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Compulsory reinstatement and re-engagement is on the horizon

  • Hong Kong
  • Employment law - HR E-Brief


On 12 February 2016, the Government gazetted the Employment (Amendment) Bill 2016 (the “Bill”). The Bill will be introduced into the Legislative Council for first and second readings on 2 March 2016 but it is not clear when it may come into force.

The Bill aims to empower the Labour Tribunal to make an order for reinstatement or re-engagement if it is requested by an employee who has been dismissed unreasonably and unlawfully. This means an employee who has been dismissed without a valid reason and in circumstances which are prohibited under the Employment Ordinance (for example those on maternity leave or paid sickness leave).

Previously, such an order could only be made with both the employer’s and employee’s consent, which meant that in practice the order was never made. If enacted, reinstatement or re-engagement could be ordered by the Labour Tribunal where the employee agrees and where the Tribunal considers it appropriate and practicable, notwithstanding that the employer has not consented.

The proposed amendments would not impact dismissals which are unreasonable but not unlawful. In those cases, consent of both parties will still be required.

When considering the practicality of an order, the Labour Tribunal will take into account various factors including the circumstances of the dismissal and the relationship between employer and employee. Each party will be given an opportunity to put forward their respective case as to whether an order should or should not be made.

There are also new sanctions included within the Bill which would punish an employer for failing to comply with a an order for reinstatement or re-engagement. The proposed penalty (to be paid to the employee) is three times the employee's average monthly wage, subject to a maximum of HK$50,000. This is on top of the monetary remedies payable to the employee as ordered by the tribunal as provided in the Employment Ordinance. An employer who wilfully and without reasonable excuse fails to pay the penalty would also be guilty of a criminal offence, giving the new provisions some teeth.

In practice, these proposals are unlikely to be game-changers but they could have an important impact. Hong Kong is an employer-friendly jurisdiction, but most employers try to avoid dismissing unlawfully; this carries significant financial penalties and potential criminal liability. That said, the proposed HK$50,000 penalty (about US$6,400/ €5,800 /£4,500) is relatively low and employers may prefer to offer this to employees directly to avoid the hassle and cost of having to produce evidence as to the impracticability of an order for reinstatement or re-engagement. Savvy employees may, however, be aware that the savings to the employer (in terms of both time and money) is greater than the amount of the fine and press for a higher settlement.