LEUNG WAN KEE SHIPYARD LTD v. LIK SHAU FOO AND OTHERS

IN THE SUPREME COURT OF HONG KONG

HIGH COURT

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REASONS

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1. On the 4th of July 1995, I allowed the appeal from the Judgment of Paul Chiu, Esq., the learned Presiding Officer of the Labour Tribunal and I said I will give my reasons later. I now hand down my Reasons.

2. The Appellant was in the business of ship repairing and ship rebuilding. The 5 Respondents were carpenters employed by the Appellant. They were first employed by the Appellant on various dates in the nineteen eighties. In early 1994, the Respondents were dismissed by the Appellant and the Respondents filed with the Labour Tribunal various claims. Amongst those claims were claims for long service payment. By his Judgment on the 26th October 1994, the Labour Tribunal awarded various long service payments to the 5 Respondents. This appeal is only concerned with these long service payments awarded. The Appeal originally included appeals relating to all 5 Respondents. At the hearing of this appeal, I was told that the appeal against the 1st and 5th Respondents had been abandoned and I am therefore only concerned with the appeal relating to the 2nd, 3rd and 4th Respondents.

3. Pursuant to the leave granted by Mr. Justice Leong on the 15th February 1995, this appeal turns on a narrow point of law, namely whether the learned Presiding Officer had misdirected himself in law as to the concept of "continuous contract" or "continuous employment" within the meaning of the Employment Ordinance ("Ordinance").

4. The entitlement to long service payment is governed by Section 31R of the Employment Ordinance and it is a condition under Section 31R that the employee would have to be employed under a "continuous contract" for the requisite number of years. The case of the Appellant is that there were breaks in the continuity of employment of the 2nd, 3rd and 4th Respondents. In order to make his award of long service payments, it was crucial for the Presiding Officer to conclude that there were "continuous contracts" in relation to the 3 relevant Respondents. "Continuous contract" was defined in section 3(1) of the Ordinance as meaning "a contract of employment under which an employee is deemed by virtue of the provisions of the First Schedule to be in continuous employment." Section 3(2) of the Ordinance provides that in any dispute as to whether a contract of employment is a continuous contract the onus of proving that it is not a continuous contract shall be on the employer. I will set out the First Schedule of the Ordinance in full:-

"	1(a)	The provisions of this Schedule are to ascertain whether or not any contract of employment is a "continuous contract" for the purposes of this Ordinance.
	(b)	In the case of a contract of employment existing at the commencement of this Ordinance, such period of employment next preceding the date of commencement of the Ordinance as may be necessary shall be taken into account in order to ascertain whether or not the contract of employment is a contmuous contract.
	2.	Subject to the following provisions, where at any time an employer has been employed under a contract of employment during the period for 4 or more weeks next preceding such time he shall be deemed to have been in continuous employment during that period.
	3(1)	For the purpose of paragraph 2 no week shall count unless the employer has worked for 18 hours or more in that week, and in determining whether he has worked in any hour the provisions of subparagraph (2) shall apply.
	(2)	If in any hour the employer is, for the whole or part of the hour-

	(a)	incapable of work in consequence of sickness or injury; provided that any such incapability in excess of 48 hours is supported by a certificate issued by a registered medical practitioner or
	(b)	absent from work in circumstances such that, by law mutual arrangement or the custom of the trade, business or undertaking, he is regarded as continuing in the employment of his employer for any purpose.

                    then, save as provided in paragraph 4, that hour shall count as an hour in which he has worked.

4.

Where an employee is absent from work for the whole or part of any hour-

	(a)	because of a strike (which is not illegal) in which he takes part or
	(b)	because of a lock-out by his employer.

that hour shall not count as an hour in which he has worked, but the continuity of his period of employment shall not be treated as broken by any such absence.

	5.	........
	6.	For the purposes of this Schedule any reference to hours in which an employer has worked shall mean hours in which he has worked for his employer whether or not the hours were worked under the same or another contract of employment with that employer and whether or not they were consecutive hours.
	7.	In this Schedule unless the context otherwise requires-
		'lock-out' and 'strike', respectively have the meanings assigned to them in the Trade Union Ordinance (Cap. 332);

'week' means a week ending with Saturday."

