LBTC 595/2012

IN THE LABOUR TRIBUNAL OF THE
HONG KONG SPECIAL ADMINISTRATIVE REGION
LABOUR TRIBUNAL CLAIM NO. 595 OF 2012

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Before : Ms. Michelle Lam, Presiding Officer
Dates of Hearing: 21-23 and 26-27 March, 25-28 May and 14 June 2012 
Date of Decision : 13 July 2012
Date of Reasons for Decision: 20 September 2012

REASONS FOR DECISION

Background
1.	The five Claimants herein, being the 3rd, 4th, 7th, 9th and 11th Claimants, claim against the Defendant for severance payments and alternatively terminal payments.  The Defendant denies liability to pay but does not dispute the quantum of the claims.  

Background facts
2.	The background facts of the present case are not subject to serious dispute.  

3.	The Defendant provided various cleaning services to the Government and also various types of private and public organizations.  Following a tender exercise, the Defendant entered into a two-year “Street Cleaning Services Contract for Wanchai” with the Food and Environmental Hygiene Department (“FEHD”) under which the Defendant provided cleaning services to FEHD for streets in Wanchai from 1 January 2008 to 31 December 2009.  Following a subsequent tender exercise, the Defendant entered into another two-year “Street Cleaning Services Contract for Wanchai”, i.e. Government Service Contract No. FEHDSC/63/09, with the FEHD (“FEHD Contract”), under which the Defendant continued to provide cleaning services for streets in Wanchai from 1 January 2010 to 31 December 2011.  On 7 December 2011, however, the FEHD notified the Defendant in writing that it was not selected as the contractor in the new tender exercise for the two-year period starting from 2012, and hence no new service contract would be made with the Defendant upon expiry of the FEHD Contract on 31 December 2011.  

4.	A total of 375 staff members were affected by then. 371 of them were engaged on monthly basis and had each entered into a “Standard Employment Contract for Employees of Contractors of Government Services Contract” with the Defendant (“Government Standard Contract”).  This was a pro forma Standard Employment Contract which, pursuant to the mandatory requirement of the government, contractors had to enter into with non-skilled workers whom they employed to provide services under any Government Services Contract.  For the remaining four staff members, as they were temporary daily-wage workers who had worked for less than seven days, the Defendant was not required to enter into Government Standard Contracts with them.

5.	In mid to late December, the Defendant sent personnel to various roll-call points across the district where cleaning services were provided, informing the cleaning workers that the FEHD Contract would end on 31 December.  Cleaning workers of less than two years’ service were given seven days’ notice of termination of their employment contracts, whereas workers of more than two years’ service, totalling 163, were asked whether they would accept re-deployment by the Defendant to other places of work starting from 1 January 2012.  Some of the staff members signed a pro forma “Staff Reply Slip on Arrangements upon Expiry of Contract at Site” prepared by the Defendant (“Reply Slip(s) on Expiry of Contract”).

6.	 The Defendant was notified by the Labour Department on 23 December that the Cleaning Workers Union and the Department had received complaints from workers against the Defendant, alleging that the Defendant had misled workers into signing the Reply Slips on Expiry of Contract with a view to evading liability for severance payment.  The Labour Department invited the Defendant to attend a meeting with its staff scheduled for 28 December.

7.	Among the attendees of the meeting on 28 December were two officers from the Labour Department; one Ms Wu Mei-lin, an officer of the Cleaning Workers Union (“the Union Representative”); and one Ms Woo Ching Sum Connie, Executive Director of the Defendant (“the Company Representative”).  Some of the cleaning workers were notified by the Union to attend the meeting, and some by fellow workers.  

8.	No agenda was set for the above meeting.  No pre-arrangement was made as to the time of attending the meeting or the number of attendees, and the cleaning workers went in and out of the meeting randomly and freely.  As there was no outline of topics for discussion, the Defendant played a passive role at the meeting and merely answered questions from individual staff members.  As the meeting became very disorderly, the Union Representative took the initiative to propose that the Defendant should set out its deployment arrangements in writing, specifying the new working hours and places of work for each member of staff, and to request that each member of staff be given a copy of those written arrangements at the meeting on the following day.

9.	Similarly, among the attendees of the meeting on 29 December were two Labour Department officers, the Union Representative and the Company Representative.  The Defendant had prepared 162 copies (with one person being omitted) of “Notification of Re-deployment to Workplaces” (“Re-deployment Notification”), each of which set out the new place of work to which a particular staff member would be deployed and his working hours.  At that time, the Labour Department and the Union Representative asked the Company Representative to distribute, in person and on the spot, the Re-deployment Notifications to each staff member present at the meeting.  Regarding the Re-deployment Notifications to the 26 staff members who did not attend the meeting, as the Labour Department and the Union Representative both refused to collect them on behalf of those staff members, the Defendant took the copies back.

