FU HONG CHOI v. HO KING RESTAURANT CO. LTD.t/a HO KING RESTAURANT

IN THE SUPREME COURT OF HONG KONG

LABOUR TRIBUNAL APPEAL NO.131 OF 1995

(CLAIM NO.E380 OF 1995)

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J U D G M E N T

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1. The appellant's claim was for statutory holiday pay for the period 9th August 1989 to 30h June 1994. The claim was filed on 27th January 1995. Thus, part of the appellant's claim was time barred under s.9 of the Labour Tribunal Ordinance Cap.25. However, the parties agreed and signed a memorandum to confer jurisdiction on the Labour Tribunal to deal with the whole claim. The Presiding Officer proceeded to hear the case and subsequently dismissed the claim. The appellant now appeals against the Presiding Officer's decision.

2. The appellant was first employed by the respondent on 9th August 1989 as a waiter. He was paid on a monthly basis. His contract of employment was terminated on 29th June 1994 after five years of service. On termination, the appellant was paid 7 days wages in lieu of notice of termination. He was also paid the wages for the annual leave he was entitled for the year 1996 on a pro rata basis. The appellant claimed that he should be paid for the statutory holidays which he was not granted over the five years he was employed and he did not claim them earlier because he was still employed by the respondent. The respondent claimed that by the terms of his contract of employment, the appellant was given paid rests days each month and annual leave with pay each year. In total, the number of paid holidays each year was more than what the claimant was entitled under the Employment Ordinance Cap.57 and they should not be liable to pay for statutory holidays.

3. The relevant parts of the appellant's contract of employment are clauses 3, 4, 5 and 6 which are as follows :

"3. The monthly wages of the employee is $4500, tips, 9%. 12 monthly wages are distributed each year. No double pay or bonus are given at the year end.

4. I agree the proposal put forward by the company that I will continue to work on the rest days specified by the Labour Ordinance and am willing to accept wages in lieu of holiday given by the employer. The limit of wages in lieu of holiday has been included within my monthly wages.

5. The employee full understands the extraordinary circumstances of the business and consents to rest days arranged by the employer, totally ___days each month.

6. I am also willing to accept the 10 day statutory holiday, which includes, New Year Day, the first three days of Lunar New Year, Ching Ming Festival, Dragon Boat Festival, the day following the Mid Autumn Festival, Chung Yeung Festival , other festival or Christmas, totally 10 days of holidays to be treated as floating holidays, in addition to the 7 day annual leave earned after one year's employment. The statutory holiday stated above is included within the rest days arranged by the employer mentioned in clause 5. If the number of rest days is still less than seventeen, employees can take 4 consecutive day leave, 3 consecutive day leave or discontinuous holidays. The dates shall be determined by the employer."

4. The parties agreed before the Presiding Officer that the appellant was given 3 days off each month and no deduction was made from the appellant's monthly wages for these 3 days. The parties also agreed that over the period of time in question, apart from these 3 days and annual leave, the appellant was not granted any other days of leave with or without pay. In other words, the appellant was only given 3 paid rest days each month.

5. The contention of the respondent is that the total of 36 paid rest days a year and the 7 days annual leave with pay provided under the appellant's contract of employment is more than the statutory requirement on rest days and paid holidays. The appellant having agreed to these terms, cannot now claim further payments for statutory holidays.

6. The Presiding Officer agreed with the respondent and in his judgment he said this :

"I accepted the defence that included in these days off were the various statutory holidays and the annual leave the claimant was entitled to enjoy every year. The total number of such days off might exceed the aggregate of the statutory holidays and annual leave the Claimant was entitled to every year. But the fact remained that substituted holidays had already been granted to him."

7. In order to determine whether that is correct, it is necessary to turn to the provisions of the Employment Ordinance on rests days and statutory holidays to see if the terms of the appellant's contract of employment are terms contracted out of these provisions.

8. Part IV of the Ordinance deals with rest days and the relevant provisions are as follows :

"s.17(1) Subject to the provisions of this Part, every employee who has been employed by the same employer under a continuous contract shall be granted not less than 1 rest day in every period of 7 days.

(2) Rest days shall be in addition to any statutory holiday, or alternative holiday or substituted holiday, to which an employee is entitled under s.39.

s.19 (1) Subject to subsection (2) no employer shall require an employee to work on any of his rest days.

(2) An employer may require an employee to work on his rest day if it is necessary to do so by reason of a breakdown of machinery or plant or other unforeseen emergency of any nature.

(3) An employer shall substitute for any rest day on which the employee is required to work under subsection (2) some other rest day .....

s.20 (1) An employee may, at his own request and if the employer agrees, work for his employer on a rest day.

(2) An employee may, at the request of his employer, work for his employer on a rest day."

9. Part VIII of the Ordinance provides for statutory holidays.

10. Section 39 sets out the statutory holidays which an employee is entitled and the manner by which another day may be substituted for a statutory holiday. Subsection (4), clearly provides that the substituted holiday must not fall on a rest day or another statutory holiday.

11. Section 40A prohibits the payment of wages in lieu of holiday except when an employee's contract is terminated and it is in respect of a holiday which the employee has been granted but falls after the termination of his contract.

12. The effect of these sections is that the employer must provide a rest day each week for the employee, although the employee may work for the employer on his rest day on a voluntary basis. However, these rest days are in addition to the statutory holidays which the employee is entitled under s.39 of the Ordinance. It is beyond doubt both under s.17 and s.39 that statutory holidays cannot be substituted by rest days. Another effect of these provisions is that no payment can be substituted for statutory holidays. There is no provision requiring the employer to pay an employee wages for his rest days. But if the employer chooses to do so, this does not make the rest day a statutory holiday nor does it relieve the employer of his obligation to comply with s.39.

13. The purpose of the legislature is to enable an employee to have a right to enjoy the statutory holidays away from work but with wages. A contract of employment which purports to show the employee agrees to substitute statutory holidays by rest days is seeking to reduce such right of the employee.

14. Section 70 of the Ordinance provides that any term of a contract of employment which purports to extinguish or reduce any right, benefit or protection conferred on the employee by this Ordinance shall be void.

15. Clauses 5 and 6 of the appellant's contract of employment purport to reduce the appellant's right to his statutory holidays by including them as part of the monthly rest days and they are void under s.70 of the Ordinance. The appellant was not bound by these clauses. The respondent should have but had not paid the appellant statutory holiday pay on termination of his employment. I allow the appeal. The amount owing to the appellant was not disputed and accordingly, I substitute for the order of the Presiding Officer an order that the respondent pay the appellant the sum of $11,550. There shall be no order as to costs.

(Arthur Leong)

Judge of the High Court