The Costs

One of the biggest challenges for most employers is dealing with staff. Happy and contented employees are easy to handle, but when things go wrong, on an individual or even a collective basis, it can create serious issues for an organisation.

 
Receiving a legal claim by an existing or former employee indicates there has been a serious breakdown in the employment relationship. The time and energy required to handle such a claim is often underestimated. This is not just an issue of direct financial costs, including legal fees. The impact of having other employees (often management) focused on the legal complaint rather than being engaged in their day-to-day business can be difficult to calculate. 

The publicity that surrounds any litigation is also a cause for concern for many companies. The idea of washing dirty linen in public and allowing the internal workings of the organisation to be publicly scrutinised is not always an attractive proposition. 

The Procedure

Hong Kong has a relatively harmonious industrial-relations environment, with a very low number of employment law claims. There are around 4,000 claims handled by the Labour Tribunal every year and the number of complaints brought to the Equal Opportunities Commission (which offers a conciliation service for discrimination claims) is around 700 each year. 

It is interesting to speculate about these low levels of litigation. Of course, in an environment where jobs are easy to find, employees may well decide to simply move on to a new employer if they feel disgruntled about issues at the workplace, rather than go through any formal legal process. In addition, in a relatively small market, many employees do not want future employers to be put off by their having brought a claim against a previous employer. When times are economically tough and new roles harder to find, employees may take a different stance. 

In the event of an employee deciding to bring a dispute, during or after his or her employment, the most likely forum will be the Labour Tribunal. All monetary-based claims over HK$8,000 alleging a breach of employment contract or non-compliance with the Employment Ordinance must commence in the tribunal, regardless of the sum being claimed. This can be surprising for many overseas organisations, as the Labour Tribunal is a very informal forum and may appear an inappropriate legal avenue for large and complex claims. 

Legal representation is not allowed, so representation has to be handled by someone from the employing company. There are no strict rules of evidence. 

The pressure on parties to settle the matter during the process may leave those involved feeling it is more about “banging heads together” rather than engaging in a sophisticated legal process. However, the informality and speed of the tribunal process means the forum is in many respects a very effective one, with cases being handled quickly and at a relatively low cost.

When the tribunal comes to a decision considered unsatisfactory by either party, the ability to challenge it is limited, with an error of law being the only real basis for appeal. Therefore the tribunal outcome will invariably be the final decision in the matter. 

The Action Required

There are some things you should do if you are unfortunate enough to have an employment claim hit your desk. First, don’t ignore it and hope it will go away. If you are going to resolve the issue, the sooner it is handled the better, and strict time limits will apply.

Second, decide who is going to take the lead from the company’s perspective. The individual chosen will need to know enough about the situation, but should also be able to put the company’s position as strongly as possible. 

If you decide to settle the claim, make sure the terms of the settlement are broad enough to ensure it really is the end of the entire matter, with no possibility of further claims being brought. 

Remember the case may be transferred to the Court of First Instance or District Court, depending on the amount being contested. In such a situation, much more complex and developed legal rules will apply, along with the availability of formal legal representation. You need to make sure that no steps taken will have a negative impact later.

Many cases are lost because of emails and other documents that are created without thinking about their content and impact. Ensure your staff understand the implications of their communications in future. 

The information contained in this article should not be relied on as legal advice and should not be regarded as a substitute for detailed advice in individual cases. If advice concerning individual problems or other expert assistance is required, the service of a competent professional adviser should be sought. 

Pattie Walsh is a partner and head of DLA Piper’s Asia-Pacific employment practice. She writes extensively for legal and HR publications, with a particular focus on multi-jurisdictional employment work.
DLA Piper is a global law firm with 4,200 lawyers located in more than 30 countries throughout the Americas, Asia, Europe and the Middle East.