CHOW WAH YAU v. KUEN KEE KWOK WING (HK) TRANSPORTATION AND STEVEDORES CO LTD AND ANOTHER

[English Translation – 英譯本]

HCLA 59/2004

IN THE HIGH COURT OF THE

HONG KONG SPECIAL ADMINISTRATIVE REGION

COURT OF FIRST INSTANCE

LABOUR TRIBUNAL APPEAL NO. 59 OF 2004

(ON APPEAL FROM LABOUR TRIBUNAL CLAIM NO. 5503 OF 2003)

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BETWEEN

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HCLA 61/2004

IN THE HIGH COURT OF THE

HONG KONG SPECIAL ADMINISTRATIVE REGION

COURT OF FIRST INSTANCE

LABOUR TRIBUNAL APPEAL NO. 61 OF 2004

(ON APPEAL FROM LABOUR TRIBUNAL CLAIM NO. 5503 OF 2003)

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BETWEEN

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(Consolidated Hearing)

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JUDGMENT

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1. In these two appeal cases, the Claimants appeal against the Presiding Officer’s decision of dismissing their claims against their former employers (i.e. the Defendants) for salary in lieu of rest days, statutory holidays and annual leave.

2. The Applicants were monthly rated workers commanding a salary in the region of $10,000 odd.  As the Defendants’ employees, they were responsible for stevedoring work at a cargo terminal which operated round the clock. In respect of the allocation of manpower, in view of the special nature of the stevedoring work, the Defendants adopted a system of “working on alternate days” – an employee who worked for 24 hours was entitled to a 24-hour rest before resuming work, thereby forming a continuous cycle of work and rest.

3. The crux of the dispute between the parties was this: the employers alleged that the rest days, statutory holidays (or compensation leave) and annual leave to which employees were entitled under the labour legislation had already been included in the 24-hour rest period following each 24-hour work period, and therefore the employers were not liable to grant to the employees any extra rest days, statutory holidays (or compensation leave) and annual leave. The employers alleged that “the Claimants were informed of the relevant arrangements when they joined the companies and they had accepted and consented to such arrangements” (paragraph 6 of the Reasons for Decision).

4. The Claimants denied having been informed of such arrangements when they joined the companies or having accepted or consented to such arrangements.

5. However, the Presiding Officer concluded as follows (paragraph 29 of the Reasons for Decision):

[I] conclude that the Claimants had accepted and consented to the arrangements made by the 2^nd Defendant regarding work periods and rest periods. [I] conclude that the Claimants knew that the statutory holidays (or compensation leave) and annual leave had been included in the paid leave that they took. [I] conclude that the Claimants had been given one rest day in every 7 days, and their claims for salary in lieu of rest days are accordingly dismissed. [I] conclude that the Claimants had, in the course of employment, in effect been given the paid holidays and paid annual leave to which they were entitled every year and the 2^nd Defendant is not liable to compensate them for any paid holiday and paid annual leave, and their claims for paid holidays and paid annual leave are accordingly dismissed.

6. Section 17(1) in Part IV of the Employment Ordinance (Cap. 57 of the Laws of Hong Kong) provides that every employee who has been employed by the same employer under a continuous contract shall be granted not less than one rest day in every period of 7 days. Under section 2(1) of the Ordinance, “rest day” is defined as “a continuous period of not less than 24 hours” during which an employee is entitled under Part IV of the Ordinance to abstain from working for his employer.

7. Furthermore, Part VIII of the Ordinance provides that an employee is entitled to statutory holidays on 12 specified days every year.

8. Part VIIIA of the Ordinance provides that every employee who has been in employment under a continuous contract for not less than 12 months shall, in respect of each leave year, be entitled to paid leave from 7 to 14 days, depending on the number of years in which that employee has worked.

9. I notice that there is no statute or law in Hong Kong which provides for the maximum working hours of an adult employee in one day (or a continuous 24-hour period). By comparison, in respect of children and young persons who are employed, the Employment of Children Regulations (Cap. 57B of the Laws of Hong Kong) and the Employment of Young Persons (Industry) Regulations (Cap. 57C of the Laws of Hong Kong) make express provisions on their maximum working hours.

10. As a matter of common sense and having regard to the present social conditions in Hong Kong, an employee in the course of one day (or a continuous 24-hour period) would naturally need time to take a break, sleep or do other things, unless there are exceptional circumstances or unless the nature of the work otherwise requires. Generally speaking, such time would be when the employee is off duty. In other words, as a matter of common sense and taking into account the employment condition in Hong Kong, an employee in the course of one day (or a continuous 24-hour period) should have both working hours and off-duty hours. As for the relative proportion of these two components, as there are no hard-and-fast rules in the statutes and the law, the employer and employee would naturally come up with some mutually acceptable agreement.

11. Where there is a clear agreement between the parties, an employee’s working hours and off-duty hours will of course be determined in accordance with that agreement. Where, however, there is any ambiguity that needs to be resolved by the court, an important consideration would be whether the proportion of working hours to off-duty hours as alleged by the employer or the employee is rational.

