LILIK ANDAYANI v. CHAN OI LING

HCLA 96/1999

IN THE HIGH COURT OF THE

HONG KONG SPECIAL ADMINISTRATIVE REGION

COURT OF FIRST INSTANCE

LABOUR TRIBUNAL APPEAL NO. 96 OF 1999

(ON APPEAL FROM LBTC 5461/1999)

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J U D G M E N T

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The background:

1. The appellant is a young Indonesian migrant domestic helper. Through the arrangement of Anlida Employment Agency (hereinafter called "the Agency"), she entered into a contract of employment with the respondent. She was told by the Agency that her wages would be $2,200 per month. Before leaving Indonesia, she signed at the request of the Agency a standard form Hong Kong Immigration Department approved employment contract for foreign domestic helpers written in English (hereinafter called "the Written Contract") to work for the respondent. The Written Contract stipulates that her wages would be $3,860 per month.

2. On 16 April 1999, the appellant made a complaint to the police of assault by the respondent and left her employment on the same day. She alleged that she only received $3,000 during her 10 months employment with the respondent from 24 June 1998 to 16 April 1999. She filed a claim in the Labour Tribunal for the arrears of wages being the amount which she ought to have been paid under the Written Contract less $3,000 she received. She also claimed for wages in lieu of notice, return air ticket to Indonesia, statutory holiday pay, annual leave pay and food and travelling allowance. The respondent admitted liability to all the claims except for wages in lieu of notice and arrears of wages.

3. The Presiding Officer found both the Written Contract on which the appellant based her claim and the oral contract to work for $2,000 a month unenforceable because of illegality and dismissed her claim for wages in lieu of notice and arrears of wages. Against that decision, the appellant now appeals.

Was the contrac(s) illegal:

4. The Presiding Officer referred to section 42(1) of the Immigration Ordinance, Cap 115, which provides:

" (1) Any person who makes or causes to be made -

(a) to an immigration officer, immigration assistant or any other person lawfully acting under or in the execution of Part IB, II, III or IV of this Ordinance;

(b) in any document furnished to an immigration officer or immigration assistant pursuant to this Ordinance or a requirement made thereunder; or

(c) for the purpose of obtaining, whether for himself or any other person, any travel document, certificate of entitlement, entry permit, re-entry permit, certificate of identity, document of identity, APEC business travel card, travel pass or Vietnamese refugee card,

any statement or representation which he knows to be false or does not believe to be true shall be guilty of an offence."

He then concluded that by implication section 42(1) prohibits employment of domestic helpers at a rate below the Immigration Department's wage standard, i.e. $3,860.

5. He found there were two separate contracts of employment, the "$2000 contract" and the "$3,860 contract". In relation to the "$2,000 contract", he found the parties had mutually intended at the time of making the contract to break the law and that rendered the "$2,000 contract" unenforceable. In respect of the "$3,860 contract", he found that the parties had mutually intended to perform the contract illegally and hence the contract was also unenforceable. In conclusion, he dismissed the appellant's claim for illegality and as being against public policy.

6. With respect to the Presiding Officer, the parties could not have entered into two contracts of employment. There was only one contract of employment. The issues are what were its terms and whether it was illegal.

7. Mr Harris argued that the contract in the contemplation of the parties was a contract to work for $3,860, i.e. the Written Contract, as that was the contract signed by the parties and approved by the authorities. He submitted that the parties then attempted to alter the term as regards wages but such variation was void as the consent of the Director of Immigration had not been obtained in accordance of Clause 16 of the Contract. He then argued for the legality of this Written Contract. The purpose, of course, is to save its legality so that the appellant could claim for a higher sum. As a fall back, he also argued for the legality of the contract to work for $2,000. He submitted that the contract was only illegal as to performance, and as the appellant had no knowledge of the illegality and acted in good faith, the contract is enforceable at the instance of the appellant.

8. I consider I am bound by the Presiding Officer's finding of fact. On his finding, I cannot agree with Mr Harris' view that the contract was one for $3,860 as that figure had never come across the mind of the appellant before she signed the Written Contract. There was never a meeting of the mind for the appellant to be paid $3,860. All along, she knew she was going to work for $2,000 and the respondent knew she was going to pay her $2,000 or $2,200 if the appellant worked on her rest day. There was never any variation of wages from $3,860 to $2,000. Mr Harris' argument is stretching legal fiction far beyond its realm. Accordingly, I find there was only one contract and that was to work for $2,000.

