LAU SZE HON v. THE SHUI HING CO. LTD.

IN THE SUPREME COURT OF HONG KONG

LABOUR TRIBUNAL APPEAL NO. 9/85

(CLAIM NO. 2147/84)

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J U D G M E N T

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The applicant in both of these appeals is an employer who is appealing against awards made in the Labour Tribunal for severance payments to be payable to two employees. Both the employees lodged separate claims in the Labour Tribunal. One of the claims was heard by Mr. Timothy Lee and the other was heard by Mr. Paul Chiu. However as both appeals relate to the same point of law I decided with the agreement of all parties that it would be most convenient to deal with these two appeals at the same time.

The main ground of appeal in both these appeals is that the Presiding Officers incorrectly applied the wrong test concerning the burden of proof. In both Decisions reference is made to the burden of proof which lies upon the employer, including the burden of its establishing that the dismissals are not due to redundancy. No where in either decision is there any reference to the employees having to prove anything.

I assume that both Presiding officers have considered section 31B of the Employment Ordinance Cap. 57 which contains the general provisions for the right to severance payments and then gone to consider section 31Q which provides:

"For the purposes of this part an employee who is being dismissed by his employer shall, unless the contrary is proved, be presumed to have been so dismissed by reason of redundancy."

Section 31B(1) provides:

"Where on or after a date to be appointed by the Governor by notice in the gazette, an employee who is being employed under a continuous contract for period of not less than 24 months ending with the relevant date (a) is dismissed by his employer by reason of redundancy or (b) is laid off within the meaning of section 31E the employer shall subject to this part, be liable to pay to the employee a severance payment calculated in accordance with section 31G."

1. The first question which poses itself is what constitutes dismissal by an employer? For this one looks to section 31D (1):

"For the purposes of and subject to this part, an employee shall be taken to be dismissed by his employer if, but only if (a) the contract under which he is employed is terminated by the employer with or without notice or payment in lieu thereof other than in accordance with section 9.

(b) .........

(c)............."

Section 31D is taken from section 3 of the Redundancy Payments Act 1965. There is however lone important difference. The words: "Other than in accordance with section 9. " appearing in 31D (1) (a) are not included in section 3. Section 9 of our Ordinance contains provisions for termination of contracts of employment for what can best be described as being for cause. As I understand it the difference in the law between Hong Kong and England is that in Hong Kong it is necessary for the employee not only to prove that he has been dismissed but also to prove that he has not been dismissed for cause.

The operation of the Redundancy Payments Act was considered in some detail in the case of GEC Telecommunications Limited v. McAllister⁽¹⁾. In the headnote which accurately reflects the contents of Mr. Justice Phillips' judgment it is stated:

"When hearing the matter afresh, the Tribunal should bear in mind the respective burdens of proof on the claimant and the respondents. The legal burden of proof of establishing an issue and the evidential burden of proof must be distinguished. Under s.1(1) of the Redundancy Payments Act, the initial legal burden of proof lies with the claimant to show that he has been dismissed. Once this has been established, under s. 9 (2) (b) of the RPA, it is up to the employer to show that the dismissal was not due to redundancy ............."

On account of the difference in the drafting of section 31D (1) (a) of our Ordinance and the corresponding provision in the Redundancy Payments Act it is also incumbent upon an employee in Hong Kong to prove that he has not been dismissed for cause.

I am satisfied on perusing the decisions of Mr. Lee and Mr. Chiu that they have not approached this problem in the correct way. It is evident that they have both been under the impression that the whole burden of proof including the burden of proving the employee's dismissal lies upon the employer. In addition to this there is nothing that I am able to find in the papers to indicate that either employee was not dismissed for cause. I accept that there is nothing to show that they were so dismissed but I regret that this is insufficient having regard to what it is necessary for them to prove.

Both employees, who were acting in person, directed my attention to passages in the transcripts of the proceedings which indicated that redundancy situations had arisen. It is with much regret that I have reluctantly come to the conclusion that the applicant is entitled to require that the terms of the Employment Ordinance are strictly adhered to and that in each case it was necessary for the presiding officer to proceed in the manner outlined by Mr. Justice Phillips in GEC Telecommunications Limited v. McAllister. The consequence of this is that I must order that these proceedings both be referred back to the Labour Tribunal for rehearing. No order for costs.

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