News & Events

Deacons-Human Resources and Pensions Newsletter, October 2013

Submitted By Firm: Deacons

Contact(s): Cynthia Chung


Elsie Chan, Victoria Cheung, Gladys Ching, Shelley Liang,

Date Published: 11/18/2013

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Employers must think twice before summarily dismissing an employee

Employers must think twice before summarily dismissing an employee
by Elsie Chan, Associate ( and Victoria Cheung,Trainee Solicitor(

If an employer wants to dismiss an employee without notice or paying wages in lieu of notice, there needs to be a good cause. In the Court of First Instance case Grant David Vincent Williams v Jefferies Hong Kong Limited [HCA 320/2011], the Defendant paid a dear price for summarily dismissing the Plaintiff without valid grounds.

The Defendant is a Hong Kong subsidiary of a New York-based international investment banking firm. The Plaintiff joined the Defendant in August 2010 as Head of Equity Trading Asia with a title of Managing Director. The Plaintiff suggested issuing the Daily Newsletter under the Defendant's name as a marketing tool. The Defendant agreed and set approval procedures for the publication of the Daily Newsletter. Under the approval procedures, the Plaintiff was required to send the daily issue to his London-based supervisor for approval before the newsletter can be sent out to its subscribers.

On 7 December 2010, the Plaintiff sent an email to a personal assistant in New York and to the London-based supervisor enclosing the draft newsletter, requesting the personal assistant to send out the Daily Newsletter when it had been approved. However, the newsletter was mistakenly published without the knowledge of the Plaintiff before approval came through. The personal assistant acknowledged fault of it.

In less than 24 hours of the publication, the Plaintiff was summarily dismissed for gross misconduct. The Plaintiff claimed against the Defendant for wrongful dismissal and for breach of the implied term of trust and confidence.

The Court of Appeal's ruling

The newsletter in question referred to a YouTube video clip depicting Hitler, with subtitles that mocked the CEO of JPMorgan. The judge ruled that the Plaintiff did not create the video and referring to it in the newsletter is not tantamount to promoting it. The mistaken publication was only a result of human error or a defect in the approval system, or a combination of both, but not the fault of the Plaintiff. The Plaintiff was also offered no reasons for the dismissal and no opportunity of discussion when he was fired. Accordingly, the judge concluded that the dismissal was wrongful and unfair.

The judge also concluded that the Defendant breached the implied duty of trust and confidence it owed the Plaintiff for the way it handled the dismissal and its attempt to distance itself from the Plaintiff. Shortly after the publication, the Defendant sent an explanatory email to the subscribers stating that the Defendant had inadvertently distributed "Grant Williams' 7 December 2010 edition of [the newsletter]". This was seen by the judge as an effort to shift the overall responsibility of the publication onto the Plaintiff by denying the newsletter as a corporate publication.

Decision on costs

The Plaintiff sought costs on an indemnity basis, which is higher than the standard basis (i.e. party and party basis). In this case, when deciding whether an unusual order for indemnity costs should be made, the judge took into account the conduct of the Defendant such as for: (1) dismissing the Plaintiff on the misconception that the Plaintiff was the author of the subtitles to the video, (2) shirking accountability onto the Plaintiff when the publication was apparently not his fault, (3) making no constructive efforts to settle the action, and (4) pressing for security for costs from the Plaintiff in order to overawe him. In the end, the Plaintiff was awarded over HK$15.8 million in damages covering his loss of income and bonuses plus costs to be paid to him on an indemnity basis.

This case serves as an important reminder to employers who wish to summarily dismiss an employee of the need to ascertain whether there is any misconduct on the part of the employee and even if there is, whether the misconduct is so serious that a summary dismissal is warranted. Dismissing an employee summarily without supporting grounds can be costly to employers.


Restrictive covenant is void for protection against competition, by Elsie Chan, Associate (

In the District Court case Union Gain Limited v Chu Wilton Lucas [DCCJ 2383/2013], the Defendant, Mr. Chu, was employed under an employment contract with the Plaintiff, a hair salon, as a hair stylist.

Immediately after termination of the Defendant's employment, he joined a competitor of the Plaintiff. The Plaintiff sought an interlocutory injunction against the Defendant restraining him from joining the competitor in breach of the restrictive covenant under his employment contract with the Plaintiff.

