ACTEM ENGINEERING LTD. v. CHAN CHUN WAH

IN THE SUPREME COURT OF HONG KONG

LABOUR TRIBUNAL APPEAL NO. 5 of 1991

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J U D G M E N T

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1. This is an appeal from the decision of the learned Presiding Officer of the Labour Tribunal made on 25th March 1991 pursuant to leave granted on 19th April 1991. The appellant/claimant claimed against the respondent/defendant for 7 days' wages in lieu of notice ($2,831.50), annual leave pay ($1,415.80), severance pay ($16,242.70) and bonus ($10,000.00) consequential upon his dismissal from its employment pursuant to a letter of dismissal dated 12th January 1990. In the event, the learned Presiding Officer found in favour of the appellant and concluded that the dismissal was unlawful. An award was made in the sums of $2,590.00 as to 7 days' wages in lieu of notice, and $1,484.62 as to outstanding balance of annual leave pay. The claims for severance pay and bonus were, however, dismissed. The appellant only appeals against the dismissal of his claim for severance pay.

2. The appellant commenced his employment with the respondent on 21st October 1987, and his last day of work was on 9th January 1990. At the material time, the appellant was employed as 1 of 6 foremen at the respondent's Hung Hom Site for the disposal of asbestos. In addition, there were 50 asbestos workers being engaged at that site.

3. The evidence of C.W.2, the Project Engineer of the Hung Hom Site, as referred to by the learned Presiding Officer in his judgment is that "when the project was completed in January 1990, the company terminated the service of 2 foremen and about 25 workers by different phrases. The remaining workers, foremen, and himself [C.W.2] were transferred to the Apleichau Site. The 2 foremen whose services were terminated were the claimant and CHEUNG Kin-man." He also referred to the evidence that "At that time, the only big project the defendant had in asbestos work was in Apleichau but that project could only take 25 to 30 workers of the Hung Hom Site. So the service of the remaiming workers in Hung Hom Site had to be terminated. The Apleichau Site could have accommodated 80 workers but because the defendant had subcontracted a large part of the work to sub-contractors, so C.W.2 could not arrange more workers of the Hung Hom Site to be transferred to Apleichau Site. C.W.2 and Mr. Siu [Manager] had to put their heads together to work out which worker to be retained and which worker to be terminated. Mr. Siu only made the decisions on the foremen and left the other workers for C.W.2 to decide. ..... As to the claimant, both C.W.2 and Mr. Siu heard rumours that the claimant worked in sites of other companies and assisted his friend LEE Kai-yuen by arranging workers of the defendant to work in Lee's Site. So Mr. Siu said the service of the claimant should also be terminated. C.W.2 said the foremen were the more experienced asbestos workers and they themselves had to work in the site as asbestos workers. If not because of the rumour, C.W.2 would take the claimant with him to the Apleichau Site." After hearing the evidence, the learned Presiding Officer dismissed the respondent's suspicion of the appellant's disloyalty and its complaint of the appellant's poor attendance record as being unfounded. He found as a fact that "There were insufficient grounds for the dismissal of the claimant under s. 9 of the Employment Ordinance."

The learned Presiding Officer found as facts the following:

"From the evidence I believe the true reason why the claimant was dismissed was because the company strongly suspected that the claimant had arranged the asbestos workers of the company to work in the construction sites of other companies at a time when the defendant was short of workers and there was a delay in the completion of the Hung Hom project. I also believed the evidence of DW2 Mr. SIU Shun-tat that the turnover of workers was great and the defendant would retain those experienced workers if possible. The claimant was one of those experienced workers. When the work in the Hung Hom Site was completed, some of the workers would be transferred to the Apleichau Site and I believed if the claimant's service had not been terminated. There would be a place for him in the Apleichau Site. I did not believe the completion of work in the Hung Hom Site was the reason or one of the reasons that DW2 decided to terminate the service of the claimant. I was satisfied from the defence evidence that the claimant was not dismissed because of redundancy.

