Adam Hugill explores the often-overlooked reality of employment terminations in Hong Kong: the absence of fairness under the law. While many employees feel wronged or seek to challenge perceived injustices after being dismissed, Hong Kong’s labour laws provide little recourse. Employers, like employees, have the right to terminate a relationship without cause, provided they meet contractual and statutory payment obligations.
Adam delves into the landmark case of Haveaux v. Hong Kong Express Airways, where the courts reaffirmed that employers retain the statutory and contractual right to terminate employment for any reason, as long as proper notice or payment in lieu is provided. He also contrasts this with the limited scope of “anti-avoidance” protections established in Sunny Tadjudin v. BAML, which apply only in specific circumstances like avoiding bonus payments. The court’s reluctance to expand protections against termination highlights the stark difference between Hong Kong’s Employment Ordinance and the UK’s more robust Employment Rights Act 1996.
While there are limited protections — such as anti-discrimination laws and rights against wrongful summary termination — Adam underscores the need for legislative reform to address the gaps in employee protection. This video provides valuable insights into the current legal framework and the challenges employees face when seeking fairness in terminations.
SHOW NOTES:
00:32 Terminating employment
00:57 HAVEAUX v. HONG KONG EXPRESS AIRWAYS
01:37 Anti-avoidance
03:08 The situation in the UK and final conclusions
TRANSCRIPT
The Fairness of Unfairness of Terminations
There’s No Fairness in Terminations
We are often consulted by employees whose employment has been terminated in circumstances that they consider to be unfair. While employees are usually looking for compensation, quite often they are also looking to challenge what they consider to be an unjust decision and correct the record.
The bad news for employees is that Hong Kong labour laws don’t recognise or care for “fairness” in the case of most terminations.
Terminating employment
An employer, and for that matter an employee, can terminate the employment relationship capriciously and without cause. Provided the correct contractual and statutory payments are made (which are usually pretty limited) the employee would not have any recourse against the employer.
This can leave employees feeling helpless, frustrated and unheard without a forum to ventilate the perceived injustice.
There have been efforts to try to expand the law to close the unfairness gap. Most recently this was considered at length in HAVEAUX v. HONG KONG EXPRESS AIRWAYS.
HAVEAUX v. HONG KONG EXPRESS AIRWAYS
The case involved a pilot whose employment was terminated by the airline with payment in lieu of notice, in circumstances where the airline considered that the pilot acted improperly. This is disputed by the pilot. The facts of the case are very detailed and technical, but as a general concept the pilot tried to argue that the airline breached the implied duty of trust and confidence when terminating his employment. Specially, the pilot claimed that the airline abused its powers and terminated his employment in bad faith leading to substantial financial loss to the pilot.
It is important to note that in this case the pilot was not summarily terminated for cause, but was terminated with payment in lieu of his contractual notice.
At its core, the airline’s defence was very simple – it had both a statutory and a contractual right to terminate the pilot’s employment for good, bad or no reason – provided that it made payment in lieu of notice – which it did. It argued that the law does not imply a term that an employer cannot terminate the employment unless it has a good case or has given the employee an opportunity to reply.
In reaching its decision in Haveaux, the Court had to consider the case of Sunny Tadjudin v. BAML – this is a case that has come up frequently during the past decade and concerns the Hong Kong Court of Appeal decision to uphold a former banker’s argument that her employment contract included an implied term of anti-avoidance. This – in essence – meant that her employer could not terminate her employment to deprive her from receiving her annual bonus.
It was suggested that as a result of the decision in Sunny there might be other possibilities of the Court finding in favour dismissed employees such that the employer does not have an absolute right to terminate.
Unfortunately for employees across Hong Kong, the Court quickly shot down any suggestion that the implied term of trust and confidence could be expanded to offer protection against termination.
Anti-avoidance
With reference to Sunny, while lawyers have attempted to argue that the “implied anti-avoidance” term is now part of Hong Kong employment law, the decision in HAVEAUX has firmly confirmed that it was limited to the facts in Sunny. This does not mean that it will not be appliable in other circumstances, but those circumstances would need to meet the strict rules for implying such a term.
Moreover, “anti-avoidance” only restricted the employers ability to terminate to avoid making a bonus payment. It does not restrict the employers right to terminate employment with notice – since this is a statutory right granted by Section 6 of the Employment Ordinance (with the right to make a payment in lieu of notice being granted under Section 7).
The law does not allow for an implied term to trump an express term, whether statutory or contractual.
The Court also considered that it would be judicial overreach expand the common law to grant additional protection against termination and this this a matter for legislation.
The situation in the UK and final conclusions
The Hong Kong position is very different from the UK. In the UK the Employment Rights Act 1996 provides a very comprehensive statutory regime of employment protection against unfair dismissal, whereas the Hong Kong Employment Ordinance is much more limited in scope and application.
There are still limited protections in Hong Kong. For example, an employment relationship cannot be terminated in cases where it is contrary to anti-discrimination legislation.
Also, the unfettered right to terminate for a good, bad or no reason only applies to terminations on notice or with payment in lieu. In the case of a summary termination for cause, the employee will have the right to challenge the employer for wrongful termination. This would, at the very least, require the employer to justify their decision and give the employee their must desired day in court.
This video is for informational purposes only. Its contents do not constitute legal or professional advice.
