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Introduction: When Employment Relationships Break Down
Employment disputes are an unavoidable reality of business life. When an employment relationship ends acutely — through summary dismissal, redundancy, or resignation — there is often a dispute about what the employee is owed and whether the termination was lawful.
In Hong Kong, the primary forum for resolving employment disputes is the Labour Tribunal. The Tribunal was established specifically to provide a fast, informal, and low-cost mechanism for resolving monetary employment claims without the need for lawyers (though legal representation is permitted in some circumstances).
What Claims Can the Labour Tribunal Hear?
The Labour Tribunal has jurisdiction to hear claims arising from employment contracts, including:
- Claims for wages in arrears, including outstanding salary, overtime, and commissions
- Claims for payment in lieu of notice
- End of year payment and double pay claims
- Annual leave pay and statutory holidays pay
- Severance payment claims (under the Employment Ordinance)
- Long service payment claims
- Claims arising from the termination of employment
- Breach of employment contract claims (subject to a monetary cap)
The Tribunal can hear claims up to HK$500,000. Claims above this threshold must be brought in the District Court or High Court.
Who Can Bring a Claim?
Both employees and employers can bring claims in the Labour Tribunal. An employee who believes they have been wrongfully dismissed or underpaid can file a claim; equally, an employer can counterclaim against a former employee (for example, for breach of restrictive covenants, misappropriation of company property, or failure to give adequate notice).
The Claims Process
Filing a Claim
A claimant files a Labour Tribunal Claim Form (Form LT1) at the Labour Tribunal, which is located in the Wanchai Law Courts Building. There is a nominal filing fee. The form requires the claimant to set out: the parties’ details, the employment dates, the grounds of the claim, and the amount claimed.
Conciliation
After filing, the case is referred to the Labour Relations Division of the Labour Department for conciliation. A conciliation officer meets with both parties and tries to facilitate a settlement. Conciliation is voluntary — either party can decline to settle — but a significant proportion of Labour Tribunal cases settle at this stage. Settlement agreements reached in conciliation are binding and can be registered in the Tribunal for enforcement purposes.
Pre-trial Review
If conciliation fails, the case proceeds to a pre-trial review before a Labour Tribunal Presiding Officer. The pre-trial review is a preliminary hearing to: identify the issues in dispute, make directions for the exchange of documents and witness statements, and explore the possibility of further settlement. Parties are expected to have a clear understanding of their claims and defences at this stage.
Hearing
If the case is not resolved at pre-trial review, it proceeds to a full hearing. The hearing is conducted by a Presiding Officer (not a jury). Both parties present evidence and submissions. The Presiding Officer takes an inquisitorial rather than purely adversarial approach — actively questioning witnesses and guiding unrepresented parties through the process.
The standard of proof is the civil standard (balance of probabilities). The Presiding Officer’s award is legally binding.
Appeals
An appeal from a Labour Tribunal award lies to the Court of First Instance on a question of law only. Leave to appeal is required. Appeals on questions of fact are not permitted — the Tribunal’s factual findings are final.
Legal Representation
Parties in the Labour Tribunal are generally expected to represent themselves. Legal representation by a solicitor or barrister is only permitted with the leave of the Presiding Officer, which is granted in cases of unusual complexity or where serious questions of law arise. In practice, many claimants represent themselves, while some employers instruct HR representatives or, in complex cases, legal counsel with leave.
Enforcement of Awards
A Labour Tribunal award is enforceable as a judgment of the court. If the losing party fails to pay the award, the winning party can apply for enforcement mechanisms including: a garnishee order (attaching funds in the debtor’s bank account), a charging order (over property), a writ of execution (against goods), or examination of the judgment debtor’s financial position.
The Employment Ordinance: Key Rights
The Employment Ordinance (Cap. 57) is the primary legislation governing employment rights in Hong Kong. Key rights protected by the Ordinance include:
Notice Requirements
Either party may terminate a continuous contract (a contract where the employee works at least 18 hours per week for 4 continuous weeks) by giving notice as specified in the contract, or (if no notice period is specified) not less than one month’s notice. Summary dismissal — without notice — is only lawful if the employee has committed gross misconduct.
Severance Payment
An employee who has been continuously employed for at least 24 months and is dismissed by reason of redundancy (or whose fixed-term contract is not renewed due to redundancy) is entitled to a severance payment. The formula is: 2/3 of last full month’s wages (capped at HK$22,500 per month) x reckonable years of service (capped at 26 years). MPF accrued benefits attributable to employer contributions can be offset against the severance payment.
Long Service Payment
An employee with 5 or more years of continuous service who is dismissed (otherwise than for serious misconduct) or who resigns in specified circumstances (e.g., due to ill health) is entitled to a long service payment, calculated on the same formula as severance payment.
Annual Leave
Employees on continuous contracts accrue paid annual leave, starting at 7 days per year for the first 2 years and increasing progressively to a maximum of 14 days per year after 9 years of service.
Statutory Holidays
All employees (not just those on continuous contracts) are entitled to 13 statutory holidays per year. Employees on continuous contracts are also entitled to general holidays (17 per year), subject to the contract terms.
Sickness Allowance
Employees on continuous contracts who have accumulated sufficient sick leave days (at a rate of 2 paid sickness days per month for the first year and 4 days per month thereafter, up to a maximum of 120 days) are entitled to sickness allowance at 80% of their average daily wages during a period of sick leave.
Maternity and Paternity Leave
Female employees on continuous contracts are entitled to 14 weeks’ paid maternity leave (at 80% of average daily wages). Male employees are entitled to 5 days’ paid paternity leave.
Wrongful Dismissal and Remedies
A dismissal is wrongful if it is in breach of the employment contract — most commonly because the employer failed to give the required notice or payment in lieu. An employee who is wrongfully dismissed can claim damages in the Labour Tribunal (or the courts) for the loss suffered as a result of the breach, typically the wages they would have earned during the notice period.
Hong Kong law does not provide a general right to reinstatement or to claim “unfair dismissal” damages beyond the contractual notice period (unlike UK employment law). However, the Employment Ordinance prohibits dismissal for specific reasons — including dismissal of a pregnant employee, dismissal of an employee who has given evidence in proceedings, and dismissal in retaliation for exercising statutory rights — and provides for additional compensation in such cases.
Practical Tips for Employers
- Maintain clear records: Keep accurate records of attendance, wages, and disciplinary actions. Labour Tribunal hearings turn on the facts, and documentary evidence is critical.
- Follow procedures before summary dismissal: Even for genuine misconduct, conducting a fair investigation and giving the employee an opportunity to respond before dismissing summarily reduces the risk of a successful Labour Tribunal claim.
- Calculate termination payments carefully: Errors in calculating severance pay, long service pay, or outstanding leave entitlements are a common source of Labour Tribunal claims.
- Use conciliation: A reasonable settlement at conciliation is often better than a contested hearing, both for cost and relationship management reasons.
Conclusion
The Labour Tribunal provides an accessible forum for resolving employment disputes in Hong Kong. Both employers and employees should understand the Tribunal’s procedures, the rights protected by the Employment Ordinance, and the importance of conciliation as a first step in resolving disputes.
Alan Wong LLP advises employers on employment law compliance, termination procedures, and Labour Tribunal disputes in Hong Kong. Contact us for a consultation.
