What Is the Right Measure of Compensation in Hong Kong Discrimination Claims?

Under Hong Kong’s anti‑discrimination ordinances, damages are compensatory in nature, aimed at compensating loss and damage suffered by the claimant as a result of unlawful discrimination. “Injury to feelings” is often a key component of such awards, and we have previously written about the assessment of damages for “injury to feelings”, and the local adjustment of the Vento scale of compensation in line with inflation.

This article does not revisit those issues. Instead, it focuses on the financial loss element of compensation, in particular how loss of earnings is assessed, and whether the UK decision in Chagger v Abbey National plc [2009] EWCA Civ 1202 offers any useful guidance in the Hong Kong context.

Loss of earnings in Hong Kong discrimination cases

Where Hong Kong courts assess loss of earnings following discriminatory dismissal or treatment culminating in loss of employment, the general approach is to ask what constitutes a reasonable period for the claimant to obtain alternative employment, assessed based on the circumstances of the case.

Guidance can be found in Chan Choi Yin Janice v Toppan Forms (Hong Kong) Limited (DCEO 6/2002). This followed the reasoning in Minister of Defence v. Cannock [1994] IRC 918, where the UK Court observed that

“In support I am referred to the following passage in Discrimination: Remedies and Quantum at p.73, para.3.1.3  ‘Future Losses: Remedies and Quantum at p.73, para.3.1.3  ‘Future Losses:

In the vast majority of cases the court or tribunal will approach its tasks as in an unfair dismissal claim, assessing the period of loss primarily as being limited to the time in which the applicant might reasonably be expected to find other employment. As a result, periods of future loss may be limited to 12 –24 months, or even less.’ …

…I do not think the learned authors of Discrimination: Remedies and Quantum meant that there is a cap to claims for future losses in discrimination cases. They were, it seems, assuming assessments in cases where the plaintiffs had yet to find alternative work. In such cases assessments of two years or less as the time it would take to find employment are understandable. This must depend, however, on the facts of each case. In discrimination claims in England, there is no cap on future loss, as the concluding passage of the judgment of the EAT (Morrison J) in Minister of Defence v. Cannock [1994] IRC 918 at p. 955G makes clear:

‘In our guidance, we respectfully suggest that [courts] need to keep a due sense of proportion when assessing compensation. Some of the applicants have received awards more appropriate for a person who has lost a career due to some kind of continuing disability. All of these applicants who were entitled to any award of compensation of loss of earnings are assumed to have been ready willing and able to resume their career in the services six months after their first child was born and, therefore, ready willing and able to undertake reasonably suitable alternative employment. To this extent, their compensation for loss of earnings is not likely to be different from the thousands of cases of unfair dismissal with which the industrial tribunals are having to deal with each year, albeit, that there is no cap on the award.’ “

Therefore while there is no legal cap on claims for future loss of earnings in discrimination cases, tribunals should “keep a due sense of proportion when assessing compensation”. The inquiry focuses on employability, including the claimant’s performance, their past relationship with their employer, whether the claimant is ready, willing and able to undertake suitable alternative employment, whether such employment is realistically available having regard to their skills and experience.

In practice, this has often resulted in awards covering a defined and relatively short period, similar to those seen in unfair dismissal claims. This reflects the courts’ recognition that private‑sector employment does not offer guaranteed security of tenure or remuneration over the longer term, and that loss of earnings must be assessed by reference to realistic labour‑market outcomes rather than assumptions of continued employment. Thus, in 秦秀清 v 長鴻鋁窗裝飾工程有限公司 (DCEO 3/2018), the District Court awarded the equivalent of three months’ wages as a reasonable period to secure alternative employment, whereas in Haden, Francis William v Leighton Contractors (DCEO 16/2018), a longer period of eight months was allowed, reflecting the claimant’s specialised expertise in blasting work and the limited availability of comparable roles in Hong Kong.