Under the Defendant's employment contract with the Plaintiff, it was provided that :-

"9(a)…the Employee covenants that he will not without the prior written consent of the Company (such consent to be withheld only in so far as may be reasonably necessary to protect the legitimate interests of the Company) after the termination of this agreement for whatever reason....


(iii) for a period of 1 year, whether on his own account or as shareholder, partner, director, agent, servant or consultant or otherwise for any other person, be engaged in the provision of Services within a radius of ½ mile of the Premises or such other business premises of the Company (as to be determined by the Company at its absolute discretion) pursuant to clause 4 above where the Employee habitually worded [sic] 6 months prior to the said termination or the Premises in the case of termination as a result of a breach of Clause 1 above."

The court considered that as it was an interlocutory application, the court could not resolve factual disputes. Further, as it was unlikely that the trial of the action could take place before the expiration of the relevant restrictive covenant, the court considered that the usual American Cyanamid test should be applied with a rider that the court should have a greater regard to the Plaintiff's prospect of success.

The court considered that there was simply nothing pleaded in the Statement of Claim to assert that the restrictive covenant in question was enforceable. In terms of evidence, it appeared that the affirmation of the Plaintiff's witness only contained very general and non-specific references to trade connections, goodwill and confidential information. More importantly, the Plaintiff's counsel had confirmed that such trade connections, goodwill and confidential information which the Plaintiff sought to protect under the restrictive covenant only related to existing customers of the Plaintiff.

In the circumstances, the present restrictive covenant was plainly unreasonably wide as it extended beyond dealing with existing customers of the Plaintiff whom the Defendant had served when he was employed by the Plaintiff. It prohibited the Defendant from serving new customers within the ½ mile radius, even though the Plaintiff had no connection with such customers whatsoever. The court considered that there was simply no justification for such a wide-ranging clause. Therefore the court ruled that the Plaintiff had no good prospect of success in upholding the validity of the present restrictive covenant and dismissed the Plaintiff's application.

Employers should note that a post termination restrictive covenant is only enforceable if the restrictions aim to protect their legitimate business interests and the scope of restriction is reasonable. In addition, the employer wishing to enforce the restrictive covenant has the duty to provide evidence to the court to support the aforesaid.


The maximum and minimum relevant income levels to be increased for mandatory MPF contributions, by Gladys Ching, Associate (

On 17 July 2013, resolutions were passed by the Legislative Council to increase both the minimum relevant income ("Min RI") and the maximum relevant income ("Max RI") levels for the purpose of making mandatory contributions under the Mandatory Provident Fund Schemes Ordinance. The changes are summarised below.

Min RI

With effect from 1 November 2013:-

  1. the monthly Min RI will be increased from HK$6,500 per month to HK$7,100 per month (applicable to employees remunerated on monthly basis or less frequently than monthly basis as prorated or self-employed persons);
    • the daily Min RI will be increased from HK$250 per day to HK$280 per day (applicable to employees remunerated more frequently than monthly basis or casual employees of an industry scheme); and
      • the annual Min RI will be increased from HK$78,000 per year to HK$85,200 per year (applicable to self-employed persons).

As a result of the aforesaid changes, starting from 1 November 2013, whilst the duty on the part of the employer remains unchanged, only those employees who earn an income of more than the above Min RIs (as the case may be) will be required to make mandatory employee's contributions.

Max RI

With effect from 1 June 2014:-

  1. the monthly Max RI will be increased from HK$25,000 per month to HK$30,000 per month (applicable to employees remunerated on monthly basis or less frequently than monthly basis as prorated or self-employed persons);
    • the daily Max RI will be increased from HK$830 per day to HK$1,000 per day (applicable to employees remunerated more frequently than monthly basis or casual employees of an industry scheme); and
      • the annual Max RI will be increased from HK$300,000 per year to HK$360,000 per year (applicable to self-employed persons).

The effect of these changes is that starting from 1 June 2014, the maximum level of contribution required from both employers and employees whose relevant income is more than the current income cap (i.e. more than HK$25,000 per month, HK$830 per day or HK$300,000 per year as the case may be) will be increased. For example, for an employee whose monthly income is HK$28,000, the level of contribution required from both the employer and the employee will be increased from HK$1,250 (i.e. HK$28,000 capped at HK$25,000 x 5%) to HK$1,400 (i.e. HK$28,000 x 5%).


