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Employers and Employees may have Different Notice Periods.

6 Januray, 2012

 

Legal News & Analysis – Asia Pacific – Hong Kong – Labour & Employment – Dispute Resolution 

 

 

Nothing in Employment Ordinance prohibits different notice periods required for employers and employees.

 

Kwong Wai Ling Candy vs. Hotel Panorama o/b Hotel Panorama Company Ltd (HCME1/2011)

 

The Plaintiff's employment contract with the Defendant commenced on 16 August 2010. The first 6 months of employment was treated as the probation period. During the Plaintiff's 5th month of service, the Defendant served termination notice on the Plaintiff terminating her employment the following date by making payment in lieu of notice of 7 days.

 

The Plaintiff claimed against the Defendant for payment in lieu of notice of 1 month.

 

a. The Employment Contract

 

"21. Termination of Employment. The Employee's employment may be terminated by the Employer for any of the following reasons:

…….

(b) without cause, upon giving the notice referred to in the Employment Ordinance of Hong Kong; 22. Notice. Should the Employee choose to resign their position, Employee must provide Employer with a minimum notice period of one (1) month, unless otherwise agreed by both parties."

 

b. The Employment Ordinance

 

Section 6(3) of the Employment Ordinance provides that:-

 

"Where in any contract of employment, whether in writing or oral, it has been expressly agreed the employment is on probation and the contract does not make provision for the length of notice required for its termination, such contract may be terminated:-……(b) by either party at any time after the first month of such employment by giving to the other party notice of not less than 7 days."

Section 6(3A) of the Employment Ordinance provides that: -"Where in any contract of employment, whether in writing or oral, it has been expressly agreed that the employment is on probation and the contract makes provision for the length of notice required for its termination such contract may be terminated –
……

 

(b) by either party at any time after the first month of such employment by giving to the other party notice of the agreed period, but no less than 7 days."Section 70 of the Employment Ordinance provides that:- "Any term of a contract of employment which purports to extinguish or reduce any right, benefit or protection conferred upon the employee by this Ordinance shall be void."

 

c. Small Claims Tribunal

 

The Plaintiff's claim was first heard in the Small Claims Tribunal. The adjudicator of the Small Claims Tribunal noted that under clause 22 of the Employment Contract, in case of resignation, the Plaintiff was required to serve at least 1 month's notice on the Defendant. Clause 22 however did not specify the notice period required on the part of the Defendant.

 

The adjudicator considered that since clause 22 of the Employment Contract already set out the notice requirement of 1 month, section 6(3)(b) of the Employment Ordinance did not apply, and instead, section 6(3A)(b) should apply. The agreed notice period under clause 22 of the Employment Contract should be 1 month.

 

The adjudicator considered that although clause 22 of the Employment Contract did not specify that termination notice period required on the part of the employer, when reading clause 21 (b) and clause 22 together, the legal and reasonable interpretation should be that the notice period required on both the employer and the employee shall also be 1 month.

 

The adjudicator further considered that if an employee was required to serve 1 month's termination notice, whilst the employer was only required to serve 7 days' notice, such "unbalance" notice period should be void under section 70 of the Employment Ordinance.

 

The adjudicator ruled that the termination notice required on the part of the Defendant was 1 month and therefore, it should make payment in lieu of notice of 1 month to the Plaintiff.

 

d. High Court

 

The Defendant appealed against the decision of the Small Claims Tribunal to the High Court.

 

The Judge of the High Court considered that clause 21 of the Employment Contract only stipulated the notice period required on the part of the employer, and clause 22 only stipulated the notice period required on the part of the employee. If it was the intention of the parties that both the employer and the employee should both serve 1 month's termination notice on the other party, it was not necessary to have 2 different provisions. Therefore, the Judge considered that the adjudicator of the Small Claims Tribunal had wrongly applied clause 22.

 

The Judge also considered that the adjudicator had wrongly applied section 6(3A)(b) of the Employment Ordinance as it only applied to the circumstances when there was an agreed termination notice period on the part of the employer. In the present case, as there was no agreed termination notice period on the part of the employer, instead of section 6(3A)(b), section 6(3)(b) should apply, and the Defendant was only required to give a termination notice period of not less than 7 days.

 

The Judge further confirmed that although the termination notice periods required on the part of the employer and the employee were different, it was not in contravention of the Employment Ordinance.

The Judge allowed the Defendant employer's appeal and concluded that it is only required to give not less than 7 days termination notice on the Plaintiff employee, and therefore, it should make payment in lieu of 7 days' notice to the Plaintiff.

 

 

 
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