Liu Chi Wah –v- Centaline (Case number: LBTC2755/2012)

In brief:

A property agency adopted a mechanism of paying a "guaranteed commission" to its estate agents so that if no commission was earned during a particular month, then the guaranteed commission meant that the employer had still complied with its statutory minimum wage obligations. An employee complained that when commission was earned then the employer deducted the value of any guaranteed payments paid in previous months. The employee lodged a claim with the Labour Tribunal alleging that the employer had wrongfully deducted the guaranteed commission from commission that he had earned.

During a preliminary hearing, the Presiding Officer of the Labour Tribunal stated that the Employment Ordinance provides an exhaustive list of circumstances in which employers can deduct wages from their employees and he took the view that in this case, the employer appears to have contravened the relevant provisions in the Employment Ordinance. The Presiding Officer stated that it was not sufficient to obtain agreement from the employee to the deduction and such agreement would be void on the basis that the provision would extinguish a right or a benefit. The fact that the purpose of the deduction was to ensure compliance with the Minimum Wage Ordinance did not justify a breach of the Employment Ordinance.

Take away points:

Although we do not have a formal decision from the Labour Tribunal in this case as it appears that it settled prior to a full hearing, it is evident from the observations of the Presiding Officer of the Labour Tribunal, that mechanisms which are used to artificially create compliance with the Minimum Wage Ordinance are likely to fall foul of the Employment Ordinance if deductions from wages are involved.