Originally published February 2010

John Simpson Warham And Ors v Cathay Pacific Airways Ltd. ("Cathay")

On 11 November 2009, the High Court in Hong Kong awarded damages to 18 of 49 pilots (known as the "49ers") who were dismissed en masse in 2001 without cause (upon payment of three months' wages in lieu of notice). Prior to their termination, the 49ers had been high profile participants in union activities which had arisen out of dissatisfaction amongst pilots, that senior management had been operating Cathay with insufficient staff and abusing pilots' goodwill in order to do so (i.e. by relying on the fact that pilots would agree to work extra shifts or work on rostered leave days). The union activities included a "contract compliance campaign", whereby pilots were encouraged to follow the requirements of their employment contracts strictly and not undertake extra duties. This led to pilots not being contactable by Cathay on their days off and declining requests for them to work on leave days. Another union initiative was the "maximum safety strategy", a strict "work-to rule" strategy which required pilots to adhere to the letter of flight action manuals, causing anticipated flight delays of 15-60 minutes.

Cathay was held to be liable for the following:

  1. Unfair dismissal: Reyes J held that the predominant reason for Cathay dismissing the 49ers was for that they had been members of the Cathay Pilots' union and engaged in the above union activities. This was not a valid reason for dismissal under s.32K of the Employment Ordinance ("the Ordinance"). The dismissal was also in breach of the statutory protections for trade union activities under s.21B of the Ordinance. Since the dismissal was without a valid reason and unlawful, the plaintiffs' were each entitled to unfair dismissal damages of HK$150,000 under s.32P of the Ordinance.
  2. Wrongful dismissal: the Cathay contracts of employment contained disciplinary procedures (for misconduct) which provided for the right to a hearing and to an appeal. Reyes J held that since the underlying reason for the dismissal was the pilots' alleged "gross misconduct", Cathay was not entitled to exercise its right to terminate by notice (or making a payment in lieu of notice) until the requisite disciplinary procedures had been completed. By failing to abide by its contractual disciplinary procedures, Cathay had wrongfully dismissed the 49ers, and was liable to pay each plaintiff damages equivalent to one month's salary.
  3. Defamation: following the plaintiffs' dismissals, senior management at Cathay made various public statements, accusing the plaintiffs' of showing "a total lack of professionalism"; disrupting Cathay's operations and damaging the airline's reputation in Hong Kong. Such statements were held to be defamatory of the pilots' professionalism and character, which had "serious repercussions" on their careers. The plaintiffs were awarded HK$3 million each for general damages, and HK$300,000 each for aggravated damages (due to Cathay's refusal to apologise).

The effect of the judgment is that Cathay is liable to pay a total of HK$61 million in damages, as well as millions in legal costs. The judgment alerts all employers to take extra care when dealing with employees who are trade union members, to follow contractual disciplinary procedures, and to be very careful when making statements regarding contentious issues involving employees.


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