Background
In the case of Life Young Medical Group Ltd (formerly known as Life Young Aesthetic Medical Ltd) (壹心駿美醫學集團有限公司前稱為壹心駿美醫學有限公司) v Chiu Suet Man (趙雪雯), the Court considered whether an employee's resignation amounted to an immediate termination (where she would need to make a payment in lieu of notice) or whether her notice period was still up for discussion with her employer.
The dispute arose from the circumstances surrounding the termination of employment of Ms. Chiu (the "Employee"), who previously served as a Centre Manager at Life Young Medical Group Ltd (the "Company"). The Employee's employment contract included a termination clause allowing either party to end the employment by giving one month's notice or payment of one month's salary in lieu.
The material facts played out in rapid succession over a three-day period in February 2022. On 15 February 2022, the Company terminated the employment of the Employee's husband, who was then serving as the Company's Chief Executive Officer. The Employee later joined this meeting and indicated that she would leave the Company with her husband. The Employee testified that she had asked the Company at that time to consider waiving the contractual notice period so that she could depart immediately.
Later that night, the Employee emailed the Company (hereinafter the "15 February email") stating that she was tendering her resignation, to take effect on 15 February 2022. While the Employee used the words "with immediate effect" ("立即生效"), she also included an express request that the Company "mutually agree" to immediately terminate her employment without notice, adding in a WhatsApp message to her colleague that she wished for a "good and amicable parting" ("好來好去"). Shortly after sending the email, the Employee exited a number of WhatsApp group chats relating to the company's business.
The next day, on 16 February, the Employee did not report to the office. She sent a further email that evening which referred to her "final payment" and attached a spreadsheet setting out the calculations for payments due to her. She wrote at the top of the spreadsheet "Mutually agree to terminate employment on 15th February 2022 without notice by either party. Email sent to Charlie on 15th February".
On 17 February, she again failed to attend work. That afternoon, she sent two emails asking the Company for a response and that she assumed she was still employed. In the second 17 February email, she clarified that, barring any agreement on the waiver of notice, her last day of employment would be 14 March 2022 (that is, serving a one-month notice period from 15 February).
Later on the same day, the Company replied by email (the "Company's 17 February email"), taking the position that the Employee had, by her 15 February communication, already terminated the employment contract with immediate effect. As a result, the Company demanded the Employee pay one month's salary in lieu of notice, pursuant to the employment contract's termination clause.
Both parties commenced proceedings in the Labour Tribunal. The Employee sought outstanding payments, contending she had validly given notice (with her final day intended to be 14 March 2022) and had merely requested a waiver that was never agreed. The Company alleged that the Employee's initial email, exit from certain WhatsApp work groups, and non-attendance at work for two days demonstrated that she had resigned immediately.
The Presiding Officer in the Labour Tribunal found in the Employee's favour, concluding that the 15 February email did not constitute an irrevocable, immediate resignation. The Presiding Officer also noted that the Employee had used the words "as mentioned earlier" ("如前所說") in the 15 February email, which should mean that something had been discussed before. The Presiding Officer also took the view that an employee would usually choose to serve out the notice period instead of making a payment in lieu unless they had a job offer which could not wait.
The Tribunal therefore found that the Employee had tendered a notice of resignation effective from 15 February, with the subset question of whether the notice period could be waived pending the Company's response. By sending the 17 February email insisting on one month's payment in lieu and making no provision for the Employee to work through her notice, the Company wrongfully terminated the employment contract.Following the Tribunal's decision in favour of the Employee, the Company appealed to the Court of First Instance, where the Court dismissed both appeals and upheld the Labour Tribunal's decision.
Key Findings
The central issue at the Court of First Instance was whether the Employee made clear that her intention was to resign immediately or whether she was simply requesting the Company's consent to waive the notice period. While the Employee's 15 February email used language that could be read as announcing an immediate departure ("立即生效"), the email and subsequent communications also contained repeated references to seeking a waiver.
The Employee's conduct over the following days was somewhat equivocal: on the one hand, she did not attend work or rejoin any work-related communication channels; yet, on the other, she sent multiple emails specifically awaiting the Company's stance on the waiver question.
In affirming the Labour Tribunal's decision, the Court of First Instance emphasised the Presiding Officer's conclusion, namely, that the Employee extended a resignation contingent on a waiver but was still willing to serve her notice, which was adequately supported by the evidence. Although the Company strongly argued that the Employee's exit from WhatsApp groups and her absence from the office on 16 and 17 February reinforced the interpretation of an immediate resignation, the Court concluded that the Tribunal's finding was equally reasonable. Indeed, the Company's position might also be "reasonable," but it could not be said that the Labour Tribunal's conclusion, favouring the Employee, was the only logical outcome on the evidence. Accordingly, there was no legal basis for disturbing the Tribunal's decision on appeal.
With regard to the question of "wrongful termination", the Court noted that once the Employee had indicated she was prepared to serve the notice period (absent a waiver), the Company's 17 February email insisting on payment in lieu effectively denied her that right. The Tribunal had found that an employee retains the right to choose whether to serve their contractual notice period or compensate the employer in lieu, and it was improper for the Company to unilaterally insist on a payment when the Employee had already stipulated her willingness to serve out her notice if no waiver was forthcoming.
The appellate court concluded that the Company's stance, as set out in the 17 February email, amounted to an improper termination of employment and that the demand for compensation in lieu from the employee was unjustified.
Takeaways for Employers
This case illustrates several key points for employers in Hong Kong.
Firstly, whether a resignation has been tendered with immediate effect or with notice requires a careful, objective reading of all communications. An employee might use "immediate" language in an email but still seek confirmation or consent from the employer regarding a waiver of the notice period. It is therefore crucial to examine the entire factual matrix before concluding that an employee has irrevocably resigned with immediate effect.
Secondly, employees in Hong Kong generally have a statutory right to choose how they terminate their employment (i.e. by working through their notice or making a payment in lieu). An employer that receives a request by an employee to "waive" the notice period must clarify with the employee promptly whether such a waiver is agreed. If the employer fails to clarify, or if the employee's correspondence indicates that the employee wishes to serve any unwaived notice period, the employer risks inadvertently terminating the employee by insisting on a payment in lieu.
An employer's prompt communication when receiving ambiguous or equivocal letters of resignation is paramount. In this case, the Company's delayed and insufficiently clear response resulted in a situation where the Employee was found not to have truly resigned with immediate effect. Had the Company positively accepted the Employee's request (or refused it with clarity) at the earliest opportunity, the outcome might well have been different.
Finally, the case underscores the importance of consistency in an employee's actions. While the non-attendance at work undermined the Employee's claim to some extent, it was outweighed in the Tribunal's view by her written, repeated requests for a waiver of notice and her ultimate statement that she would serve the notice period in the absence of any waiver.
Employers in Hong Kong should ensure that they are vigilant in evaluating both the written evidence and behaviour of employees when they indicate their wish to resign. Any uncertainty during a termination of employment is best resolved through prompt, explicit communication so as to avoid unnecessary disputes.
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.
