Mak Wai Man v. Richfield Realty Ltd

DCCJ 1631/2017

DCCJ 1632/2017

DCCJ 1633/2017

DCCJ 1634/2017

(Consolidated)

[2019] HKDC 358

DCCJ 1631/2017

IN THE DISTRICT COURT OF THE

HONG KONG SPECIAL ADMINISTRATIVE REGION

CIVIL ACTION NO 1631 OF 2017

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DCCJ 1632/2017

IN THE DISTRICT COURT OF THE

HONG KONG SPECIAL ADMINISTRATIVE REGION

CIVIL ACTION NO 1632 OF 2017

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DCCJ 1633/2017

IN THE DISTRICT COURT OF THE

HONG KONG SPECIAL ADMINISTRATIVE REGION

CIVIL ACTION NO 1633 OF 2017

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DCCJ 1634/2017

IN THE DISTRICT COURT OF THE

HONG KONG SPECIAL ADMINISTRATIVE REGION

CIVIL ACTION NO 1634 OF 2017

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J U D G M E N T

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1.This is the retrial of the 4 actions DCCJ 1631/2017, DCCJ 1632/2017, DCCJ 1633/2017, and DCCJ 1634/2017 (collectively referred to as “the 4 Actions”) following the order made by the Hon B Chu J on 23 June 2016 (“the Appeal Judgment”). The order for retrial states as follows:

“The matter be remitted to the Labour Tribunal for determination only on the issue as to whether, having regard to the legislative intent, the Statutory Entitlements payable to the Claimants should be reduced by such payment of the Commission, and also the Team Leader Bonus (if there was no agreement), under sections 35(4), 41(6) & [41C(6)] of the EO.”

2.On 10 March 2017, the Labour Tribunal transferred the remitted case to the District Court.

3.At the retrial of the 4 Actions, both parties compiled a list of agreed facts (“the Agreed Facts”) and agreed there was no need to call any witnesses. Parties submitted the retrial is essentially a matter of legal interpretation and proceeded to make submissions on the proper interpretation of sections 35(4), 41(6) and 41C(6) of the Employment Ordinance (Cap 57).

4.The questions posed by both parties for the court to adjudicate on are framed as follows:

1)   Whether, having regard to the legislative intent, the Statutory Entitlements payable to the plaintiffs should be reduced by such payment of Commission and the Team Leader Bonus pursuant to the Deduction Sub-sections; and

2)   Depending on the answer to the above, whether the defendant is liable to pay the sums set out at paragraph 10 of the Agreed Facts as the shortfall in their Statutory Entitlements.

5.Having heard the submissions of counsel, I am of the view the court is required to make the following determinations in order to answer the above questions:

1)   Whether, for any other reason, the Commission and the Team Leader Bonus constitute sums of money paid for the Statutory Entitlements?

a)   What is the meaning of “any other reasons” in the Deduction Sub-Sections?

b)   Whether the Commission and the Team Leader Bonus are sums paid for every day of the month and therefore inclusive of Statutory Entitlements?

FACTS NOT IN DISPUTE

6.The list of agreed facts which form the basis of the retrial are as follows:

“1. An employment contract was entered into between the Defendant and each Plaintiff for the latter to work in the marketing department of the Defendant, commencing on the following dates:-

(1)Fung Pui Wah Sally (“Fung”) – 17 October 2008

(2)Mak Wai Man (“Mak”) – 30 October 2007

(3)Tsang Mei Sheung Meiz (“Tsang”) – 15 May 2008

(4)Mo Kwok Kei (“Mo”) – 15 January 2007 (employment contract dated 1 February 2007)

(collectively, the “Employment Contracts” and each defined as “Fung Employment Contract”, “Mak Employment Contract”, “Tsang Employment Contract” and “Mo Employment Contract” respectively)

2. The relevant express terms of the Fung Employment Contract include the following:-

(a)Monthly basic salary: HK$10,000;

(b)Travel allowance: HK$1,000;

(c)Overtime pay: hourly overtime pay rate, at monthly salary ÷ 30 ÷ 9 x 1.5 (only for office employees), and payable only upon special request for overtime made by the company supervisor;

(d)Commission: 50% of commissions received from the owner (only for marketing team).