10.	Some of the staff members who attended the meeting (including the five Claimants herein) wrote down the reasons for refusing to be re-deployed in the respective Re-deployment Notifications distributed to them and then returned them to the Company Representative on the spot. The Company Representative said that she would take into account the replies of each individual and consider whether they would be re-deployed.

11.	On the following day, namely 30 December, the Defendant revised the re-deployed work places and/or working hours of some of the staff members.  As regards the five Claimants herein, only the 9th and 11th Claimants had their re-deployed work places and/or working hours revised.  However, the Defendant only sent the revised particulars concerned to the Union Representative and the Labour Department by e-mail without notifying the staff members individually.

12.	Having sent the e-mail, the Defendant telephoned the Labour Department and the Union Representative to see if they had duly received the e-mail.  Apart from this, the Defendant did not communicate any further with the workers, the Labour Department or the Union Representative regarding the arrangements on re-deployment or resignation. 

13.	Some of the workers were dissatisfied with the Defendant’s arrangements and took part in a strike on 31 December in which the Union also participated.

14.	On 6 January 2012 the Defendant sent by post the Notifications of Termination of Employment Contract to those cleaning workers who did not turn up for work at their new posts after 1 January, including the five Claimants.

15.	Of the 163 workers of two years’ service or more, only six continued to work for the Defendant after 1 January.  These six workers had already entered into employment contracts with the Defendant for the provision of services under other Government services contracts.    

The five Claimants
16.	Except for the 4th Claimant, who started working for the Defendant on 4 July 2008, the Claimants started working for the Defendant on 1 January 2008.  Each of the five Claimants had entered into his own Government Standard Contract with the Defendant when he first joined the Company.  Those contracts specified that they were employed by the Defendant as cleaning workers providing cleaning services in Wanchai district.  As the previous “Street Cleaning Services Contract for Wanchai” between the Defendant Company and the FEHD came to an end on 1 January 2010 and they entered into a new contract – the FEHD contract, the Defendant was required to enter into another Government Standard Contract with each of the five Claimants as required by the FEHD contract.  All these contracts came into effect on 1 January 2010 and the Claimants’ wages were revised.

17.	On 1 May 2011, following the implementation of the Minimum Wage Ordinance, the Defendant entered into another Government Standard Employment Contract with each of the five Claimants which took effect from 1 May 2011 and under which wages were revised (“the 3rd Contract(s)”).  The second and the 3rd Contracts mentioned above both specified that the places of work of the five Claimants were within the service area specified in the FEHD contract (with the FEHD contract number stated), and also specified the Claimants’ respective working hours and monthly wages.

18.	The five Claimants had provided services exclusively under the “Wanchai Street Cleaning Services Contracts” ever since their recruitment by the Defendant until 31 December 2011.  Except for the 7th Claimant, whose working hours had been varied once during his employ with the Defendant, the places of work and the working hours of the Claimants had never changed.  Their working hours were specified in their respective Government Standard Contracts with the Defendant, and their places of work were within the service area under the FEHD contract.  The relevant particulars are set out below:


19.	The personal background of the five Claimants is summarized below:


Contact on two occasions
20.	During the period from 7 December 2011 to 6 January 2012 when the Defendant sent dismissal letters by post to the five Claimants, the five Claimants and the Defendant had contacted each other on only two occasions in relation to the arrangements after 31 December (except for the 9th Claimant, who was present for some time at the Labour Department meeting on 28 December).  The first one took place in mid to late December when the Defendant sent personnel to various roll-call points, informing the workers of the expiry of the FEHD contract on 31 December and enquiring if they were willing to be re-deployed to other places of work.  All but the 11th Claimant signed the “Reply Slip on Expiry of Contract”.

21.	The second occasion was when all the five Claimants attended the Labour Department meeting on 29 December, at which the Re-deployment Notifications were distributed to them.  However, the Defendant did not hold any direct or separate discussion with any of the Claimants.  According to the Re-deployment Notifications given to the Claimants, the work arrangements after 1 January 2012 which the Defendant required of the five of them are as follows:       
  
22.	 On 30 December the Defendant re-arranged the workplaces and working hours of the 9th and 11th Claimants (as shown below), but the arrangement was not communicated to those two Claimants.


