Typhoon trading: Hong Kong Stock Exchange scraps seven-decade practice of suspending stock market trading during typhoons and extreme weather conditions – what this means for financial services employers

Background

Historically the Hong Kong stock market cancels the morning trading session if Typhoon No. 8 signal (“T8”) or above, a black rainstorm warning, or extreme weather conditions are in force before the market opens at 9am. If the market has already opened, trading will be suspended after one of these warnings has been issued. If a T8 or higher signal, a black rainstorm warning or any announcement of extreme conditions remains in force at noon, all trading sessions will be cancelled for the day.

Hong Kong experiences typhoons and rainstorms frequently between June to October but it is not uncommon for typhons to affect Hong Kong in May and November. The new arrangement allows investors to trade Hong Kong stocks and derivatives, or trade A-shares (through Shanghai and Shenzhen Stock Connect) during severe weather conditions. According to HKEX data, typhoons and severe rainstorms have caused the stock market to shut down eleven times since 2018.

The HKEX, the Hong Kong Monetary Authority and the Securities and Futures Commission have reminded banks and brokerage firms to ensure that their online training systems and digital banking services are ready to support staff working from home during extreme weather. To ensure safety, remoting working (i.e. working from home) and online services will be implemented on a SWT day. 

Legal Implications 

In the post Covid-19 era, employers in Hong Kong are no longer strangers to work from home arrangements. However, if during a SWT day, limited members of staff are required to work in the office, appropriate insurance and transportation arrangements need to be arranged. Employers should bear in mind their broad duty to take reasonable care of their employees whilst at work, a duty which cannot be delegated to others as it is owed to each employee individually. 

According to the Employees' Compensation Ordinance (ECO), if an employee sustains an injury as a result of an accident arising out of and in the course of employment, the employer is liable to pay compensation under the ECO. The ECO specifically provides that when a T8 or higher signal, or a red or black rainstorm warning signal is in force, if an employee is injured as a result of an accident: 

• while travelling from his/her place of residence to his/her place of work by a direct route within a period of 4 hours before the time of commencement of work; or
• from his/her place of work to his/her place of residence within a period of 4 hours after the end of his/her work hours, 

The accident shall be deemed to arise out of and in the course of employment.  Brokerage firms and banks therefore need to bear in mind the risks of having employees working during severe weather and should update their employee handbooks and prepare a SWT work policy accordingly.

Having employees in the office for SWT  

Most banks and brokerages have taken steps to ensure that all employees can work remotely, if the need arises. However, for those which still need to have people in the office, employers should ensure that the following points are considered: 

Below are some tips for banks and brokerage firms to consider when requiring essential staff to work in the office for SWT:

1. In deciding whether an employee should stay or return to the office, make realistic and critical assessments and only request those employees who are absolutely essential to stay/return to the office; 

2. Give consideration to the different situations faced by individual employees, such as their place of residence, their family situation, and the road and traffic conditions in the vicinity;

3. To consult and engage employees when drawing up the arrangements and make appropriate updates or amendments based on the experience of each occasion;

4. Agree with the staff who will attend the office in advance on the duty arrangements and contingency measures, which may include:

i. ensuring the workplace has an adequate amount of food and water for the employee’s consumption

ii. Employees living on outlying islands not being required to return to the office 

iii. Being flexible and monitoring real-time weather conditions. 

5. Where public transport services are limited or suspended due to extreme weather conditions, employers should provide safe transport services for employees travelling to and from their workplace. Taxis often charge multiples of the metered fare or charge a flat fee which is several times higher than the usual fare when a T8 or higher is raised. Employers need to be clear whether they are willing to reimburse staff for such excessive fares if this is the only way in which the employee can travel to the office. 

6. For employees who are unable to arrive at their workplace on time, employers should not deduct their wages, good attendance bonuses or allowances, nor reduce employees' entitlement to annual leave, statutory holidays or rest days under the Employment Ordinance.

Commentary  

Whilst it is expected that the vast majority of employees of banks and brokerage firms will not be required to go into the office to work on a SWT day, employers should still be realistic in terms of the output expected from employees working from home during a typhoon or in extreme weather conditions. Employers should be understanding where employees have young children who need to be looked after and entertained whilst schools are closed and not assume that all employees have help so that they can work productively like they do from the office. 

As home is also now the workplace, employees should ensure that it remains a safe working environment from a health and safety perspective. Leaking walls and windows should take priority over work so as not to compromise an employee’s safety. Where an employee is injured whilst working from home in the course of employment, they are entitled to compensation under the Employees’ Compensation Ordinance in the same way they would be if they were injured at the office.