YAN KWOK TUNG AND OTHERS v. NAPOLEON RESTAURANT LTD. AND ANOTHER

L.T. 15 of 1990

H E A D N O T E

Severance payments - sections 31B(2)(a) and 31B(2)(c) of the Employment Ordinance (Cap. 57) - whether physical location at which employees worked relevant for purposes of section 31B(2) (a) - whether "the place where the employee was so employed" in section 31B(2) (c) means the place where the employee actually worked, or the place where he could be required to work under his contract of employment - whether Sutcliffe Hawker Siddelev Aviation Ltd. [1973] ICR 560 should be followed - whether Presiding officer in Labour Tribunal required to raise of his own motion whether employee has received retirement scheme payment.

IN THE SUPREME COURT OF HONG KONG

LABOUR TRIBUNAL APPEAL NO. 15 OF 1990

(CLAIM NO. Western - 51/90)

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J U D G M E N T

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1. This application raises, among other issues, an important question on the proper construction of Section 31B(2)(c) of the Employment Ordinance (Cap. 57). Between 5th March 1990 and 7th March 1990, the Labour Tribunal heard the claims of 32 Claimants arising out of the ending of their employment. In reasons given both orally on 7th March 1990, and in writing on 2nd May 1990, the Presiding Officer held that all 32 Claimants had been dismissed from their employment and that the reason for their dismissal was redundancy. He awarded all the Claimants various sums by way of wages in lieu of notice, and to those of the Claimants who the Presiding Officer found had been employed for not less than 24 months the Presiding Officer awarded various sums by way of severance payments. The two companies who, between them, employed the 32 Claimants now appeal, with the leave of Deputy Judge Sakhrani Q.C., against the findings of the Presiding Officer, though, subject to one point which only affects some of the Claimants, the two companies, who I shall call "the employers", do not challenge the accuracy of the figures in the award. Some of the Claimants were represented by Mr. Wu, others by Mr. Mughal, and two of the Claimants were unrepresented. However, Mr. Wu and Mr. Mughal adopted each other's submissions as their own.

The Statutory Framework

2. Severance payments are governed by Part VA of the Employment Ordinance. Part VA consists of Sections 31B to 31Q. The right to a severance payment is given by Section 31B(1), which, so far as is material to this appeal, provides as follows:

"Where an employee has been employed under a continuous contract for a period of not less than 24 months ending with the relevant date ... is dismissed by his employer by reason of redundancy ..., the employer shall, subject to this Part ..., be liable to pay the employee a severance payment ..."

The facts which constitute an employee's dismissal, and the facts which constitute his dismissal by reason of redundancy, are both subject to statutory definition. "Dismissal" is defined in Section 31D(1) as follows:

"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) where under that contract he is employed for a fixed term, that term expires without being renewed under the same contract; or

(c) the employee, being so entitled by reason of the employer's conduct, terminates that contract without notice or payment in lieu in accordance with section 10."

And "dismissal by reason of redundancy" is defined in Section 31B(2) as follows:

"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 -

(a) his employer has ceased, or intends to cease, to carry on the business for the purposes of which the employee was employed by him;

(b) his employer has moved, or intends to move, the place in which the employee was or is so employed -

    (i)from the Island of Hong Kong to Kowloon or the New Territories; or

    (ii) from Kowloon or the New Territories to the Island of Hong Kong; or

(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."

There is a rebuttable presumption for the purposes of Part VA that an employee who has been dismissed is presumed to have been dismissed by reason of redundancy: Section 31Q.

The Facts

3. I turn to the relevant facts found by the Presiding Officer, and those either admitted or not challenged before him. The Claimants were all employed by the employers in the various restaurants operated by the employers in Ocean Park, Aberdeen, Hong Kong. They were employed as cooks, kitchenhands, and waiters, and as clerical and other support staff. However, the employers were given notice that their licence to operate the restaurants would be terminated, and the employers' response was to post, on 4th December 1989, a notice on the Notice Board of all sections in the following terms:

"The catering contract between the Ocean Park and our Company will terminate on 10th of January, 1990. We hereby notify all employees of the Ocean Park Catering Services Department that their services in the Ocean Park positions will end on 10th of January, 1990. At the same time, we uphold the Company's tradition of looking after the employees. Accordingly, each employee will be individually invited by letter to make arrangements for transfer. We seek your co-operation and usual devotion until the end of the contract in the hope of maintaining the reputation of the Company."

On the following day, each of the Claimants, and I imagine the rest of the employers' employees who worked in Ocean Park, were issued with a letter addressed to them personally, which read as follows:

"The catering contract between the Ocean Park and our Company will terminate on 10th of January, 1990. We hereby give you one month's notice in advance in accordance with the regulation that your work in the Ocean Park Catering Services Department will cease on 10th of January, 1990. The Company hereby arranges to transfer you to a Hong Kong Island unit within the company for the post of (              ) with effect from (             ) to continue your service to the Company."