Claimants’ case
23.	It was the five Claimants’ case that they had at various points of time entered into three Government Standard Contracts with the Defendant, which specified that the Claimants were employed to provide cleaning services under the “Wanchai District Street Cleaning Services Contract” between the Defendant and the FEHD, with places of work being confined to the locations at which services were to be provided under the said contract, and which also specified the Claimants’ working time, number of working hours and wages.  Given that, following the expiry of the FEHD contract on 31 December, the parties did not enter into new employment contracts, nor did the Defendant offer to enter into new contracts with the Claimants or renew their existing contracts pursuant to the Employment Ordinance, the Defendant is liable for severance payments or terminal payments.

Defendant’s case
24.	The Defendant’s case is that its employment relationship with the five Claimants did not terminate as a result of the expiry of the FEHD contract, because the Defendant had notified the Claimants in mid-December that they would be re-deployed to other workplaces starting from 1 January 2012 and had also given the Claimants written notice on 29 December informing them of the new time and place of work.  It was just that the Claimants did not comply with the re-deployment order by failing to turn up for work at the new workplaces on or after 1 January 2012.  The Defendant contends that, as the Claimants failed to comply with a legitimate and reasonable order, the Defendant was entitled to issue to them notices of dismissal on 6 January, notwithstanding it was stated therein that the Defendant would not claim against the Claimants for wages in lieu of notice.  The Defendant therefore considers the Claimants’ claims unjustified.

25.	The five Claimants gave evidence in court and called the Union Representative as their witness, whereas the Defendant called the Company Representative and Wong Shuk Yin, the Defendant’s Deputy Human Resources Officer, to give evidence in court.

Findings of fact
26.	In determining the present case, I have carefully considered all the witness statements and exhibits submitted by the parties, the testimonies and demeanour of the witnesses in court, as well as all relevant surrounding circumstances.

Severance payment
27.	 Under section 31B of the Employment Ordinance (Cap 57), where an employee who has been employed under a continuous contract for a period of not less than 24 months is dismissed by his employer by reason of redundancy, the employer shall be liable to pay to the employee a severance payment.

28.	It is not disputed in the present case that the five Claimants had each been employed for not less than 24 months under a continuous contract.  The issue is whether they were dismissed by reason of redundancy.   

29.	Section 31D of the Employment Ordinance provides as follows:
“(1)	For the purposes of and subject to this Part, an employee shall be taken to be dismissed by his employer if, but only if - 

(a)	the contract under which he is employed is terminated by the employer with or without notice or payment in lieu thereof other than in accordance with section 9;

(b)	where under that contract he is employed for a fixed term, that term expires without being renewed under the same contract; or

(c)	the employee terminates that contract with or without notice or payment in lieu, in circumstances such that he is entitled to terminate it without notice or payment in lieu in accordance with section 10 by reason of the employer’s conduct. 

(2)	An employee shall not be taken for the purposes of this Part to be dismissed by his employer if - 

(a)	his contract of employment is renewed, or he is re-engaged by the same employer under a new contract of employment; and

(b)	the renewal or re-engagement takes effect immediately on the ending of his employment under the previous contract.

(3)	For the purposes of the application of subsection (2) to a contract under which the employment ends on a rest day or holiday, the renewal or re-engagement shall be treated as taking effect immediately on the ending of the employment under the previous contract if it takes effect on or before the next day after that rest day or holiday.”

Dismissal
30.	Having carefully considered all the evidence, I find the five Claimants to have been dismissed by the Defendant in the circumstances as provided in section 31D(1)(b).  In other words, they were employed under the 3rd Contracts for a fixed term, upon expiry of which the contract was not renewed.  I consider that the fixed term concerned is the period from 1 May 2011 to 31 December 2011.

31.	The employment relationship between the five Claimants and the Defendant since 1 May 2011 was based on the 3rd Contracts which they individually entered into with the Defendant.  All the five contracts were Government Standard Contracts in the prescribed format and terms, and they differed from one another only in terms of wages, working time and the number of working hours.

32.	In construing the five contracts, I have taken into account the underlying factual matrix.  The Defendant entered into the FEHD contract, following which the five Claimants were employed to provide services under that contract, which expressly required the Defendant to enter into a Government Standard Employment Contract with each of the Claimants.  

33. 	As a matter of fact, since April 2005, in respect of service contracts mainly involving the use of non-skilled workers, the Government has required the relevant service contractors to enter into Standard Employment Contracts with non-skilled workers in their employ. This is to ensure that the places of work, working hours and calculation and amount of wages of those employed by the contractors to provide services under the service contracts are governed by the relevant terms of the service contracts, the objective of which is to provide clear and stable places and time of work to non-skilled workers who provide services for the Government but who are employed by the service contractors.  The service contracts also provide for a penalty points system under which contractors who fail to comply with the above requirements are penalized.