(a), (b) and (c) [the monthly basic salary, travel allowance and overtime pay] are to be paid on the first day of each month. (d) [commission] the cut-off date is the 25^th of each month and it is to be paid on the 1^st.

3. The express terms of the Mak Employment Contract include the following:-

(a)Monthly basic salary: HK$10,000;

(b)Travel allowance: HK$1,000;

(c)Overtime pay: hourly overtime pay rate, at monthly salary ÷ 30 ÷ 9 x 1.5 (only for office employees), and payable only upon special request for overtime made by the company supervisor;

(d)Commission: 40% of commissions received from the owner (only for marketing team).

(a), (b) and (c) [the monthly basic salary, travel allowance and overtime pay] are to be paid on the first day of each month. (d) [commission] the cut-off date is the 25^th of each month and it is to be paid on the 1^st.

4. The express terms of the Tsang Employment Contract include the following:-

(a)Monthly basic salary: HK$10,000;

(b)Travel allowance: HK$1,000;

(c)Overtime pay: hourly overtime pay rate, at monthly salary ÷ 30 ÷ 9 x 1.5 (only for office employees), and payable only upon special request for overtime made by the company supervisor;

(d)Commission: 46.4% of commissions received from the owner (only for marketing team).

(a), (b) and (c) [the monthly basic salary, travel allowance and overtime pay] are to be paid on the first day of each month. (d) [commission] the cut-off date is the 25^th of each month and it is to be paid on the 1^st.

5. The express terms of the Mo Employment Contract include the following:-

(a)Monthly basic salary and travel allowance: HK$10,000;

(b)Overtime pay: hourly overtime pay rate, at monthly salary ÷ 30 ÷ 9 × 1.5 (only for office employees), and payable only upon special request for overtime made by the company supervisor;

(c)Commission: 40% of commissions received from the owner.

(a), (b) and (c) [the monthly basic salary, travel allowance and overtime pay] are to be paid on the first day of each month. (d) [commission] the cut-off date is the 20^th of each month and it is to be paid on the 25^th.

6. Under the Employment Contracts, apart from the Monthly Basic Salary, Travel Allowance and Commission, the Plaintiffs are also entitled to, amongst other things, Sick Leave, holiday and Annual Leave with pay.

7. There were no express provisions in the Employment Contracts as to whether the Basic Salary, Commission, Travel Allowance or Team Leader Bonus (as defined in the Employment Contracts and the Judgment) were payments in respect of a paid sickness day, holiday and annual leave day.

8. The Defendant as employer was subject to statutory obligations under the Employment Ordinance (“EO”) and the Plaintiffs as employees were entitled to the statutory benefits and entitlements under the EO.

9. The Employment Contracts were terminated by the Defendant on the following respective dates:

(1)Fung 25 April 2014

(2)Mak 17 April 2014

(3)Tsang 17 April 2014

(4)Mo 5 May 2014

10. In the LT Claim commenced on 31 July 2014 by the Plaintiffs against the Defendant the Plaintiffs claimed the shortfalls of their entitlements according to the Employment Contract and the EO, with the respective claims of each Plaintiff as follows:-

Fung	Statutory Holiday Pay	$19,140.49
	Sick Leave Allowance	$1,314.37
	Annual Leave Pay	$22,250.24
	Total	$42,705.10
Mak	Statutory Holiday Pay	$27,664.30
	Annual Leave Pay	$69,843.50
	Total	$97,507.80
Tsang	Statutory Holiday Pay	$25,398.04
	Annual Leave Pay	$52,959.21
	Total	$78,357.25
Mo	Statutory Holiday Pay	$27,352.14
	Annual Leave Pay	$53,632.26
	Total	$80,984.40

11.   For all plaintiffs, they were employed and remunerated on a monthly basis. Both Basic Salary and Commission were payable to the plaintiffs on a monthly basis and were in fact paid on a monthly basis in accordance with the Employment Contracts.

12.   Commission is a team-based remuneration, earned by a marketing team through their hard work throughout a prolonged period of time, and contingent upon the success of a particular project.

13.   Commission is paid to the employee for each day of that month. Commission is not contingent on whether or not a team member has come into work on a particular day. Commission is also not contingent on whether the employee has taken annual leave, statutory holiday or sick leave during that month. If a team member was on leave during the currency of a project, the other team members would provide cover for his/her work in his absence. An employee would not receive less Commission from a successful project just because he or she has taken a day or some days off (of annual leave, statutory holiday or sick leave) during the currency of the project.