Accompanying that letter was a reply slip in these terms:

"I accept the Company's arrangement starting from 11th of January, 1990, I will be transferred to a Hong Kong Island unit within the Company for the post of (             ) to continue my loyal service to the Company."

At the foot of the reply slip were these words:

"Attention: (1) Please return this reply letter to Mr. Wong Hing Leung before noon on 9th of December. (2) Late reply will be treated as voluntary abandonment of the offer."

4. The Claimants, and I assume other employees of the employers, were concerned as to what would be the implications for them if they accepted a "transfer", and they wanted the employers to clarify what was meant. In order to give their employees that clarification, the employers on 9th December 1989 issued to each of the employees another reply slip. This was headed "Notice of Intent", and immediately below the heading, in brackets, were the words: "This is not an employment contract, neither is this legally binding". The body of the reply slip stated:

"I am willing to accept the arrangement made by the company to transfer me to one of the units of this enterprise in Hong Kong as ( ) as from 11-1-90 and to continue to serve the company loyally. As to the terms and conditions of employment, they will be negotiated at a later date and determined according to various circumstances."

At the foot of the revised reply slip were these words:

      "N.B. (1) To assist us in reserving this job for you please return this document to Mr. Wong Hing-Leung by 12th December 1989.

(2) If you fail to return by the specified date it will be taken to mean that you no longer wish to work for the company.

(3) Whether you accept or not we will deal with this matter in accordance with the employment law."

5. None of the Claimants responded to either the notice of 5th December 1989 or to the revised reply slip sent to them on 9th December 1989. They had many reasons for not wanting to. The Presiding Officer set out his findings as to what those reasons were in paragraph 5 of his Reasons. Mr. Ma, for the employers, in an attractive submission, argued that it was not clear whether the Presiding Officer was setting out the Claimants' reasons as advanced at the hearing for not responding to the notice, or whether he was setting out his findings as to what their reasons were. In my view, it was the latter, but it is unnecessary for me to consider the point in any more detail, because the point is irrelevant to any question which arises on this appeal. The Claimants' reasons for not responding to the notice were highly relevant in the Labour Tribunal, because the Presiding Officer had to decide whether the Claimants' refusals to be "transferred" meant, for the purposes of Section 31C(3), that the Claimants had unreasonably refused an offer of suitable alternative employment, and had thereby denied themselves the severance payments to which they would otherwise have been entitled. That issue does not arise on this appeal, because it is not suggested on this appeal that if the Presiding Officer did not err in law in holding that the Claimants had been dismissed by reason of redundancy, they should nevertheless, by the operation of Section 31C(3), be deprived of a severance payment.

6. Mr. Ma and Mr. Wu told me that in the absence of a response by the Claimants to the "transfer" proposals, they continued to work at Ocean Park until 10th January 1990, on which date their employment came to an end.

The Presiding Officer's conclusions

7. On these facts, which are sacrosanct by virtue of the Section 35(2)(i) of the Labour Tribunal Ordinance (Cap.25), the Presiding officer reached two conclusions which are material to this appeal:

(1) The Presiding Officer found that all the Claimants had been dismissed. In paragraph 6 of his Reasons, he said: "There were certainly no explicit dismissal in the sense that the Claimants were expressly told they were dismissed, but it is quite obvious from the terms of the second notice called the Notice of Intent issued on 9-12-89, the Defendants could not have regarded the Claimants as still being in their employ otherwise they could not have invited them to apply for employment. It was to be a fresh employment and to be on new terms to be negotiated between the parties. The Defendants must have considered the Claimants' employment terminated, presumably when the Claimants failed to comply with the first notice to return the reply slip by the specified date line of midday, 9-12-89. Judging from what was written into the second notice, I hold that there was a dismissal of the Claimants by the Defendants even though the Defendants have refrained from saying directly that the Claimants were dismissed or that they were deemed to have been dismissed." It is plain that in this passage the Presiding Officer was making a finding of what I shall call an "actual" dismissal within the meaning of Section 31D(1)(a).

(2) The Presiding Officer found that the reason for the Claimants' dismissal was redundancy. Mr. Ma submitted that the Presiding Officer did not identify which of the three circumstances constituting a dismissal by reason of redundancy set out in Section 31B(2) he had in mind, but that submission, in my view, does not do justice to paragraph 5.7 of the Reasons, in which the Presiding Officer said that "the Defendants were closing down their restaurant business in Ocean Park, which is clearly a redundancy situation as envisaged in Section 31B(2)(a)." It is true that the Presiding Officer did not say in terms that the Claimants' dismissal was wholly or mainly attributable to that fact, but I have no doubt that that was what the Presiding Officer had in mind.

