KAO LEE & YIP (a firm) v. LAU WING and TSUI WAI YU CACV 121/2006

S’s words:-

If the case authority of Yip Wan-chiu v Magnificent Industrial Ltd [1974] HKLR 183 is to be relied on, my personal view, a different (but rather unreasonable) decision may be given.

However, an employee should be entitled to give notice or by “agreeing” (i.e. undertaking or promising) to pay wages in lieu of notice (under s.7).

---

Date of Judgment : 4 July 2007

The facts:-

“The plaintiff is an established and well-known firm of solicitors in Hong Kong. The defendants are two young, recently qualified solicitors who were in the plaintiff’s employ as assistant solicitors. At the material time they had approximately one and two years’ post-qualification experience. ... In August 2005 the defendants purported to terminate their employment with the plaintiff. Contractually, they were required to give three months’ notice. They relied on sections 6 and 7 of Cap. 57, the Employment Ordinance to, in fact, terminate their employment in the following way. On 19 August 2005 they gave three months’ notice in writing but stated that they would only work for one month, until 19 September 2005, and pay to the plaintiff two months’ wages in lieu of the remaining two months’ notice. The plaintiff did not accept their notice of termination and refused to accept the cheques purporting to represent the two months’ wages”

Relating to D2

As [the Judge understood] the law the position now is that contrary to the obiter dictum of the majority in Yip Wan-chiu and in any event after the passing of s.8A, a contract of employment may be lawfully terminated by either party by giving notice (under s.6) or by “agreeing” (i.e. undertaking or promising) to pay wages in lieu of notice (under s.7). If the terminating party having agreed to pay wages in lieu fails to do so, the cause of action would be for breach of that agreement. But if a party terminates a contract of employment without either giving notice or agreeing to pay wages in lieu, that would be an unlawful termination and the innocent party’s cause of action would be for damages for wrongful termination, which is set by the legislature under s.8A at the notice period’s wages.

Relating to D1

However [the Judge did] not see any substance in the Plaintiff’s argument in any event. It is clear that s.6(2A) is for the protection of the employee only. First, what are the parties’ positions when an employee is enjoying statutory annual leave? The employee gets the benefit of being on leave and at the same time being paid his salary. The employer derives no benefit. He has to get someone else to do the holidaying employee’s work and he has to pay the holidaying employee during that period.

So analysed, [the Judge thought] it is clear that it was for the employee’s benefit that s.6(2A) was enacted, so it would not apply when it is the employee who gives notice, or if it does apply, the employee can waive the exclusion of the leave