9. Mr Harris submitted that section 42(1) of the Immigration Ordinance is a penal provision. It provides for the offence of making a false representation to an immigration officer. It must be construed strictly and cannot be extended by a process of reasoning by analogy to criminalise other conduct which it does not mention. He therefore submitted that it is not illegal to enter into a contract at less than the approved minimum wages, a minimum which is not enshrined in statute or regulations but is set administratively by the Director of Immigration and periodically varied.

10. Section 42(1) of the Immigration Ordinance is not a wage protection legislation. It does not expressly prohibit employment of migrant workers below the minimum wage. However, the Director of Immigration has discretion to permit non residents to enter Hong Kong and impose conditions governing their stay in Hong Kong. For policy reasons, the Director would not permit domestic helpers to enter Hong Kong for employment unless their employers would pay them the minimum wages and enter into standard contracts giving these domestic helpers certain employment protection and benefits. These minimum standards are imposed not by legislation or by regulations made under any legislation but by administrative means. To my understanding, the reason for imposing these minimum standards is to discharge Hong Kong's international obligation under International Labour Convention No. 97, Migration for Employment Convention (Revised) 1949, which was applied to Hong Kong without modification on 11 August 1980. Paragraph 1 of Article 6 of the Convention provides:

"1. Each Member for which this Convention is in force undertakes to apply without discrimination in respect of nationality, race, religion or sex, to immigrants lawfully within its territory, treatment no less favourable than that which it applies to its own nationals in respect of the following matters:

(a) in so far as such matters are regulated by law or regulations, or are subject to the control of administrative authorities -

(i) remuneration, including family allowances where these form part of remuneration, hours of work, overtime arrangements, holidays with pay, restrictions on home work, minimum age for employment, apprenticeship and training, women's work and the work of young persons;

(ii) membership of trade unions and enjoyment of the benefits of collective bargaining;

(iii) accommodation:"

According to An Issue in Commemoration of the 75th Anniversary of the ILO, the Convention is implemented by a number of Ordinances, including the Employment Ordinance and the Immigration Ordinance.

11. The minimum wage was determined by the Director of Immigration to ensure that migrant workers receive a remuneration which is no less favourable than that received by local workers, that is such a remuneration as would enable them to enjoy a decent and reasonable standard of living as is appropriate to our society and at the same time to have a reasonable amount of pay to remit home. The minimum wages and standard contracts imposed by the Director of Immigration are measures aimed at protecting migrant workers, who because of their inequality in bargaining power and language disability, are particularly vulnerable to exploitative conduct of their employers. These safeguards are necessary so as to ensure that migrant workers receive treatments no less favourable than that received by local workers as provided for in International Labour Convention 97. Thus unless the Director is satisfied that a migrant worker has secured employment on similar or more favourable terms than those stipulated in the standard contract, including the minimum wage, a migrant worker will not be given permission to enter and stay in Hong Kong for employment. While a contract of employment which provides for a wage below the minimum is not illegal as being contrary to any legislation in Hong Kong, such a contract simply could have no existence in Hong Kong as no migrant worker would be lawfully admitted into Hong Kong on such a contract. Hong Kong is under an international obligation to implement that convention. For the courts of justice to enforce such a contract of employment is inconsistent with Hong Kong's international rights and obligations. Such a contract must therefore be illegal and void as being contrary to public policy and not voidable at the instance of the party who acted in good faith as Mr Harris submitted.

12. Another equally compelling reason for not upholding the legality of this contract is that it is a contract of exploitation. As a general principle, men and women of full age and competent understanding have the utmost liberty of contracting and that their contracts when entered into freely and voluntarily shall be held sacred and shall be enforced by courts of justice. There is nothing to prohibit a local resident from entering into contracts of the kind entered into by the appellant, though any reasonable member of our society would consider such a wage of $2,000 a month outrageous. But it is not the court's duty to enquire into the adequacy of consideration and a pepper corn does not cease to be good consideration. However, such a contract of employment whether entered into by a local resident or by a migrant worker will not be enforceable if it is vitiated by illegality, duress and undue influence.

