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Hong Kong: Think twice before filing an employment claim directly to the High Court 

Hong Kong
Written by
Lewis Silkin, a specialist employment law practice in Hong Kong.
Under Hong Kong’s court rules, the Labour Tribunal has exclusive jurisdiction over claims for money damages arising from an employment contract or the Employment Ordinance. A recent decision highlights the pitfalls in bringing employment-related claims directly to the High Court.

Case background

The Plaintiff was a former employee of Hannover Rück SE, the Defendant. The Plaintiff brought court proceedings before the High Court, claiming that the employer was in breach of its statutory duty pursuant to the Employment Ordinance when it terminated his employment. He also claimed that there had been a breach of the contractual obligations owed to the Plaintiff, including the employer’s internal code of conduct, and that he suffered damage to his reputation because of his allegedly unreasonable dismissal, causing him to suffer a loss of income and benefits. 

The decisions

The employer applied to strike out the Plaintiff’s claim on the basis that the Labour Tribunal had exclusive jurisdiction over a claim of money arising from the breach of a term of the employment contract. The employer argued that there was no claim founded in tort, nor was this a mixed claim founded in both tort and contract.  

The Plaintiff used counsel to draft his pleadings and sought to improve the pleadings by claiming that there were tortious elements. The Plaintiff argued that there were references therein to defamation as a cause of action. The Plaintiff submitted that even if there was no specific reference to a ‘defamatory statement’ or ‘libel’ in the pleadings, there were nonetheless references to statements that were defamatory in nature. The Plaintiff argued that his pleadings contained sufficient references to a tortious claim which caused the case to fall outside of the Labour Tribunal’s exclusive jurisdiction. 

The Master granted the strike out application, noting that as counsel had drafted the pleadings, if there was a tortious claim, it should have been clearly set out. The Plaintiff then applied to appeal the strike-out decision to the High Court. Upon review of the pleadings and the Plaintiff’s application, the Court was similarly not convinced that he had pleaded any tortious claim. 

The Plaintiff’s position in the appeal was that the pleadings contained a claim for the torts of defamation and malfeasance. The Plaintiff’s counsel at the appeal hearing also raised the question on whether the pleadings could be amended to properly plead a claim in tort. The Plaintiff’s primary position was that the facts in support of the two tortious claims were adequately pleaded, but that if deemed necessary, the Plaintiff should be afforded the chance to amend his pleadings, and that a striking out of the claim was a matter of last resort. 

The appeal was dismissed on the basis that even if amendments were made to the pleadings, the proposed amendments would not be sufficient to assist the Plaintiff to formulate a tortious claim. The judge’s view was that it was plain and obvious that the substance of the Plaintiff’s claim was founded on an alleged breach of the employment contract giving rise to a claim of unlawful dismissal and a failure to comply with the provisions of the Employment Ordinance. There was no claim that was founded in tort. The judge dismissed the appeal and awarded costs of the appeal to the Defendant employer. 

Commentary and key takeaways

It is important to note that under the Rules of the High Court, the Court should only exercise its summary powers to strike out in plain and obvious cases. Disputed facts are considered in the favour of the party against whom the application is made. Therefore, persuading a court to strike out a claim in its entirety is a rare outcome in the Hong Kong courts. The obvious advantage to a defendant able to persuade the court to strike out a claim is that the time and costs needed to make such an application are a fraction of the costs which would be involved in defending a case up to trial. 

This case highlights the essential factors to bear in mind when considering whether one should issue a strike-out application on the basis that dispute falls within the exclusive jurisdiction of the Labour Tribunal: 

  • The Labour Tribunal has exclusive jurisdiction over a claim for a sum of money from, amongst others, (a) the breach of a term of a contract of employment and (b) a failure to comply with the provisions of the EO.
  • Any claim in respect of a cause of action founded in tort falls outside the Labour Tribunal’s jurisdiction.
  • In deciding the jurisdiction issue, the court should look at both the pleaded causes of action and relief sought.
  • Mixed claims founded both in employment contracts and torts are excluded from the Labour Tribunal’s jurisdiction. Similarly, a mixed claim for monetary and non-monetary relief, even though based on a breach of contract or of the EO, falls outside the jurisdiction of the Labour Tribunal.
  • The proper approach of the court is to look at the substance of the dispute and not the labels put on the pleadings.
  • Once the court is satisfied that the case before it should be within the exclusive jurisdiction of the Tribunal, the court must strike out the claim. The Court of First Instance does not have any power, whether under statute or its inherent jurisdiction, to transfer or refer the matter to the Labour Tribunal. 
Jezamine Fewins
Partner - Hong Kong
Lewis Silkin (Hong Kong)
Carly Fan
Associate - Hong Kong
Lewis Silkin (Hong Kong)