That said, the reasonable job-search period is not an inflexible proxy in every case. Where it would not adequately capture future loss, courts have accounted for other metrics, including: how long an employee might otherwise have remained in the role, particularly where employment was for a fixed term,[1] differences between the claimant’s original salary and earnings in subsequent employment,[2] and the period during which the claimant would have been able to resume work following recovery from an illness before suffering a relapse.[3]

In principle, this analysis also leaves room for longer period of loss where re-employment within a short timeframe was not realistically foreseeable at the point of dismissal. An extreme example would be the discriminatory dismissal of an employee in their early 60s, where age or health materially constrains future employability, casing a genuine loss of career. In such cases, a longer period of loss may be recoverable if supported by evidence that suitable alternative employment was unlikely to be obtained within a conventional job‑search period. The focus remains on what is objectively reasonable.

The assessment operates alongside the claimant’s duty to mitigate loss by taking reasonable steps to seek alternative employment. Losses that could reasonably have been avoided are not recoverable, and a longer period of unemployment does not in itself justify recovery for the entirety of that period. [4] The assessment is fact‑sensitive and evidence‑based, grounded in labour‑market realities.

The UK approach in Chagger

The UK decision in Chagger v Abbey National plc provides a useful analytical framework for assessing loss of earnings in discrimination cases. The central inquiry is this: What would have happened had there been no discrimination at all?

This requires a comparison between two scenarios. In a discrimination‑free scenario, the employee may have remained employed long enough to secure alternative employment and transition smoothly into a new role on comparable or better terms. In the discriminatory scenario, the employee is forced abruptly into the labour market at a time and in circumstances not of their own choosing, often resulting in delayed re‑employment or depressed earnings. The loss to be compensated is the difference between these two positions.

A key point from Chagger is that compensation should not automatically be confined to the period during which the employee might otherwise have remained with the employer. Evidence that an employee was likely to have quit in any event does not, by itself, justify limiting compensation to that period. The relevant question is how the employee would have exited the employment relationship in a non‑discriminatory environment, and the labour‑market consequences flowing from that exit.

This does not mean such evidence is irrelevant. Where there is credible evidence that the employee would probably have left (or been dismissed) in any event, compensation may be reduced by applying a so-called “Chagger reduction”. This typically takes the form of a percentage reduction directly corresponding to the percentage likelihood that the employee would have exited employment absent discrimination.

The Chagger approach was reinforced in the recent case of KJ v British Council [2026] EAT 46. In that case, the tribunal applied a 35% Chagger reduction on the basis that the claimant might have left employment anyway. On appeal, that approach was rejected because insufficient attention had been given to whether the claimant’s thoughts about leaving, and steps taken to explore other opportunities, were themselves influenced by the discriminatory conduct. The correct focus remained what would have happened if there had been no discrimination at all.

Takeaways for Hong Kong

While Chagger and KJ are not binding in Hong Kong, they are helpful in clarifying how loss of earnings should be analysed in principle.  In particular, they highlight the risk of reducing compensation by reference to hypothetical departures or claimant behaviour without first considering whether those outcomes were themselves shaped by the discrimination itself.

Hong Kong courts have generally adopted a pragmatic approach, often limiting loss of earnings to a reasonable job‑search period and placing weight on mitigation. However, the assessment remains fact‑sensitive, and the court’s task is to compensate the loss caused by discrimination, rather than to apply fixed assumptions about how long an employee might otherwise have stayed.

In exceptional cases, Hong Kong courts have recognised longer‑term loss where discrimination has foreclosed a particular career path. In K & Ors v Secretary for Justice (DCEO 3, 4 and 7/1999), the District Court awarded future loss of earnings based on the pay gap between disciplined services roles and alternative employment, as well as the loss of associated benefits such as housing and pension. This case turned on its specific facts, involving the loss of a relatively secure public service career, and does not represent the norm. It nonetheless illustrates that Hong Kong courts are, in principle, prepared to look beyond short‑term loss where discrimination has clearly affected the claimant’s broader position in the labour market.

Russell Bennett

Russell Bennett

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Disclaimer: This publication is general in nature and is not intended to constitute legal advice. You should seek professional advice before taking any action in relation to the matters dealt with in this publication.