8. The Presiding Officer also made findings relating to constructive termination and constructive dismissal. In my judgment, the Presiding Officer erred in law in those respects:

(i) As for constructive termination, the Presiding Officer, in paragraph 6 of his Reasons, said: "... the act of the Defendants in issuing the second notice constituted a constructive termination of the contract of employment of the Claimants ... within the meaning of sub-sections 1 and 2 of Section 31L." I do not follow that reasoning. The employers' act in issuing the revised reply slip could not of itself operate so as to terminate the Claimants' contracts. Assuming, as the Presiding Officer must have done, that the issue of the revised reply slip amounted to a breach by the employers of the Claimants' contracts of employment, that breach had to be accepted by the Claimants for the contract to have come to an end. If the Claimants had taken that course, it would not have been the employers' issue of the revised reply slip which operated so as to terminate the Claimants' contracts, but the Claimants' reaction to that breach.

(ii) As for constructive dismissal, the Presiding Officer, in paragraph 10 of his Reasons, said: "

If an employer tries to impose a unilateral change in employment terms, such as a significant change in job content or working hours, a lowering in earnings or status, or a significant change in the location of employment, any such act on the part of the employer amounts to a constructive dismissal of the employee. I hold that the Claimants referred to in paragraph 5(4) above [i.e. 12 Claimants who had been offered different jobs or positions] all had the right not to accept the offers made to them by the Defendants."

9. There are, in my view, three problems with that passage. First, the Presiding Officer appears to elide the question as to whether the Claimants were constructively dismissed within the meaning of Section 31D(1)(c) with the question as to whether the Claimants had unreasonably refused the offers of re-employment within the meaning of Section 31C(3). Secondly, I do not see how an employee who has been actually dismissed can also have been constructively dismissed. The essence of a constructive dismissal is that the employee resigns from his employment: the law in certain defined circumstances "construes" his resignation as a dismissal. The mere fact that the employees chose not to "transfer" does not mean that they resigned: if they had been actually dismissed by the notice of 5th December 1989 when read with the revised reply slip of 9th December 1989, they were merely allowing their notices of dismissal to take effect. The question of constructive dismissal could only have arisen if the Presiding Officer had found that the Claimants had not been actually dismissed. Thirdly, the question of constructive dismissal could not, in my view, arise on the facts of this case, even if the Claimants had not been actually dismissed by the notice of 5th December 1989 when read with the revised reply slip of 9th December 1989. Their employment would still have come to an end by their actual dismissal. That is because when the Claimants' employment came to an end on 10th January 1990, that can only have been because the employers terminated their contracts for the Claimants' refusal to transfer (whether that refusal had put the Claimants in breach of their contracts or not). It may be that the employers were treating the employees' refusal to transfer as resignations, i.e. by their refusal to transfer the employees had dismissed themselves, but the heresy of "self - dismissal" was laid to rest many years ago in cases like Western Excavating (ECC) Ltd. v. Sharp [1978] Q.B. 761and London Transport Executive v. Clarke [1981] I.C.R. 355, in which the Court of Appeal clearly assumed that when a repudiatary breach of a contract of employment was accepted by the innocent party, it was that party rather than the party in default who was terminating the contract. In my judgment, therefore, constructive dismissal has nothing to do with this case, and I propose to say nothing further on the topic. The only issue on dismissal is whether the Presiding Officer erred in law in concluding that the Claimants had been actually dismissed within the meaning of section 31D(1)(a).

Were the Claimants actually dismissed?

10. The first of Mr. Ma's submissions is that the Presiding Officer erred in law in concluded that the Claimants were dismissed within the meaning of Section 31D(1)(a). Neither the notice of 5th December 1989 nor the revised reply slip of 9th December 1989 amounted on their proper construction to the actual dismissal of the Claimants. They merely notified the Claimants of the proposal to transfer them to other restaurants operated by the employers in either Hong Kong or Kowloon. That was a permissible requirement, says Mr. Ma, because such a requirement was permitted by their contracts, either on a proper construction of the express terms of their contracts or on a proper application of such terms of their contracts which ought to be implied. Thus, when the Claimants' employment came to an end on 10th January 1990, that was because the employers terminated their contracts for the Claimants' breach. Although that was an actual dismissal, it was a termination in accordance with Section 9(b), which gives an employer the right to terminate a contract without notice or payment in lieu on any ground "on which he would be entitled to terminate the contract without notice at common law", e.g. the employee's breach, and Section 31D(1) (a) provides that such a termination does not count as a dismissal for the purposes of Part VA. The error into which the Presiding officer fell, submitted Mr. Ma, was his failure to consider at all whether the Claimants were contractually mobile, and if so precisely what mobility clauses their contracts of employment were subject to.

