LUEN HING ENGINEERING CO. v. LAM CHO KWAN and Others

Labour Tribunal Appeal No. 15 of 1995

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JUDGMENT

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1. The respondents were employed by the appellant. They were dismissed. The Presiding Officer awarded each of the respondents 26 days' wages in lieu of notice. The appellant appeals against that decision. At the end of the day, I was left with only two grounds of appeal to consider:

a) the Presiding Officer failed to investigate the issue raised by the written defence as whether or not the respondents were employed on a "continuous contract" within the meaning of section 3 of the Employment Ordinance (Cap. 57); and

b) the Presiding Officer erred in applying section 6(2)(a) of the Ordinance in determining the length of notice required.

2. Section 3 of the Ordinance says -

"(1) In this Ordinance, "continuous employment" means a contract of employment under which an employee is deemed by virtue of the provisions of the First Schedule to be in continuous employment.

(2) In any dispute as to whether a contract of employment is a continuous contract the onus of proving that it is not a continuous contract shall be on the employer."

3. The relevant provisions of the First Schedule provide -

"2. . . . where at any time an employee has been employed under a contract of employment during the period of 4 or more weeks next preceding such time he shall be deemed to have been in continuous employment during that period.

3. . . . no week shall count unless the employee has worked for 18 hours or more in that week. . ."

4. The applicable parts of sections 5 and 6 of the Ordinance read -

"5 (1) Every contract of employment, which is a continuous contract, shall, in the absence of any express agreement to the contrary, be deemed to be a contract for 1 month renewable from month to month."

6 (2) The length of notice required to terminate a contract of employment shall be -

(a) in the case of a contract which is deemed by virtue of the provisions of section 5 to be a contract for 1 month renewable from month to month and which does not make provision for the length of notice required to terminate the contract, not less than 1 month:

(b) . . .;

(c) in every other case, the agreed period, but not less than 7 days in the case of a continuous contract."

5. The respondents also claimed annual leave or holiday pay, but the appellant agreed to pay this before the commencement of the hearing before the Labour Tribunal.

6. Regarding wages in lieu of notice, the Presiding Officer said this: "The only outstanding issue before me was whether the claimants were entitled to the 26 days Wilon. As it was agreed that there was no stipulation as to the length of the notice required for the termination of their employment contracts, by section 6(2) of the Employment Ordinance it should be one month." He said no more about this because the main dispute before him was "whether the claimants were dismissed by the defendant or it was the other way round."

7. Mr Lau argues that whether or not there was a "continuous contract" was a "live issue" raised in the written defence, and the Presiding Officer should have investigated this. He did not do so.

8. The respondents were dismissed on 17 February 1994.

9. It appears from the appellant's written defence that, on that date, each of the respondents had "been employed under a contract of employment during the period of 4 or more weeks". The defence says that the respondents' wages were calculated on a daily basis. There was no rest day. The respondents are described as "day labourers". Their working hours were eight a day. There was no length of notice required to terminate the employment. "This kind of work is usually regarded as day labouring. The workers could decide whether coming to work or not." They were paid on two days in each month. "My company and I only agreed to pay for 2-3 days of annual leave when 3 months were completed, according to the labour legislation." "According to labour legislation, if (the workers) have worked for 3 months, whether they are day labourers or long-term workers, the 3-day annual leave should be paid for whatever reason. I do not have any dispute." ". . . workers . . . can leave at any time. They do not have to give notice to the employers. They can come and leave as they want." "I strongly object to pay the claimants for 26 days wages in lieu of notice." The appellant then went on to give reasons why it so objected. These reasons related solely to whether or not the respondents were dismissed. It is not suggested that the respondents are not entitled to 26 days wages in lieu of notice because of the nature of the employment contracts.

10. Mr Lau is right, of course, to say that it is the Presiding Officer's duty to investigate issues relevant to the case before him. But he is entitled to have regard to a written defence for the purposes of determining what issues are relevant. Clearly, if an employer, for example, says that an employee was dismissed, there is no duty on the Presiding Officer to go behind this, and investigate whether or not the employee was dismissed. After reading the defence in this case, the Presiding Officer was, in my view, entitled to conclude that there was a "continuous contract" of employment between the parties. The fact that the appellant did not dispute the claim for holiday pay, and agreed to pay this, would support this view. In terms of the "labour legislation", paid annual leave is available only to an employee employed under a "continuous contract".

11. The contracts of employment being continuous contracts, the Presiding Officer then had to consider whether there were express agreements that the contracts were other than contracts for 1 month renewable from month to month.

12. Mr Lau suggests that there were express agreements that the contracts were for one day. In my view, there is nothing in what the appellant says that would justify this view. It is true that the wages of the respondents were calculated on a daily basis, but the wages were paid twice a month. The appellant does not suggest that there was any express agreement that the contracts were for one day. If they were so, one would expect the respondents to be paid at the end of each daily contract, and then present themselves the next day, hoping to be employed for another day. There is no suggestion at all that this is what happened. What did happen is that the appellant settled the matter, through the mediation of the Labour Department, by agreeing to pay the respondents wages for 41/2 hours, 5 days wages in lieu of notice, wages for 2 days annual leave and wages for 3 statutory holidays. Afterwards, the appellant failed to honour this agreement because, the appellant's representative told the Presiding Officer, he changed his mind "because he had not terminated the employment." This agreement was inconsistent with the view that there were express agreements that the contracts were for only one day. It is significant that the appellant does not suggest that it dishonoured the settlement agreement because it thought that the respondents were getting more than they were entitled to if they had been dismissed.

13. On this basis, in my judgment, the Presiding Officer was entitled to take it, as he did, that there were no express agreements that the contracts were other than contracts for 1 month renewable from month to month, and that the contracts did not make provision for the length of notice required to terminate them. Accordingly, his conclusion was the correct one.

14. In the result, the appeal is dismissed. I cannot think of any basis on which the respondents should not have their costs, and I make an order nisi accordingly.