Tadjudin Sunny v Bank of America [2010] 3 HKLRD 417

3.1. The defendant employer applied to strike-out the plaintiff employee’s claim and was initially successful. The defendant asserted that the implied terms of her employment contract could not co-exist with the statutory regime in Hong Kong as provided by the EO and that consequently, the plaintiff’s case was legally unsustainable and should be struck out before trial. The plaintiff appealed from the lower court's decision.  

Facts

3.2. The plaintiff was employed by the defendant as a vice-president for over seven years. The employment contract was terminated according to terms of the contract in August 2007. The plaintiff’s claim was in relation to the performance bonus for the year 2007 which was payable in February 2008, by which time the plaintiff’s employment with the defendant had already been terminated.

3.3. The plaintiff argued that there was a breach of an implied term by the defendant, namely not to exercise its right of termination in order to avoid the plaintiff being eligible to the company’s performance incentive programme. The plaintiff argued that on English authorities, it was possible to imply into an employment agreement a term that an employee's express power to terminate or dismiss must not be exercised in order to deprive an employee of a benefit expressly conferred by contract.

The Law  

3.4. The Court of Appeal in this case took the view that the law relating to a possible implied "anti-avoidance" term was an area of law which was still in the process of development and as such, the striking out of such a claim at a preliminary stage prior to trial was held to be inappropriate. The court then observed that although there cannot be an implied anti-avoidance term protective of the employee’s interest in remaining employed, a term protecting employees against tactics calculated to avoid the payment of a performance bonus may possibly be implied.  

3.5. The court stated that the EO serves only as an “irreducible minimum” in terms of employee protection. Where the existing statutory provisions are found to be inadequate or insufficient to meet the requirement of justice, the common law can be resorted to by the courts to develop the law, such as by implying the necessary anti-avoidance terms, because justice and fair play so requires.

Decision  

3.6. The implying of an "anti-avoidance" term may not necessarily be incompatible with the statutory regime under the EO. Whether or not the implied terms contended by the plaintiff will in fact be implied greatly depends on the factual matrix of the case relating to the proper construction of the relevant clauses in the employment agreement. In this case there was no “plain and obvious” case for striking out and dismissing the plaintiff’s claim outright. Therefore the strike-out action failed.  

3.7. It is yet to be seen if the courts hold that such an implied "anti avoidance" clause exists.

Practical Implications

3.8. As stated above, we will have to wait to see what the court's position is in relation to whether an "anti-avoidance" term can, if at all, be implied into an employment agreement. However, it is clear that courts will not go so far as to interfere with the parties’ intentions and imply an anti-avoidance term where it is inconsistent with any express terms of an employment agreement. Therefore, employers should be especially careful when drafting employment agreements and bonus provisions to ensure that no possible term be implied where it need not have been.