The District Court docket in Hum Matthew Ta v Allied Manner Safety Administration Restricted [2024] HKDC 134 not too long ago dismissed an worker’s declare for wrongful dismissal in opposition to his former employer. The worker claimed that his employment had been terminated and, on that foundation, determined to not return to work. The Court docket discovered that the employer didn’t initially terminate his employment however the worker’s unauthorised absence from work as a substitute gave his employer a legitimate motive for abstract dismissal. The worker due to this fact misplaced his entitlement to a Golden Parachute fee and payment-in-lieu of discover (PILON).

Background

The defendant employer is a Hong Kong firm that supplied consulting and IT resolution companies on cyber-defence and community infrastructure. The defendant employed the plaintiff to behave as its CTO, in addition to to supervise the operations a newly acquired enterprise (New Enterprise). In reference to this, the New Enterprise employed three supporting workers to work below the plaintiff’s supervision.

The plaintiff’s employment settlement with the defendant supplied that:

• the plaintiff was entitled to a housing allowance on high of a fundamental month-to-month wage;
• the defendant could terminate the employment for trigger at any time, however was silent on the discover interval for the defendant to terminate the employment with out trigger; and
• the defendant agreed to supply the plaintiff with “severance advantages equal to 12 months of wage” if his employment was terminated “with out trigger” which was outlined to imply causes apart from, amongst others, resignation or termination “for Trigger” (Golden Parachute).

In October 2018, members of the defendant’s administration crew met with the plaintiff and knowledgeable him that the employment of the plaintiff’s subordinates can be terminated (the October Assembly).

The plaintiff claimed that within the October Assembly, he was additionally advised that the New Enterprise can be shut down and was requested if he would settle for a suggestion of three months’ wage as a severance fee, however declined this supply. Following this assembly, the plaintiff alleged he had been dismissed and didn’t return to work. He introduced a declare looking for fee below the Golden Parachute and PILON provisions of his contract, on the premise he had been wrongfully dismissed.

The defendant denied terminating the plaintiff within the October Assembly and argued that the plaintiff’s unauthorised absence following the assembly gave the defendant a foundation to summarily terminate his employment below each s 9 of the Employment Ordinance (EO) and his employment contract.

Findings

The District Court docket discovered for the defendant.

The primary situation for the Court docket to find out was whether or not the discussions within the October Assembly amounted to the defendant dismissing the plaintiff. Underneath the regulation, a discover of termination of employment should be clear and unambiguous.

After contemplating the varied witness proof as to the content material of those discussions, in addition to the credibility of the witnesses, the Court docket discovered that nothing in these discussions amounted to a transparent and unambiguous discover of termination of employment.

Even when it had been the case that the plaintiff was knowledgeable by administration that the New Enterprise was being shut down, this could not represent termination because the plaintiff’s scope of obligations was wider than the New Enterprise. Equally, that the defendant inquired as as to if the plaintiff would settle for a severance supply, couldn’t in itself represent a termination discover, significantly in circumstances the place the plaintiff instantly refused the supply, and no settlement was reached.

The Court docket additionally thought-about that in contrast to his subordinates who had truly been terminated, the plaintiff had not been supplied with a written discover of termination or been included within the formalities that had been organized for the subordinates to course of their terminations. It was additionally related that the plaintiff’s variations of occasions concerning the main points of his termination diversified between totally different units of pleadings and WhatsApp messages following the October Assembly confirmed that the plaintiff didn’t contemplate himself terminated.

Validity of the abstract dismissal

Because of discovering that the plaintiff had not been dismissed within the October Assembly and that the plaintiff was absolutely conscious that he had not been so dismissed, the Court docket wanted to then contemplate whether or not the defendant’s later abstract dismissal of the plaintiff was justified.

Underneath s 9 of the EO, an employer could dismiss an worker with out discover or PILON if the worker engaged in misconduct and such conduct was inconsistent with the due and devoted discharge of their duties (or on another floor on which an employer can be entitled to terminate the contract with out discover at frequent regulation). The Court docket held that unauthorised absence for even simply someday could possibly be thought-about as a severe neglect of responsibility amounting to repudiation of the employment settlement which justified abstract dismissal.

The burden was on an employer to justify that the worker has disregarded the important circumstances of the contract of service and this requires the employer to point out that the conduct in query quantities to a sufficiently severe breach of the contract of employment corresponding to to point that the worker not intends to be certain by the contract.

The Court docket thought-about that the plaintiff’s unauthorised absence from work (and failure to speak with anybody at work on this time), coupled along with his false accusation that his superior had terminated his employment, constituted legitimate grounds of abstract dismissal.

Entitlement to PILON and the Golden Parachute

Given the plaintiff’s abstract dismissal was discovered to be legitimate, the defendant had no obligation to pay both PILON or the Golden Parachute to the plaintiff. Nevertheless, for completeness the Court docket did contemplate how each of those funds ought to have been calculated.

In respect of PILON, the employment settlement gave the plaintiff the proper to terminate at any time with 3 months’ discover or PILON. The defendant, below the Golden Parachute provision, had the proper to dismiss the plaintiff with out trigger, however in return for a severance fee. This clause is, nevertheless, silent on the discover interval. In such circumstances, the Courts will impose an affordable discover interval, which on this case was held to be 3 months, given the plaintiff’s senior title in addition to that the plaintiff’s proper to terminate was additionally topic to a 3 month discover interval.

In respect of the Golden Parachute provision, the query arose whether or not this fee ought to embody the housing allowance the plaintiff obtained. The Court docket held that using the phrase “wage” on this clause, moderately than “fundamental month-to-month wage“, as had been utilized in different clauses, was a deliberate alternative, that means the clause would cowl not solely the essential month-to-month wage but in addition the housing allowance.

Key takeaways

This case serves as a useful reminder that an unauthorised absence at the same time as brief as someday can provide an employer the proper to summarily dismiss an worker.

Moreover, when finishing up any enterprise reorganisations which will end in redundancies, being clear in conversations with workers and guaranteeing they absolutely perceive the content material and impact of any discussions or communications is of significant significance. Moreover, holding correct information of such conversations can be of nice profit within the occasion there’s a dispute corresponding to on this case, or could assist to keep away from such a dispute occurring within the first place.