Read the full judgment text of HCLA 000035/1991 on BabelCite. This HCLA judgment was delivered on 10 October 1992 before Deputy Judge J. Chan.
Employment law – constructive dismissal – lay-off – severance payment – frustration – affirmation – waiver – statutory interpretation – Labour Tribunal appeal – piece-rated knitting workers in hand-operated machine section of knitting factory – workers laid off before and after a fire on 9 September 1990 – workers recalled on 24 September and assigned only to a low-paid order at $9-$9.90 per garment compared to prior $16 and subcontractor rate of $13 – workers ceased work on 8 October after pay day and claimed severance payment under s.31N – Presiding Officer found constructive dismissal and awarded damages for loss of wages and severance payments based on both redundancy and lay-off – whether the fire frustrated the employment contracts so as to defeat the claims – held, no: applying Davis Contractors Ltd v. Fareham Urban District Council and Morgan v. Manser the fire did not strike at the root of the contracts, and the Defendant's own witnesses showed it never regarded itself as discharged but only as suspending the contracts – plea of frustration not open on the Defendant's case at trial – whether the Claimants affirmed the contracts by resuming work from 24 September to 6 October – held, no: following Western Excavating (ECC) Ltd v. Sharp, W.E. Cox Toner Ltd v. Crook, Bashir v. Brillo Manufacturing Co. and Peyman v. Lanjani, affirmation requires knowledge of legal rights and an unequivocal demonstration of intent to proceed; the Claimants resumed work on union advice unaware of their rights, were working under protest at drastically reduced piece-rates, and only fully appreciated the financial impact on 8 October – mere continuance of work cannot amount to waiver or estoppel of a statutory right under s.31E – whether severance payment under s.31B(1)(b) for lay-off requires prior termination of the employment contract – held, no: in the absence of an express provision equivalent to s.6 of the Redundancy Payments Act 1965 / s.88 of the Employment Protection (Consolidation) Act 1978, the Hong Kong scheme does not require termination of the contract as a prerequisite for a lay-off-based claim – whether s.31L(1)(b) treats termination by frustration as dismissal by the employer – held, yes: any event operating to terminate the contract by operation of law is treated as a termination by the employer for Part VA purposes, and if the employee is not re-engaged immediately on the ending of the previous contract, he is taken to be dismissed by reason of redundancy under s.31L(2) read with s.31D(2) and s.31B(2)(c) – appeal dismissed with costs – Presiding Officer's award upheld.
Legal issues: Whether the fire frustrated the employment contracts so as to defeat the Claimants' claims for constructive dismissal and severance payment · Whether the Claimants affirmed, waived, or were estopped from claiming constructive dismissal and severance payment by resuming work from 24 September to 6 October 1990 · Whether a claim for severance payment based on a lay-off under s.31B(1)(b) requires prior termination of the employment contract · Whether s.31L(1)(b) treats termination of employment by frustration as a dismissal by the employer for the purpose of severance payment
Outcome: Appeal dismissed in its entirety with costs; the Presiding Officer's award of damages for loss of wages and breach of contract, and severance payments based on both redundancy and lay-off, upheld.
Cited by 1 case