I wish to add that I did not believe DW2 that the Apleichau Site could absorb all the asbestos workers of the Hung Hom Site when the project in Hung Hom was completed. I believed the evidence of CW2 that the service of 25 to 30 asbestos workers were terminated for redundancy in or about January 90. However, the claimant was an experienced asbestos worker and if not because of the rumours about him, I believe DW2 would have arranged him to be transferred to the Apleichau Site."

4. Pursuant to section 31Q of the Employment Ordinance, all dismissals are deemed to be by reason of redundancy unless the contrary is proved. Though the learned Presiding Officer referred to the Appellant's reliance on this statutory presumption, he had made no specific finding in his judgment of a successful rebuttal of the presumption. In view of his judgment, it would have to be taken that he was satisfied that the presumption had been rebutted. He said he was satisfied "from the defence evidence" that the dismissal was not "because of redundancy". However, the allegation by the respondent that the Apleichau Project was able to absorb all the workers rendered redundant after the completion of the Hung Hom project was specifically rejected by the learned Presiding Officer. There is no evidence of any other projects to absorb the redundant workers. The respondent adduced no evidence that upon the dismissal of the appellant, a new foreman had been employed to replace him. The respondent's case is that but for its dissatisfaction of the appellant he would have been transferred to the Apleichau Project. The learned Presiding Officer in fact found that 25 to 30 workers in the Hung Hom project were dismissed for redundancy in or about January 1990. Thus, it would appear that the only 'defence evidence' capable of being relied on by the learned Presiding Officer of rebutting the statutory presumption of redundancy is his finding that:

(i) The respondent strongly suspected that the appellant had been disloyal to it; and

(ii) The appellant being an experienced worker, would have been retained by the respondent for the Apleichau project but for the said suspicion.

That formed the basis for his refusal to accept the completion of the Hung Hom Project as " the reason or one of the reasons that [the respondent ] decided "to dismiss the appellant.

5. The learned Presiding Officer accepted the evidence of CW2 that 25 to 30 workers were made redundant. He had rejected the respondent's evidence about the ability of the Apleichau Project to absorb the redundant workers from the Hung Hom project when it contradicted CW2' s evidence. There is no suggestion he refused to accept CW2' s evidence on other aspects of the case, or he treated his credibility differently. According to CW2, the facts are:

"We had about 50 workers in Hung Hom Site. Most of the work in Apleichau were handled by sub-contractors. The Apleichau Site could only accommodate half of the workers of Hung Hom Site. So I and Mr. Siu (the manager) had to put our heads together to work out which one to be retained and which one to be terminated. Mr. Siu only made the decisions on the foreman and left the other workers for me to decide. There were 6 foremen in the Hung Hom Site. ...."

The respondent did not challenge the above evidence of CW2 in cross-examination. It is beyond a shadow of doubt that when the Hung Hom Project was completed, a decision was required to select which of the foremen and workers were to be retained and transferred to the Apleichau project, and which were to let go as there would not be work for them to do. The appellant was eliminated from the team to be transferred to Apleichau as a result of the repondent's suspicion of his performance and loyalty. In the premises, the underlying cause of the appellant's dismissal is the need to reduce the work force. And the reason why he instead of another foreman was eliminated was the respondent's suspicion.

6. The learned Presiding Officer had failed in toto to consider the said underlying cause which brought about the need to carry out the elimination process. There is no evidence at all that the respondent would have dismissed the appellant independent of the requirement of the work force at the Apleichau Project. Indeed, the evidence suggested that the management of the respondent had been receiving such unfavourable reports on the appellant for some time prior to the completion of the Hung Hom Project, but had took no action until after the completion of that project. Had the learned Presiding Officer asked himself the following questions: Would the respondent have dismissed the appellant if the Apleichau Project could have absorbed all the existing workers at the Hung Hom Project? Did the occasion for the consideration of the dismissal of the appellant arise because 25 to 30 workers need to be dismissed as a result of redundancy? It would have been inevitable for him to come to the conclusion that there is no evidence to suggest the appellant would, in any event, have been dismissed even if the Apleichau Project could have absorbed all the workers. He would be bound to conclude that the underlying cause for the appellant's dismissal was the redundancy, even without the assistance of any statutory presumption. I do draw the above inferences of fact under the powers conferred on me by section 35 (2) (a) of the Labour Tribunal Ordinance.