11. In my judgment, this elaborate argument falls at the first hurdle. The notice of 5th December 1989 cannot be read as a notice of transfer: it can only be read as a notice of dismissal, coupled with either an offer of fresh employment at another of the employers' restaurants, or as a statement of intent on the part of the employers that they would be employed elsewhere. It is true that the notice refers to the arrangement as a "transfer" to enable the recipient to "continue" his service with the employers, but the vital words in the notice are the words "in accordance with the regulation." Mr. Ma accepted that there was no evidence before the Presiding Officer that the employers' internal regulations required one month's notice of transfer to be given, and Mr. Ma further accepted that the regulation referred to could therefore only have been Section 6(2)(a) of the Employment Ordinance. That provides that the length of notice required to terminate contracts of employment (which are, as the Claimants' contracts were, for one month renewable from month to month and which did not make provision for the length of notice required to terminate them) is not less than one month. In my view, therefore, whether or not it was contractually permissible for the employers to transfer the Claimants to other restaurants operated by the employers, the language they chose to use in the notice of 5th December 1989 was consistent only with a notice amounting to one month's notice of dismissal.

12. Indeed, I do not think that it was even coupled with an offer of fresh employment. The revised reply slip, which might have been said to contain an offer of fresh employment, was expressed to be not legally binding, the terms of any new employment were not specified, and the revised reply slip merely informed employees that the terms could be negotiated at a later stage. In my view, the notice of dismissal was accompanied by a notice of intent on the part of the employers that their employees would be re-employed elsewhere, and it is noteworthy that was what the revised reply slip was called. Accordingly, the Presiding Officer did not, in my view, err in law in concluding that the Claimants had been actually dismissed, though my reasons for reaching that view are different to those expressed by the Presiding officer in paragraph 6 of his Reasons.

13. In those circumstances, it is not necessary for me to consider whether the Claimants' contracts of employment were subject to express or implied mobility clauses. However, since that question has been fully argued before me, I propose to state my conclusions on it.

The mobility clauses

14. There was an express mobility clause, in wide terms, in the contracts of C16, 20, 21, 22, 23, 24, 25, 26, 27, 28, 29, 30 and 31. Those clauses gave the employers power to transfer the employees to other restaurants operated by them in either Hong Kong or Kowloon. With the exception of C25, the restaurants to which the employers proposed to transfer them were all in Hong Kong or Kowloon. In refusing to be transferred, those Claimants would have been acting in breach of contract. However, the restaurant to which the employers proposed to transfer C25 was in the New Territories, and his refusal to work there would not therefore have been in breach of contract.

15. There was an express mobility clause, in narrow terms, in the contracts of C4, 9, 10, 11, 12, 13, 14, 15, 17 and 18. It read: "I agree that during my service, the hotel authority can transfer me to any department to perform provisional duties as any department requires." Mr. Ma faintly submitted that if a Claimant could have been transferred "provisionally", he could have been transferred permanently, but that begs the question as to what "provisional" means. In my view, "provisional" can only mean "temporary", and since the transfers which the employers proposed were permanent, these Claimants would not have been in breach of contract in refusing to be transferred.

16. Mr. Ma submitted that C1, 2, 3, 6, 7 and 8 had orally agreed to transfer. However, the only reference to that oral agreement was in the Defence of the Second Defendant. The oral agreement was not particularised. In particular, the Presiding Officer was not told whether the oral agreement was reached at the beginning of the Claimants' employment, in the course of it or at the end of it. Nor was the Presiding Officer told what the terms of the oral agreement were, i.e. whether the Claimants agreed to go to the particular restaurants which the employers had in mind for them, whether they agreed to go temporarily or permanently, or whether they agreed to go to wherever the employers wanted them to go, even if the restaurants were in the New Territories. It is true that the Presiding Officer may receive any evidence which he considers relevant (see Section 27(2) of the Labour Tribunal Ordinance), but the wholly unparticularized assertion contained in the Defence of the Second Defendant does not, in my view, even begin to amount to "evidence".

17. Finally, I turn to the Claimants who did not have mobility clauses in their contracts, and who I would have found could not be treated by the Presiding Officer as having orally agreed to transfer, namely C1, 2, 3, 5, 6, 7, 8 and 19. In Jones v. Associated Tunnelling Co. Ltd. [1981] I.R.L.R. 477, Browne-Wilkinson J. (as he then was), in giving the judgment of the Employment Appeal Tribunal, said at paragraphs 14 and 19:

". . .a contract of employment cannot simply be silent on the place of work: if there is no express term, there must be either some rule of law that in all contracts of employment the employer is (or alternatively is not) entitled to transfer the employee from his original place of work or some term regulating the matter must be implied into each contract. We know of no rule of law laying down the position in relation to all contracts of employment, nor do we think it either desirable or possible to lay down a single rule ... Therefore, the position must be regulated by the express or implied agreement of the parties in each case. In order to give the contract business efficacy, it is necessary to imply some term into each contract of employment ... In such a case, it seems to us that there is no alternative but for the tribunal or court to imply a term which the parties, if reasonable, would probably have agreed if they had directed their minds to the problem."

