Orders for Reinstatement and Re-Engagement in Hong Kong

Amendments

Under Hong Kong’s employment laws (principally, the Employment Ordinance (“EO”)), a court or tribunal could, until recently, only make an order for reinstatement or re-engagement if both employer and employee agreed. For obvious reasons, in practice this rarely happened.

The position has changed: with effect from 19 October 2018, the Hong Kong courts and labour tribunal have become empowered under an amended EO to order reinstatement or re-engagement without the need for employer agreement, where a dismissal is unreasonable and unlawful; this is the case provided that the employee seeks or agrees to the order, and that such order is reasonably practicable.

Details follow.

Distinction between reinstatement and re-engagement

An order for reinstatement is an order under which the employee is to be treated in all respects as if he or she had not been dismissed and there had been no variation to the terms of employment. An order for re-engagement, on the other hand, may involve a change in benefits and entitlements, although the overall terms must still be comparable to what was previously enjoyed; and re-engagement will not necessarily be by the original employer.

Unreasonable and unlawful dismissal only

The court or tribunal’s power to order reinstatement or re-engagement is confined to cases of dismissal which are both unreasonable and unlawful.

Dismissal will be unreasonable if there is no ‘valid reason’ (eg misconduct, poor performance, redundancy) in support of the decision to dismiss, and unlawful when the dismissed employee:

• has served notice of pregnancy
• was on paid (statutory) sick leave at the time of dismissal
• was let go because of involvement in proceedings or an inquiry in connection with the enforcement of the EO, a work accident or breach of work safety regulation, or trade union membership or activities, or
• has suffered an accident or injury at work and no certificate of assessment has been issued.

Relevant considerations before making an order for reinstatement or re-engagement

The court or tribunal must give an opportunity to both ex-employer and ex-employee to present their respective cases, and must take into account factors such as:

• circumstances of both employer and employee
• circumstances surrounding the dismissal
• difficulty that the employer would face with the reinstatement or re-engagement, and
• the relationship between the employer and the employee, and between the employee and other persons with whom the employee would have connection in relation to the employment.

Failure to reinstate or re-engage

It is an offence not to comply with any term set out in an order for reinstatement or re-engagement. As part of its order, a court or tribunal will specify that an employer is liable to pay the following amount if it does not comply:

• any terminal payment and compensation that would have been awarded if no such order was made, and
• a further sum of three times the employee’s average monthly wages (calculated over the period of 12 months immediately before the date of termination), subject to a cap of HK$72,500 (c. US$9,300).

These remedies allow recovery of the payments to which an employee would have been entitled without the order, in addition to a further payment. This term enables an employee to recover what would have been received, without having to initiate a further action.

The ex-employer may, within seven days after the last date for reinstatement or re-engagement, apply for relief from the liability of paying the further sum on the ground that it is no longer reasonably practicable to reinstate or re-engage.

Key Takeaways

This change makes it likely that employees will begin to request reinstatement or re-engagement as a remedy, either due to a genuine wish to be re-employed, or as a strategic move. Given, however, that the remedy can only be sought where a dismissal is unlawful, we consider the impact of the Amendment Ordinance to be limited in practice; employers must, in any event, always ensure that a dismissal does not contravene relevant legislation (and this is not a change in the law).