Employment Law Worldview Webinar Featured Country: Hong Kong. Presented by Nicholas Chan 28 October 2015

Transcription

1 Employment Law Worldview Webinar Featured Country: Hong Kong Presented by Nicholas Chan 28 October 2015

2 Today s Presenter Nick Chan Partner T E Nick.Chan@SquirePB.com 2

3 Outline 1. Hong Kong s legal system under One Country Two Systems following Hong Kong s return to China s sovereignty in Expansion of anti-discrimination/harassment laws 3. Introduction of non-sector specific competition/anti-trust laws and the impact on HR practitioners 4. Increase in the minimum wage 5. Paternity leave 6. Protection of personal data and the legislation governing the transfer of personal data outside Hong Kong, in particular the exemptions available for transfers to overseas group companies 7. Dual employment for senior executives sent to mainland China 8. Rights of third parties in employment-related contracts 9. Amendments to the Mandatory Provident Fund scheme 10.Recent cases, updates and trends 3

4 1. Hong Kong s legal system under One Country Two Systems following Hong Kong s return to China s sovereignty in 1997 One Country Two Systems? Common law city in an otherwise Civil Law system country Hong Kong s independent judiciary and rule of law has long been a bedrock of success for the territory. Articles 2 and 19 of the Basic Law stipulate that Hong Kong shall be vested with independent judicial power, including that of final adjudication. It has not been done before, and some other jurisdictions are considering to use it as model. Guaranteed for 50 years? 4

5 2. Expansion of anti-discrimination / harassment laws 1. Sex Discrimination Ordinance (Cap. 480) ( SDO ) Pursuant to the amendment to the SDO which came into force on 12 December 2014, employees in frontline roles receive enhanced protection in two main aspects 5

6 Expansion of anti-discrimination / harassment legislation 2. Discrimination Law Review ( DLR ) Expanding beyond 4 Discrimination Ordinances in HK: the Sex Discrimination Ordinance ( SDO ), the Disability Discrimination Ordinance ( DDO ), the Family Status Discrimination Ordinance ( FSDO ) and the Race Discrimination Ordinance ( RDO ). The EOC has invited opinion on, among other things, the following issues: Whether to legislate to protect against prejudice based on immigration and residency status, in the light of an anti-mainlander protest in February that was both applauded and condemned locally. Whether to widen the definition of marital status to include de facto relationships, known as civil unions or common-law partnerships in some countries. Whether the four existing anti-discrimination ordinances should be combined into a single modernized Discrimination Ordinance. Whether the law should provide protection from sexual harassment in common workplaces. 6

7 3. Introduction of non-sector specific competition/anti-trust laws and the impact on HR practitioners The Competition Ordinance (Cap. 619) ( CO ) has been a long time coming to Hong Kong (a possible competition law was mooted as early as 1997). It is finally expected to come into full effect on 14 December Consistent with international practice, the CO sets out three types of substantive rules prohibiting anti-competitive conduct: i. "first conduct rule" ii. iii. "second conduct rule" "merger rule" 7

8 The introduction of non-sector specific competition/anti-trust laws and the impact on HR practitioners HR NOT To Do: PRICE FIXING / WAGE FIXING HR NOT To Do: SHARING OF INFORMATION ON WAGES AND BONUSES HR NOT To Do: NON-SOLICITATION AGREEMENT BETWEEN COMPETITORS 8

9 4. Increase in the minimum wage The Minimum Wage Ordinance (Cap. 608) came into force in Hong Kong on 1 May The revised Statutory Minimum Wage rate of HK$32.5 per hour equivalent to US$4.2 per hour (adjusted from the original level of HK$30 per hour) came into force on 1 May

10 5. Paternity leave PATERNITY LEAVE EFFECTIVE SINCE 27 FEB 2015 Duration Pay rate Eligibility criteria Entitlement to paternity leave Entitlement to paid paternity leave Timing of leave 3 days 80% of average daily wage in the 12 months prior to paternity leave (i) No marriage requirement imposed (ii) No restrictions on birthplace of the new born child Employee must: o be the child s father o be employed under a continuous contract immediately before the first day of paternity leave; and o comply with all notification requirements. Employee must: o be employed under a continuous contract for 40 weeks or more immediately before commencement of paternity leave; and o comply with all notification requirements. Any time during the period from 4 weeks before the expected date of birth to 10 weeks after the actual date of birth. Note: All 3 days of paternity leave may be taken at once or on 3 separate occasions 10

