UK: Redefining The Jurisdiction Of The Courts In Hearing Employment Claims

HCA 2313/2012

Anneli Munkholm v Elec-Tech International (H.K.) Company Limited

On 17 June 2013, Master S Kwang handed down an unprecedented ruling on the issue of whether the High Court has jurisdiction to hear a Plaintiff's claims where some of the items claimed fell within the Labour Tribunal's exclusive jurisdiction and other items were within the High Court's jurisdiction.

The hearing before Master Kwang was in respect of an application on behalf of the Defendant to set aside a judgment which had been entered in default of an Acknowledgment of Service being filed by the Defendant.

The Defendant's Counsel argued that the judgment was entered irregularly on the basis that the Labour Tribunal had exclusive jurisdiction under section 1(a) of the Schedule to the Labour Tribunal Ordinance (Cap 25) ("the Ordinance"). The Defendant submitted that the Plaintiff should have issued proceedings at the Labour Tribunal instead of issuing a Writ at the High Court.

Section 7(1) of the Ordinance provides: "The tribunal shall have jurisdiction to inquire into, hear and determine the claims specified in the Schedule."

Section 7(2) of the Ordinance provides: "Save as is provided in this Ordinance, no claim within the jurisdiction of the tribunal shall be actionable in any court in Hong Kong".

The Schedule sets out the claims which are within the exclusive jurisdiction of the Labour Tribunal which include:

"1. A claim for money which arises from:

(a) the breach of a term, whether express or implied or (if relevant) arising by force of section 10(1) of the Minimum Wage Ordinance (Cap 608), of a contract of employment, whether for performance in Hong Kong or under a contract to which the Contracts for Employment Outside Hong Kong Ordinance (Cap 78) applies;

(b) the failure of a person to comply with the provisions of the Employment Ordinance (Cap 57), the Minimum Wage Ordinance (Cap 608) or the Apprenticeship Ordinance (Cap 47);

other than a claim specified in the Schedule to the Minor Employment Claims Adjudication Board Ordinance (Cap 453)."

The Defendant's fall back position was that three of the eight claims in the judgment arose from a failure to comply with the provisions of the Employment Ordinance in that the claims were for outstanding salary and accrued annual leave. Therefore, the Labour Tribunal had exclusive jurisdiction to hear the claim under section 1(b) of the Schedule.

As a third alternative argument, the Defendant argued that the Plaintiff should be required to commence separate actions in the Labour Tribunal and the High Court to resolve her claims.

The Defendant sought an order that the Master should permanently stay the proceedings and require the Plaintiff to restart the case at the Labour Tribunal. The Defendant relied on the case of Tsui Chung Fai v Kwok's Fashion Co Ltd unreported HCLA 154 of 2003, 17 August 2004 wherein the Judge presiding over that case stated that a claim for payment of wages, end of year payment and annual leave payment are all benefits protected by the Employment Ordinance. In that case although the employee performed his contract in Shanghai, the Judge ruled that the Tribunal had jurisdiction to deal with his claim which fell within section 1(b) of the Schedule to the Ordinance.

The Plaintiff's solicitors submitted that as the Plaintiff had performed her employment contract out of Hong Kong, section 1(a) of the Schedule did not apply. In respect of the Plaintiff's claims for wages and annual leave payments, the Defendant had already paid part of the outstanding amounts prior to the hearing and before judgment was entered.

The Plaintiff's solicitors further contended that the High Court had jurisdiction to consider all of the Plaintiff's claims collectively and pointed out under the Civil Justice Reforms one of the underlying objectives of the Rules of the High Court was to ensure that a case was dealt with as expeditiously as is reasonably practical. The Plaintiff was a resident of the United States and had returned home after her employment with the Defendant ended. It was submitted that it would be impractical and unreasonable to expect the Plaintiff to incur the costs of flying back to Hong Kong to attend hearings before the Labour Tribunal and at the same time litigate the remainder of her claims through the High Court whilst she looked for a new job.

Master Kwang agreed with the Plaintiff's arguments and stated that it was necessary to be pragmatic in such circumstances. The Master held that where some of an employee's claims fell within the exclusive jurisdiction of the Labour Tribunal and other claims fell within the jurisdiction of a competent court, that court had jurisdiction to adjudicate on all of the claims at once. The Plaintiff's case was distinguished from the Tsui Chung Fai case as that case dealt only with claims that all fell within the Labour Tribunal's exclusive jurisdiction. The judgment of the Plaintiff included claims for a signing bonus, a performance bonus, reimbursement of monies deducted for the payment of tax and payment as compensation for a non-compete clause.

The Master's ruling is in our view a good decision and demonstrates that the Hong Kong courts are willing to hear mixed jurisdictional employment claims without the need for the claimant to first refer the matter to the Labour Tribunal.

Jezamine Fewins of Clyde & Co represented the Plaintiff at the court hearing.

The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.

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