New PRC Exit-Entry Requirements Involving Foreigners, by Iris Cheng, Partner ( and Shelley Liang, Associate (

On 30 June 2012, the Standing Committee of Chinese National People's Congress enacted the "Exit and Entry Administration Law of the People's Republic of China" (the "New Law"), which took effect on 1 July 2013. The State Council subsequently promulgated the "Administrative Regulation of the People's Republic of China on the Entry and Exit of Foreigners" (the "New Regulation") on 22 July 2013, which has come into force since 1 September 2013. The New Law and the New Regulation replace the existing laws and regulations which had been in effect since the mid 1980s. In this article, we highlight some salient points of the New Law and the New Regulation especially those employment-related immigration matters:

1. Changes to the visa categories and resident permits

Under the New Regulation, the types of visa have been increased from 8 to 12, and the main changes to the visa categories are:

  • Dividing F visa into F visa and M visa: F visa, which is currently also used for business purposes, will only be reserved for non-commercial activities such as for scientific, cultural, athletic and educational purposes. A separate M visa will be created to cover business and trade activities.
  • Dividing L visa into L visa and Q visa: Currently, foreigners with L visa may enter China for tourism, family reunions or personal affairs. As this visa category does not precisely correspond to the purpose of these various types of visits, the New Regulation has limited L visa to tourism purposes only and, at the same time, introduced a "family reunion" visa called Q visa, which will be issued to the relatives of Chinese citizens or permanent residence applying to enter and reside in China for purposes of family reunion. Q visa is also divided into Q1 visa (for long term stay of more than 180 days) and Q2 visa (for short term visit of less than or equal to 180 days).
  • Dividing Z visa into Z visa and S visa: Currently, Z visa is the "work visa" issued to foreigners working in China and their accompanying family members. Under the New Regulation, Z visa shall be issued to persons applying to work in China only. The family members of the foreign workers will have to apply for S visa which is newly created to be issued to foreigners with family member residing in China for work or study etc. who come to China for family visit, or other persons who need to reside in China for private purposes. S visa is divided into S1 visa (for long term stay of more than 180 days) and S2 visa (for short term visit of less than or equal to 180 days). To be eligible to apply for S1 visa, the applicant shall be the spouse, parents, children under the age of 18, or parents-in-law of the foreigner who is residing in China.
  • Creating new R visa: A new category of talent visa called R visa is firstly introduced by the New Regulation. R visa will apply to foreign high-level talents and professionals whose skills are urgently needed in China.
  • Splitting X visa: The New Regulation has divided the current X visa (student visa) into X1 visa and X2 visa. X1 visa applies to foreigners coming to China for long-term study for more than 180 days while the X2 visa applies to foreigners coming to China for short-term study for less than or equal to 180 days).

The New Regulation has also newly categorized residence permits into five types, namely working residence permits, study residence permits, journalist residence permits, family reunion residence permits and personal affair residence permits. Different types of visa holders shall apply for the corresponding residence permits for residing in China.

2. Harsher penalties imposed to tackle illegal employment

The New Law imposes harsher sanctions with the aim of tackling illegal entry, illegal residence and illegal employment by foreigners. The New Law, for the first time, gives clear definition of "illegal employment", and stipulates that foreigners should obtain the required identification and employment documents when they are working in China.

Penalties for illegally working in China include:

  • Sanctions on Foreigner: Any foreigner working in China without valid employment documentation may be subject to a fine ranging from RMB 5,000 to RMB20,000. In serious circumstances, detention from 5 to 15 days may also be imposed.
  • Sanctions on Employer: A fine of RMB10,000 may be imposed on employer for every foreigner illegally employed subject to a cap of RMB100,000. Any monetary gains from the employment of such individuals will also be forfeit. < >Possible Deportation: Those who have committed "severe violations" of the New Law that do not constitute crimes may be deported and prohibited from entering China for a period of up to 10 years. It is newly provided in the New Law that the foreign executive of a company in China may be prohibited from departing China if he or she defaults in paying labour remuneration to workers. < >The New Regulation provides that relevant entities must report to the local entry and exit administrative authorities if the foreign nationals employed by them have left their jobs, changed work locations, or if the overseas students enrolled by them have left.

As the New Law and the New Regulation have just been promulgated, it is advisable that employers shall pay close attention to their implementation status in the coming months.











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Altra Industrial Motion Inc.

Altra Industrial Motion Inc. has multiple locations in the U.S., as well as Central America, Europe, and Asia. The Employment Law Alliance has proved to be a great asset in assisting us in dealing with employment issues and matters in such diverse venues as Mexico, Australia, and Spain. We have obtained excellent results using the ELA network for matters ranging from a multi-state review of employment policies to assisting with individual employment issues in a variety of foreign jurisdictions.