11 6. Protection of personal data and the legislation governing the transfer of personal data outside Hong Kong, in particular the exemptions available for transfers to overseas group companies The Personal Data (Privacy) Ordinance (Cap. 486) ( PDPO ) came into force on 1 August However, section 33 of the PDPO relating to the transborder transfer of personal data has never been implemented. Section 33 of the PDPO deals with the transfer of personal data, and prohibits the transfer of personal data to a place outside of Hong Kong except in specified circumstances, such as when: i. the data protection laws of the foreign country are similar to the PDPO; or ii. the data subject has consented in writing to the transfer. Employers are recommended to get consent from employees to their personal data being transferred outside of Hong Kong in advance of the implementation date. This can be built into employment contracts for new staff while current employees can be asked to sign consent forms. 11

12 7. Dual employment for senior executives sent to Mainland China There are basically 3 contract options to transfer foreign employees to work in China: i. Secondment: ii. iii. Dual contract Direct PRC employment 12

13 Dual employment for senior executives sent to Mainland China Key issues Employment dispute claims: if the employee is considered as an employee of the PRC subsidiary, he/she may be able to bring a claim against the PRC subsidiary, and/or claim protection under the PRC labour law. Social insurance and benefits: PRC companies are required to enroll all employees in the PRC social insurance regime. Actual implementation of this requirement varies by locality. Permanent establishment ( PE ): a foreign enterprise seconding employees to work in China may be considered to be providing services in China and may be subject to business tax and enterprise income tax. Enterprise income tax deduction: if the foreign company pays the remuneration expenses for the employee, and gets reimbursed by the PRC affiliate, then the PRC affiliate may claim enterprise income tax deduction. Individual income tax: the employee s tax liability will depend on the length of her/his stay in China. The PRC affiliate has the obligation to withhold tax. 13

14 8. Rights of third parties in employmentrelated contracts Contracts (Rights of Third Parties) Ordinance (Cap. 623) ( C(RTP)O ) C(RTP)O was passed in December 2014 and is expected to become effective later this year or early next year. C(RTP)O reforms the long established rule - privity of contract - and provides a mechanism for parties to a contract to expressly agree in the contract that non-contracting parties will have rights under it. It is also possible in some circumstances for third parties to enforce terms of a contract, even where there is no express statement by the contracting parties giving them any rights. No retrospective effect. Application to and claims by third parties? 14

15 9. Amendments to the Mandatory Provident Fund Schemes Ordinance ( MPFSO ) 1. Amendments The Legislative Council passed certain changes to the MPFSO on 30 January Key amendments to the MPFSO include: i. allowing withdrawal of accrued benefits due to terminal illness such that an employee may withdraw the full amount of his or her MPF benefits if he or she is diagnosed with a terminal illness, which means an illness that is likely to reduce the life expectancy of the employee to 12 months or less. ii. iii. allowing the withdrawal of accrued benefits by instalments upon a scheme member s retirement or early retirement ( phased withdrawal ) currently benefits have had to be paid in a single lump sum; reducing the compliance burden on trustees and employers by simplifying operational processes and communication; 15

16 Amendments to the Mandatory Provident Fund Schemes Ordinance ( MPFSO ) iv. requiring a trustee to process, free-of-charge, at least 12 withdrawal requests made by each scheme member per year on the ground of retirement or early retirement; v. extending the time limit to institute criminal proceedings under the MPFSO and the Mandatory Provident Fund Schemes (Exemption) Regulation (Cap. 485B) from six months to three years from the time when the matter arose; and vi. permitting the disclosure of certain information under certain conditions, which covers Foreign Account Tax Compliance Act compliance. 16

