Employment Law Alert - October 2009 - Reed Smith

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Furthermore, an employer should be careful to ensure that employees are aware of amendments to the Handbook in a manner that can be clearly evidenced and which is in line with the contractual provisions of the actual employment contract. Merely posting a notice or perhaps sending an email detailing an amendment may not be enough. Lastly, if an employer wishes to protect ‘confidential information’ (not that this case necessarily concerned ‘confidential information’) it should include carefully drafted confidentiality provisions in its employment contracts to protect such information post employment. HKSAR v Lam Lenor Chan MA No 125 of <strong>2009</strong> Employer found guilty of failing to pay wages to an employee in breach of Section 23 of the EO and imprisoned for 3 months in accordance with Section 63C of the EO This case involved an employer deliberately failing to pay a domestic helper her correct wages in contravention of Sections 23 and 63C of the EO and serves as a timely reminder for all employers (as these provisions relate to all employers in Hong Kong) to pay their employees both correctly and on time. Failure to do so can attract very serious criminal and civil liability, including both fines and imprisonment. Facts The employer engaged the domestic helper under an employment contract (“Contract”) which set out her salary in accordance with the legal minimum wage for domestic helps at the time ($3,270). However, after the domestic helper commenced working, the employer paid her $1800 to $2000 per month, for the majority of her 2 year Contract. The domestic helper didn’t question this until she left her employment as she claimed that she was not in the dominant position as the employer. The Court accepted her claim. In practice, the employer asked the employee to cash cheques for the full amount of her salary. The employer then asked the domestic helper to pay back a portion of her salary in cash, whilst at the same time asking her to sign a receipt evidencing payment for the full amount. These facts were established through the credibility of the domestic helperʹs evidence and a recording made by the
domestic helper of a discussion between herself and the employer which was admissible despite it being recorded without the knowledge of the employer. The <strong>Law</strong> Section 23 of the EO states:‐ “Wages shall become due on the expiry of the last day of the wage period and shall be paid as soon as is practicable but in any case not later than 7 days thereafter.” Section 63C of the EO states:‐ Any employer who wilfully and without reasonable excuse contravenes section 23, 24 or 25 commits an offence and is liable to a fine of $350000 and to imprisonment for 3 years. These provisions combine to create serious obligations and consequences for employers to pay wages on time. As Section 63C of the EO was only recently amended, it appears that the Courts are now more willing to hand down harsher sentences for this offence. The Decision This matter involved an appeal from a Magistrates’ decision to impose a 9 month prison sentence upon the employer. Whilst the appeal was partially successful in reducing the sentence, Justice Line otherwise agreed with the sentiments of the Magistrate. Importantly in imposing a 3 month jail sentence, Justice Line noted that, whilst in his view 9 months was a heavy sentence, the Legislative Council had recently increased the penalties for failure to comply with Section 23 of the EO to a 3 year imprisonment term and a fine of $350,000 and as such:‐ “Sentences which have attracted fines or community service have, in my view, to this point been inadequate. The deliberate raising of the maximum sentence of imprisonment to 3 years by the legislature in 2006 must have been undertaken for good reason, and the legislative intent is only too clear.” Therefore in this case where the employer had “deliberately and consistently” underpaid the employee and then sought to “have her cake and eat it too” by taking the matter to trial, the Judge commented that ʺyou cannot expect to be shown the mercy of community service and save yourself from imprisonment”.
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Employment Law Alert - October 2009 - Reed Smith

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