14.   By default, Commission payable by the Defendant would be divided equally among all team members of a particular marketing team, and the team members would need to agree on an allocation of the Commission if it was not to be allocated equally.

15.   The parties’ disputes before the Labour Tribunal were in respect of the following issues:-

(1)   Whether the calculation of the Daily Average Wage (“DAW”) under sections 35, 41 and 41C of the EO for the Plaintiffs’ statutory entitlements should include only the basic salary and the commission as alleged by the Defendant, or also the travel allowance and the bonuses as alleged by the Plaintiffs;

(2)   Whether the Defendant was entitled to deduct the DAW from the Plaintiffs’ statutory entitlements, the Plaintiffs’ case being for the deductions, only the basic salary and the travel allowance should be taken into account.

(3)   Whether the Plaintiffs had agreed with the Defendant in relation to the replacement arrangement over the Chinese New Year holidays.

16.   After trial before the Presiding Officer, he made the following determinations on the above issues:

(1)   For the purpose of calculating the DAW of the Plaintiffs’ statutory entitlements under sections 35(2), 41(2) and 41C(2) of EO, in addition to the Basic Salary and Commissions, the Plaintiffs’ travel allowance and the bonuses should be taken into account (the “1^st Determination”);

(2)   The Commission earned by the Plaintiffs did not include payment in respect of the statutory entitlements, and thus under sections 35(4), 41(6) and 41C(6) of EO, the statutory entitlements payable to the Plaintiffs should not be reduced by any part of the commission (the “2^nd Determination”);

(3)   The Chinese New Year holidays previously given to the Plaintiffs in breach of section 41F of EO should be treated as part of the Plaintiffs’ annual leave in the relevant years, and the Defendant was not entitled to unilaterally treat them as “free holiday” (the “3^rd Determination”).

17.   The Labour Tribunal granted an Award for each Plaintiff (all dated 29 July 2015) (collectively the “Awards”) in the amount of their present claim (with interests on the following sums at judgment rate from 29 July 2015 to the date of full payment), namely:-

(1)Fung Pui Wah Sally:     HK$42,705.10

(2)Mak Wai Man:   HK$97,507.80

(3)Tsang Mei Sheung Meiz:   HK$78,357.25

(4)Mo Kwok Kei:    HK$80,984.40

18.   As regards the Awards, the Defendant successfully obtained leave to appeal on 30 October 2015 and successfully appealed against the Awards pursuant to the Hon B Chu J’s judgment dated 23 June 2016 under HCLA 28, 29, 30 and 31 of 2015. The Awards were set aside, and the matter was remitted to the Labour Tribunal for determination of the issue as to whether, having regard to the legislative intent of the Deduction Sub-sections, the Statutory Entitlements payable to the Claimants should be reduced by such payment of the Commission and Team Leader Bonus under the Deduction Sub-sections.

19.   On 10 March 2017, the Labour Tribunal transferred the remitted case to the District Court.”

7.It is therefore clear from the Agreed Facts submitted, I am only required to make a determination in respect of the “team based” commission (“the Commission”) and the Team Leader Bonus. This is to be distinguished from other types of commission that are attributable to the individual performance or individual effort.

THE EMPLOYMENT ORDINANCE

8.The relevant sections of the Employment Ordinance, referred to as the “Deduction Sub-Sections” by the Hon B Chu J are set out as follows: 

1)   Section 35(4) relating to sickness allowance:

“If, pursuant to the terms of his contract of employment or any other agreement or for any other reason, an employee is paid by his employer a sum of money in respect of a paid sickness day taken by him, the sickness allowance payable to the employee in respect of that sickness day is to be reduced by the sum.”

2)   Section 41(6) relating to holiday pay (otherwise known as statutory holiday pay):

“If, pursuant to the terms of his contract of employment or any other agreement or for any other reason, an employee is paid by his employer a sum of money in respect of a holiday taken by him, the holiday pay payable to the employee in respect of that holiday is to be reduced by the sum.”

3)   Section 41C(6) relating to annual leave pay:

“If, pursuant to the terms of his contract of employment or any other agreement or for any other reason, an employee is paid by his employer a sum of money in respect of a day of annual leave taken by him, the annual leave pay payable to the employee in respect of that day of annual leave is to be reduced by the sum.”