17 Amendments to the Mandatory Provident Fund Schemes Ordinance ( MPFSO ) 2. Abolishing the Off-setting Mechanism The mechanism allows employers to use their portion of contributions to the MPF to offset the severance or long-service payment due to an employee. The offset was put in place as a condition for the business lawmakers to support the introduction of the MPF in The MPF is meant for retirement protection of the 2.4 million employees covered by the scheme. The offset system has caused employees to receive less, undermining the purpose of setting up the MPF. Employers are forcefully lobbying against abolishing the off-setting mechanism which has saved companies for more than HK$20 billion in the past 13 years. 17

18 10. Recent cases, updates and trends Sunny Tadjudin v. Bank of America, National Association, CFI, HCA322/2008 Background P was employed at Vice President level in the Distress Debt Trading Group of Bank of America, National Association in P's employment contract provided that she was eligible for a bonus under the Bank s performance incentive programme, subject to her being employed by the Bank at the time of payment. P was a profitable member of her team but started to experience difficulties after the new Head of Desk came on board. Clashes between them intensified, and it was alleged that P behaved unprofessionally and was often confrontational and paranoid. In 2007, P was issued with a written notice to terminate her employment and was given one month s salary in lieu of notice. P received no payment, pro rated or otherwise, in respect of her bonus for 2007 given that she was not employed at the time of payment. 18

19 Recent cases, updates and trends Sunny Tadjudin v. Bank of America, National Association, [2014] CFI, HCA322 The Claims P brought claims in the High Court for the following: 1.Damages for wrongful termination of employment by the Bank with the intention of depriving her of the performance bonus for 2007; and 2.Damages for perverse, irrational and mala fide (bad faith) evaluations for her performance bonuses for 2005, 2006 and 2007 P also issued proceedings in the District Court for sex discrimination under the Sex Discrimination Ordinance. 19

20 Recent cases, updates and trends Sunny Tadjudin v. Bank of America, National Association, CFI, HCA322/2008 Held There was an implied duty of anti-avoidance of which the Bank was in breach when it dismissed P in order to avoid paying her 2007 bonus. There was no evidence that P received perverse, irrational and mala fide (bad faith) evaluations for her performance bonuses for 2005 and 2006, therefore these elements of her claim failed. P was awarded HK$3,900,000 (US$500,000) as damages for the loss of her 2007 bonus and the Bank was ordered to pay 85% of P s legal costs. 20

21 Recent cases, updates and trends Sunny Tadjudin v. Bank of America, National Association, CFI, HCA322/2008 Points to take away An implied term of anti-avoidance exists at common law and may be implied into a contract of employment. The decision has the effect of preventing employers from engaging in conduct designed to evade the operation of an express term in the contract, which would otherwise confer a certain or conditional benefit on the employee. Employers should consider objectively whether there is sufficient evidence to demonstrate a genuine and fair reason for dismissing an employee who is accruing or has accrued a benefit which will be lost as a result of the termination. 21

22 What is Global Edge? Global Edge is a subscription based international labour law portal: 30 countries on launch (40 by end 2016) Over 20 areas of employment law Facility to create multijurisdictional bespoke reports Updated quarterly News and On the Horizon (i.e. what s in the pipeline) features iphone, ipad, Android compatible Is Global Edge for you? Essential research tool for multinational organisations Ideal for general and in-house counsel and global/regional HR professionals A one-stop shop that will save you time and allow you to save on legal costs Contact Us: Fraser Younson T E fraser.younson@squirepb.com Olivia Mardon T E olivia.mardon@squirepb.com

23 Contact Nick Chan Partner T E Nick.Chan@SquirePB.com 29th Floor, Edinburgh Tower The Landmark 15 Queen s Road Central, Central Hong Kong 23

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25 Disclaimer The information contained in this presentation is for general information purposes only and should not be construed as giving the ground for any action or omission in connection with the above material. This presentation should not be construed as professional advice on legal or any other matters. The examples given in this presentation are described with a level of detail that does not provide for their implementation without additional comprehensive review with due regard to specific relevant facts and circumstances. The application of laws and statutes may vary depending on particular circumstances. Squire Patton Boggs does not assume liability for any damage that may be caused to anyone as a result of any action (or omission) on the basis of the information contained herein. 25