Hong Kong court confirms that suspension from partial performance of duties is not the same as suspension from employment

Facts

Mr. Lengler Werner (“Mr. Werner”) was employed by Hong Kong Express Airways Limited (“HK Express”) as a pilot. He had a dispute with two colleagues as a result of which HK Express suspended Mr. Werner from his flying duties for about 6 weeks in order to carry out an internal inquiry into the incident. 

However, the inquiry did not complete on time. When Mr. Werner asked about the progress of the inquiry, HK Express told him that he would receive warning letters. Mr. Werner believed that this amounted to constructive dismissal. He tendered his resignation and commenced proceedings in the Labour Tribunal against HK Express for termination payments.The Labour Tribunal found in favor of Mr. Werner and HK Express appealed to the Court of First Instance.

Law

This case was concerned with two circumstances under which an employee would be entitled to terminate the employment contract if certain conditions were satisfied:

1. Section 11 of the Employment Ordinance – Section 11 entitles an employer to suspend an employee from employment without notice or payment in lieu for a limited period of time in circumstances where serious misconduct is involved (“Section 11 Suspension”). An employee who is placed on a Section 11 Suspension may terminate his/her contract of employment without notice or payment in lieu.

2. Constructive dismissal – This refers to the situation where an employer commits a serious breach to which the employee reasonably believes that he/she could no longer work for the employer. The employee then accepts the repudiation and treats him/herself as dismissed and the employment contract terminated, and claims compensation on this basis.

Issues

1. Did the suspension amount to a Section 11 Suspension which entitled Mr. Werner to resign?

2. Was Mr. Werner entitled to treat himself as having been constructively dismissed?

Findings

1. Did the suspension amount to a Section 11 Suspension which entitled Mr. Werner to resign?

No. 

To qualify for Section 11 Suspension, it must be a “suspension from employment”.

A suspension from employment is where the relationship between the employer and employee is temporarily put on hold such that neither party is required to perform their part of the employment contract. In such a situation, the employee would not be required to do any work and the employer would not be required to pay the employee.

However, in this case, Mr. Werner was not suspended from all his duties. He was only suspended from his flying duties. Moreover, HK Express continued to perform its part of the employment contract and paid Mr. Werner his salary and allowances during the period of suspension.

The suspension in question was therefore not a suspension from employment but only a suspension from partial performance of duties.

Since Mr. Werner was not suspended from employment, Section 11 had no application in this case. It followed that Mr. Werner was not entitled to resign pursuant to Section 11.

2. Was Mr. Werner entitled to treat himself as having been constructively dismissed?

No.

The court held that HK Express had a right to suspend Mr. Werner from partial performance of duties pursuant to the employee handbook which had contractual effect. HK Express simply exercised its right when putting Mr. Werner on suspension.

Since HK Express was entitled to suspend Mr. Werner, there was no breach of employment contract pursuant to which Mr. Werner would be entitled to treat himself as having been constructively dismissed.

It is worth noting that during the suspension there was a slight drop in Mr. Werner’s income. The court disagreed that this constituted a breach of contract by HK Express and held that the drop in income had to be considered together with whether HK Express had a right to suspend. The court also disagreed that there was a breach of contract on the part of HK Express by not keeping Mr. Werner informed about the progress of the inquiry. Hence, it remained that there was no breach by which Mr. Werner could claim constructive dismissal.

Key takeaways

1. Section 11 of the Employment Ordinance only applies to a complete suspension from employment and not to a suspension from partial performance of duties. The period of suspension should also be unpaid to avoid argument that the suspension is not a “suspension from employment”.

2. Employers who wish to rely on Section 11 to suspend an employee from employment should ensure that they meet the conditions under Section 11 and indicate that the suspension is pursuant to Section 11.

3. If the circumstances for which an employer wishes to suspend an employee falls outside Section 11, an employer could only suspend an employee if it has a contractual right to do so. When providing for a contractual right to suspend, it is recommended to refrain from describing it as “suspension” so as to make it clear that it is distinct from Section 11. It would be advisable to refer to it as “administrative leave” instead.

4. If during administrative leave, the employee is suspended from partial performance of duties, employers should clearly identify which duties are being suspended and state that except for those duties being suspended, the employee should continue to perform all other duties under the employment contract, so as to avoid dispute.

5. An employer who suspends an employee other than in accordance with Section 11 or in the absence of a contractual right to suspend may face the risk of an employee claiming constructive dismissal.

6. To minimize the risk of employees claiming constructive dismissal during an investigation, it is good practice to keep the employee informed about the progress of the investigation.

How we can help you

We would be pleased to review your employee handbook and employment contract to include or clarify the right to suspend an employee, which should cover the right to suspend from employment pursuant to Section 11 and the right to place an employee on administrative leave. We would also be pleased to review your investigation process and provide suggestions to help minimize the risk of employees claiming constructive dismissal during an investigation.

Please reach out to us if you wish to know more.

Lengler Werner v Hong Kong Express Airways Ltd [2021] HKCFI 1333 – full judgment here.