This approach was expressly approved by the Court of Appeal in Courtaulds Northern Spinning Ltd. v. Sibson & another [1988] I.C.R. 451. The term which was implied in both those cases was a term that the employee could be required to work at any place within a reasonable daily commuting distance from his home. The same conclusion was reached by Mayo J. in Globe Dyeing Factory Ltd. v. Ng Chi-Leung & others [1989] 1 H.K.L.R. 184. He does not appear to have had the benefits of either Jones v. Associated Tunnelling Co. Ltd. or Courtaulds Northern Spinning Ltd. v. Sibson & others being cited to him, but he had relied on the dictum of Lord Denning M.R. in O'Brien & others v. Associated Fire Alarms Ltd. [1968] 1 W.L.R. 1916 at page 1923G to the effect of that "the only term to be implied in [the employees'] contracts was that they should be employed within daily travelling distance of their homes or, if you please, within a reasonable distance of their homes."

18. Mr. Wu and Mr. Mughal submitted that no mobility clause should be implied into the Claimants' contracts of employment because the Claimants had worked at Ocean Park for the duration of their employment, some for only a few months, but others for many years. Alternatively, if a mobility clause should be implied, the employers had waived any right they may have had to transfer them elsewhere. I would have rejected those submissions. The time at which it would be appropriate to ask what the parties, if reasonable, would have agreed to was when the contract was entered into, and taking into account the length of their employment is necessarily inconsistent with that. The alternative submission amounts to a plea by way of estoppel, but in my view none of the conditions necessary to support such a plea are present.

19. It was also submitted that even if the Claimants' contracts of employment were subject to mobility clauses, the proper clause to be implied was one akin to the express term in the contracts of C4, 9, 10, 11, 12, 13, 14, 15, 17 and 18 relating to "provisional duties". I would have rejected that submission as well. There may have been some substance in it if all the employers' employees whose contracts were subject to an express mobility clause were subject to the same mobility clause. But that is not the case. The contracts of other employees had much wider mobility clauses, and it was not suggested that there was some rational feature which caused the employers to require some employees to be subject to a narrow clause, and others to be subject to a wider one.

20. Accordingly, subject to one point, I would have found that the contracts of employment of C1, 2, 3, 5, 6, 7, 8 and 19 were subject to an implied term that they could be required to work at any place within a reasonable daily commuting distance from their homes. The twist is the provision in Section 31B(2) (b) that "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 his employers ... intend to move the place in which the employee ... is ... employed ... from the Island of Hong Kong to Kowloon or the New Territories." Relying on that provision, Mr. Ma submits that the contracts of employment of those 8 Claimants were subject to an implied term that they could be transferred, in addition, to anywhere on the Island of Hong Kong even if that place was not within reasonable daily commuting distance of their homes. I would have rejected that submission. If the correct test for the implication of a contractual term is what the parties, if reasonable, would probably have agreed if they had directed their minds to the problem, the statutory definition of redundancy is beside the point. Accordingly, I would have found that those 8 Claimants in refusing to be transferred would have been in breach of contract if the restaurants to which the employers proposed to transfer them were within reasonable commuting distance from their homes, and I would have remitted their complaints to the Labour Tribunal for that actual inquiry to be made.

Were the Claimants dismissed by reason of redundancy?

21. Mr. Ma submits that the Presiding Officer erred in law in concluding that the Claimants were dismissed by reason of redundancy. This ground of appeal was not included either in the original grounds of appeal or in the supplemental grounds of appeal, which the Claimants were given leave to argue by Deputy Judge Sakhrani Q.C. In the course of the hearing, and in the absence of an objection from any of the Claimants, I gave the employers permission to argue this additional ground of appeal: notice of the employer's intention to rely on this ground having been given to the Claimants as long ago as last March.

22. The employers argue that the reason for the Claimants' dismissal was not attributable to the fact that the employers were intending to cease to carry on the business for the purposes for which the Claimants were employed by them within the meaning of Section 31B(2)(a), because the business for whose purposes they were employed was not the employers' business at Ocean Park. The employers' unchallenged evidence was that the employers' business was the operation of restaurants and catering establishments in various parts of the Island of Hong Kong, Kowloon and the New Territories. That was the business for whose purposes the Claimants were employed, albeit that part of their business in Ocean Park. The physical location at which the Claimants worked is immaterial for the purposes of Section 31B(2)(a). The provenance of Section 31B(2)(a) was Section 1(2)(a) of the Redundancy Payments Act 1965, subsequently re-enacted as Section 81(2)(a) of the Employment Protection (Consolidation) Act 1978. I quote from Section 81(2)(a):

"For the purposes of this Act 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 his employer has ceased, or intends to cease, to carry on the business for the purposes of which the employee was employed by him, or has ceased, or intends to cease, to carry on that business in the place where the employee was so employed."

