Hong Kong: Amendments to the Labour Tribunal Ordinance – Security for awards and orders

The Administration of Justice (Miscellaneous Provisions) Ordinance 2014 (the "Ordinance") was gazetted and came into effect on 24 December 2014.  Part 6 – Division 1 makes a number of changes to the Labour Tribunal Ordinance (the "LTO"), the most significant of which are in relation to:

• section 30 – conferring on the Tribunal the power to make an order for one party to give security for the payment of an award; and
• section 31(4) – expanding the existing right of the Tribunal to make an order for payment of security on the review of an award or order.

A copy of the Ordinance can be found here.

Section 30 – Security for awards and orders

Under the old section 30 of the LTO, the Tribunal had the power to make an award for payment of security in the context of an adjournment i.e. it could decide to grant an adjournment only on the condition that a sum of money (or some other form of security) would be paid into the Tribunal.  It could do this if it was of the opinion that that an adjournment might result in prejudice to one party because of a disposal or loss of control of assets by the defendant.  The new section 30 of the LTO widens the scope of this power to apply not only in the context of an adjournment but at any stage in the proceedings, and sets out the factors that the Tribunal will take into consideration.

Under the new section 30 of the LTO, a Tribunal may order a party to give security for the payment of an award or order that has been or may be made if the Tribunal considers it "just and expedient" to do so.  The Tribunal can make the order either of its own motion or on the application of either party.

Section 30(4) gives a non-exhaustive  list of the factors the Tribunal will consider before making such an order, including where:

1. the Tribunal is satisfied that there is a real risk that payment of an award or order will be obstructed or delayed because:
   • one party has disposed of, removed from Hong Kong or lost control of its assets;
   • that party is about to do so; or
   • there is a real risk of any of those things happening;
2. the Tribunal is satisfied that:
   • one party has conducted the proceedings in a manner that delays the determination of the case; or
   • the party's conduct otherwise constitutes an abuse of process; or
3. the Tribunal is satisfied that one party has, without reasonable excuse, failed to comply with any award, order or direction.

If a party fails to comply with an order made under section 30, the Tribunal may – depending on the applicant – dismiss the claim, stay proceedings or enter judgment on the claim against the party.

Section 31 – Security on review of awards and orders

The Ordinance also amends section 31(4) of the LTO, which gives the Presiding Officer the power to make a similar order in the context of reviewing an award or order of the Tribunal.

Under the old section 31(4) of the LTO, if a party applied for a review of an award or order, the Presiding Officer could, if he thought fit, make an order for payment of security into the Tribunal if there was a possibility that assets might be disposed of such as would render the award unable to be satisfied to the prejudice of any party.

The new section 31(4) has been amended to reflect the new "just and expedient" test embodied in section 30: after a party has applied for a review of an award or order of the Tribunal, the Presiding Officer may order the applicant to give security if he considers it "just and expedient" to do so.  Again, the Presiding Officer can make the order either of his own motion or on the application of either party.

A (non-exhaustive) list of the factors the Presiding Officer will consider before making such an order is set out in section 31(4C), and includes where:

(a)  the application for a review of an award or order is:

• devoid of merit;
• is made to delay the process; or

(b)  assets that may be available to satisfy an award or order may be disposed of to the prejudice of any party.

If a party fails to comply with an order made under section 31(4), the Presiding Officer may dismiss the application for review.

Comment

These amendments to the LTO should serve as a reminder of the tools available to employers during the course of any employment litigation, particularly when handling vexatious litigants.  Although the Labour Tribunal procedure is intended to offer a relatively informal means of resolving disputes in comparison to court litigation, the power of the Tribunal and Presiding Officer to make awards for payment of security in relation to abuses of process and applications for review that are devoid of any merit, can act as useful deterrents against former employees who simply want to drain time, resources and morale from their former employers.  In order to apply successfully for such orders under sections 30 and 31(4) of the LTO, employers will need to be able to show that it would be "just and expedient" for the Tribunal or Presiding Officer to do so.

Please contact Gareth Thomas, Helen Beech or David Smail of the Employment Pensions and Incentives team if you have any questions.