12. It is obvious that, where the work is of a special nature, or where there are unexpected occurrences, an employee may on a particular day or period of time be required to work continuously for long hours without rest. In such a case, however, unless there is a clear and express agreement between the parties, common sense dictates that the employer will make rational arrangements or reasonably compensate the employee in respect of his overall and average working hours and rest hours (i.e. off-duty hours).

13. In the present case, the employers argue that an employee who has worked for a continuous period of 24 hours will be given a continuous rest period of 24 hours before he resumes work; this “work-and-rest” cycle not only satisfies the employee’s reasonable needs for rest or off-duty hours, but also meets the statutory requirements of granting benefits to the employee such as rest days, statutory holidays and annual leave.

14. In my view, taking a common sense approach and having regard to the present condition in Hong Kong, if the above argument were valid, the arrangement involved would be extremely harsh and unreasonable. Leaving aside statutory holidays and annual leave to which an employee is entitled, an illustration of the unreasonableness of the argument can be made by focusing on rest day calculations. On the employers’ argument, an employee would in one week have to work for 84 hours and would also have 84 hours’ rest time. On the employers’ argument, these 84 hours of rest time have included the continuous 24-hour rest time (i.e. one rest day) to which an employee is statutorily entitled for every 7 days. In other words, taking out that 24-hour rest time, the employee will in the remaining 6 days of the 7 days have only 60 hours’ off-duty/rest time (i.e. 84 hours minus 24 hours). On average, he will only have 10 hours’ off-duty time per day.

15. Put another way, on the employers’ argument, leaving aside the 24-hour rest day, during the 6 of the 7 days of a week, the employee will on average have a rest period equal to that of someone who has to work 14 hours per day (that employee has 10 hours’ off-duty time per day).

16. The above working time is considerably longer than the average working hours of general office workers or physical workers in Hong Kong. Furthermore, the above calculations have not taken into account all statutory holidays and annual leave. If these benefits were to be factored in, then on the employers’ argument, the employee’s average working hours would even be longer than 14 hours per day. Moreover, the Claimants were not off-duty after they finished 14 hours’ work. They had to work continuously for 24 hours before they could take a rest. This arrangement over working hours would be even tougher than the preceding scenario.

17. As stated above, I am not saying that, as a matter of law or principle, the employer and the employee are prohibited from enter into an employment contract which requires the employee to work long hours. In the absence of a statutory or legal upper limit, the parties are free to agree on the working hours or average working hours.

18. Nevertheless, where an agreement between the parties in that respect is less than absolutely clear and unequivocal, there is no reason for the court to readily come to a conclusion which defies common sense or logic.

19. As stated above, the Presiding Officer found as a fact that the Claimants had accepted and consented to the Defendants’ arrangements on work and rest hours and that those rest hours had already included rest days, statutory holidays (or compensation leave) and annual leave. The question is: on what evidential basis did the Presiding Officer make these findings of fact?

20. As it is the Defendants who alleged that the Claimants were informed of the relevant arrangements when they joined the companies, that the 24-hour rest period had included rest days, statutory holidays (or compensation leave) and annual leave, and that the Claimants had accepted and consented to such arrangements, the burden would naturally be on the Defendants to prove those allegations.

21. It is not in dispute that no written employment contract had been entered into which recorded the above arrangements. As stated above, at the hearing before the Tribunal, the Claimants had during cross-examination denied the Defendants’ claim that the 24-hour rest period had included rest days, statutory holidays (or compensation leave) and annual leave. At the hearing, the Defendants only called one witness, namely one Mr Lui, who was apparently a supervisor. Mr Lui obviously was not the staff member of the Defendants who was responsible for hiring the Claimants. His evidence never touched upon the negotiations between the Defendants and the Claimants on the terms of employment, the particulars of the negotiations or the contents of the relevant employment contracts. Nor did Mr Lui give evidence on the terms of employment that he himself negotiated with the Defendants. His evidence merely revealed his own understanding of the Defendants’ arrangement of “24-hour work and 24-hour rest” and of whether the 24-hour rest period had included rest days, statutory holidays (or compensation leave) and annual leave. In my judgment, Mr Lui’s evidence did not begin to show the contents of his employment contract with the Defendants, let alone enable an inference to be made, on the basis of such contents, of the contents of the employment contracts between the Claimants and the Defendants.

22. Apart from the lack of direct evidence on any agreement or arrangement between the parties in respect of rest days, statutory holidays and annual leave, Certain fresh evidence that were admitted by the Presiding Officer at the hearing, such as work report cards and paid leave application forms, did not suffice to show the special arrangements and agreement that the Defendants alleged had been made in respect of rest days, statutory holidays and annual leave. Indeed, the Defendants’ pro forma application forms for paid leave are, if anything, contradictory to the Defendants’ case. The reason is, if the 24-hour rest period had included rest days, statutory holidays (or compensation leave) and annual leave, then there would be no reason whatsoever for requiring employees to apply for paid leave by filling out the application forms. It is true that the Defendants had offered an explanation at the hearing that the application forms were no more than records and did not mean that the employees were entitled to apply for paid leave over and above the 24-hour rest period. This explanation, however, is extremely flimsy and unconvincing. In any event, I do not consider that the Defendants were able to discharge their burden of proof merely by producing those documents piecemeal.

