CHAN YIN PING AND 40 OTHERS v. POME LTD.

IN THE SUPREME COURT OF HONG KONG

HIGH COURT

LABOUR TRIBUNAL APPEAL NO. 18 of 1989

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J U D G M E N T

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1. This is an appeal from the judgment of Mr. P. STOPPA in the Labour Tribunal. The Appellants were among a group of employees of the Respondent who were by notice posted on the 15th of December, 1988, given seven days notice of termination of employment. All of the employees continued to work up to the 21st day of December 1988, the date of expiry of the notice.

2. The Presiding Officer accepted the evidence from the Respondents representatives that the employees had expressed dissatisfaction with the time given in the notice of termination and that as the Respondent had some work in hand the employment of the Appellants, was continued after the 21st of December, 1988. The remainder of the employees ceased working on that day. The extension of employment was on the terms that the employment would be on a day to day basis until the work was completed, at which time their employment would terminate. He found that it was clear from the evidence that the notice given was inadequate and that by the parties subsequent action they must be taken to have mutually agreed for this to be extended to the date when a proper notice duly given would have expired or to the date when work would cease. With respect the parties could not be said at the time employment was extended to have mutually agreed for the extension to be to the date when a notice properly given would expire. At that point in time the parties had no idea what the period of "proper" notice was. The Presiding Officer was, however, entitled to find on the evidence that in respect of the Appellants there had been a mutual agreement to extend the period of notice of termination to the completion of the work.

3. The employees subsequently brought a claim in damages for wrongful dismissal, pursuant to S. 6 and S. 8A (1) of the Employment Ordinance Cap. 57 which provide:

"S. 6 (1)..... either party to a contract of employment may at any time terminate the contract by giving to the other party notice, orally or in writing, of his intention so to do.
(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.

S. 8A(1) Without prejudice to Section 9, 10 or 11(2) where a contract of employment is terminated other than in accordance with Section 6 or 7, a sum equal to the amount of wages which would have accrued to the employee during the period of notice required by Section 6 shall be payable by the party terminatimg the contract."

4. The Presiding Officer quite properly found that the contract of employment between the Respondent and the employees was one requiring one months notice of termination, in accordance with S. 6(2). This point is not in issue.

5. In respect of the employees who ceased work on the 21st of December, 1988, that is at the expiry of the seven days notice, the Presiding Officer allowed the claim for damages pursuant to S. 8A but deducted the wages paid to these employees by the Respondent for the 7 days worked between the posting of the notice and the 21st of December, 1988. Those employees have not appealed against the judgment.

6. In respect of the appellants whose employment was continued the Presiding Officer allowed the claim for damages under S. 8A but deducted the wages paid to the Appellants for the period from the posting of the notice up to the date they ceased work. This termination date varied but in respect of all the Appellants was within the period of one month from the 15th of December, 1988. It is the Appellants case that he was wrong to do so.

7. The Respondent does not contest that the Presiding Officer was correct in finding that the Appellants were entitled to damages in a sum equal to the amount of one months wages, the contracts of employment having been terminated other than in accordance with S. 6. It is the Respondents case however that the Presiding Officer was correct to set off against those damages the amount of wages paid to the Appellants during the one month period.

8. In considering the question of termination of a contract of employment Hunter J. in Lai Soon Yung v. Tun Sum Valley Public Primary School 1988 [HKLR] 128 stated at pg. 130:

"The Common Law principle here is a deeply rooted one." It is most conveniently described by Buckley L.J. in Gunton v. The London Borough of Richmond-onThomas [1980] 3 All ER 577. This passage appears at page 589H, "the date when a contract would have come to an end however must be ascertained on the assumption (my emphasis) that the employer would have exercised any power that he may have had to bring the contract to an end in the way most beneficial to himself. That is to say he would have terminated the contract at the earliest date he could properly do so."

9. In this case the earliest date the Respondent could have terminated the Appellants contract of employment was at the expiration of one month from the 15th day of December 1988. This position is not in my view altered by the parties extending the period of notice from 7 days to an undetermined date when the work would cease.

10. Mr. S.K. Wong for the Appellants argues that Section 8A (1) must be strictly interpreted in that it provides for payment of a liquidated sum in damages by the parties terminating the contract where the proper notice required by Section 6 or 7 has not been given. The Appellants are not therefore required to prove actual loss or mitigate the damage. If an employee's employment is terminated at the end of a seven day period of notice the employee is entitled to damages pursuant to Section 8A (1) notwithstanding the fact that he may have obtained other employment during the statutory notice period. I agree with this. However an employer is entitled to require an employee to work during a period of notice terminating employment and it is irrelevant that other employees of that employer are discharged at the beginning or during the period of notice. Those so discharged might well be in a better financial position in that they might in addition to the damages payable to them be able to obtain other employment. This does not alter the fact that those who are required to work for the employer during the period of notice must do so.

11. The intention of S. 8(1) is to ensure that the employee (or where applicable the employer) is not deprived of any wages they would have earned but for the early termination of his contract. The Section 8A(1) maximizes the amount to which an employee is entitled.

12. Mr. Wong submits that his argument gains support from the provisions of S. 8(2) which provides that where a party to a contract of employment has given proper notice under Section 6 but then terminates the contract before the expiry period, that party must pay to the other party the amount of wages which would have accrued from the termination to the time the notice would expire.

13. Section 8A (2) in my view supports the opposite proposition to that submitted by Mr. Wong. The intention of the legislation is to ensure that the employee recovers one month's wages by either wages for work done or in lieu thereof. It would be wrong in my view for an employer who for example paid 14 days wages in lieu of notice (and was therefore in breach of Section 7 ) to then be made to pay to the employee a full month's wage in addition to the money already paid . The same principle applies to employers giving notice other than that required by Section 6. Section 8A (1) should not be read as imposing a penalty on the defaulting party. I am satisfied that the Presiding Officer was right to find that the wages paid to the Appellants for work done during the period of one month from the 15th of December 1988 should be deducted.

The appeal is dismissed.

14. There will be an order nisi for the appellants to pay the respondents costs of and occasioned by the appeal to be taxed if not agreed to become absolute, unless application is made to the contrary, within 14 days of the delivery of this judgment.