The words "or has ceased, or intends to cease, to carry on that business in the place where the employee was so employed" were omitted when Section 31B(2)(a) was enacted. The intention must have been to remove the question of geographical location from consideration when Section 31B(2)(a) falls to be applied. The reason for that, I infer, was because of the special provision applicable to Hong Kong only in Section 31B(2)(b). In my judgment, there is no answer to Mr. Ma's submission, and the Presiding Officer therefore erred in law in concluding that on the application of Section 31B(2)(a) the Claimants were dismissed by reason of redundancy.

23. However, that is not the end of the matter. Since Mr. Ma submitted that the Presiding Officer did not identify which of the circumstances constituting a dismissal by reason of redundancy set out in Section 31B(2) he had in mind, Mr. Ma made submissions on Section 31B(2)(c) as well. He submitted that although the employers' business no longer required the Claimants to carry out their work in Ocean Park, the words "in the place where the employee was so employed" in Section 31B(2)(c) referred not to the geographical location in which the employee actually worked, but rather to the place or places where by his contract he could be required to work. For the purposes of this submission, I shall assume (contrary to what I would have held in relation to some of the Claimants on the issue of dismissal) that all the Claimants could have been required under their contracts to work at the locations to which the employers proposed to transfer them.

24. Mr. Ma's submission is based on the judgment of the National Industrial Relations Court in Sutcliffe v. Hawker Siddelev Aviation Ltd. [1973] I.C.R. 560. The Court was considering Section 1(2)(b) of the Redundancy Payments Act 1965, which provided:

... 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 if the requirements of [the business for the purposes of which the employee was employed by him] for employees to carry out work of a particular kind, or for employees to carry out work of a particular kind in the place where he was so employed, have ceased or diminished or are expected to cease or diminish."

Sir John Donaldson (as he then was), in giving the judgment of the Court, said at pages 566 D-F:

"The words 'where he was so employed' in section 1(2)(b) do not mean 'where he in fact worked.' They mean 'where under his contract of employment he could be required to work.' The section is intended to cover two different situations. The first is where an employer suffers a general diminution in work of a particular kind and has to dismiss employees in consequence. In that situation there is a redundancy under the main provisions of the paragraph, namely, that work of a particular kind has diminished. But the section is also intended to give a worker the right to a redundancy payment where, although the overall requirements of the employer for work of a particular kind is unaffected, the requirement for work of that kind at the particular place where alone the employee has agreed to work under his contract of employment has diminished. Were it not for the extra words which are included in the paragraph, an employee who had agreed to work only in London, where work had diminished, would have no claim for a redundancy payment if the employer could say:

Certainly there is less work in London, but the amount of work in Birmingham has increased and viewed as a whole there has been no diminution in the amount of my requirements for work of this particular kind. Therefore there is no redundancy situation.'

Parliament has met that by putting in these additional words, which enable the London employee who has contracted to work only in London to say:

'No, the work in the particular place where I have contracted to work has diminished. I am entitled to my redundancy payment.'"

25. There is no doubt that Section 1(2)(b) covered the case which the Court offered as an example, but that, in my view, does not justify the contractual test as opposed to the geographical test. The same result would follow on either test. The additional words to which Sir John Donaldson referred would equally have enabled the employee to say:

"No, the work in the particular place where I have been working has diminished. I am entitled to my redundancy payment."

Accordingly, the only reason advanced by the Court for adopting the contractual test was by way of an example which, in my view, begged the question as to what the true test was.

26. It is for this reason that, with respect to Sir John Donaldson, I find the reasoning of the Court in Sutcliffe unconvincing. Indeed, to construe the words in Section 1(2) (b) "the place where he was so employed" as "the place where under his contract he could be required to work" is open in my judgment, to serious criticism. Firstly, the construction imports words into the section which are not there. Secondly, the construction is inconsistent with the identical words in Section 1(2)(a), to which I have already referred. There is no room for the contractual test there, and where an English Statute uses the same language in different sections, the sections should, if possible, be given the same construction. Thirdly, it is not difficult to envisage situations in which the application of the contractual test would result in anomalies. An example is given in Harvey on Industrial Relations and Employment Law, (Issue 90, July 1991), Vol.l, Div. III, paragraph 335:

"Suppose ... that, though entitled to insist that the employee move, the employer does not in fact so insist: he merely closes down that establishment and dispenses with the services of the employee. A common sense reading of the Act says that the employee is redundant (though he may lose his right to a redundancy payment if he unreasonably turns down an offer of suitable alternative employment). The geographic test says he is redundant ... But the contractual test denies that he is redundant."

That anomaly would not arise under the geographical test.

