LAI SUET LAN VIVIAN AND OTHERS v. WILLAS-ARRAY ELECTRONICS MANAGEMENT LTD

HCLA 12/2025

[2025] HKCFI 2009

IN THE HIGH COURT OF THE

HONG KONG SPECIAL ADMINISTRATIVE REGION

COURT OF FIRST INSTANCE

LABOUR TRIBUNAL APPEAL NO. 12 OF 2025

(ON APPEAL FROM LABOUR TRIBUNAL CLAIM NO. 942 OF 2024)

________________________

________________________

_______________

D E C I S I O N

_______________

I.  INTRODUCTION

1.  This is an application for leave to appeal against the Award made by of Deputy Presiding Officer Jennifer Ng on 6 January 2025, with, as usual, oral reasons (the “Oral Reasons”) delivered on the same day. The Award was made in favour of the 1^st – 4^th Claimants, that the Defendant shall pay the Claimants for their end-of-year payment for 2023, when they left their employment.

II.  BACKGROUND

2.  The contractual terms of the 1^st Claimant on the one hand, and those of the 2^nd, 3^rd, and 4^th Claimants on the other, were not the same. I shall set out their relevant contractual terms separately.

3.  The 1^st Claimant started her employment on 23 August 1993. The employment letter (the “1^st Claimant’s Employment Contract”) provided that:-

“2. End of Year payment

You are entitled to have one month’s end of year payment on completion of a full payment period (from January 1 to December 31). Pro-rata payment will be given for an incomplete year of services, if only that you have worked till the last date of the payment period.

The Company reserves to have the right to cancel, modify, or amend the aforesaid rules and regulations, policies, and benefits. When changes are made and announced, the old ones should cease to be in force and automatically be superseded by the new measures.”

4.  Pausing here, I note that in Clause 13, no such word as “unilateral” or “unilaterally” was used.

5.  On 19 May 2003, the Defendant revised its Staff Handbook to set out its policy in respect of “End of Year Payment” (the “2003 Policy”). Clause 1 provided that:-

“Nature

End of year payment is gratuitous and paid by the Company at its absolute discretion.”

6.  The 2^nd, 3^rd and 4^th Claimants started their employment in 2004, 2013 and 2018 respectively. Their employment contracts (the “2^nd – 4^th Claimants’ Employment Contract”) provided that:-

“9. End of Year Payment

You are entitled to have one month’s end of year payment on completion of a full payment period (from January 1 to December 31). Pro-rata payment will be given for an incomplete year of services, if only that you have satisfactorily passed probation and worked till the last date of the payment period.

If the resignation within the payment period, you will not be entitled to have end of year payment.

10. Gratuitous Payments

All payments, except basic salary as stated under Item 1 of this Employment Letter as well as reimbursements, are purely gratuitous and are paid by the Company at its absolute discretion.

18. Rules & Regulations

There is an Employees’ Handbook that depicts all the benefits offered and rules & regulations of the Company. Please refer to [webpage] (Employees’ Handbook – Hong Kong) for details. Whenever changes are made, announcements will be given on the supersession.

For rules and regulations, it does not confine to all those which are explicitly stated. Those that are implied by conduct and understandably common rules and regulations generally adopted by other companies should also be strictly observed.

7.  The “Handbook” mentioned in Clause 18 as at that time was the 2003 Policy.

8.  Pausing here, I note that in Clause 18, no such word as “unilateral” or “unilaterally” was used.

9.  On 31 December 2019, the Defendant issued the revised policy effective in 2020 (the “2020 Policy”). Its paragraph 1 provided that:-

“1. Nature 性質

The discretionary end of year payment (hereinafter End of Year Payment) is gratuitous in nature. The board of directors of the Company (hereinafter “the Board”) has the sole discretion to decide whether to distribute the End of Year Payment, depending on the Company’s performance or other factors which the Board consider reasonable.

酌情年終酬金 (以下稱“年終酬金”) 屬賞贈性質。公司董事會 (下稱 “董事會”) 有權決定是否發放年終酬金，具體是取決於公司的業績或董事會認為合理的其他因素。

The Board may consider to distribute the End of Year Payment when the overall sales and profit goals for a particular year have been met. The Board may, however, also consider to distribute the End of Year Payment after taking into account the overall circumstances including but not limited to the business of the Company and the economic environment in a particular year and the prospects in the forthcoming year no matter how the performance of the Company is in the particular year.

