In this episode, we focus on the Hong Kong region. Our Hong Kong Of Counsel, Jenny Zhuang engages in a conversation with Hong Kong Senior Managing Associate, David Kwok to review the top five developments in 2023.

View the video or read the summary text below.

Our top five developments in 2023 are:

1. Landmark decision on employee vs independent contractor status

In the high-profile case of Re Zeek, six food delivery workers brought claims against the company which operates a popular food delivery app for, among other things, unpaid wages, payment in lieu of notice and annual leave pay, as a test case. The company argued they were not employees but independent contractors. The Labour Tribunal disagreed, holding they were in fact employees and were therefore entitled to all the benefits and protection offered by the Employment Ordinance (cap. 57).

The case serves as a reminder that the difference between an employee and an independent contractor is really substance over form, so it is not about how you might label a worker but what in fact is the true nature of the relationship between the company and the worker. The court will look at a variety of factors, the most important being the level of control the company has over the workers. Other factors include the ability to delegate or subcontract to others, remuneration structures and level of financial risk involved.

In this case, what led the Labour Tribunal to conclude that the delivery workers were employees and not independent contractors was the fact that the company exercised dominant control over the workers. For example, they would risk losing their job if they refused to take orders, the fixed amount of payment for each delivery, the absence of other sources of income for the workers, so they were all working full-time for Zeek, and their inability to personally profit from their work, because pay was very much fixed and based on the amount of deliveries they make.

2. Unfettered right to terminate without reason or justification

In the case of Haveaux Xavier Marie-Ghislain v. Hong Kong Express Airways Limited [2023] HKCFI 2073, the High Court of Hong Kong once again clarified and reaffirmed an employer’s unfettered right to terminate an employee by giving notice or payment in lieu in accordance with the employment contract, without giving any reason or cause.

In this case, the plaintiff was a pilot whose employment was terminated by the airline by payment in lieu of notice. He felt aggrieved and brought a claim, accusing the airline of abusing its power and breaching its duties of trust and confidence in terminating his employment. However, what the court said is that, under Hong Kong law, an employer is perfectly entitled to terminate the employment of an employee without giving any reason, and this is to be contrasted with the position in the UK. Although much of Hong Kong law mirrors that in the UK, one stark contrast is that there is no statutory protection against unfair dismissal under Hong Kong law. In the UK, there is a comprehensive regime of employment protection against unfair dismissal generally, but there is no equivalent under Hong Kong law. Therefore, under Hong Kong law, as long as an employee has been lawfully terminated with notice or payment in lieu, no reason or justification needs to be given.

3. When is a bonus truly discretionary

In Kan Kin Tong v. Man Leong Fire Services Ltd [2023] HKDC 513, the plaintiff had an arrangement with the company where he would be paid a share of the net profit but this profit share was labelled as a bonus that was paid regularly twice a year. When he resigned to set up a competing business on his own, the company refused to pay his outstanding profit share and argued the bonus was discretionary in nature. The court concluded that although the payment was labelled a bonus, it was in fact a profit share or commission based on the work done. Despite the bonus being labelled as discretionary, it was in fact a formulaic incentive payment scheme and contractual in nature. So it must be paid.

Bonuses, even if they are labelled to be discretionary, can in fact be contractual in nature. Much will depend on whether the employer has stipulated any eligibility criteria for a bonus. For example, where there is some objective formula or condition to be satisfied and an employee has satisfied them, the employer cannot then deny them their bonus because the bonus is arguably contractual. That is exactly what happened in this case where the court found in favour of the employee.

4. Medical certificates now in digital format only

In February 2023, the Hospital Authority announced that, starting from 6 March 2023, all medical certificates issued by the Hospital Authority will adopt a digital signature, which will replace the traditional manually signed paper certificates.

Action point for employers – many companies will want to see a traditional wet ink or chopped original to be satisfied that a medical certificate is authentic, but now that the signature has moved to digital format, there will no longer be a wet ink version. However, there will be an encrypted QR code on the digital certificate, which employers can scan to verify the authenticity.

5. New guidelines on safeguarding data security

With a surge in cyberattacks and an increased number of data breaches, the Hong Kong Privacy Commissioner’s Office has issued new guidance on data breach handling and notification. The Guidance Note is designed to help organisations be prepared in the event of a data breach. It contains practical recommendations to help organisations handle data breaches to contain the damage and harm that follows from such incidents. It recommends that organisations follow key steps in handling a data breach – from gathering essential information, containing the breach, assessing the risk of harm, giving necessary data breach notifications and documenting the breach. Employers should notify the Privacy Commissioner and affected persons as soon as practicable after becoming aware of the breach, especially if the data breach is likely to result in a real risk of harm to individuals whose data has been compromised.

For further information regarding any of the noteworthy employment law updates covered in this episode of our series, please contact any member of our Hong Kong employment team.