Mak Wai Man v Richfield Realty Ltd
District Court
Civil Action Nos 1631, 1632, 1633 and 1634 of 2017
Deputy District Judge WY Ho
29–30 October 2018, 8 April 2019

Employment law — employee’s benefits — statutory entitlements — statutory entitlements to be reduced by payment of “team based” commission and team leader bonus — commission and bonus constituted sums paid “for any other reason” and inclusive of statutory entitlements — Statutory interpretation of “any other reason” — purposive interpretation — consistent with policy objective of legislation to avoid double payment of employees’ statutory entitlements by employer — Employment Ordinance (Cap. 57) ss. 35(4), 41(6), 41C(6)

Ps, the former employees of D, a property agency, brought successful claims in the Labour Tribunal for shortfalls in their statutory entitlements under ss. 35, 41 and 41C of the Employment Ordinance (Cap. 57) (“EO”). On D’s appeal, the Judge set aside the awards granted to Ps and ordered a retrial. The Labour Tribunal then transferred the remitted case to the District Court. At the retrial, the only issue was whether, having regard to the legislative intent, the statutory entitlements payable to Ps should be reduced by the “team-based” commission (“Commission”) and team leader bonus (“Bonus”) paid to them, pursuant to ss. 35(4), 41(6) and 41C(6) of the EO (“Deduction Sub-Sections”). Ps argued that the Commission and Bonus could not be viewed as payments inclusive of statutory entitlements and therefore would not fall within the Deduction Sub-Sections. D argued that since the Commission and Bonus were paid on a monthly basis, they should be taken to be payments for every day of the month and include statutory entitlements. As a result, they fell within the Deduction Sub-Sections and should be deducted from the relevant statutory entitlements.

Held, dismissing Ps’ claims against D, that:

Preliminary issue trial procedure

1) The purpose of the Deduction Sub-Sections was to express clearly that any sums paid for statutory entitlements, which would be taken into account in calculating the daily average wage for statutory entitlements, should be deducted from the statutory entitlements payable to avoid double payment by the employer. (See paras. 19–22.)

2) The general elements of the Deduction Sub-Sections were: (a) a sum of money had been paid by the employer to his employee; (b) the sum of money was paid pursuant to (i) the terms in the contract of employment, or (ii) any other agreement, or (iii) for any other reason; (c) the sum of money was paid in respect of a holiday or annual leave or sick leave; and (d) the holiday pay or sickness allowance or annual leave pay shall be reduced by the said sum of money. (See paras. 8–9.)

3) There was no express term in Ps’ employment contracts, or in any other agreement between the parties, that the Commission and Bonus were paid for statutory entitlements. Thus, the real dispute was whether the Commission and Bonus fell within the “any other reason[s]” limb of the Deduction Sub-Sections. (See paras. 10, 28.)

4) The ejusdem generis principle was not applicable in construing the meaning of the phrase “any other reason” to limit it to the genus of agreements only. This was because the first two limbs of the Deduction Sub-Sections already covered any possible form of agreement. Instead, on a purposive approach to statutory construction, the “reason[s]” had to be consistent with the policy objective of the legislation to avoid any double payment being made by the employer. As a result, “other reason[s]” included, but were not limited to, situations where a sum of money paid was taken to be paid for statutory entitlements by operation of law or otherwise (Town Planning Board v Society for the Protection of the Harbour (2004) 7 HKCFAR 1 applied). (See paras. 30–40.)

5) By virtue of the nature of the Commission and Bonus, they were to be considered payments by the employer for Ps’ statutory entitlements. They were payments covering every day of the whole wage period, including payments for days on which Ps were on leave (Cathay Pacific Airways Ltd v Kwan Siu Wa Becky (2012) 15 HKCFAR 615 applied). (See paras. 43–53.)

6) In light of the above, the Commission and Bonus payment fell under the limb of “any other reason[s]” within the Deduction Sub-Sections and were inclusive of statutory entitlements. They should therefore be deducted when calculating the statutory entitlements. The failure to deduct the payments would result in double payment of Ps’ statutory entitlements. (See paras. 53–54.)

Retrial

This was the retrial of the four plaintiffs’ claims against the employer-defendant for shortfalls in their employees’ statutory entitlements, confined to the proper interpretation of ss. 35(4), 41(6) and 41C(6) of the Employment Ordinance (Cap. 57). The facts are set out in the judgment.

Jurisdictions: 

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