Legal update: Government resubmits proposal for Labour Tribunal to order compulsory re-instatement or re-engagement of unlawfully dismissed employees

Employment Update (May 2017)

On 5 May 2017 the Government published in the Gazette the Employment (Amendment) Bill 2017, which is to be introduced into the Legislative Council for first and second readings on 17 May 2017.   This resubmits, with minor amendments, the proposal set out in the Employment (Amendment) Bill 2016, which we had reported on in February 2016 and which lapsed at the end of the 2012-2016 LegCo term.

The Bill aims to amend the Employment Ordinance (Cap 57) (“EO”) to allow the Labour Tribunal (the “LT”) to order an employer to reinstate or re-engage an employee where the employee concerned is unreasonably and unlawfully dismissed in the circumstances mentioned in section 32A(1)(c) of the EO.

This is a change from the current position in which re-instatement or re-engagement will only be ordered where both the employer and employee agree to this.  In the absence of mutual consent, under the current framework, the LT may instead make an award of terminal payments and/or, in the case of certain unlawful dismissals, an award of compensation not exceeding HK$150,000.  At present, it has no power to demand or order reinstatement or re-engagement without the employer’s consent.

Proposed Amendments

Under the proposed amendments:
1. The employer’s agreement is no longer a pre-requisite if an employee has been unlawfully dismissed under the EO – where an employee has been dismissed without a valid reason and in breach of the specific provisions outlined in section 32A(1)(c), the LT or Court must make an order for reinstatement or re-engagement if the employee agrees even if the employer does not, if it finds that reinstatement or re-engagement of the employee is “reasonably practicable”.

The provisions listed under section 32A(1)(c) specify the circumstances in which it is unlawful to dismiss an employee (including whilst the employee is pregnant or on statutory sickness leave (other than for summary dismissal); for exercising rights in respect of trade union membership and activities; for giving evidence or information to public officers in relation for enforcement of the Employment Ordinance; or if the employee has an outstanding employee compensation claim).

2. Before making a decision to order reinstatement or re-engagement, the LT or Court must consider and take account of the circumstances of the claim, including the circumstances of the employee and surrounding the dismissal, any difficulty the employer might face in reinstatement or re-engagement and the relationship between the employer and employee and between the employee and other persons with whom the employee has connection in relation to the employment. The LT or Court may also request the Commissioner of Labour to provide a report containing information relating to the circumstances of the claim and that was obtained in connection with any conciliation under the Labour Tribunal Ordinance.

3. Where an order of compulsory reinstatement or re-engagement has been made pursuant to the proposed amendment to section 32N, the employer is bound to do so.  If the employer fails to reinstate or re-engage the employee as required, the employer must pay the employee a further sum set at three times the employee’s average monthly wages (subject to a maximum of HK$72,500).  This amount is in addition to any monetary remedies payable to the employee as currently provided in the EO.

4. A failure to pay the further sums mentioned in (3) above, will constitute an offence under the EO.

5. The proposals also provide for the employer to be reinstated or reengaged by an alternative company which is a successor or associated company of the employer provided the employer, employee and alternative company agree to this in writing and meet other requirements proposed in the amendments.

Additional Comments

According to the background brief prepared by the Legislative Council Secretariat in 2012, there was an average of only about two to three cases of reinstatement or re-engagement per year (by consent) in the years running up to 2012.  This suggests that employers are generally reluctant to reinstate or re-engage former employees, inciting concern among the lawmakers that the amendments will create tension in the work place.

In order to tackle this, the LT reserves the right to only award monetary compensation, where the circumstances render reinstatement or re-engagement inappropriate and impracticable.  The proposed amendments also allow an employer to apply for relief in paying the sum if it is no longer reasonably practicable for reasons attributable to the employee or because of a change of circumstances.

The Legislative Council Brief issued by the Labour and Welfare Bureau on 2 May 2017 notes that provisions for the Court to make an order for reinstatement or reengagement without the agreement of the employer already exist in other pieces of legislation, specifically under the four anti-Discrimination Ordinances.

Given the existence of such powers in other legislation, that the amendments have been limited to circumstances in which an employee has been dismissed unlawfully and that an employer may not be subjected to such an order if it is not “reasonably practicable”, there is a reasonable prospect that these amendments may be passed into law .

The Bill will be introduced into the Legislative Council on 17 May 2017.  Tanner De Witt will continue to monitor the position.  For more enquiries:

Kim Boreham
Partner | Email

Russell Bennett
Partner | Email

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.