27. The contractual test in Sutcliffe has been followed in a number of cases, including one referred to in Mr. Ma's helpful skeleton argument, Rank Xerox Ltd. v. Churchill & others [1988] I.R.L.R. 280, a decision of the Employment Appeal Tribunal. However, in none of these cases was the reasoning in Sutcliffe analysed, nor was any reference made to any of the criticisms which in my view can legitimately be levelled at its conclusion. Accordingly, with diffidence, I decline to follow it, but I am fortified by the fact that academic writers share my view that the geographical test is the correct one for what has now become Section 81(2) (b) of the Employment Protection (Consolidation) Act 1978: see, for example, Harvey, op. cit., Vol. 1, Div. III, paragraph 339.

28. I return to Section 31B(2)(c) of the Employment Ordinance, which is the section I must construe. The second of the three criticisms which I have sought to level against the contractual test does not apply to Section 31B(2) (c) because there are no words corresponding to "the place where the employee was so employed" in Section 31B(2)(a), being the equivalent in the Employment Ordinance of section 1(2) (a) of the Redundancy Payments Act 1965. However, there is, in my view, an additional reason why the words "the place where the employee was so employed" in Section 31B(2) (c) imports the geographical test, and that is that the words "the place in which the employee was or is so employed" in Section 31B(2)(b) can only refer to the place at which the employee actually worked. Any other construction would make Section 31B(2)(b) unworkable. It cannot have been the intention to limit an employee's entitlement to a severance payment by reason of Section 31B(2)(b) to those cases in which an employee could before his dismissal have been contractually required to work only on the Island of Hong Kong, but whose subsequent dismissal was attributable to the fact that his employer could contractully require him to work only in either Kowloon or the New Territories, or vice versa. When an Ordinance uses the same language in different sections, the sections should, if possible, be given the same construction. The construction which, in my view, has to be placed on Section 31B(2)(b) dictates that the geographical test should govern Section 31B(2)(c).

29. In the interest of completeness, I should add that Mr. Ma relied on two passages in the judgment of Penlington J. (as he then was) in Leung Wan Jing & 4 others v. Chiat Si Plastic Metalware Manufactory (Labour Tribunal Appeal No. 17/87). Penlington J. said:

"... provided similar work at the same salary is still available to an employee without having to go from either Hong Kong to Kowloon and the New Territories or vice versa, the employee has not been dismissed by reason of redundancy."

However, that is a reference to Section 31B(2)(b), not to Section 31B(2)(c). What Penlington J. said about Section 31B(2) (c) in the previous sentence of his judgment was that this provision "appears to conflict with [Section 31B(2)(b)] but I am satisfied this simply means that if employment is offered in the same place of employment but doing work of a different kind that shall constitute a dismissal by reason of redundancy." I too see no conflict between the two provisions, but I prefer to express it slightly different. An employee's dismissal will be by reason of redundancy if it is attributable to his place of work being moved from the Island of Hong Kong to Kowloon or the New Territories or vice versa. It will also be by reason of redundancy if his dismissal is attributable to the fact that at the place where he worked, wherever it was, his employers no longer needed as many employees, or any employees at all, to do the work which he was doing. Incidentally, although the point does not appear to have been argued before him, Penlington J. assumed that the geographical test was the correct one.

30. For these reasons, I agree with the Presiding Officer that on the primary facts found by him the dismissal of the Claimants was by reason of redundancy, though I have reached that conclusion by a different route.

The 25th claimant

31. The employers took a separate point relating to C25. They say that on the unchallenged evidence before the Presiding Officer, C25 had not been employed for a period of not less than 24 months ending with 10th January 1990, which it is common ground was the relevant date for the purposes of Section 31B(1). That is indeed the case, because it is plain from the documents placed before the Presiding Officer that although C25 applied for a job with the Second Defendant on 8th January 1990, his employment did not commence until 15th January 1990. Mr. Mughal, who represented C25, did not disagree.

32. On what basis, then, did the Presiding Officer award C25 a severance payment? At first blush, the answer is obvious. In a written submission on behalf of the Second Defendant, the Second Defendant admitted that a number of Claimants, including C25, "had been employed by it for not less than 24 months". If that was the reason why the Presiding officer found that C25 had the necessary qualifying period of employment, he can hardy be said to have erred in law in relying upon that admission and not checking, amongst the voluminous bundle of documents which he had, whether that admission was correctly made.

33. However, the peculiar twist in the story is that Mr. Ma told me, on instructions, that the written submission was "rejected" by the Presiding Officer. He was not willing to look at written submissions or skeleton arguments at all. Mr. Ma told me that the Defendants' representatives at the hearing could not now recall whether the Presiding Officer was told that the Second Defendant withdrew its admission that all named Claimants had been employed for not less than 24 months, though it seems to me that it would have been unnecessary for them to do so if in fact the Presiding Officer was unwilling to look at the document in which that admission was contained. Mr. Mughal for his part told me that C25 had no recollection, one way or the other, as to what was said about the Second Defendant's written submission.