5. The law on this is not easy, but in the admirably clear judgment of Mr. Justice Yam in David Hot Blocking Press Ltd. v Ho King Yam (unreported Judgment dated 30th January 1995 in Labour Tribunal Appeal No. 56 of 1994), he made the law simple and clear. After setting out in extenso the First Schedule, he said at page 5 of his Judgment:-

"From the aforesaid provisions, it should be apparent that the concept of "continuous employment" is not a concept which can be deduced from the wording itself. In other words, the exercise of finding the meaning of "continuous employment" is not an exercise to find out the plain and obvious meaning of the word "continuous". It is a statutory concept and the meaning thereof could only be found in the statute rather than construction of the words. Put it in another way. the use of the word "continuous" is generic as well as descriptive."

6. Because the statutory concept has its meaning in the statute, in order to decide if there is a statutory "continuous contract", the Labour Tribunal must focus on the important and key provisions at paragraph 2 and 3(1) of the First Schedule. The complaint of the Appellant is that the learned Presiding Officer did not appreciate the vital importance of those provisions and did not direct his mind to the statutory meaning of continuous contract and in consequence failed to direct the parties to advance the relevant evidence.

7. It is submitted to me in the very able submissions of Mr. Ambrose Ho for the Appellant that at no stage in his Judgment did the Presiding Officer refer to the statutory definition for "continuous contract". It is asserted by the Appellant and not denied by the Respondents that at no stage of the proceedings did the Presiding Officer properly explain to the parties the important definitions, meaning and significance of the statutory concept of "continuous contract". A quick reading of the notes of proceedings in fact will readily reveal that this must be the case.

8. The question which the learned Presiding Officer ought to have addressed his mind to is, in respect of each Respondent, whether such Respondent had been employed under a "continuous contract" under the Ordinance. If his mind had been so applied, he would then appreciate that he must ask the following questions:-

9. The case of the Appellant is that if he had asked the relevant questions and directed the minds of the parties to these questions and the evidence necessary on these questions, then the Labour Tribunal would have found that continuity of employment had been statutorily broken in the following periods, as alleged in the Affirmation of Mr. Wong Sack Hong of 13th February 1995 and Affirmation of Mr. Wong Shun Foon of 9th May 1995:-

10. In respect of the 4th Respondent, as his commencement of employment was on 13th July 1987 which was less than 2 weeks earlier than the disputed period and it will really make only marginal difference to the end result Mr. Ho has upon my indication that it is not worthwhile to have this reopened, agreed to that particular appeal being dismissed. As for the contracts relating to the 2nd and 3rd Respondents having read the material put before me including of course the latest Affirmations and with the benefit of the very persuasive argument of Mr. Ho, I must confess that very unfortunately, in his desire to come to a just result, the learned Presiding Officer had overlooked the very special nature of this statutory concept and approached the claim of the Respondents without giving proper regard to the strict requirements demanded by law. I cannot detect in the papers, in respect of each of the periods complained of in relation to the 2nd and 3rd Respondents, any reference by the Presiding Officer to the 18 hours per week requirement of paragraph 3(1) of the First Schedule. Without having satisfied himself as to that requirement, I do not see how it would be possible for the Tribunal to give consideration to the questions under the four exceptions.

11. What is important to bear always in mind when dealing with the issue of break in the "continuous contract" is that it is the statutory concept and statutory requirements and statutory exceptions which matter. Everything else such as artificiality or harshness or unconscionability are irrelevant and only likely to cause confusion and misdirection. There is a duty on the Presiding Officer to investigate all matters on his own volition and direct the parties to the right issues and seek from them the relevant material and evidence. I of course appreciate that this is an onerous duty but this is what the law demands and bearing in mind that lay people with very little or no knowledge of the law are regularly before the Labour Tribunal, I do not see how the law can demand any less from the Tribunal.

12. In the circumstances, in relation to the 2nd and 3rd Respondents, I am compelled to remit this matter back to the Labour Tribunal for such findings and decisions as may be appropriate, in the light of this Judgment. The appeal of the Appellant in relation to the 4th Respondent is dismissed. The appeal of the Appellant in relation to the 2nd and 3rd Respondents is allowed.