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Disciplinary procedures and the termination of employment contract

Jun 06, 2016
Although it is not a legal requirement, companies often adopt a set of disciplinary procedures for their employees. A consistent process is important, particularly for large organisations. On the other hand, if the disciplinary procedures have become part of the employment contract, the employer’s right to dismiss an employee could be restricted.

In an earlier case, Blakeney-Williams v Cathay Pacific Airways Ltd [2012], the Court of Final Appeal held that, if there were disciplinary procedures to follow before dismissal, the employer could not simply dismiss the employee by notice (or payment in lieu of notice) without going through those procedures. The court said that, even if no reason was given for the dismissal, the employer would still be liable for wrongful dismissal if the employee could prove that the dismissal was for disciplinary reason (and thus the disciplinary procedures should have been followed). In that case, the court said that the employer would be liable to compensate the employee for salary lost during the expected time required for the disciplinary procedures to take place.

In the recent case of Lam Chun Choi v Standard Chartered Bank (Hong Kong) Ltd [2016], the High Court dealt with an appeal from the Labour Tribunal in relation to a dismissal of employees for disciplinary reason.

In that case, the claimant was dismissed by the bank for alleged poor performance. The claimant brought a claim in the Labour Tribunal, arguing that the bank was in breach of the employment contract as the disciplinary procedures (which were incorporated to his employment contract) had not been followed before his dismissal.

The Tribunal dismissed the original claim, as it thought that the disciplinary procedures would only apply to cases of conduct-related performance (involving misdeeds such as willful disobedience, dishonesty or conflict of interest) but not performance in general (involving behaviour such as incompetence, neglect of duty or general poor performance).

The claimant appealed to the High Court. The High Court reviewed the disciplinary procedures in detail and found that the two words “conduct” and “performance” were often being used consistently together. Therefore, it was clear the disciplinary procedures were intended to cover both conduct-related performance and performance in general.

As such, the High Court held that the Tribunal was wrong in holding that the disciplinary procedures would not apply to “poor performance in general”. The High Court then held that the Tribunal had failed to consider certain relevant matters, including:-
  1. whether the bank was obliged to investigate into the matter for discipline purposes;
  2. if it was found that the bank was obliged to (but did not) so investigate, whether that still entitled the bank to dismiss the claimant; and
  3. whether the bank was obliged to proceed to a disciplinary hearing before dismissing the claimant.

Based on the above findings, the High Court allowed the appeal and remitted the case to the Tribunal for a new hearing.

Therefore, it is advisable for an employer to specify clearly in the employment contract whether the disciplinary procedures form a part of the employment contract, the conditions for them to apply, and whether the right to dismiss an employee would be subject to the completion of the disciplinary procedures.

For more information on Employment Law matters, please contact:

Chris Gordon | | +852 2861 8413

Chris Lambert | | +852 2861 8417

Jennifer Wong | | +852 2861 8318

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