34.	 The 3rd Contract is the version of the Government Standard Employment Contract which has been revised consequential to the implementation of Minimum Wage Ordinance on 1 May 2011.

35.	The relevant terms and conditions of the five employment contracts read as follows:
“Standard Employment Contract
for Employees of Contractors of Government Service Contract (Note 1)
Government Service Contract No.: FEHDSC/63/09 (Note 2)
…
This employment contract shall commence on 1 May 2011. 

The Employee shall be employed by the Employer as cleaning worker (job title). The place of work is street cleaning services in Wanchai district (as specified in Government service contract no.: (Note 2) FEHDSC/63/09). If necessary, the Employer shall be allowed to deploy the Employee to work within the Hong Kong Island region (Note 3) under an urgent situation or on an ad hoc and limited basis.

(a) The Employee shall work 6 days per week, and his/her daily working hours shall be: (Note 4)
[state the exact time of going on and off duty] 

Under exceptional circumstances and at the request of the relevant procuring department, the Employer may make appropriate adjustment to the above working hours, provided that such adjustment shall be on an ad hoc basis and shall not affect the original daily number of working hours of the Employee.
…

6.	In respect of work done in accordance with the working hours specified in Clause 3(a) of this employment contract, the Employee shall receive:

(a)	wages of HK$… [state the exact amount of wages] per month … 

21.	Any variation of, amendment to, cancellation of or addition to any terms of this employment contract (including the Schedule) shall be void unless it does not extinguish or reduce any right, benefit or protection conferred upon the Employee by this employment contract and is signed by both parties. The Employer shall also provide a copy of the amendments signed by both parties to the Employee for his/her retention.

[Emphasis added]

36.	Furthermore, Clauses 22 and 23 of the 3rd Contract state that the Employee and the Defendant agree that a copy of the 3rd Contract, wage records, attendance records and other relevant information shall be provided to the FEHD for record and for the purpose of monitoring the Defendant’s performance of employment-related obligations under the FEHD contract.

37. 	It follows that Clause 2 of the contract strictly provides that the place of work must be the place where cleaning services are to be provided under the FEHD contract.  In other words, the Claimants can only work within the areas specified in the FEHD contract.   

38.	Although a mobility clause is also provided under Clause 2, it is a rather stringent provision in that it only allows the Defendant to adjust the deployment within Hong Kong Island region where it is necessary to do so as an emergency measure or on an ad hoc and limited basis.  In other words, even when there is an actual need, the Defendant may not re-deploy an employee to work somewhere beyond the cleaning service area specified in the FEHD contract for an extended period of time, let alone permanently.  

39.	Therefore, it is apparent from Clause 2 itself that the subsistence of the 3rd Contract was highly dependent on the fixed term of the FEHD contract.  And paragraph 1(a) of Part 2 of the FEHD contract [Exhibit D-238, page 34] expressly stated that the fixed term of the contract was from 1 January 2010 to 31 December 2011.  This being the case, a term must have been implied in the 3rd Contract that the employment contract would come to an end on 31 December 2011.

40.	Furthermore, the existence of such an implied term finds support in the other terms and provisions of the 3rd Contract.

41.	First of all, the title of the contract made it clear that it was an employment contract between the Defendant as a FEHD contractor and its employees. Moreover, the salient terms of the contract, such as those on working time, number of working hours and wages, were all governed by the relevant provisions of the FEHD contract. Furthermore, the contract expressly prohibited any variation of, amendment to, cancellation of or addition to any terms of the contract, and also provided that the rights and benefits conferred upon the employee by the contract must not be extinguished or reduced.  Both parties expressly agreed to allow the FEHD to monitor the performance of the contract.  

42.	It would indeed be impossible to perform or enforce these terms following the expiry of the FEHD contract.  For this reason, a term must have been implied in the 3rd Contract that the 3rd Contract would be terminated at the same time as the expiry of the FEHD contract.  As such, the 3rd Contract must have come to an end on 31 December 2011.

43.	It follows that, according to the 3rd Contract which each of the five Claimants entered into with the Defendant, the fixed term of employment of each of them expired on 31 December 2011.  After the expiry of the term, the Defendant failed in a subsequent tender exercise and was therefore unable to renew the terms of employment of the five Claimants under the same contracts.  For this reason, the circumstances of their dismissal fall within sections 31B(2) and 31D(1)(b) of the Employment Ordinance, and accordingly, pursuant to section 31B(1)(a), they shall be taken to be dismissed by their employer by reason of redundancy, and the Defendant is liable for severance payments.  

44.	Alternatively, even if the said implied term did not exist, which means that the 3rd Contract did not come to an end with the expiry of the FEHD contract on 31 December 2011, the Defendant would still not have been able to comply with Clause 2 of the 3rd Contract.