In one instance, we were faced with an employment dispute with a former associate in Mexico that had the potential for substantial economic exposure. The matter had been pending for over a year, and we were not confident in the employment advice we had been receiving. I obtained a referral to the ELA counsel in Mexico, who was able to obtain a favorable resolution of the dispute in only a few days. Based on our experiences with the ELA, we would not hesitate to use its many resources for future employment law needs.

American University in Bulgaria

In my career I have been a practicing attorney, counsel to the Governor of Maine, and CEO of a major public utility. I have worked with many lawyers in many settings. When the American University in Bulgaria needed help with employment litigation in federal court in Syracuse, New York, we turned to Pierce Atwood, the ELA member we knew and trusted in Maine, for a referral. We were extremely pleased with the responsiveness and high quality of service we received from Bond Schoeneck & King, the ELA's firm in upstate New York. I would not hesitate to recommend the ELA to any employer.

David T. Flanagan
Member of Board of Trustees 

Arcata Associates

I really enjoyed the Conducting an Effective Internal Investigation in the United States webinar.  We are in the midst of a rather delicate employee relations issue in California right now and the discussion helped me tremendously.  It also reinforced things that you tend to forget if you don't do these investigations frequently.  So, many, many thanks to the Employment Law Alliance for putting that webinar together.  It was extremely beneficial.

Lynn Clayton
Vice President, Human Resources

Barrett Business Services, Inc.

I recently participated in the ELA-sponsored webinar on the Employee Free Choice Act.  I was most impressed with that presentation.  It was extremely helpful and very worthwhile.  I have also been utilizing the ELA's online Global Employer Handbook.  This compliance tool is absolutely terrific. 

I am familiar with several other products that purport to provide up-to- date employment law information and I believe that this resource is superior to other similar compliance manuals.  I am delighted that the ELA provides this free to its members' clients.

Boyd Coffee Company

Employment Law Alliance (ELA) has provided Boyd Coffee Company with a highly valued connection to resources, important information and learning. With complex operations and employees working in approximately 20 states, we are continually striving to keep abreast of specific state laws, many of which vary from state to state. We have participated in the ELA web seminars and have found the content very useful. We appreciate the ease, cost effectiveness and quality of the content and presenters offered by these web seminars.  The Global Employer Handbook has provided our company with a very helpful overview of legal issues in the various states in which we operate, and the network of attorneys has helped us manage issues that have arisen in states other than where our Roastery and corporate headquarters are located in Portland, Oregon.

Capgemini Outsourcing Services GmbH

As an international operating outsourcing and consulting supplier Capgemini has used firms of the Employment Law Alliance in Central Europe. We were always highly satisfied with the quality of employment law advice and the responsiveness. I can really recommend the ELA lawyers.

Hirschfeld Kraemer

As an employment lawyer based in San Francisco, I work closely with high tech clients with operations around the globe. Last year, one of my clients needed to implement a workforce reduction in a dozen countries simultaneously. And they gave me 48 hours to accomplish this. I don't know how I could have pulled this off without the resources of the ELA. I don't know of any single law firm that could have made this happen. My client received all of the help they needed in a timely fashion and on a cost effective basis.

Stephen J. Hirschfeld

Hollywood Entertainment Corporation

As the Vice President for Litigation & Associate General Counsel for my company, I need to ensure that we have a team of top-notch employment lawyers in place in every jurisdiction where we do business. And I want to be confident that those lawyers know our business so they don't have to reinvent the wheel when a new legal matter arises. With more than 3400 stores and 35,000 employees operating in all 50 U.S. states and across Canada, we rely on the ELA to partner with us to help accomplish our objectives. I have been delighted with the consistent high quality of the work performed by ELA lawyers. I encourage other in-house counsel to use their services, as well.

Ingram Micro

Ingram Micro is the world's largest technology distributor, providing sales, marketing, and logistics services for the IT industry around the globe. With over 13,000 employees working throughout the U.S. and in 35 international countries, we need employment lawyers who we can count on to ensure global legal compliance. Our experience with many multi-state and multi-national law firms is that their employment law services are not always a high priority for them, and many do not have experts in many of their offices. The ELA has assembled an excellent team of highly skilled employment lawyers, wherever and whenever I need them, and they have proven to be an invaluable resource to our company.

