DLA Piper Hong Kong
The Labour Tribunal is a specialised court set up to provide a simple, inexpensive and informal means of resolving employment disputes in Hong Kong. The Tribunal has exclusive jurisdiction to deal with claims arising from a breach of employment contract or the failure to comply with the provisions of the Employment Ordinance or the Apprenticeship Ordinance. The Labour Tribunal does not however have jurisdiction to hear claims founded in tort, i.e. claims involving actions that are wrong such as negligence or conspiracy.
But what about "mixed claims" based on breach of contract of employment and tort?
According to the recent case of Uferahal Limited v Hansen Larry Douglas, the Labour Tribunal does not have jurisdiction to hear mixed claims.
Can employers now bypass the Labour Tribunal by bringing a mixed claim in the High Court? In this update, we consider the implication of the Court's ruling.
The Hansen Douglas Case
The Hansen Douglas case was concerned with the Company's dismissal of Mr Hansen Douglas. Following his dismissal, Mr Douglas brought a claim in the Labour Tribunal against the Company for breach of employment contract. The Company denied his claim and applied to transfer his case to the High Court. However, the case was not so transferred.
Instead of preparing for the trial in the Labour Tribunal, the Company took its case to the High Court and sued Mr Douglas for breach of employment contract, breach of fiduciary duties, negligence and for stealing confidential documents. Apart from seeking compensation for the losses caused by Mr Douglas, the Company also applied for an injunction to restrain Mr Douglas from using the Company's confidential documents.
One of the key issues in dispute was whether the Company's case should continue in the High Court. The points in contention were:
- Whether the Labour Tribunal had exclusive jurisdiction to hear the Company's claims based on both tort and contract;
- Whether the Company's claims in the High Court should be suspended because there were parallel proceedings in the Labour Tribunal.
Mr Douglas vehemently argued that the Company's case should not be heard in the High Court because it was brought by the Company merely to delay and frustrate his case in the Labour Tribunal. The Company disagreed.
The Court's Ruling
The Court noted that most of the Company's claims against Mr Douglas were mixed claims based on breach of employment contract and tort.
According to the Judgment of Madam Justice Queeny Au-Yeung, this type of mixed claim is not within the jurisdiction of the Labour Tribunal. If the claim is based only in tort or is based in both tort and contract, then the claim cannot be heard in the Tribunal.
Consequently, the Company's case in the High Court was permitted to continue.
Take Away Points
In Hong Kong, it is not uncommon for employers to apply to transfer cases from the Labour Tribunal to a higher court. An attempt to transfer a case out of the Labour Tribunal would likely be unsuccessful if it is resisted by the employee.
Can employers now bypass the Labour Tribunal by bringing a mixed claim in the High Court? The short answer is "maybe".
If the Company has basis to pursue a mixed claim (such as a claim for breach of confidence, breach of duties, negligence or conspiracy), this would take the case outside the exclusive jurisdiction of the Labour Tribunal.
However, if the attempt to pursue a mixed claim in the High Court is a window dressing exercise in that the claim is not supported by facts, then such a claim will likely be struck out by the Court as an abuse of its process. Any unsuccessful attempt to "hijack" a Labour Tribunal case will have costs consequences that follow. It's dollars to donuts that this will be costly.