9.The wording of the above provisions is similar and can be distilled to the following general elements:

1)   A sum of money is paid by the employer to his employee;

2)   The sum of money is paid pursuant to:

a)   The terms in the contract of employment; or

b)   Any other agreement; or

c)   For any other reason;

3)   The sum of money is paid in respect of a holiday / annual leave / sick leave; and

4)   The said holiday pay / sickness allowance / annual leave pay (“Statutory Entitlements”) shall be reduced by the said sum of money.

10.It is not disputed there is no express term in the plaintiffs’ employment contracts that stipulates the Commission and the Team Leader Bonus are paid for holiday pay/ sick leave and/or annual leave, and that there has not been any other agreement to the same effect. Hence the real dispute between the parties is whether the Commission and the Team Leader Bonus fall within the third limb (that is, the “any other reasons” limb) of the Deduction Sub-Sections.

11.I do not intend to repeat the submissions of both parties in full. In summary, the plaintiffs argued the Commission and the Team Leader Bonus cannot be viewed as payments inclusive of Statutory Entitlements and therefore would not fall within the Deduction Sub-Sections.

12.The defendant argued that since the Commission and the Team Leader Bonus are paid on a monthly basis, it should be taken to be payments for every day of the month. Ms Lee, counsel for the defendant, relied on the case of Cathay Pacific Airways Ltd v Kwan Siu Wa Becky and others (2012) 15 HKCFAR 61 to argue such payments are inclusive of Statutory Entitlements and submitted the Commission and the Team Leader Bonus fall within the Deduction Sub-Sections. Hence the Commission and the Team Leader Bonus payment should be deducted from the relevant Statutory Entitlements.

13.I shall deal with the parties’ submissions in more detail in the sections below.

LEGISLATIVE BACKGROUND AND POLICY REASONS BEHIND THE DEDUCTION SUB-SECTIONS.

14.The Hon B Chu J has succinctly summarized the legislative background in paragraphs 15 to 27 of the Appeal Judgment, of which I can do no better, and I therefore do not intend to recite the entire legislative background in this judgment.

15.Instead of repeating the summary provided in the Appeal Judgment, I shall highlight a few matters below:

1)   The Deductions Sub-Sections were added to the Employment Ordinance by way of the Employment (Amendment) Ordinance 2007 (“the 2007 Amendment Ordinance”). The 2007 Amendment Ordinance was a holistic amendment to the Employment Ordinance triggered by the ruling of the Court of Final Appeal in the case of Lisbeth Enterprises Ltd v Mandy Luk (2006) HKCFAR 131;

2)   In Lisbeth Enterprises Ltd, the Court of Final Appeal held that although contractual commission fell within the definition of “wages,” it could not be included in computing Statutory Entitlements because the contractual commission was not accrued or calculated on a daily basis and in such circumstances the Employment Ordinance did not provide a workable mode of calculation for the Statutory Entitlements;

3)   The amendments set out in the 2007 Amendment Ordinance were to bring the existing provisions of the Employment Ordinance in line with the original policy intention that contractual commission should be considered wages and to remove any ambiguities from the definition of “wages”;

4)   Furthermore, the amendments were aimed at providing a “workable mode” of calculating the various entitlements, including the Statutory Entitlements, in cases where contractual commission was included in the calculation of wages; and

5)   As a consequence of the holistic amendments, the Deduction Sub-Sections were added “to express more explicitly the intention of avoiding double payment by the employer”: see Explanatory Paper on Committee Stage Amendments Proposed by the Administration (LC Paper No CB(2) 1511/06-07(03)) (“the Explanatory Paper”).

16.In order to understand the Deduction Sub-Sections properly, it is necessary to understand the rationale behind the amendments relating to the calculation of the daily rate of Statutory Entitlements.

17.In general, the method of calculating the daily rate of Statutory Entitlements is set out below (the calculations are based on the plaintiffs’ period of employment being more than 12 months):

1)   Sickness allowance: a sum equivalent to 4/5 of the daily average wage earned during the period of 12 months immediately preceding the sickness day or the first sickness day;

2)   Holiday pay (statutory holidays): a sum equivalent to the daily average wage earned during the period of 12 months immediately preceding the holiday or the first day of the holidays; and

3)   Annual leave pay: a sum equivalent to the daily average wage earned during the period of 12 months immediately before the day of annual leave, the first day of the annual leave or the date of termination of the contract of employment.