45.	The reason is that, with the expiry of the FEHD contract on 31 December 2011, the Defendant could no longer assign the five Claimants to the places of work specified in the FEHD contract, but as pointed out above, the mobility clauses in Clause 2 prohibited the Defendant from re-deploying an employee to work at places other than those specified in the FEHD contract for an extended period of time or on a permanent basis.  

46.	Therefore, when the Defendant, as mentioned above, sent personnel to contact the five Claimants individually for the first time so as to ascertain their intentions regarding the Defendant’s proposal to re-deploy them to other places of work, the Claimants were entitled to refuse the re-deployment.  This was all the more so given the fact that they had been working in the same place throughout the many years of employment by the Defendant.

47.	 When the Defendant issued Re-deployment Notifications to the five Claimants on 29 December, ordering them to show up for work on 1 January 2012 at the specified new places of work, of which none was among those specified in the FEHD contract, the Defendant had unilaterally varied a major employment condition on which the parties had mutually agreed.   

48.	Furthermore, Clause 3 of the 3rd Contract clearly stated that the Defendant could make appropriate adjustments to the working hours only in special circumstances and upon request of the FEHD, and that such adjustments were to be temporary and should not affect the daily number of working hours as originally prescribed.  This being the case, the Re-deployment Notifications show that the Defendant had unilaterally varied the working hours and even the number of working hours, thereby unilaterally varying another major employment condition.

49.	For these reasons, the five Claimants were entitled to refuse re-deployment on the spot as they did and not to show up at the new places of work on 1 January 2012.  It was beyond doubt that in doing so, they were exercising their rights to terminate their respective employment contracts in response to the employer’s breach.  

50.	These rights are aptly illustrated in the case of Western Excavating (ECC) Ltd v Sharp [1978] 1 QB 761 and form part of the legal principle of constructive dismissal.  Under this principle, if an employer acts in serious breach of an employment contract, which expressly or implicitly shows that he no longer intends to be bound by the essential terms of the contract, the employee is entitled to treat himself as discharged from any further performance of his obligations under the contract.  If the employee chooses to do so, he terminates the contract by reason of the employer’s conduct.  In that case, the breach of contract by the employer constitutes constructive dismissal.  The employee is entitled to leave at the instant without giving any notice to the employer, or he may give notice to the employer or leave at the end of the notice period.  Applying this legal principle, it was by reason of the serious breach of contract by the Defendant that the five Claimants terminated the employment contract with the Defendant after 31 December 2011, and the Defendant could neither allege that the Claimants voluntarily resigned on 6 January 2012 by reason of absence for work at the new places of work, nor dismiss them summarily pursuant to section 9 of the Employment Ordinance, and hence cannot rely on section 31C(1) of the Employment Ordinance to avoid liability for severance payments.  On the other hand, under 31D(1)(c), the five Claimants are taken to have been dismissed by their employer and the Defendant is liable to pay to them severance payments.  

51.	Although the Defendant contends that the five Claimants were bound by the unlimited mobility clause in the Code of Conduct for Staff prepared by the Defendant, there is no concrete evidence whatsoever which indicates that the Defendant had ever distributed the Code or made the contents thereof known to the five Claimants.  Further, it was only in the middle of the trial that the above contention was raised out of the blue.  I do not believe that the Defendant had ever drawn the attention of the five Claimants to the abovementioned clause.

52.	Furthermore, given the presence of an express mobility clause in Clause 2 of the 3rd Contract, coupled with the stringent restrictions in Clause 21 on variation of contract terms, the 3rd Contract could not possibly allow for the unlimited mobility clause in the Code of Conduct for Staff or an implied term permitting permanent re-deployment of the Claimants to other places of work (Wong Yuk Ling v East East Food Products Limited, HCLA 95/2002).    

Reply Slips on Expiry of Contract
53.	On the other hand, I have also carefully considered the effect, if any, of the following incidents on the Claimants’ case, namely the first contact the Defendant made with the five Claimants in relation to the ending of the FEHD contract, and the fact that the 3rd, 4th, 7th and 9th Claimants signed the Reply Slips on Expiry of Contract.

54.	The overall case of the five Claimants is that, around mid to late [December], the Defendant sent personnel to their respective places of work during their respective working hours (some time after 15 December for the 3rd and 4th Claimants; on 23 or 24 December for the 7th Claimant; on 26 December for the 9th Claimant; and on 28 December for the 11th Claimant), telling them the FEHD contract would come to an end on 31 December and asking if they were willing to be re-deployed to other workplaces thereafter, but without specifying the places, times and re-deployment arrangements.  The five Claimants expressed their refusal right away.  

