LEE CHEUK LAM v. TAI PING CARPETS LTD

HCLA 3/2023

[2025] HKCFI 2733

IN THE HIGH COURT OF THE

HONG KONG SPECIAL ADMINISTRATIVE REGION

COURT OF FIRST INSTANCE

LABOUR TRIBUNAL APPEAL NO 3 OF 2023

(ON APPEAL FROM LBTC NO 3480 OF 2017)

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REASONS FOR JUDGMENT

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Introduction

1.  This is the Appellant’s appeal against the Decision of Deputy Presiding Officer Mr Bosco Cheng (“Presiding Officer”) of the Labour Tribunal dismissing the Appellant’s claims for (i) wrongful deduction of wages; (ii) overtime work payments; (iii) annual leave and (iv) interest for (i) and (ii).

2.  At the end of the appeal hearing, I allowed the appeal except for item (iii). I directed that the matter be remitted back to the Labour Tribunal for retrial and the Presiding Officer shall make findings on whether there was an agreement between the Appellant and the Respondent to modify the terms of the employment agreement on the restriction of overtime payment for managerial staff.

3.  The followings are the reasons for my judgment.

The appellant’s case

4.  The Appellant’s case has been succinctly summarized by Mr Kev Wan[1], counsel for the Appellant, in his written submission which is essentially adopted in this part.

5.  By an employment letter dated 11 April 2015 and an employment contract dated 16 April 2015 (“Employment Contract”), the Appellant started working at the Respondent as Special Projects Manager. She was promoted to Head of Human Resources, Asia (“HR Head”) on 12 June 2015.

6.  After taking up the role of HR Head, the Appellant discovered that the former HR Director had left a large quantity of company documents and unopened letters unattended for nine years.

7.  The Appellant found it necessary to check the documents and letters to see if they were related to daily operation of the Respondent, a task which she described as “Extra Work” to be done on the weekends in return for payment of additional wages (“Payment for Extra Work”).

8.  The Appellant discussed her plan of doing the Extra Work in return for Payment for Extra Work with her supervisor, Chief Financial Officer Mr Geoff Jones (“Jones”). Jones verbally and by an email dated 14 July 2015(“Jones’s Email”), approved the Payment for Extra Work.

9.  With Jones’s Email, the Appellant performed the Extra Work on various Sundays from August 2015 to January 2016, totalling 35 working days.

10.  For the period from August to December 2015 and pursuant to Jones’s approval, the Appellant received Payment for Extra Work in the amount of HK$85,682. However, the Payment for Extra Work for January 2016 of HK$17,727.27 was withheld. Further, following the Appellant’s resignation effective on 24 March 2016, an amount of HK$85,682, identified as “unauthorised OT payment”, was deducted from the payment of reimbursement to which the Appellant was entitled. The above forms the basis for her claims for deduction of wages (HK$85,682) and overtime payment (HK$17,727.27).

11.  Further, upon her resignation, the amount paid to the Appellant for unused annual leave was calculated on the basis of 16 days entitlement instead of 20 days, despite her senior managerial work grade level. This forms the basis for her claim for annual leave pay (HK$14,772.72).

The respondents’ case

12.  The Respondent’s case is that the Appellant is not entitled to overtime payment under the Employment Contract. Clause 4 of the Employment Contract provides that:-

“Your normal working hours shall be from 8:45 a.m. to 5:45 p.m., Monday to Friday, with one hour lunch break. You may be required to work additional hours from time to time in order to meet the needs of the Company’s business. No remuneration is payable for any additional working hours performed outside the normal hours of work.”

13.  The Respondent’s leave policy[2](“Leave Policy”)[3]also provides that compensation leave (instead of overtime payment) may be granted to staff at the managerial level or above only if such work involves working and attending business meetings/activities (i) over weekends and/or over public holidays during the course of overseas business trip or (ii) over public holidays in Hong Kong.

14.  The Leave Policy also stressed that “Those at managerial grade or above are hired under the condition that they are required to work as much time as necessary in order to fulfill the requirements of the position. They will not be entitled to any compensation leave for work done beyond their normal work hours and/or over weekends, even upon instruction of their superior, unless otherwise specified.”

15.  It is also the Respondent’s case that Jones’ Email is not an approval of the scheme of payments as the Appellant suggested. Instead, any actual payment would have to be subject to the determination of (i) the planned overtime work schedule, (ii) validity of overtime work attended and performed, (iii) calculation basis of the overtime payment and (iv) the financial approval of the relevant payments.

16.  As regards the issue of annual leave, the fact that the Appellant was promoted from “work level 4B” to “work level 4A” (which is concerned only with “Short Term Incentive Plan”) does not affect her annual leave entitlement as determined by the terms of the Employment Contract.

