SECRETARY FOR JUSTICE v. LI CHI LEUNG trading as Transmate Service Co.

IN THE HIGH COURT OF HONG KONG

(Appellate Jurisdiction)

MAGISTRACY APPEAL NO.431 OF 1997

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J U D G M E N T

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1. This is an appeal by way of case stated.

2. On 19 December 1996 the learned magistrate ruled that the offences under s.s.23 and 25 of the Employment Ordinance, Cap 57 were not continuing offences. The practical effect of his ruling was that he had no jurisdiction to hear the Summonses No.KTS 15446-15449 of 1996 since they were based on information which was laid outside the 6-month period, contrary to the provisions of s.26 of the Magistracy Ordinance.

3. The questions for this court to determine, as stated by the learned magistrate, are:

"(a) Whether I was correct in ruling that the offences under sections 23 and 25 of the Employment Ordinance are not continuing offences;

(b) Whether I was correct in ruling that the summonses KTS 15446-15449 were time-barred by virtue of section 26 of the Magistrates Ordinance and I have no jurisdiction to hear them."

4. The wording of relevant sections of the Ordinance are:

"23. Wages shall become due on the expiry of the last day of the wage period and shall be paid as soon as is practicable but in any case not later than 7 days thereafter.

24. ...

25.(1) Subject to section 31O, where a contract of employment is terminated any sum due to the employee shall be paid to him as soon as is practicable and in any case not later than 7 days after the day of termination."

Section 63C which is the penalty section provides:

" Any employer who wilfully and without reasonable excuse contravenes section 23, 24 or 25 commits an offence and is liable to a fine of $200,000 and to imprisonment for 1 year."

5. No doubt the spirit of the legislation is to protect employees from being exploited by unscrupulous employers who seek to withhold wages improperly. Previously the rights of the aggrieved employees to recover wages payable was confined to taking out civil actions. Under s.63C wilful delay to pay wages or any sum due on termination of the contract has been made a criminal offence and the prospects of facing criminal prosecution will no doubt be a leverage on employers to effect prompt payment. By virtue of the sections, employers are under an obligation to pay the wages or any other sum due under the contract "as soon as practicable" and in any event not later than 7 days after they were due. Moreover the court is empowered under s.65 of the Ordinance, regardless of the outcome of the prosecution, to order the employer to pay the wages or any other sum outstanding.

6. The position regarding criminal proceedings against reluctant employers must therefore be this: no criminal sanction can be invoked against an employer unless he has failed to effect payment after the 7-day grace period provided under the sections.

7. I would assume that, for the sake of illustration, under s.23 the last day of the employee's wage period falls on 31 October. The employer is under an obligation to pay the wages as soon as practicable. If however, the employer sits back and does nothing, then he would be liable to criminal prosecution earliest by the eighth day of November. Under the Ordinance he is under a duty to perform the positive act of paying the wages due to his employee and unless payment is made, and subject to the statutory defences available, he would be committing an offence.

8. Let me assume further that by December the employer still has not paid up. If one is to ask the question: since when had the employer been committing an offence under s.23 or s.25? The answer to the question must be that it was from 8 October onwards and thereafter until payment is made although the offence is completed if payment is not made on the eighth day.

9. The view above is consistent with that expressed by the Full Court of the Supreme Court of Victoria in R v Industrial Appeals Court ex parte Barelli's Bakeries Pty. Ltd. [1965] V.R.615. One of the issues decided by the Court in that case was whether the offence created by s.205 of the Labour and Industry Act of 1958 of failing to pay within the time prescribed the amount of wages prescribed by a wages board determination is a continuous offence for which an information may be laid outside the period of six months. As to the characteristics of a continuous offence, I do not think I can put it better than O'Bryan and Gillard, JJ. at p.620 of the judgment:

"... There is, on the other hand, the kind of conduct, generally of a passive character, which consists in the failure to perform a duty imposed by law. Such passive conduct may constitute a crime when first indulged in but if the obligation is continuous the breach though constituting one crime only continues day by day to be a crime until the obligation is performed. In such a case in measuring the period of limitation, if one is applicable, the right to lay an information is not barred if the breach has continued up to the day the information was laid or if the breach was cured before the information was laid, time counts from the day when the obligation was satisfied."

10. The offences before this Court is not that the employer had allowed the time prescribed for payment to pass without making payment but that the employer had failed to perform a statutory obligation to pay the employee. This duty exists from the time prescribed for payment until actual payment. The conclusion reached by the learned magistrate was inconsistent with the spirit of the legislation which is to provide a speedy remedy for the aggrieved employees to recover wages or other payments which they are entitled. If the 6-month period under s.26 of the Magistrate Ordinance is applicable to these sections, the purpose of the legislation would be defeated.

11. At page 10 of the Case Stated the learned magistrate tried to distinguish the Barelli's case from the offences created in s.s.23 and 25. His reasons are:

"... However, the offences in sections 23 and 25 of the Employment Ordinance do not depend on there being a failure by the employer to comply with any award, notice or directive. The offence in section 23 arises when the employer does not pay wages for a wage period, whatever those wages are or amount to. The wage period is, in the absence of contrary agreement, one month and the obligation to pay wages for the wage period arises as soon as practicable after the end of the wage period and, in any event, no longer than seven day thereafter. Thus, there is an alleged positive act on the part of the employer, that is that he has not paid wages. The fact that, in practice, the employer may have sat back and done nothing is, in my judgement, immaterial."

12. With respect to the learned magistrate I am unable to see his distinction between an award or directive by a statutory body in Australia and the employer's obligation to pay under s.s.23 and 25 of the Employment Ordinance as a valid one. The gravamen of the offence is the employer's failure to discharge his statutory obligations once it arose and also in his further omission or failure to rectify the situation within the 7-day period provided to him by the Ordinance. It would be inconceivable that the employer is to benefit by his own inactivity.

13. The other factors which influenced the learned magistrate in reaching his conclusion was that no specific words were used in the Ordinance to indicate that the offences were continuing nor was there any provision for a daily fine. It appears to me that the learned magistrate had not taken into consideration the provisions of s.65 of the Ordinance under which the Court has power to order the employer to pay any wages or any sums outstanding regardless of whether the employer was convicted of the offence for which he was charged. In cases where the employers resort to protracted negotiations or other delaying tactics; if the offences are otherwise than continuing offences, the power of the Courts under s.65 would be curtailed to the obvious detriment of the employees. It cannot be the intention of the legislation that if the summons under these sections are issued outside the 6-month period, the aggrieved employee is left only with the remedy of taking out a civil action against his employer.

14. For the reasons given, the answers to both questions posed by the learned magistrate in the Case Stated are in the negative.