Entitlement to more than one rest day plus an alternative holiday?
In Hong Kong, some employers grant to employees more than one day off per week while the Employment Ordinance (“EO”) only requires the employer to grant one rest day in every period of seven days. Under such circumstances, there is a question as to whether the employees are entitled to an alternative holiday when the statutory holiday falls on a day off.
The recent decision of the Court of Appeal in Tam Wai Mei (“Tam”) v Cathay Pacific Airways Limited (“Cathay”) CACV 232/2005 decided on this issue. This appeal case was an appeal from a decision of the Court of First Instance. In June 2005, the Court of First Instance ruled that by Tam’s shift roster, she was only required to work five days a week. The EO does not prohibit an employer from granting more than one rest day to the employees and thus in this case Tam was entitled to two rest days per week. By not granting Tam an alternative holiday when a statutory holiday fell on a rest day, Cathay was in breach of section 39 of the EO and liable to claim for compensation for not granted the statutory holidays as provided under that section.
This decision had a significant impact on employers in Hong Kong who practise five-days work (Monday to Friday) per week and the rest day, in particular, Saturday, may not be clearly specified as a contractual day off or a statutory rest day. Based on the decision of the case, if the statutory holiday falls on any of the rest days, the employee would be entitled to an alternative holiday. If the employers have not granted the alternative holiday in accordance with the EO, it would have the effect of making such employers liable to claims for outstanding statutory holidays which fall on Saturdays.
In the Court of Appeal, the decision of the Court of First Instance was overruled. According to the findings by the Appeal Judges, Cathay had in place a roster system under which Tam was notified the days on which she was required to work by the roster supplied on a monthly basis before the beginning of each month for which the roster was applied. The roster was marked clearly with the days on which Tam was required to work and it was marked “off” on two days in each week when Tam was not required to work. The way in which the roster system worked was in accordance with the requirements of section 39 of the EO.
In addition, the Appeal Judges found that there was no warrant that the days marked “off” in the rosters should be treated as rest days under section 17 of the EO as there was no contractual provision between the parties to give effect to that.
By giving Tam more than one rest day per week, Cathay was in compliance with the EO. In particular, it should be noted that she had been notified well in advance of the statutory holidays upon which she would be required to work and in such case the roster would specify at least an equivalent number of days “off” in lieu of each particular statutory holiday. The Court of Appeal ruled that such practice was in a manner and to the extent complied with the EO in relation to the grant of rest days and statutory holidays.
On the part of the employers, if they grant more than one day off per week to the employees, they must notify the employees when the employees will be given an alternative holiday in substitution for a statutory holiday in order to comply with the EO.
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Should commission be included in “wages” for calculating holiday and annual leave pay?
In Hong Kong, it is quite common for employers to grant commission or allowance in addition to basic salary to the employees as part of the remuneration package. Under the EO, eligible employees are entitled to holiday and annual leave pay in respect of holiday or annual leave taken by the employees. There is a question as to whether commission is to be included in “wages” for the purpose of calculating the holiday and annual leave pay to the employees.
In the Court of Appeal case of Laing Agnes and Others v Lisbeth Enterprises Limited trading as Phillip Wain International (“Phillip Wain”) CACV
204/2004, the Court of Appeal has to decide whether commission payments should be used in the calculation of the wages which are required to be paid in respect of holiday and annual leave pay under the provisions of the EO.
The claimant in this case was employed by Phillip Wain, a beauty and health club in Hong Kong as a consultant. Her main role was to recommend courses of treatment and exercise packages to new and existing members of the club. Under her employment contract with Phillip Wain, it provided that she was entitled to receive a gross salary of HK$5,600 per month and in addition she was also entitled to commission on sales made by her provided payment was made by the customer in accordance with the scale set out in her employment contract. The reality of the situation was that the remuneration was mainly made up by the commission (over 90%) over the years of employment with Phillip Wain and gross salary was only an insignificant part.
