Businesses of almost all sectors are severely affected by the latest COVID-19 outbreak. Some companies are compelled to ask their employees to take no-pay leave or even start laying off workers, sparking unavoidable labor disputes. Labor disputes refer to disagreement between employer and employees related to wages, benefits, hours of work, dismissal, wage default, or fulfillment of contract.
If disputes between employers and employees arise over the above circumstances, or even developed into a legal issue, employers should pay more attention to the communication and handling measures beforehand. To avoid unnecessary labor disputes, communication between employers and employees is key, while contracts have to be written clearly with bilateral agreement.
Regarding the arrangement of rest days, holidays and leave, Chapter 4 of the Employment Ordinance states that "whether a rest day is paid or not is to be agreed by employers and employees." If the company decided to let their employees to take no-pay leave, employers should first consider offering options, such as 4 days of leave per month, half a month or even a whole month.
Arrangement on no-pay leave should not be decided by either employers or employees unless specifically written in the employment contract, otherwise it could be treated as "unreasonable variation of the terms of the employment contract" which employees have the right to make a claim for remedies. In short, employers should consult and discuss with employees before making any decision on no-pay leave arrangement, and take individual employee's needs into consideration so as to maintain harmonious labor relations.
Chapter 9 of the Employment Ordinance listed limitations on termination of contract of employment, and calculation on termination payments like payment in lieu of notice and severance payment. What does "dismissal" mean?
An employee is taken to be dismissed by reason of redundancy if the dismissal is due to the fact that:
If employees were unreasonably dismissed, meaning that employers were not based on valid reasons listed in the Ordinance such as employee's behaviours, competences, or qualifications to make the decision, employees could make a claim for remedies. Employers should also pay attention to the definition of "lay-off" under the Employment Ordinance as employers may have to make severance payments to qualified employees.
In the employment contract, if it specifies that the employee's remuneration is dependent on the kind of work responsibilities that he was given, then the employee can be regarded as laid off based on the following scenarios:
(The days of lock-out, rest days, annual leave and statutory holidays should not be counted as normal working days mentioned above)
Employers can refer to the guidelines from the Labour Department to handle measures properly:
If wage reductions are unavoidable, employers should have an honest and sincere discussion with the affected employees. Before rolling out the wage reduction, it is necessary for employers to get consensus from employees, otherwise employers will contravene the provisions of the Employment Ordinance with respect to timely payment of wages.
Plan early, consult from HR professionals, or get advice from the Labour Relations Division in your district. To sum up, employers should stay flexible and be patient when discussing with employees. Try to listen closely to their feedback. Proposals in written formats help to demonstrate sincerity and smoothen the discussion process.
If retrenchment is unavoidable, employers should have an honest and open discussion with the Consultative Council, Staff Association, or Trade Union within the organization to fully explain the company's plight and reasons for lay-off. Employers should especially prepare to have a detailed discussion with the affected employees with patience and understanding. It is necessary for employers to ensure the standards of lay-off are objective, fair and transparent, while the compensation given to employees under termination of employment contract should be no less than what was stated in the Employment Ordinance and related employment contract.
Besides, employers can consider granting ex gratia payments, and explain every detail clearly and calculation method to the dismissed employees. Support and caring are crucial, employers should handle their relationship with employees carefully to avoid influencing company's productivity and quality of service.
If employers and employees haven't been able to solve labor disputes on their own, then either side can seek voluntary conciliation service for free. Conciliation service is designed to be a simple, time-saving and informal way to assist labors and employees outside of the government to solve issues related to Employment Ordinance, Minimum Wage Ordinance or the terms in their employment contracts.
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