The avoidance of statutory benefits to employees by Hong Kong employers

Abstract

In 2006, Hong Kong's Court of Appeal had to decide whether it was lawful for an employer to deliberately adopt a strategy to avoid having to make a statutory payment to an employee. The employer's liability to make that payment was contingent on the employee completing a prescribed period of continuous service. The employer engaged the employee under successive, non-continuous contracts of employment, each for a shorter duration than the prescribed period to prevent his liability for the payment from crystallising. The Court of Appeal held that there was nothing unlawful in an employer arranging his affairs so as to prevent his liability for the payment from even arising. This article analyses the case concerned and expounds how the foregoing decision could see employers avoiding a whole range of employee rights and benefits under the Employment Ordinance. The article views such conduct as negating the legislative intention and as being contrary to the norms of justice. To rectify the situation as it currently stands, we propose an amendment to the Employment Ordinance to prohibit such avoidance.