如特定年份的整體銷售及盈利目標已經達到，董事會將考慮發放年終酬金。然而，無論公司業績在特定年份表現如何，董事會亦可在考慮整體情況後 (包括但不限於公司的業務、特定年份的經濟環境及新一年的前景) 發放年終酬金。”

III.  ISSUES

10.  The issues before the learned Presiding Officer were, broadly:-

(1)  What was the nature of the 1^st Claimant’s end-of-year payment prior to 2003 and 2020, and that of the 2^nd – 4^th Claimants’ prior to 2020?

(2)  If the nature was contractual, whether the Defendant had validly varied the nature to discretionary prior to the termination of the Claimants’ employment in 2023?

IV.  ISSUE (1)

11.  For Issue (1), in respect of the 1^st Claimant, it was clear that under the 1^st Claimant’s Employment Contract, it was contractual. Even assuming that Clause 13 of the Contract empowered the Defendant to amend the Contract unilaterally (a matter to which I shall return), the 2003 Policy did not purport to amend any contract unilaterally. This was so dealt with at p 252T-253E of the Transcript of the Oral Reasons (the “Transcript”).

12.  In respect of the 2^nd – 4^th Claimants, the learned Presiding Officer, applying the correct test at 253M-O of the Transcript, considered that the label of “contractual” or “discretionary” was not determinative, a matter which in my view, rightly, the Defendant does not complain of in its application for leave to appeal. She considered and accepted the evidence of the Defendant’s former directors until their resignation in 2023 that prior to the Policy 2020, the Defendant did not exercise any discretion in granting the end-of-year payments and even did not differentiate between contractual and discretionary end-of-year payments in the employees’ contract. On this, the learned Presiding Officer concluded that as a matter of fact, the end-of-year payments were contractual.

V.  ISSUE (2)

13.  In respect of Issue (2), at 253S-U of the Transcript, the learned Presiding Officer discussed whether the Defendant could exercise any power to vary the Employment Contracts unilaterally, and stressed that any clause intended to confer such power should be clearly worded. At 254A of the Transcript, the learned Presiding Officer found that Clause 13 of the 1^st Claimant’s Employment Contract was too wide. At 254D-G of the Transcript, the learned Presiding Officer then referred to Lord Woolf’s dicta in Wandsworth London Borough Council v D’Silva [1998] IRLR 193 at §31:-

“The general position is that contracts of employment can only be varied by agreement. However, in the employment field an employer or for that matter an employee can reserve the ability to change a particular aspect of the contract unilaterally by notifying the other party as a part of the contract that this is the situation. However, clear language is required to reserve to one party an unusual power of this sort.”

14.  At 254M of the Transcript, the learned Presiding Officer then expressed her view, as a matter of contractual construction, that by Clause 13 of the 1^st Claimant’s Employment Contract, any variation had to be made by mutual agreement or lawful means, and cannot be effected unilaterally by inserting variations into the contract or handbooks, because for the Defendant to have power to do so, the words must be clear and precise. At 254Q of the Transcript, the learned Presiding Officer concluded that the variations in question would not be enforced. The learned Presiding Officer then went on to consider, for the sake of completeness, other grounds whereby she concluded that the variations could not be valid.

VI.  LEGAL PRINCIPLES IN RELATION TO APPLICATION FOR LEAVE TO APPEAL

15.  The legal principles in relation to an application for leave to appeal against a Labour Tribunal’s decision are trite, as set out in Mak Wai Man v Richfeild Realty Ltd, HCLA 28/2015, 30 October 2015 at §16 per B Chu J.

VII.  GROUND 1

16.  As summarised by the submissions of Mr Dexter Leung, counsel for the Defendant, there are Ground 1(1) and Ground 1(2). In Ground 1(1), the Defendant complains that the learned Presiding Officer failed to consider section 11A and 11AA and Bruce Gordon Hut v Special Assets Ltd, HCA 2668/2002, 15 September 2006, all of which were drawn to the learned Presiding Officer’s attention by the Defendant’s closing submissions. The learned Presiding Officer did not specifically mention any of these in her Oral Reasons. However, it is trite that the Labour Tribunal (as any other Court) does not have to deal with each and every point raised. As the learned Presiding Officer stated at the outset of her Oral Reasons, she only considered the material points and absence of mention of certain points did not mean that she had not considered those points. In any event:-

(1)  in respect of the 1^st Claimant, this limb is irrelevant because (subject to the contractual variation point to which I shall return below), there was no written term to the effect that the end-of-year payment was discretionary; and

(2)  in respect of the 2^nd – 4^th Claimants, had the learned Presiding Officer mentioned these authorities, she would still have to consider, as she did, how the end-of-year payment was decided, having noted that label was not determinative.