23. Furthermore, the Presiding Officer pointed out that, over the many years in which they were employed by the Defendants, the Claimants had never made any request, claim or protest in respect of rest days, statutory holidays (or compensation leave) and annual leave. In my view, while this was certainly a relevant piece of evidence, it was impossible to establish, on the sole basis of this evidence, the special arrangement that had allegedly been made regarding rest days, paid holidays and annual leave.

24. More importantly, as stated above, if the Defendants’ case were true, it would mean that the employees’ average working hours were considerably longer than those of the general local workforce. It was incumbent upon the Presiding Officer to consider the inherent probability of the Defendants’ case before arriving at the conclusions that he did. To answer this question, the Presiding Officer had to consider various objective circumstantial factors such as whether what the employers said made sense; whether the remuneration, terms of employment and benefits being offered to the employees were commensurate with the stringent requirement on working hours; the general conditions of the labour market; and the working hours and remuneration for other similar industries. Only then would the Presiding Officer be able to determine whether the Claimants had indeed reached agreements with their employers to include, in the 24-hour rest period following every 24-hour work period, all the rest days, statutory holidays and annual leave to which they were entitled under the legislation.

25. The Presiding Officer had never considered the above questions. He only took into account that, in practice, the cargo terminal did not operate in such a way that workers were needed at all times, and therefore workers might be left idle at the terminal or be able to stay home awaiting work instructions, which meant that their workload was actually not as heavy as the mathematical calculations of working hours might suggest. This, however, is only part of the whole picture. In any event, according to the employees, when the terminal was busy, their employers would also instruct them to do overtime work after they had worked continuously for 24 hours, and hence sometimes they would have to work non-stop for more than 30 hours. All this is in my view part of the evidence, and the Presiding Officer had to consider all the evidence, objective circumstances and the inherent probability or improbability of the parties’ cases before he could make findings of fact.

26. For all the above reasons, the Presiding Officer’s findings of fact — that the Claimants were informed of the relevant arrangements when they joined the companies, that the 24-hour rest period had included rest days, statutory holidays (or compensation leave) and annual leave, and that the Claimants had accepted and consented to such arrangements — are in my judgment wrong in law: the Presiding Officer had failed to consider various factors and circumstances and had completely overlooked the fact that the evidence of Mr Lui, the only witness for the Defendants, never touched upon whether he and the Defendants had reached the alleged agreement when he took up the employment, let alone constituted evidence in support of the Defendants’ allegations regarding the terms of the Claimants’ employment. On the available evidence, the Presiding Officer’s findings of fact are simply unsustainable.

27. In any event, the Presiding Officer had in my judgment also erred in law in respect of the issues of statutory holidays and annual leave. As Yam J pointed out in his judgment (10 June 2005) in the case of Cathay Pacific Airways Limited v. Tam Wai Mei, HCLA 95/2004, where an employer has not complied with the legislation by designating an exact date as compensation or substitution for a statutory holiday, he cannot subsequently just quote a day on which the employee is not required to work under the employment contract and claim that it is compensation or substitution for the statutory holiday, in order to avoid the obligation to grant statutory holidays or compensation leave to the employee. In my view, the same principle is fully applicable to the designation and grant of paid annual leave. In the present case, it was not open to the Defendants to simply make a sweeping statement that the statutory holidays (or compensation leave) and annual leave had been included in the 24-hour rest period that followed the 24-hour work.

28. In the absence of an oral agreement as alleged by the Defendants, the Defendants’ claim that the rest days, statutory holidays (or compensation leave) and annual leave had been included in the 24-hour rest period that followed the 24-hour work must be rejected. And in the absence of any agreement between the parties in respect of rest days, statutory holidays and annual leave, these benefits must of course be granted in accordance with the legislation.

29. For all the above reasons, the Presiding Officer’s decision of dismissing the Claimants’ claims for salary in lieu of rest days, statutory holidays and annual leave is erroneous and must be set aside.

30. In terms of both liability and quantum, the Claimants’ claims involve questions of fact and evidence. The case is to be re-heard before the Tribunal, which will have to carry out proper investigations and consider all relevant evidence and circumstances before making the correct findings of fact and ultimate decisions.

31. I therefore make the following orders:

(1)   that the Claimants’ appeals be allowed;

(2)   that the Presiding Officer’s relevant orders be set aside;

(3)   that the Claimants’ claims in respect of salary in lieu of rest days, statutory holidays and annual leave be remitted to the Tribunal for re-hearing before another Presiding Officer.

32. I also make the following orders nisi: The Defendants are to pay to the Claimants costs of the two appeals; such costs are to be taxed if not agreed; and the costs of appeal of the 6^th, 8^th, 9^th, 17^th, 18^th and 20^th Claimants are to be taxed in accordance with the Legal Aid Regulations (Cap. 91A of the Laws of Hong Kong). Unless any party hereto applies to the court within 14 days of delivery of this judgment for variation of the costs orders nisi, these orders will become absolute upon the expiry of 14 days.