55.	According to the 3rd, 4th, 7th and 9th Claimants, at that time they were shown a document which they did not understand and the contents of which were not explained to them.  They had no idea whatsoever about the contents of the document when they signed it.  The 4th Claimant’s case is that he was specifically told that he would be paid wages and annual leave pay as soon as possible after he signed the document at hand.  The 7th Claimant’s case is that he signed the document as instructed as he was told that the document was merely a Notice of Expiry of Contract.  The other two Claimants’ case is that they were arranged to sign the document without knowing what was going on.  All the four of them claim that they did not know that refusal to accept the re-deployment was tantamount to voluntary resignation, and that they had never indicated that they would resign.    

56. 	On the other hand, while the Company Representative, who claimed to have talked to the 3rd and 9th Claimants individually in person and had them sign the Reply Slips on Expiry of Contract in mid-December was called by the Defendant to give evidence in court, the staff members who had communicated with the other three Claimants regarding the Reply Slips on Expiry of Contract were not called as witnesses.

57.	The Company Representative contended that although specific re-deployment arrangements or places of work had yet to be confirmed when she talked face to face with the 3rd and 9th Claimants individually, she did read out to them the contents of the Reply Slips including the two available options and leave them to make their own choices, telling them that it was for the purpose of ascertaining their preferences before proceeding to make further arrangements.  When she learned that they refused to accept re-deployment to other places of work, she ticked the second option for them and then let them sign the Reply Slips.  She testified that she also told the 9th Claimant that his failure to follow the re-deployment by the Defendant amounted to resignation.  

58.	And under cross-examination, Ms. Wong Shuk Yin admitted in the end that she neither communicated directly with the five Claimants nor had any idea of the details of the communication between her colleagues and the five Claimants.  She only maintained that, upon instructions given by her superior on 16 December, she visited various FEHD cleaning services roll-call points on 20 and 21 December, bringing along the Reply Slips on Expiry of Contract and informing staff members of less than two years’ service of their last day of service; and after 23 December, she notified staff members of more than two years’ service and ascertaining their intentions regarding re-deployment to other places of work. 

59.	Having carefully considered all the evidence, including all the witness statements, exhibits and testimonies, and having closely observed their demeanour in the course of giving evidence in court and taken into account all the relevant surrounding circumstances, I do not consider any of the Defendant’s witnesses veracious or reliable.  There were extensive contradictions in their testimonies and statements, which were also inconsistent with the actual circumstances on the material days.  Furthermore, when they gave evidence, they were evasive from time to time and kept changing their stance.  I find their evidence to be incredible.

60.	On the contrary, although there were discrepancies between the evidence given by the four Claimants in court and their witness statements, given they are seniors with limited education and, as far as I could observe during the trial, their hearing and ability in comprehension and expression are obviously poor, it is understandable that some of their thoughts were not properly expressed in their statements, which were not prepared by professionals on their behalf.  However, in the course of giving evidence, as long as the questions put to them were clear enough for them to truly understand their meaning and they were given sufficient time to organize their thoughts, they could eventually give clear accounts of the crucial details of events.  Their testimonies were also consistent with both their individual circumstances and objective circumstances.  I accept their evidence.

61.	On the contrary, I do not accept that the Company Representative had face-to-face conversations with the 3rd and 9th Claimants and had the Reply Slips on Expiry of Contract signed.  The reason is that such contention had never been mentioned in any of her statements, nor had it ever been raised at any of the numerous pre-trial hearings or any stage of the two-day trial. What is more unbelievable is that she did not mention such contention or put it to the 3rd Claimant when the 3rd Claimant gave evidence.  She was unable to give a reasonable explanation of her failure to recognize the appearance of the 3rd or 9th Claimant all along.  She could not even provide such basic information as the date and time.  She also gave various versions of what people did at the scene.  Given a time lapse of only two months and her background as a young professional, her memory of the events should have been fresh.  

62.	Furthermore, it is clear from a comparison of the handwriting on the two sets of Reply Slips on Expiry of Contract [Exhibits D-208(1) and D-208(7)] which she claimed to have been written by her, and further comparison of the same with what she wrote in court [Exhibits D-210 and D-213(1)] and in other documents, that she was lying.  

63.	Therefore, the Defendant did not have any substantial evidence to dispute the fact that the five Claimants had communicated with personnel sent over by the Defendant at that time.

64.	Furthermore, turning to the Reply Slips themselves, they contain the following relevant provisions:
“[  ] I am willing to be re-deployed to Yue Wan Estate or Hong Kong Museum of Coastal Defence or Chi Fu Fa Yuen or (              ) as from 1 January 2012 to perform duties of the same nature.  From the date hereof until the date of re-deployment, if I change my mind and do not intend to work at (              ), I will be taken as resigning of my own accord and have to give 7 days’ notice or payment in lieu of notice to the Company in order to terminate the employment contract.   