18.In calculating the daily average wage for the purposes of ascertaining the Statutory Entitlements, the following periods are to be disregarded:

1)   any wages paid for any maternity leave, paternity leave, rest day, sickness day, holiday or annual leave taken by the employee;

2)   any period therein for which the employee was not paid his/her wages or full wages by reason of —

a)   any maternity leave, paternity leave, rest day, sickness day, holiday or annual leave taken by the employee;

b)   any leave taken by the employee with the agreement of his/her employer;

c)   not being provided by his/her employer with work on any normal working day; or

d)   his/her absence from work due to temporary incapacity for which compensation is payable under section 10 of the Employees’ Compensation Ordinance (Cap 282).

19.Since the definition of wages set out in section 2 Employment Ordinance cover sums of money “payable to an employee in respect of work done or to be done under his contract of employment,” sums paid to the employee which do not arise from work done or to be done are generally not included in the definition of wages.

20.The Explanatory Paper specifically states that for the purposes of calculating the Statutory Entitlements, the definition of “wages” was extended to cover “any sums paid by an employer in respect of any specified period of leave taken by an employee and normal working day on which the employee is not provided with work by his employer...”: see paragraph 6 of the Explanatory Paper. See also sections 35(1), 41(1) and 41C(1) Employment Ordinance.

21.The extended meaning of wages coupled with the disregarded periods have the effect of arriving at a daily rate of Statutory Entitlements which is not depressed in value by reason of sums being excluded for falling outside the definition of wages under section 2 Employment Ordinance. In other words, the purpose of these amendments is to ensure the average daily rate of Statutory Entitlements would not be lessened or “depressed” by reason of payments being made which cannot be classified as being paid for “work done or to be done.”

22.Due to the inclusion of such sums in the calculation of Statutory Entitlements that do not strictly fall within the definition of “wages” in section 2 Employment Ordinance, it was also important to express clearly that any sums paid for Statutory Entitlements should be deducted to avoid double payment by the employer.

23.In the case of Cathay Pacific Airways Ltd v Kwan Siu Wa Becky and others (2012) 15 HKCFAR 61, the Chief Justice stated that where employees are paid a monthly salary, the salary presumably covers the whole of the month, including non-work days. Where monthly salaried employees employed for more than 12 months claim for Statutory Entitlements, their salary is divided by 365 days to work out their daily average wage. Since the Deduction Sub-Sections mandate a deduction for sums paid for various Statutory Entitlements, then the usual scenario would be that monthly employees would not have a claim for outstanding Statutory Entitlements.

24.To use the example set out in Cathay Pacific Airways Ltd, if the monthly salary of the monthly salaried employee is $30,000, his daily average wage is $986 ($30,000 ÷ 365 days). Hence when calculating, for example, his holiday pay for 1 July he would be entitled to $986 for that holiday. If he has received his salary in full over the year without any change in his salary, he would not be entitled to extra pay for that holiday because the employer is entitled to deduct the sums paid for such holiday and such payment has been included as part of his salary.

25.There are other more obvious scenarios where employers pay employees an extra sum, on top of the monthly salary, which is meant to be payment for all holiday leave pay. In such cases, the holiday pay is not part of the wages but is “a sum of money” agreed between the parties to be paid for holidays and therefore deducted by the employer when calculating the outstanding holiday pay.

26.However, the scenario with contractual commission is more complicated. The wages of commission earning employees fluctuate each month according to their commission sums. Hence the daily rate of Statutory Entitlements is different throughout the year. It is for this reason the treatment of commission payments is always contentious as the inclusion or non-inclusion of commission payments drastically affects the ultimate sum of Statutory Entitlements, the difference of which could be great.

27.I shall now proceed to discuss the issues of the present case.

WHETHER, PURSUANT TO THE TERMS OF THE PLAINTIFFS’ EMPLOYMENT CONTRACT OR ANY OTHER AGREEMENT, THE COMMISSION AND TEAM LEADER BONUS CONSTITUTE SUMS OF MONEY PAID FOR THE STATUTORY ENTITLEMENTS?