Presiding Officer’s findings

17.  Regarding the Appellant’s claim for deduction of wages, the Presiding Officer found that as it is the evidence of the Appellant that the amount paid and deducted was in the nature of “wages of extra work”, it does not fall within the definition of wages under the Employment Ordinance. Coupled with the fact that the Respondent deducted the amount from the “reimbursement” payable to the Appellant, the amount claimed cannot be deduction of wages and therefore, the Appellant’s claim must fail.

18.  Besides, the Presiding Officer held that, according to how it was described under the email from the Appellant to Jones and also the Appellant’s witness statement, the payment for Extra Work was gratuitous in nature at the employer’s discretion and therefore could not be regarded as wages.

19.  For overtime payment, the Presiding Officer referred to the Leave Policy and found that the claimed amount could not be overtime payment but remunerations for extra work. Further, Jones Email approved only a one-off payment for 10 days as stated in the Appellant’s email requesting payment.

20.  For annual leave, the Presiding Officer found that upon proper interpretation of the Employment Contract, the Appellant’s promotion to work level Grade 4A does not necessarily entitle her to have 20 days’ annual leave.

Grounds of Appeal

21.  On behalf of the Appellant, Mr Wan advanced 5 grounds of appeal, which are as follows:

(i)  The Presiding Officer erroneously adopted an unduly narrow and/or restrictive interpretation of employment contract in deciding that the Extra Work was out of the scope of the employment contract.

(ii)  The Presiding Officer erroneously relied on erroneous grounds in deciding that the Payment for Extra Work was not wages.

(iii)  The Presiding Officer erroneously considered irrelevant evidence in deciding that there was no deduction of wages of HK$85,682 by the Defendant Company; and erroneously reasoned that the said deduction was a deduction against reimbursement applied by the Claimant but not against wages of the Claimant.

(iv)  The Presiding Officer erroneously considered irrelevant evidence and/or failed to consider all relevant evidence in deciding that the Payment for Extra Work for January 2016 applied by the Claimant was not overtime pay and was unauthorised by the CFO.

(v)  The Deputy PO erroneously failed to consider all relevant evidence in deciding that the Claimant was entitled to only 16 days of annual leave.

Discussion

22.  Grounds (i) to (iv) are not without force.

23.  As submitted by Mr Wan, the Presiding Officer decided that Payment for Extra Work could not be “wages” under the Employment Ordinance for the sole reason that the Appellant gave evidence that she considered the Extra Work to be out of the scope of her own duties. This is, with respect, an overly simple approach.

24.  In Chan Kwok Kin v Mok Kwan Hing & Another[4], the Court of Appeal held that it was for the Court and not the parties to evaluate the facts and determine the legal nature of a relationship in the context of employment such that the parties’ own description of the relationship was not determinative.

25.  The Presiding Officer should have considered and investigated on the scope of the Appellant’s job duties and the nature of the Extra Work to make a finding on whether the Extra Work was within the ambit of the Appellant’s scope of work.

26.  As submitted by Mr Wan, it was the Respondent’s case that the Extra Work formed part of the job duties of the Appellant. If the same approach is adopted, it is hard to explain why the Presiding Officer would not simply adopt the evidence of the Respondent and find that the Extra Work was within the scope of the Employment Contract.

27.  Furthermore, even if the Extra Work was outside the scope of the Employment Contract, as submitted by Mr Wan, the Appellant and the Respondent, through Jones, may have formed an implied oral and/or written agreement for the Appellant to perform the Extra Work with remunerations for the benefit of the Respondent.

28.  The Presiding Officer should therefore investigate on the issue of whether the approval by Jones of the Payment for Extra Work have had modified the terms of the Employment Contract to allow overtime payment, or created a new agreement in whatever form.

29.  Mr Jeff Yau, counsel for the Respondent, submitted that it is not open to the Appellant to contend on appeal that the Extra Work would in fact fall within the scope of the Employment Contract as she had confirmed before the Presiding Officer that it was outside her job duties.

30.  With respect to Mr Yau, a confirmation of position before the Presiding Officer shall not have the effect of binding the court’s finding of facts. It remains the duty of the Labour Tribunal to investigate and make findings in the light of relevant evidence, notwithstanding the position adopted by a particular party.

31.  In my judgment, the Presiding Officer erred in law in adopting an overly simple approach on the issue of whether the Payments of Extra Work are wages. The Presiding Officer has also failed to discharge his duty to investigate on whether the Employment Contract has been modified to allow overtime payment; or a separate or collateral agreement has been formed by the approval of Jones for the Payment of Extra Work.

32.  On the above grounds, the appeal on deduction of wages, overtime payment, and the interest thereon shall be allowed.

33.  Concerning the claim for annual leave, I agree with the Presiding Officer that on the proper interpretation of the employment contract, there is no direct relationship between annual leave entitlements and the Appellant’s work level. Under the Employment Contract, the Appellant only entitled to 16 days’ annual leave. The fact that she was promoted to work level Grade 4A does not automatically entitle her to have 20 days annual leave.

34.  For the above reasons, I made the order as mentioned under Paragraph 2 herein.