[  ] For personal reasons, I am not willing to be re-deployed to other places of work for personal reasons, and I also decide to resign of my own accord and my last working day is _____(Day)____(Month)_____(Year).

* Please delete as appropriate
* Please tick as appropriate”

65.	There is no doubt that the Reply Slips offered the workers only two options, one being willing to be re-deployed to other places of work, and the other being unwilling to be re-deployed, which would be taken as a decision to resign voluntarily.  No other options were available.  Therefore, it is highly probable that the Reply Slips did not truly reflect the intentions of the signatories, which is also consistent with the contention made by the four Claimants that they had merely indicated that they were unwilling to accept the re-deployment but had never indicated that they would resign.

66.	And taking into account each Claimant’s age, education background and handwriting on the relevant Reply Slip, I accept the Claimants’ evidence that they simply put their signatures on the Reply Slips and that the rest was filled in by staff members of the Defendant.  The Claimants could not read and understand the contents of the Reply Slips, and no one explained the contents to them.  They did not know that refusal to be re-deployed would be taken as voluntary resignation.   

67.	Therefore, having carefully considered the proper construction of the Reply Slips and the fact that the four Claimants signed them without full knowledge and understanding of their effect, I find that although they signed the Reply Slips, the four Claimants had never decided or indicated that they would resign of their own accord, and the Reply Slips did not serve to terminate the employment relationship between the Defendant and the four Claimants.

68.	Indeed, the Defendant’s  case and the conduct of the parties further demonstrate the fact that the four Claimants’ signing of the Reply Slips on Expiry of Contract had not been taken as voluntary resignation.

69.	First of all, on the Defendant’s own case, it sent staff members to various roll-call points for the purpose of informing the cleaning workers of the expiry of the cleaning services contract on 31 December, and the Defendant merely wanted to make preliminary enquiries about the workers’ intentions regarding re-deployment so as to enable the Defendant to decide the way forward.  For this reason, particular re-deployment arrangements and new places of work were yet to be confirmed.

70.	Furthermore, neither party had ever made any subsequent move in respect of voluntary resignation.  The Defendant took no corresponding steps to accept their resignation; instead, it issued re-deployment notifications to the five Claimants on 29 December, requiring them to turn up for work at the new places of work on 1 January 2012, failing which they would be regarded as being absent without leave.

71.	Subsequently on 6 January 2012, the Defendant sent notifications to the Claimants by post, informing them that by reason of their absence at the new places of work on 1 January 2012 and thereafter, they were deemed to have resigned of their own accord and terminated the employment contracts.  This shows that at no time did the Defendant or the Claimants regard the signing of the Reply Slips by the four Claimants as voluntary resignation.  The Defendant was all along fully aware that the Claimants had not indicated that they would resign.   

Exclusion from right to severance payment 
72.	I have also considered whether the re-deployment of staff to other working places by the Defendant would enable the Defendant to avoid liability to pay severance payment by relying on section 31C of the Employment Ordinance.  As the Defendant sought to change the times and places of the Claimants’ employment and most of the terms and conditions of the 3rd Contract could not be retained, I only have to consider whether section 31C(3) is applicable, in other words, whether the Defendant had made written offers to the five Claimants to renew their employment contracts or to re-engage them under new contracts not less than 7 days before the termination of the employment contracts, and in relation to the five Claimants the offers constituted offers of suitable employment which were no less favourable than hitherto, so that if the five Claimants unreasonably refused those offers, they shall not be entitled to severance payments.    

73.	Viewing the arrangements made by the Defendant as a whole, I do not consider section 31C(3) applicable.  The Defendant had only contacted the five Claimants twice in relation to the arrangements after 31 December 2011, with only the first contacts with the 3rd, 4th and 7th Claimants made no less than 7 days before the termination of the employment contracts or the expiry of the contract terms as required by section 31C(3).

74.	Besides, during the course of the first contact, the Defendant only showed the Claimants the Reply Slips on Expiry of Contract which, however, contained no terms and conditions of new contracts, not even essential terms of employment such as working hours, wages, specific places of work and holidays.  They simply could not satisfy the statutory requirements.  

75.	The second contact was made on 29 December, which temporally failed to meet the 7-day requirement.  Furthermore, the re-deployment notices, being the only documents shown, specified nothing but the working hours and places of work and were silent on wages or other essential terms and conditions of employment.

