to another area, and offered to transfer the employee to the new establishment. The employee did not want to go and in May 1971 he was dismissed. On an application by the employee for a redundancy payment, an industrial tribunal held the employee had been dismissed by reason of redundancy caused by the move to a new area and that the employers ought to have made a written letter of suitable alternative employment as required by s.2(3) of the Redundancy Payment Act 1965 since the new contract involved the employee being employed in a different place and that since there was no written letter, the employee could not be said to have unreasonably refused the transfer and he was dismissed by reason of redundancy within s.1(2)(b) of the Act.

10. The employer's appeal was successful on the basis that the words "the place where he was so employed" and the "place in which he would be employed" in s.1(2)(b) and 2(3) of the Act meant the place where under his contract of employment he could be required to work, namely, the employer's establishments as a whole; that accordingly, since there was work available, the employee was not dimissed on account of redundancy and was not entitled to a redundancy payment.

11. Mr Fung suggests that these authorities are apposite in the Present appeal and that the presiding officer should not, on his findings of fact, have held that there were terminations of service or constructive dismissals of the respondents by the appellant. He has referred me to clause 5.2 of the contracts of service that:-

    "If ... certain posts are no longer required, the company has the right to assign the security guards to other posts."

12. He also refers me to the Presiding officer's reasons for decision, and submits that on those findings it was not competent for him to find constructive dismissal.

13. The Presiding officer's reasons for decision are set out as follows:-

    "Background

    The three claims were heard together. The claimants all worked for the defendant as security guards in the three housing estates in Tuen Mun. The defendant failed to renew its management contract with the Housing Department. All the claimants alleged they were dismissed and claimed for severance payment, wages in lieu of notice, and double pay.

    Findings

    Many of the claimants gave evidence. I find they were all truthful witness when describing how each of them was informed by the defendant that it failed to renew the management contract with the Housing Department. On 20th December, either individually or in small groups there were told by either one of the two Mr Cheung's that the current management contract was expiring at the end of the year and that they had to be transferred to the successor company if they wanted to carry on working there. They were also persuaded to sign a resignation letter in to order sign up for employment with the security company who was taking over as from 1st January. Many did sign the letters but some refused. I find DW2 an untruthful witness. I did not believe him that he had asked the claimants if they would continue to work with the defendant. In fact I find, as alleged by most claimants, that he encouraged them to the join its successor and assisted its successor in recruiting them.

    Apart from Wong Ming, all claimants who had given evidence admitted their signature on the resignation letters. A variety of reasons were given to explain why they signed. None of those reasons was sufficient to enable any one of them to pray in aid the non est factum rule, or any other rule which might spare them the effect of the letter. For all intent and purpose they had resigned. Their claims must fail.

    Wong Ming denied that the signature in his name was in fact his. No evidence was called by the defendant to prove that it was in fact his signature. I therefore find that he had not signed any resignation letter and therefore did not resign.

    For those claimants who had not resigned, I find that they were constructively dismissed on the 20th December. This was so because they were told that the defendant failed to renew the contract, no alternative placement was offered or suggested or promised even after they refused to sign the resignation letter. Therefore they are entitled to wages in lieu of notice for 19 days and pro rata year end double pay.

    The presumption of redundancy arose against the defendant. From the various documents produced by Mr Kong I am satisfied that the defendant was in a position to find alternative placements for them though not immediately but eventually, if it chose to retain them. I therefore dismiss the claim for severance payments.

    For all those claimants who had not given evidence, I have to dismiss their claims as there was no evidence as to how they left their employment with the defendant."

14. Mr Fung summarises his arguments by saying that in effect there were three findings of fact by the presiding officer -

(1) The employer (appellant) no longer had the contract with the Housing Department in respect of the three housing estates in Tuen Mun.

(2) The employer (appellant) encouraged most of the claimants (respondents) to join its successor and assisted its successor in recruiting them.

(3) No alternative placement was offered or suggested or promised even after they refused to sign the resignation letter on the 20th December.

15. On the law, the employer must have placed an employee in the position of having no option but to resign. Mr Fung suggests that the findings of fact do not go far enough to enable the presiding officer to reach the conclusion that there was constructive dismissal. Indeed he points out that the presiding officer dismissed the redundancy claim with the following words -

"From the various documents produced by Mr Kong I am satisfied that the defendant (appellant) was in a position to find alternative placement for them (the respondents) though not immediately but eventually if he chose to retain them. I therefore dismiss the claim for severance payment."

16. In my judgment, Mr Fung is right when he complains about the lack of findings of fact. Those findings without more would not justify a conclusion of constructive dismissal. The mere fact that the employees (the respondents), if they wished to continue working in the same work place, had been encouraged to resign and join the successor company and that the employer (appellant) had assisted the successor in recruiting them, would not necessarily justify such a conclusion. The fact that no alternative placement was offered, suggested or promised at this time, does not necessarily constitute a constructive dismissal.

17. If, therefore, any claimant (respondent) left the employment of the defendant (appellant) at the end of December (and there is no finding of this), it would require the finding of further facts to enable the Presiding officer to conclude that the defendant (appellant) was intending to treat the contract as at an end.

18. There should have been clear findings of fact in relation to the conduct of the defendant (appellant) upon which the presiding officer could have concluded that it constituted a repudiation of the contract. Where an employer so conducts himself to show that he did not intend to be bound by the contract of employment, the employee would be entitled to treat the contract as at an end and leave and in these circumstances his departure would be regarded as constructive dismissal by the employer.

19. I am of course bound by the findings of fact of the tribunal, and that is why it is so important that they should be clearly stated.

20. It is of some concern to me that it was the evidence of Mr Tsang Ming, the first witness for the claimants (respondents) that the company did not ask him to leave their employment. Furthermore, it appears that the presiding officer on being asked to review his decision realised that he had been mistaken in some respect but considered that the time for review having already passed, he was unable to remedy the situation. The grounds for review have not been placed before me and no point has been taken before me with regard to them. However, it does indicate the desirability that the evidence in this matter should be reviewed again by the tribunal, which should make proper findings of fact as to the exact circumstances in which a claimant (respondent) came to leave the appellant company and when.

21. For these reasons, I have decided to allow this appeal, set aside the awards in favour of these respondents for wages in lieu of notice and double pay, and remit this matter to the presiding officer for him to reopen the hearing and reach his conclusion in the light of my comments above.