YAN TAK CHEUNG v. FAMOUS HORSE GARMENT FACTORY LTD. AND ANOTHER

IN THE SUPREME COURT OF HONG KONG

HIGH COURT

(On Appeal from Labour Tribunal Claim No. E2809 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.

2. The respondent was a factory supervisor employed by the appellant. About 2 years ago, he was asked to work in a branch factory in China. He was paid a basic salary of 36,300 per month plus a monthly allowance of $900 and an allowance for working in China of $3,600, making a total of $10,800 per month. In August 1991, he was dismissed. The appellant paid him a payment in lieu of notice and severance payment as well. However, those payments were made on the basis of his basic salary of $6,300. He lodged a claim in the Labour Tribunal for the balance of the payment in lieu of notice and balance of the severance pay, i.e. the difference between $6,300 and $10,800 per month. The appellant disputed this.

3. Before the Labour Tribunal, the learned Presiding Officer explained to the respondent and a representative of the appellant "the definition of wages which include allowances". The Notes of Proceedings show that the appellant's representative expressed he understood this but would like to take instruction from his boss. After having done so, he informed the learned Presiding Officer that his boss did not accept that the wages should include the allowances. The learned Presiding Officer took the view that the matter was clear and "should be dealt with summarily as no facts were in dispute". He allowed the respondent's claim and against his decision the appellant now appeals.

4. Before me, Mr Allman-Brown, for the appellant, quite fairly indicated to me that he was not seeking a reversal of the decision but a rehearing . His main complaint was that the learned Presiding Officer had failed to give sufficient consideration to the reason and nature of the allowance for working in China. He pointed out that the definition of wages in s.2 of the Employment Ordinance, Cap. 57 does not simply include allowances but also specifies certain exceptions. He submitted that the allowances in question might arguably fall within exception (d). He said that it was not clear whether the learned Presiding Officer when explaining to the parties the definition had also referred to the exceptions. It was submitted that the learned Presiding Officer had failed to consider this in the light of the dispute between the parties and had gone too far and too fast in having a summary determination of the case.

5. With respect, I agree with counsel for the appellant. Whilst the learned Presiding Officer was right to say that the definition of wages in s.2 of Cap. 57 include allowances, that section also sets out various exceptions. I think "wages" must be construed in the light of the exceptions. So must "allowance". In my view, there is no magic in the word "allowance". It is not defined anywhere in the Ordinance. The parties, particularly laymen, may call a certain payment or benefit "allowance". But the label is not conclusive. It is not what the parties call it but what it is in substance that matters. One has to look into the nature of the payment, the reasons therefor, and the circumstances or conditions under which such payment is made. It is a question of mixed law and fact. Since it is clear the issue whether the allowance for working in China can be regarded as part of the wages is contested by the parties, I am unable to agree that there is no fact in dispute.

6. With respect, the learned Presiding Officer should have investigated this matter as he is obliged to do so under the provisions of the Labour Tribunal Ordinance. He should have heard evidence from the parties before he decided the issue whether this allowance can be regarded as part of the wages and whether it falls within the exceptions. In my opinion, a summary determination in these circumstances is not appropriate. That being the case, I think the appeal must be allowed, the award set aside and the case be remitted to the Labour Tribunal for a rehearing. [The question of costs is dealt with.]