The High Court of Hong Kong has in the recent case of Cheung Chi Wah Patrick v Hong Kong Cement Company Limited (HCLA 18/2016) considered whether an employer was entitled to summarily dismiss an employee on the ground that the employee had committed an act of gross misconduct.

Background

The employer summarily dismissed an employee on the ground that the employee had committed gross negligence in carrying out his duties and the employee had put the employer’s associated company at risk of breaching the listing rules. The employee considered that the employer was not justified in dismissing him summarily, and he commenced a claim against the employer in the Labour Tribunal for wrongful termination.

The Labour Tribunal considered that whilst the employee’s mistake was indisputably serious, and there was sufficient prima facie evidence to support the decision of summary dismissal, it was still necessary for the tribunal to consider whether the employee’s misconduct was a repudiation of the employment contract. The tribunal had to consider how much responsibility should the employee bear in relation to his error and whether he had any reasonable explanation for it.

In this case, the employee sought legal advice following the instructions given by his supervisor, but he had made the wrong decision according to the legal advice that he had honestly misunderstood.

Therefore, the Presiding Officer at the Labour Tribunal held that whilst the employer had preliminarily established the cause for summary dismissal under section 9 of the Employment Ordinance, the employee had raised a reasonable and sufficient ground of defence to the dismissal. The Presiding Officer held that the employee’s conduct did not amount to repudiation of the employment contract and therefore the employer was not entitled to dismiss him summarily.

The employer appealed to the High Court.

High Court

The employer appealed the decision of the Labour Tribunal on the following grounds:-

  1. Whether the Presiding Officer had erred in law in finding that the employee had honestly albeit erroneously believed and relied on the legal advice given to him by the employer’s legal advisor.
  2. Whether the Presiding Officer erred in law in his conclusion that the employer did not have sufficient grounds to dismiss the employee summarily, despite his finding that the gross negligence of the employee could have prima facie led to very serious consequences to the employer’s associated company.

The High Court dismissed the appeal on the 1st issue because whilst on the facts found, it would have been reasonable for the tribunal to come to different conclusions, but it is not a case where the only reasonable conclusion on the facts found is inconsistent with the finding of the Presiding Officer.

With respect to the 2nd issue, the employer’s submission was that in considering whether it was justifiable to dismiss an employee on the ground of misconduct under section 9(1)(a)(ii) of the Employment Ordinance, it was only necessary to consider whether the employee’s misconduct is inconsistent with the due and faithful discharge of his duties and that the employee’s explanation on why he had committed the misconduct was irrelevant for the consideration of this question.

The High Court disagreed with the above submission. The court considered that it was necessary to make a finding as to why the employee had committed the conduct in question. Without such consideration, it was difficult, if not impossible, to ascertain objectively whether the employee had manifested an intention not to be bound by the employment contract. It was only when it was clear that the employee had by his conduct manifested such an intention that he could be dismissed summarily under section 9 of the Employment Ordinance.

In the present case, the court considered that not only did the respondent not manifest any intention not to be bound by the essential terms of his employment contract, he had in fact acted faithfully in the discharge of his duties as he took legal advice as instructed by his supervisor and acted in accordance with the advice. The unfortunate thing was that he misunderstood a poorly given legal advice and thus conducted himself wrongly. The court also considered that he was also not acting in a neglectful manner as the court considered that the miscomprehension of a poorly given legal advice is not a serious neglect of duty.

The High Court therefore dismissed the appeal.

Conclusion

The High Court dismissed the appeal and held that if the employer was dismissing an employee summarily on the ground of his misconduct, apart from cases of serious neglect of duty or breach of confidence or incompetence, the employer has to show that the employee has demonstrated an intent not to be bound by the essential terms and conditions of the employment contract or has repudiated the contract. Otherwise, the employer can only terminate the employment contract by giving the necessary notice to quit or wages in lieu of notice and other compensations as the law may require.