Most employment disputes are resolved through friendly (and sometimes not so friendly) negotiations between the employer and employee.
On termination, it is fairly typical for employers to pay an ex gratia enhanced termination payment in exchange for the employee agreeing to enter into a waiver and release agreement that ‘settles’ any dispute between the parties. However, some disputes cannot be resolved.
Under Schedule 1 of the Labour Tribunal Ordinance, the tribunal has exclusive jurisdiction to hear all employment disputes for monetary compensation exceeding HK$8,000 that arise from a contract of employment or under the Employment Ordinance and the Minimum Wage Ordinance.
There is, however, an exception to the Labour Tribunal having entirely exclusive jurisdiction over monetary employment claims. The Arbitration Ordinance creates an exception, giving the court a discretion to stay claims which fall within the Tribunal’s exclusive jurisdiction in favour of arbitration.
In claims against employees for breach of confidentiality clauses or post termination restrictions, the employer is often seeking injunctive relief as opposed to monetary damages. Since the Tribunal can only award monetary damages, the employer will usually issue proceedings for equitable remedies such as injunctive relief against the errant employee in the High Court. Where the relief sought is both monetary and equitable, in certain circumstances it is possible to commence proceedings in the High Court, provided the claim for equitable relief is genuine and has not simply been included for the purpose of “window dressing”.
Labour Tribunal Process and Procedure
Employers and employees are required to represent themselves at the Labour Tribunal and strict rules apply as to who can attend. It is not uncommon for lawyers to be present in the background for the purpose of preparing documents, negotiating with the opposition, advising and, in some circumstances, fully scripting their clients for what to say at the hearing.
Claims in the Labour Tribunal often take around 12 – 18 months from commencement to trial. If not settled beforehand, the parties can expect there to be 3 – 5 “mention hearings” in the course of the litigation the at the mention hearings, the Presiding Officer will try to assist the parties by explaining the issues and applicable laws, issuing directions for disclosure of documentation and the filing of witness statements, and general case management. The Presiding Officer will often encourage the parties to settle or explore conciliation utilising the Labour Tribunal’s conciliation officers.
Once a judgment is issued, either following trial, after successful conciliation or by default (if a party fails to attend) it is binding on both parties and, unless otherwise stated, any sums ordered must be paid within 14 days otherwise criminal proceedings can be commenced against the defaulting party. On conviction of the non-payment of a Tribunal award, serve penalties including a fine of up to HK$350,000 and 3 years imprisonment can and usually will be ordered.
Our team at Hugill & Ip has extensive experience in dealing with Employment matters – so if you need further advice on these subject and other topics discussed, get in touch with us to find out how we can help.
This article is for information purposes only. Its contents do not constitute legal advice and readers should not regard this article as a substitute for detailed advice in individual instances.