28.The short answer to the above question is, No. It is not disputed there is no term in the employment the contract which stipulates the Commission and the Team Leader Bonus are paid for Statutory Entitlements. Nor is there any agreement between the parties that stipulates the same.  

29.Though Mr Shum and Miss Wong for the plaintiffs made anticipatory arguments about how the principles relating to implied terms cannot be invoked, I am of the view such submissions are irrelevant. The defendant does not argue there are any implied terms of the contract stipulating the Commission and the Team Leader Bonus are paid for Statutory Entitlements. Rather, the defendant argues the Commission and the Team Leader Bonus fall within the limb of “any other reason.”

WHETHER, FOR ANY OTHER REASON, THE COMMISSION AND TEAM LEADER BONUS CONSTITUTE SUMS OF MONEY PAID FOR THE STATUTORY ENTITLEMENTS?

The meaning of “any other reason”

30.The Deduction Sub-Sections, in so far as “any other reasons” are concerned, are drafted as follows:

“If, ... for any other reason, the employee is paid by his employer a sum of money in respect of [a paid sickness day / a holiday / a day of annual leave] taken by him, the [sickness allowance / holiday pay / annual leave pay] payable to the employee in respect of that [sickness day / holiday / day of annual leave] is to be reduced by that sum.”

31.Mr Shum and Miss Wong argued according to the Deduction Sub-Sections, “the parties can agree to a [sic] certain arrangements by ... for any other reason, such as implied agreement or estoppel by convention”: see paragraph 30 of the plaintiffs’ joint opening submissions.

32.The basic principles of statutory interpretation have been clearly set out by the Court of Final Appeal in the case of Town Planning Board v Society for the Protection of the Harbour (2004) 7 HKCFAR 1 at paragraphs 28 to 30:

“28. The interpretation of statutes is of course an essential part of the judicial function and is ultimately a matter for the courts. In interpreting a statute, the function of the courts is to ascertain the intention of the legislature as expressed in the legislation. The statute must be considered as a whole. Any statutory provision must be understood in its context taken in its widest sense: A-G v HRH Prince Ernest Augustus of Hanover [1957] AC 436 at p.461.

29. A purposive approach should be adopted. In construing a statute, the courts should adopt an interpretation which is consistent with and gives effect to the legislative purpose. An interpretation which is inconsistent with and does not serve that purpose should be avoided. The mischief rule is an early example of the purposive approach to statutory interpretation: see generally Bennion, Statutory Interpretation: A Code (4th ed., 2002) p.809ff, on purposive construction. In Hong Kong, the purposive approach (including the mischief rule) has been reflected in s.19 of the Interpretation and General Clauses Ordinance which provides:

An Ordinance shall be deemed to be remedial and shall receive such fair, large and liberal construction and interpretation as will best ensure the attainment of the object of the Ordinance according to its true intent, meaning and spirit.

The legislative purpose:

30. In applying a purposive approach to interpretation, the legislative purpose must first be identified. It is sometimes not easy to discern the purpose of a statute or a particular provision. In the present case, there is no difficulty in identifying the legislative purpose. It is referred to in the preamble to the Ordinance and is spelt out in s.3(1) itself. The preamble states that the purpose is "to protect and preserve the harbour by establishing a presumption against reclamation in the harbour". As succinctly and powerfully stated in the explanatory memorandum to the bill, the legislative purpose is "to ensure that [the harbour] will be protected against excessive reclamation". (Emphasis added.) The purpose is to make sure that the harbour will be so protected.”

33.The purposive approach was reiterated in the case of Cathay Pacific Airways Ltd at paragraph 20(1):

“(1) As a general approach to statutory interpretation, particularly where a piece of legislation deals with a subject matter which most people would expect to be dealt with in a common sense and purposive manner (and I would put holiday pay and annual leave pay in this category), the Court should aim to arrive at an interpretation that, as far as the wording of the legislative provision in question will allow, will accord with such common sense and which can be easily applied . . .”

34.The 3 class of payments that can be deducted under the Deductions Sub-Sections are those sums of money paid “pursuant to the terms of his contract of employment or any other agreement or for any other reason.”

35.Normally, one would adopt the ejusdem generis principle[1] of construction and read the phrase “any other reason” to be within the genus of an agreement. I understand this to be the rationale behind Mr Shum and Miss Wong’s argument that the phrase “any other reason” should include implied agreements.