13. The appellant came from a very deprived part of Asia. On the face she was willing to work for less than the minimum wage and freely and voluntarily entered into the contract. She does not read English and obviously did not know the content of the Written Contract she signed which provides for a wage of twice of what she had agreed with the Agency. She has no knowledge of the minimum wage protection available to her under our policy. The respondent knowingly took advantage of that. Not only did the Agency fail to advise her of the minimum wage protection, but in breach of its fiduciary duty owed to the appellant, it also conspired with the respondent to deprive her of that protection. While the appellant was willing and might even be happy to work for $2,000, this is only half of what she is entitled to under our law. Her consent was uninformed and vitiated by fraud. Such a wage is outrageously low by our standard and is insufficient to provide a decent standard of living for the appellant and a reasonable amount of take home pay which a migrant worker reasonably expects for her labour. Any right thinking member of our civilised society must regard such a wage an affront to justice and insult to human dignity. The appellant was lured into this contract of exploitation through the undue influence of the Agency and unconscionable conduct of the respondent and as a result of unequal bargaining power. Public policy must require that this contract be declared void. No court of justice would enforce such a contract against the employee as that would amount to aiding and abetting the employer to exploit the employee; nor will it enforce the contract against the employer at the instance of the employee as that in effect is to condone the exploitation. If the employee has performed any part of the contract, she should recover for her toil and labour not under the contract which is void and unenforceable, but on a quantum meruit or on the principle of unjust enrichment. But that is outside the jurisdiction of the Labour Tribunal.

Whether illegality is a complete bar to recovery:

14. Mr Harris referred to two lines of authorities as to whether illegality is a complete bar to recovery under an illegal contract. Up until 1994, the English Court of Appeal developed a "public conscience" test, whereby the conduct and relative moral culpability of the parties were weighed in determining whether the defence of illegality would succeed: see Saunders v. Edwards [1987] 1 WLR 1116. This test has been applied by the Hong Kong Court of Appeal in Charles Chan Sing-Chuk & Others v. Innovisions Ltd [1992] 1 HKLR 254. Subsequent to that the House of Lords disapproved the "public conscience" test and held that where it was necessary for a party to rely on an illegal contract to found a claim the claim must fail. Mr Harris urged me to consider I am bound by the local Court of Appeal decision in Charles Chan Sing-Chuk & Others v. Innovisions Ltd.

15. On the facts of the present case, I do not think it serves any useful purpose to analyse the authorities as I consider no court of justice would enforce such a contract of exploitation against either the employee or employer; nor will the court give effect to such a contract because to do so is inconsistent with Hong Kong's international obligation under International Labour Convention 97. I prefer the later House of Lords decision as being more persuasive.

Contract of employment implied by law:

16. However, the fact that a person works for another, acknowledges him as his employer to whom he owes fiduciary duty and the acknowledgement by that other person of his reciprocal obligation, creates a de facto employment relationship. This relationship gives rise to a contract of employment between the parties. In fact, "Contract of employment" is defined by section 2 of the Employment Ordinance, Cap 57, to mean "any agreement, whether in writing or oral, express or implied, whereby one person agrees to employ another and that other agrees to serve his employer as an employee and also a contract of apprenticeship." Thus despite the original contract entered into in Indonesia was void for illegality, a contract of employment is created by reason of their de facto relationship.

17. What then are the terms of this contract of employment? In the circumstances of an Indonesian domestic helper, the terms of the standard contract approved by the Director of Immigration can be readily implied because it is only upon those minimum terms she could be allowed to enter and stay in Hong Kong for employment and the parties had previously agreed to the terms of that Written Contract apart from the wage clause. Thus while the original contract to work for $2,000 was void for illegality and the Written Contract to work for $3,860 was bogus and never intended by the parties to be binding, the law implies a contract of employment between the parties on the same terms as those in the Written Contract, including the minimum wage approved by the Director of Immigration.

Conclusion:

18. The appellant's evidence is that she was only paid $3,000 for the ten months she worked and she left her employment because of the assault committed on her by the respondent. If her evidence is accepted she would be entitled to $3,860 as wages in lieu of notice and $34,699.20 as arrears of wages, a total amount of $38,559.20. According to the evidence of the respondent herself, she paid the appellant $2,200 which is in any event $1,660 short every month. Even if the respondent's evidence is accepted, the appellant still has a significant claim against the respondent. The Presiding Officer has not made any finding as to whether the appellant was entitled to treat herself as having been "constructively dismissed" by reason of the assault nor has he made any finding as to how much the respondent has paid. In the circumstances, it is impossible for me to assess the amount of the appellant's claim.

19. Accordingly, I allow the appeal and remit the matter to the Labour Tribunal with a direction that the Presiding Officer shall continue to hear the appellant's claim on wages in lieu of notice and arrears of wages on the basis that there was a valid contract of employment between the appellant and respondent on the same terms as those in the Written Contract signed by the parties dated 20 February 1998. The respondent shall pay the appellant's costs of the appeal, while the appellant's own costs shall be taxed in accordance with Legal Aid Regulations.