SIU LAM RESTAURANT v. HO FUNG CHING

IN THE SUPREME COURT OF HONG KONG

HIGH COURT

LABOUR TRIBUNAL APPEAL NO. 65 OF 1994

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J U D G M E N T

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1. The Appellant appeared before Presiding Officer, Y.W. Yung Esq. on 14th July 1994 and he admitted the Claimant's claim for (1) arrears of wages, (2) annual leave pay, and (3) tips.

2. He applied for leave to appeal on the claim for annual leave pay on the basis that the Claimant had not worked for 12 months.

3. Leave was granted to appeal on the claim for annual leave pay because on record the Tribunal had not explained to the Appellant the effect of section 41AB of the Employment Ordinance, Cap. 57 which provides :

"41AB. Option for common leave year

(1) Notwithstanding anything in this Part, an employer may, at his option, elect to use a 12 month period determined by him as the leave year for the purpose of calculating the annual leave of all of his employees and, in that case, each of his employees is entitled to an annual leave under this Part determined in accordance with this section.

(2) An employer shall, before making an election under this section, give 1 month's notice -

(a) to each of his employees in writing; or

(b) by posting a notice in a conspicuous place in the place of employment,

stating his intention to make the election, the 12 month period he intends to elect to use and the date from which he will commence using it.

(3) Where an employer makes an election under this section, he shall thenceforth use that 12 month period as the leave year for the purpose of calculating the annual leave entitlement of all of his employees and, where an employee has not been in employment under a continuous contract for the full period of a leave year -

(a) the employer shall calculate the leave entitlement on a pro rata basis, based on the number of calendar days between the day the employee commenced employment and the end of the leave year, divided by 365, and any fraction of a day resulting from the calculation shall be counted as a full day's leave; and

(b) the employee may, at his option -

(i) after consultation with his employer, take his leave entitlement for the pro rata portion referred to in paragraph (a); or

(ii) carry it forward and combine it with his leave entitlement for the next full leave year.

(4) Where an employee was already employed on the day an employer commences using a 12 month period for calculating annual leave for all of his employees under this section -

(a) the employee is entitled to an annual leave calculated on a pro rata basis, based on the number of calendar days between the day he commenced employment (or the anniversary of such day, as the case may be) and the day preceding the day on which the employer commenced using the 12 month period under this section, divided by 365, and any fraction of a day resulting from the calculation shall be counted as a full day's leave; and

(b) the employee may, at his option -

(i) after consultation with his employer, take his leave entitlement for the pro rata portion referred to in paragraph (a); or

(ii) carry it forward and combine it with his leave entitlement for the first full leave year calculated in accordance with this section.

(5) Where section 41F applies to an employer who has made an election under this section -

(a) the annual leave granted shall be in respect of the leave year immediately preceding the period of the close down; and

(b) section 41F(3) to (6) shall not apply to the calculation of the leave entitlement."

4. The Respondent (Claimant) had worked for the Appellant for more than 3 months, i.e. from 1st June 1993 to 10th October 1993, and it was not disputed that she was not summarily dismissed under section 9, section 41D(2) therefore applies.

5. Section 41D(2) provides :

"(2) Where -

(a) an employee ceases to be employed;

(b) the cesser occurs otherwise than on the expiration of a leave year of the employee;

(c) his contract of employment terminates or is terminated otherwise than under section 9 for any reason whatsoever (including his resignation); and

(d) the termination occurs at least 3 months after the appropriate day,

he shall, as soon as practicable and in any case not later than 7 days after the termination, be paid by the person by whom he was formerly employed, in addition to any sum due under subsection (1), a sum equal in amount to that which bears to the notional leave pay the same proportion as the number of days in the final employment period bears to 365."

6. "Appropriate day" in section 41D(2)(d) is defined in section 41A as :

"(b) where the employee does not become so entitled (i.e. under s. 41F(3), which relates to a close down situation -

(i) the day following the end of the employee's last (or only) leave year; or

(ii) where there is no such leave year, the day on which his employment commenced."

7. The appropriate day in the present context therefore means the day her employment commenced.

8. Since the present case falls within section 41D(2), there is no necessity to go to section 41AB. The Appellant is therefore liable to pay to the Respondent the annual leave pay on pro rata basis. There is no dispute that the correct sum under annual leave pay on pro rata basis is $611.50.

9. The appeal is therefore dismissed with costs. The Respondent's own costs to be taxed in accordance with Legal Aid Taxation Regulations.