76.	Moreover, the working hours of each of the five Claimants were varied.  The working hours of the 7th and 11th Claimants were even significantly varied, and this would, as the Claimants pointed out, certainly affect their other part-time engagements and family arrangements.  In addition, the five Claimants had hitherto worked at the same places all along; given their senescence and limited education or even illiteracy, they would naturally find it difficult to work in a completely new environment.   

77.	Furthermore, at no stage did the Defendant specify the amount of wages.  Although the Company Representative contended that at the Labour Department meeting on 28 December she mentioned that the wages would not be lower than those in the original contracts or the statutory minimum wage, none of the four Claimants attended that meeting.  Nor is there evidence that the 9th Claimant, who was the only Claimant present for some time at the meeting on 28 December, was actually present at the moment the Company Representative made the above statement on wages.  In any event, even if it is assumed that the five Claimants were all present, given that the Defendant had varied their places of work, working times and number of working hours, a general statement that the wages would not be lower than those in the original contracts or the statutory minimum wage would not, without more, suffice to show that the new offers of employment were not less favourable than hitherto.  All these indicate that the five of them had not unreasonably refused the Defendant’s offers.

78.	 In the premises, the arrangements made by the Defendant failed to comply with the statutory requirements, and the five Claimants were entitled to refuse the Defendant’s offer on 29 December.  The Defendant cannot avoid liability for severance payments on the ground that it had arranged new jobs for the Claimants.

Working for the new service contractor
79. 	The Defendant also sought to argue that, since 1 January 2012, the contractor who took over the FEHD service contract from the Defendant had employed the five Claimants as cleaning workers in their existing posts.  However, the Defendant admitted that, as of the middle of the present trial, it had no idea at all whether the five Claimants were employed by that contractor.  The Defendant also admitted that at no point during their employ by the Defendant had the five Claimants indicated that they would switch over to work for the new service contractor.
 
80.	On the other hand, the five Claimants indicated that they had been awaiting specific arrangements by the Defendant and it was only when they heard nothing from the Defendant that they decided to work for the new service contractor from 1 January 2012, and written employment contracts were entered into only after they reported duty.  This being the case, the Defendant  cannot possibly avoid liability for severance payments on the ground that the Claimants eventually switched to another company on 1 January 2012.

Ruling
81.	 Having considered all the evidence and the various arguments and grounds of defence put forward by the Defendant, I do not consider any of those grounds sustainable.  The employment contracts between the Defendant and the five Claimants came to an end following the expiry of the FEHD contract on 31 December 2011.  As the parties neither renewed the existing contracts nor entered into any new contracts, the Defendant is liable to pay severance payments to the Claimants.  Alternatively, even if the employment contracts did not come to an end upon the termination of the FEHD contract, the Defendant was in breach of the fundamental terms and conditions of the employment contracts by making the requests for re-deployment, and the Claimants were therefore entitled to refuse re-deployment on 29 December, not to turn up for work at the new places of work on 1 January 2012, and to seek severance payments.

82.	For the above reasons, by virtue of section 31D of the Employment Ordinance, the five Claimants have been dismissed by reason of redundancy.  Accordingly, I allow their claims under item (A) for severance payments and order that the Defendant do pay forthwith: HK$13,412.05 to the 3rd Claimant, HK$3,003.42 to the 4th Claimant, HK$21,848 to the 7th Claimant, HK$13,827.86 to the 9th Claimant, and HK$13,826.82 to the 11th Claimant. 

83.	As I have allowed the five Claimants’ claims for severance payments, their claims under the second item for terminal payments are dismissed.

84.	Interest on the said judgment sums is to be calculated in accordance with section 39(3) of the Labour Tribunal Ordinance (Cap 25).

Costs
85.	I have considered the submissions on costs made by the parties.  The basic principle governing awards of costs is that costs are to follow the event.  There are no exceptional circumstances in the present case to justify a departure from that principle.  As provided in section 28 of the Labour Tribunal Ordinance, costs include any reasonable expenses necessarily incurred and any loss of salary or wages suffered by a party and its witnesses in attending a hearing of the Tribunal.  Having regard to the reasonableness of costs and the factual background to the present case, I order that the Defendant do pay forthwith: HK$197 to the 3rd Claimant, HK$1,020 to the 4th Claimant, HK$180 to the 7th Claimant, HK$290 to the 9th Claimant, and HK$199to the 11th Claimant.

86.	Interest on the above sums is also to be calculated in accordance with section 39(3) of the Labour Tribunal Ordinance and to be paid by the Defendant.





	(Michelle Lam)
	Presiding Officer of the Labour Tribunal


Translated by the Judgment Translation Unit of the Judiciary and vetted by Mr Edmund Cham, Solicitor