36.However, I am of the view the ejusdem generis principle is not applicable in this case. This is because if the phrase “any other reasons” is to be limited to the genus of agreements only, the phrase of “any other agreement” immediately preceding the phrase “any other reasons” will be redundant. The phrase “any other agreements” must necessarily include any express and implied agreement. Similarly, express and implied terms of the plaintiffs’ employment contract will be included in the phrase “the terms of his contract of employment.” It is evident that any possible form of agreement is already encompassed by the first 2 limbs of the Deduction Sub-Sections.

37.I am of the view that on a reading of the Deduction Sub-Sections, the phrase “any other reasons” is not meant to be limited to the genus of agreements. This then begs the question: if not pursuant to an agreement or the terms of an employment contract, what could possibly be the “other reasons” in which an employer pays an employee a sum of money inclusive of Statutory Entitlements?

38.In interpreting the phrase “any other reasons”, I am of the view that the said phrase should not be interpreted narrowly and should not be confined to the genus of agreements or the like. I am of the view the purposive approach must be adopted when considering what would constitute “any other reasons.”

39.Though I am prepared to accept the phrase “any other reason” can include situations where estoppel may arise, I do not believe that is exhaustive of the scenarios that are encompassed by the phrase.

40.In interpreting what would fall under “any other reasons,” those “reasons” must be consistent with the policy objective of the legislation, namely, to avoid any double payment being made by the employer. Hence “other reasons” may include, but are not limited to, situations where a sum of money paid is taken to be paid for Statutory Entitlements by operation of law or otherwise.

41.I shall now go on to consider whether the Commission and Team Leader Bonus fall within the Deduction Sub-Sections.

Are the Commission and Team Leader Bonus sums of money paid for or inclusive of Statutory Entitlements?

42.Mr Shum and Miss Wong argued the Commission is only attributable to the days on which the plaintiffs have worked and not to “non-working days.” They submitted that since the Commission is paid on the basis of work actually done and not calculated purely on a periodic basis, the Commission and basic monthly salary are inherently different and cannot be regarded as payment attributable to the whole month of employment. It was submitted the Commission is distinct from the basic monthly salary and therefore the case of Cathay Pacific Airways Ltd is distinguishable from the present case.

43.I note counsel’s submissions in this regard are inconsistent with the calculation method adopted by the plaintiffs and to the matters set out in the Agreed Facts.

44.It is important to note the parties agreed the following in so far as the nature of the Commission is concerned:

1)   The Commission is paid for each day of the month: see paragraph 13 of the Agreed Facts;

2)   The Commission is paid regardless of whether the plaintiffs took leave or has come into work on a particular day: see paragraph 13 of the Agreed Facts;

3)   The Commission is a team-based remuneration and is earned through the work done throughout a prolonged period of time:  see paragraph 12 of the Agreed Facts; and

4)   The Commission is contingent on the success of a project: see paragraph 12 of the Agreed Facts.

45.Based on the Agreed Facts relating to the Commission, the Commission and monthly salary are similar in that both are paid monthly, are not contingent on whether leave has been taken, and is paid to the employee for each day of that month. In other words, by reason of the matters set out in the Agreed Facts, the plaintiffs have agreed the Commission is payment received for working days and notional working days.

46.The same is true for the Team Leader Bonus. The Team Leader Bonus is a fixed amount awarded to the team leader upon each successful transaction. It is paid on the 25^th day of every month and is derived from the success of the team as a whole. The payment of the Team Leader Bonus is not contingent on whether the team leader was on leave during the month or not. Though not expressly agreed between the parties, there was no issue raised by the parties that the character of the Team Leader Bonus is fundamentally different from the Commission.

47.By reason of the matters set out in the Agreed Facts, the Commission and Team Leader Bonus do not wholly fall within the definition of wages in section 2 Employment Ordinance as the payments cover not only work done by the individual plaintiffs’ themselves but includes payment for work done by their teammates. Hence for the entire Commission and Team Leader Bonus to be included in the calculation of the daily rate of Statutory Entitlements, the Commission and Team Leader Bonus must be payments that, at the very least, fall partly within the extended meaning of wages set out in the various sections relating to the Statutory Entitlements. Under the extended meaning of wages, sums paid in respect of, inter alia, a day of leave or sums paid in respect of a normal working day on which an employee is not provided with work are included in the calculation of the daily rate of Statutory Entitlements.