17.  Ground 1(2) is that the learned Presiding Officer failed to discharge her duty to investigate by asking the former directors of the Defendant about the 2003 Policy and in particular its Clause 1. I fail to see why the learned Presiding Officer would have to ask questions about it, when the former directors testified that prior to the Policy 2020, the Defendant did not exercise any discretion in granting the end-of-year payments and even did not differentiate between contractual and discretionary end-of-year payments in the employees’ contract. What the Defendant actually considered was a matter of fact which would not be changed by any handbook it wrote. I cannot see how the answer would be changed even when the former directors were specifically directed to Policy 2003.

18.  Therefore, I see no arguable point of law in Ground 1.

VIII.  GROUND 2

19.  Mr Leung, for the Defendant, divided Ground 2 into eight sub-grounds in his skeleton submissions.

20.  Ground 2(1), concerning Clause 13 of the 1^st Claimant’s Employment Contract, is only limited to the 1^st Claimant, apparently because in her Oral Reasons, the learned Presiding Officer appeared to deal with the 1^st Claimant’s Employment Contract only. However, when read in context, taking into account that the wording in Clause 13 of the 1^st Claimant’s Employment Contract and Clause 18 of the 2^nd – 4^th Claimants’ Employment Contract were essentially identical (save and except that the latter referred to and apparently incorporated into contract the Defendant’s handbooks), it is reasonably clear that the learned Presiding Officer also had the 2^nd – 4^th Claimants’ Employment Contracts in mind; otherwise, she would not have said at 254Q that in the event she were wrong about the contractual construction, she would considered the other matters.

21.  Thus, to be fair to the Defendant, I am also prepared to consider Ground 2(1) not as limited as to the 1^st Claimant but applicable to all the Claimants.

22.  The Defendant complains that the learned Presiding Officer found erroneously that Clause 13 of the 1^st Claimant’s Employment Contract (and thus also Clause 18 of the 2^nd – 4^th Claimants’ Employment Contract) was too wide. I do not see how this ground would advance the Defendant’s position. Too wide or not, Lord Woolf’s dicta in Wandsworth London Borough Council v D’Silva as quoted by the learned Presiding Officer (quoted above) was still applicable. I do not read the learned Presiding Officer’s Oral Reason to mean that the dicta was applicable and applied by her only upon her view expressed about the width of the relevant clause. Applying Lord Woolf’s dicta, in the light of the absence of the word “unilateral” or the like, I can see nothing wrong in her conclusion that any variation to the Employment Contracts would still need to be agreed mutually.

23.  Insofar as there is any allegation that the Claimants mutually agreed with the Defendant to the variation by their absence of protest and their continuance to work (and this is Ground 2(6) and (7) according to Mr Leung’s skeleton submissions), the learned Presiding Officer considered the matter at 254T-255E of the Transcript. Essentially, the learned Presiding Officer’s reasoning is that despite the variation by the 2020 Policy, the end-of-year payments were still made in the next three years, that is 2020, 2021 and 2022, and in such circumstances, she came to a finding of fact that continuing to work in such circumstances did not mean acceptance of the variation. Mr Leung, for the Defendant, submits that the learned Presiding Officer failed to consider the Claimants; failure to raise objection upon their receipts of emails on 26 November 2020, 29 November 2021 and 9 December 2022 which all referred to the 2020 Policy and described the payments as discretionary, and upon the receipts of their payslips describing the payments as discretionary. In my view, first, the learned Presiding Officer did not have to set out each and every point she considered (as she made it clear at the outset), and in any event, these emails and payslips were for 2020, 2021 and 2022 only. It is precisely because during these periods, the payments were still made, that the learned Presiding Officer came to the finding as she did. It would have been different if the Claimants continued to work after 2023, which might then be taken as conduct accepting the variation. But this is not the fact here. I cannot see how the learned Presiding Officer’s finding can be faulted.

24.  Therefore, I see no arguable point of law in Ground 2(1), (6) and (7).

IX.  UNNECESSARY TO DEAL WITH OTHER GROUNDS

25.  With my conclusions above, the learned Presiding Officer’s findings of fact that (1) the end-of-year payments were contractual; and (2) there had been no effective variation to this contractual nature remain unscathed. As such, I do not need to consider the other sub-grounds in Ground 2.

X.  CONCLUSION

26.  In the premises, I am not satisfied that the intended appeal is arguable. I dismiss the Defendant’s application for leave to appeal against the Award, with no order as to costs.

27.  It remains for me to thank Mr Dexter Leung for his assistance.