7. It appears that the learned Presiding Officer had failed to distinguish the causation for the dismissal, and the explanation for the respondent's choice to victimize the appellant in a redundancy situation. In every redundancy situation involving a diminished requirement of work force, the managment would have to make a choice as to who to retain and who to make redundant. It may be an arbitrary random draw of ballots, or it may be an informed choice with good management justifications. For the purpose of severance payment, it is irrelevant whether the choice was based on a dislike of the employee's face, a matter of fortune, or on ground of a poorer skill or performance than others. The worker would have been dismissed by reason of redundancy even if it was because his name rather than the other was drawn from the ballot box. The reason for choosing the dismissed worker only becomes relevant if it could independently amount to a ground for lawful dismissal. (Thus the provisions in section 31D (1) (a) of the Employment Ordinance.) It cannot be the law that an employer can escape liability for severance payment by saying that the dismissal was motivated by a dislike of the employee's face when he was required to make the choice as a result of a reduced requirement in his work force.

8. In the premises, the learned Presiding Officer had based his conclusion that the appellant " was not dismissed because of redundancy" on an irrelevant finding of fact, i.e. the reason as to why he instead of another foreman was made redundant; and had failed to properly consider the relevant fact that there was a redundancy created by the completion of the Hung Hom Project and the inability of the Apleichau Project to absorb such number of redundant workers. No reference was made in the judgment to section 31B (2) (c) of the Employment Ordinance which provides that:-

"(2) For the purposes of this Part an employee who is dismissed shall be taken to be dismissed by reason of redundancy if the dismissal is attributable wholly or mainly to the fact that (c) the requirements of that business for employees to carry out work of a particular kind in the place where the employee was so employed have ceased or diminished or are expected to cease or diminish."

The inevitable inference to be drawn from the evidence, and other findings of the learned Presiding officer, is that the Appellant's dismissal was mainly, if not wholly, attributed to the diminished requirement in the respondent's work force.

9. In the premises, the learned Presiding Officer had erred in law in holding impliedly that the statutory presumption had been rebutted in that his conclusion is not supported by any evidence. And in the absence of any specific finding regarding the effect of his finding that the Apleichau Project could not have absorbed all the workers in the Hung Hom Project and that 25 to 30 workers were in fact made redundant at that time would have on the causation of the dismissal, and in the absence of any specific consideration of section 31B (2) (c) in his judgment, I draw the inference that the underlying cause for the appellant's dismissal was the redundancy created by the inability of the Apleichau Project to absorb all the Hung Hom Project workers, and that the Appellant became one of the 25 to 30 victims made redundant. I accept, as found, the immediate reason for choosing the appellant and not somebody else was the suspicion of the disloyalty of the appellant harboured by the management of the respondent. However, it is not necessary for the redundancy to be the sole and only cause of the dismissal to found liability for severance payment. It will suffice if it is mainly attributed to redundancy. The inevitable inference to draw is that the appellant's dismissal was at least, mainly, if not wholly, attributed to the said redundancy. In the premises, not only was the statutory presumption not rebutted, the evidence, in fact, establishes a dismissal by reason of redundancy under section 31B (2) (c). By reason of the above, the dismissal of the appellant's claim for severance pay is set aside. Judgment is to be entered for the appellant for the sum of $16,242.70, the quantum of which has not been challenged by the respondent. There will be an order nisi for costs of the application for leave to appeal and the appeal to the appellant.

10. Dated the 12th day of July 1991.