According to the EO, holiday and annual leave pay shall be a sum equivalent to the wages which the employee would have earned on a full working day and in case the daily wages vary from day to day, the pay shall be a sum equivalent to the average daily wages for the preceding wage period. The definition of wages under section 2 of the EO includes commission. Judges Anthony Rogers and Doreen Le Pichon found that based on the construction of the EO, commission should be used in the calculation of the wages in respect of holiday and annual leave pay. In this case, the commission payments would vary and Phillip Wain should use the formula to calculate average daily wages for the case of varying daily wages in respect of the amount of pay.
However, the dissenting judge William Stone took a contrary view and found that the only monies which could be said with certainly that the employee would have earned was that represented by the gross salary and the sections in the EO on holiday and annual leave pay had no application in terms of fluctuating commission payments.
Leave of appeal to the Court of Final Appeal has been granted to Phillip Wain with hearing fixed on 20 February 2006 as the Court was of the view that this case has major implications on many businesses in Hong Kong, in particular those which pay a high amount of varying commission to their
employees.
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Recent district court ruling on sex and family status discrimination
On 23 December 2005, the District Court delivered its judgment on a sex and family status discrimination claim in the case of
Lam Wing Lai v YT Cheng (Chingtai) Ltd DCEO 6/2004.
The Defendant was a Hong Kong company carrying on the business of trading in industrial raw materials and the Plaintiff was employed as the secretary to the director between 21 May 2001 and 11 November 2002. In this case, the Plaintiff claimed that she was dismissed by the Defendant due to her pregnancy and family status and she was also discriminated by way of victimisation.
Under the Sex Discrimination Ordinance (the “SDO”), a person discriminates against a woman if on the ground of her pregnancy he treats her less favourably than he treats or would treat a person who is not pregnant and it is unlawful to discriminate against an employee by dismissing her, or subjecting her to any other detriment. Similarly, under the Family Status Discrimination Ordinance (the “FSDO”), it is not lawful to discriminate against a person on the ground of that person’s family status.
In order to show pregnancy discrimination, the Plaintiff had to show that she was treated less favourably by being dismissed because of her pregnancy when compared to an employee who was not pregnant. Under family status discrimination, the Plaintiff had to show that she was treated less favourably by being dismissed on the ground of her family status compared to an employee who did not have such a family status.
In this case, the Court applied the "but for" and "less favourable treatment" test. The burden was on the Plaintiff to prove discrimination on a balance of probabilities. Once the Plaintiff was able to show from the primary facts that inferences could be drawn from the circumstances that disclosed a possibility of discrimination, the Court would look to the employer for an explanation. If there were no or no adequate explanation put forward, the Court would infer that there was discrimination as a matter of common sense.
The Plaintiff’s case was that she had good performance, fostered a good relationship with colleagues and showed devotion to her job during her employment with the Defendant. She then became pregnant and because her pregnancy was not a smooth one, she had to take pregnancy related sick leave for significant length of time before childbirth. During the time she took the sick leave, the Defendant has been advertising for a permanent secretary. After she gave birth to her son, she asked the Defendant whether it was the Defendant’s intention not to employ her anymore. There was evidence that the Defendant told her that the Defendant did not want to continue to employ her because of her bad health and it wanted her to stay home to rest and take care of her son.
Based on the above, the Court found that the Plaintiff had established the primary facts on her claim. On the other hand, the Defendant had failed to put forward adequate explanation in relation to the termination. Therefore, on a balance of probabilities, the Court was satisfied that the Plaintiff was dismissed on ground of her pregnancy and her family status. The Plaintiff was awarded compensation for injury to feelings and loss of income in a total sum of HK$163,500. In addition, the Court allowed a declaration that the Defendant had committed unlawful acts under the SDO and the FSDO.
This ruling should serve as a strong message to the employers in Hong Kong and they should be mindful that employees are entitled to protection under the SDO and the FSDO. The employers should behave in a manner that observes the principle of equal work opportunities.
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CHINA EMPLOYMENT
Occupational Qualification Certificates for Foreigners
The Ministry of Labour and Social Security (“MLSS”) issued the
Letter on Issues Relevant to the Occupational Qualification Certificates Held by Foreigners Seeking Employment in China