34. If Mr. Ma's instructions are correct, I have no doubt that the Presiding Officer erred in law, first in failing to consider what the Second Defendant asserted in his written submission, and secondly, in making a finding of fact which was wholly unsupported by the evidence (though it is not within my power to correct that latter error of law, because Section 35(2)(i) of the Labour Tribunal Ordinance prohibits me from reversing or varying any determination made by the Presiding Officer on questions of fact). In my view, therefore, whether the Presiding Officer erred in law in failing to consider the written submission of the Second Defendant turns on whether he did in fact "reject" it. That is not a question I can determine. I therefore have no alternative but to remit the case of C25 to the Labour Tribunal, with a direction that the Presiding officer (who must, of course, be the same Presiding officer who heard the case) declares whether he considered the written submissions of the Second Defendant, and whether the admission contained in it was the reason why he thought that C25 had sufficient qualifying service. It is only if the answers to those two questions are "yes" that his award can stand.

Payments under a Provident Fund Scheme

35. Mr. Ma's final submission relates to such payments as may have been made to the Claimants under a provident fund scheme. This ground of appeal was not included either in the original grounds or the supplemental grounds. Mr. Mughal objected to the employers being given leave to argue this ground of appeal, first because leave was being sought so late, and secondly because the ground of appeal amounted to an application by the employers to call further evidence, which Section 35(2)(ii) of the Labour Tribunal ordinance prohibits. I decided to give Mr. Ma the leave he sought, first because notice of the employers' intention to rely on this ground of appeal had also been given to the Claimants in March 1991, and secondly because it seems to me, for the reasons which will be apparent, that the new ground of appeal did not invoke the reception of further evidence.

36. At Section 31I of the Employment Ordinance requires a severance payment to be reduced by the amount of any provident fund payment (now called a "retirement scheme payment") paid to the employee. Mr. Ma submitted that the Presiding Officer erred in law in failing to inquire whether any provident fund payments had been made to the Claimants, or alternatively in failing to make his award of severance payments subject to such provident fund payments as the Claimants might have received. Logically, Mr. Ma's arguments applied to all of the Claimants who had been awarded severance payments, i.e. C1-4 and C6-25, although the Defendants' ground of appeal as formulated only applied to those Claimants who Mr. Ma had been instructed have received provident fund payments, namely C1-3, C6-9 and C13-15. It is not disputed that the Presiding Officer did not inquire into whether any provident fund payments had been made to the Claimants, and that he did not make his award subject to such provident fund payments as they may have received.

37. I have no difficulty in rejecting Mr. Ma's alternative submission. If there is a dispute as to whether provident fund payments have been made or if there is a dispute as to the amount, the case would have to be relisted for a further hearing for that dispute to be resolved. A multiplicity of hearings should, if possible, be avoided. Mr. Ma's primary submission, however, is another matter altogether. It raises in sharp focus the nature of the Presiding Officer's role. Is it incumbent upon him to raise the question of provident fund payments of his own motion if neither of the parties, as here, raised it themselves? In Manetta & Co. Ltd. v. Yip Kwong-ying (Labour Tribunal Appeal, No. 83/86), Barnes J. pointed out that:

"the Labour Tribunal has not been cast in the traditional common law mould. A Presiding Officer ... can pursue an active investigative role by calling whatever witnesses he thinks may be of assistance in his determination, ordering for production of whatever exhibits he thinks are relevant and putting questions to any party or witness as he thinks fit (S.20(2)) ... The procedure is inquisitorial not adversarial."

Indeed, Section 20(3) expressly gives him an inquisitorial role because it provides that he "shall investigate any matter which he may consider relevant to the claim, whether or not it has been raised by a party." The requirement to investigate is a mandatory one, though it is for the Presiding Officer in his discretion to decide what is relevant. The investigative role is particularly important in a forum in which lawyers are barred: see Section 23(2).

38. The question of whether an employee has received provident fund payments is of the greatest relevance to the amount of his severance payment. Although I do not want to burden Presiding Officers with yet another avenue to explore, I have no doubt that a Presiding Officer who proposes to award a severance payment, but who fails to investigate whether the Claimant has received a provident fund payment, errs in law. I cannot receive further evidence as to whether the 9 Claimants to which this ground of appeal relates have received such payments, and I therefore remit their cases to the Presiding Officer for that question to be investigated.

Conclusion

39. For the reasons set out in this judgment, the appeal is allowed, but only to the extent of remitting the cases of C1-3, C6-9, C13-15 and C25 to the Presiding Officer for such further investigation as I have directed. Pursuant to my powers under Section 35(2)(b) of the Labour Tribunal Ordinance, I make an order nisi that the employers pay the Claimants' costs of the appeal, including the costs reserved on 2nd October 1990 and 19th March 1991.