Konami Gaming

Our company, Konami Gaming, Inc., is growing rapidly in a very diverse and highly regulated industry. We are aggressively entering new markets outside the domestic U.S., including Canada and South America. I have had the recent opportunity to utilize the services provided by the ELA. The legal advice was both responsive and professional. Most of all, the entire process was seamless since our Nevada attorney coordinated the services and legal advice requested. I look forward to working with the ELA in the future, as it serves as a great resource to the legal community.

Jennifer Martinez
Vice President, Human Resources

Nikkiso Cryo, Inc.

Until recently, I was unaware of the ELA's existence. We have subsidiaries and affiliates throughout the United States, as well as in Asia, the Middle East and Europe. When a recent legal issue arose in Texas, our long-time Nevada counsel, who is a member of the ELA, suggested that this matter be handled by his ELA colleague in Dallas. We are very pleased with the quality and timeliness of services provided by that firm, and we are excited to now have the ELA as an important asset to help us address employment law issues worldwide.

Palm, Inc.

The ELA network has been immensely important to our company in helping us address an array of human resources challenges around the world. I strongly encourage H.R. executives who have employees located in many different jurisdictions to utilize the ELA's unparalleled expertise and geographic coverage.

Stacy Murphy
Former Senior Director of Human Resources

Rich Products

As the General Counsel for a company with 6,500 employees operating across the U.S. and in eight countries, it is critical that I have top quality lawyers on the ground where we do business. The ELA is an indispensable resource. It has taken the guesswork out of finding the best employment counsel wherever we have a problem.

Jill K. Bond
Senior Vice President/General Counsel, Shared Services and Benefits

Ricoh Americas Corporation

We have direct sales and service offices all over the U.S., but have not necessarily had the need in the past for assistance with legal work in every state where we have a business presence. From time to time, we suddenly find ourselves facing a legal issue in a state where we have no outside counsel relationship. It has been a real benefit to know that the ELA has assembled such an impressive team of experts throughout the U.S. and overseas.

A few years ago, we faced a very tough discrimination lawsuit in Mississippi. We had never had to retain a lawyer there before. I was absolutely delighted with the Mississippi ELA firm. We received an excellent result. They will no doubt handle all of our employment law matters in Mississippi in the future. I have also obtained the assistance of several other ELA firms around the U.S. and have received the same outstanding service. The ELA is a tremendous resource for our company.

Roberts-Gordon LLC

Our affiliated companies have used the Employment Law Alliance in connection with numerous acquisitions, and have always been extremely pleased with our ability to obtain the highest quality legal advice on due diligence issues from jurisdiction to jurisdiction. We have found the Employment Law Alliance firms to be not only first rate with respect to their legal advice but also responsive and timely in assisting us with federal and state law issues critical to our due diligence efforts. We consider the Employment Law Alliance to be an important part of our team.

Rockwell Collins, Inc.

We have partnered with many ELA firms on the development and execution of case management strategies with very positive results. We have been very pleased with the legal advice and counsel provided by the law firms we have utilized who are affiliated with the Employment Law Alliance. The ELA firms we have worked with are customer focused, responsive, and thorough in their approach to handling labor and employment law matters.

Elizabeth Daly
Assistant General Counsel


Sanmina-SCI has facilities strategically located in key regions throughout the world. Our customers expect that we will provide them with the highest quality and most sophisticated services in the marketplace. We have that same expectation for the lawyers with whom we do business. With operations in 17 countries, we need to be certain that we have a team of lawyers working together to address our employment law needs worldwide. The ELA has delivered exactly what it promised-- seamless and consistent high quality services delivered in each locale around the globe. It has quickly become a key asset for our human resources department.


We own, manage, and franchise hotels throughout the U.S. and in more than 90 countries. With more than 145,000 employees worldwide, ensuring that we comply with the complex web of local labor and employment laws in every one of these jurisdictions is a daunting task. The Employment Law Alliance has served as an important resource for us and we have benefited greatly from its expertise and long reach. When a legal dispute or issue has arisen in some far-flung place, Employment Law Alliance lawyers have always provided responsive, practical, and cost-effective assistance.

Wilmington Trust Corporation

Wilmington Trust has used the ELA to locate firms in California, Washington State, Georgia, and Europe. Our experience with the ELA lawyers with whom we have worked has always been one of complete satisfaction and prompt, practical advice.

Michael A. DiGregorio
General Counsel