48.Consistent with the Agreed Facts and the extended meaning of wages, the annexed table of calculations set out in the plaintiffs’ respective witness statements show the plaintiffs have included the Commission in their calculation of daily average wages by averaging the whole sum (all wages inclusive of the Commission) over the whole wage period, which includes notional working days or days on which they were on leave. The method of calculation adopted means the Commission is treated as being attributable to both working days and notional or non-working days. If the Commission is a sum attributable to notional or non-working days by virtue of the inclusion of the Commission in the calculation, it must follow that the sum is paid by the defendant for the respective plaintiffs’ Statutory Entitlements.

49.For the plaintiffs to average all Commission payments over their whole wage period and to simultaneously argue the Commission should NOT be counted as a payment for Statutory Entitlements (and therefore should not be deducted when calculating the outstanding balance) is to give inconsistent treatment to the same Commission payments over the same wage period. In other words, the plaintiffs have accepted the Commission is attributable to every day of the wage period in so far as the calculation of the daily average wage is concerned but the same Commission payment does not cover every day of the wage period when considering deductions to be made for calculating the Statutory Entitlements.

50.Furthermore, their current method of calculation results in an inflated daily rate of Statutory Entitlements, leading to double payment on the employer’s part. This is because they have counted the Commission in the daily average wage over the whole wage period without deducting the same to account for days on which they received pay but were on leave.

51.It is evident the plaintiffs’ submissions are not supported by the Agreed Facts and the method of calculation adopted in the tables of calculation annexed to their witness statements. I therefore do not accept the plaintiffs’ submissions.

52.Having regard to the Agreed Facts and the matter set out above, I accept defence counsel’s submissions that the Commission is akin to the monthly salary and that the case of Cathay Pacific Airways Ltd is applicable in this case. I accept the Commission and the Team Leader Bonus are sums paid for every day of the month, including non-working days.

53.By virtue of the nature of the Commission and Team Leader Bonus, though not expressly stipulated by agreement, I am of the view such payments are to be taken to be payments by the employer for the plaintiffs’ Statutory Entitlements. For reasons given above, I find the Commission and the Team Leader Bonus are payments covering every day of the whole wage period, including the notional working days. In other words, the Commission and Team Leader Bonus include payments to the plaintiffs for days on which they were on leave. In such circumstances, the failure to deduct the said payments would cause double payment of the plaintiffs’ Statutory Entitlements.

54.Hence, despite the lack of any agreement or contractual term specifying whether the Commission and Team Leader Bonus are payments inclusive of the Statutory Entitlements, I am of the view the Commission and Team Leader Bonus payment fall under the limb of “any other reasons” within the Deduction Sub-Sections and should be deducted when calculating the Statutory Entitlements.

55.It has been agreed by counsel that if the court finds the Commission and Team Leader Bonus to fall within the Deduction Sub-Sections, there would be no shortfall in the plaintiffs’ Statutory Entitlements.  Consequently, by reason of having found the Commission and Team Leader Bonus to fall within the Deduction Sub-Sections, I find there is no shortfall in the plaintiffs’ Statutory Entitlements and the defendant is not liable for the sums set out in paragraph 10 of the Agreed Facts.

56.By reason of the matters set out above, I dismiss the plaintiffs’ claim against the defendant and make a costs order nisi that the plaintiffs do pay the defendant’s costs of this action to be taxed if not agreed, with certificate for counsel. Unless any party applies to vary the costs order nisi within 14 days hereof, the costs order shall become an order absolute.

57.In respect of the plaintiffs of DCCJ 1631, 1633, and 1634 of 2017, their own costs are to be taxed in accordance with Legal Aid Regulations.

Mr Erik Shum, instructed by K. B. Chau & Co, assigned by the Legal Aid Department, for the plaintiffs in DCCJ 1631/2017, DCCJ 1633/2017 and DCCJ 1634/2017

Ms Christy Wong, instructed by K. L. Chan & Co, for the plaintiff in DCCJ 1632/2017

Ms Connie Lee and Mr Vincent Chiu, instructed by Iu, Lai & Li, for the defendant in DCCJ 1631/2017, DCCJ 1632/2017, DCCJ 1633/2017 and DCCJ 1634/2017