Can employers freely terminate contracts? Court reaffirms rule
Hong Kong's High Court's recent ruling shed light on an employer's authority to terminate employees without cause, emphasizing contractual obligations over implied duties.
The worker was a pilot employed by Hong Kong Express Airways Limited from June 2005 until he was terminated in September 2019 via payment in lieu of notice. Unlike a summary dismissal for misconduct, this termination was based on contractual terms.
The worker contested the termination, alleging a breach of implied trust and confidence, or "wrongful dismissal," seeking substantial compensation exceeding HK$13 million.
He had additional claims for libel, defamation, and reputational damage but were dismissed early in the proceedings, focusing the case solely on wrongful dismissal.
Employer's alleged breach
According to the decision, the worker argued that the airline's actions preceding his termination constituted a breach of trust and confidence.
He challenged the airline's Quality, Safety, and Security (QSS) data regarding flight incidents, alleging fabrication.
He also argued that the employer "abused its powers prior to terminating his employment," and its actions in terminating his employment in bad faith amounted to a "serious breach of its duties of trust and confidence."
He further said the employer’s actions "have caused him to suffer substantial loss and damage including (but not limited to) loss of future earnings."
Employer's contractual right to terminate
The High Court highlighted the established principle that the duty of trust and confidence between employer and employee does not extend to the manner of dismissal.
The court emphasized that the legislative intent limits claims related to dismissal to tribunal hearings and statutory remedies.
Drawing a distinction from prior cases, the court clarified that previous rulings do not establish an implied term prohibiting termination without cause.
The court reiterated the mutual nature of the employer-employee relationship, emphasizing that just as employees can resign without cause, employers can terminate contracts without justification.
‘Termination is mutual’
"The position as between employer and employee on termination is mutual," the decision said.
"Hence, the circumstances in which an employer can terminate the employment are identical to those in which an employee can choose to leave."
"No one would seriously argue that an employee cannot resign from employment unless and until he or she has good or justified reasons for doing so, or could only do so in good faith," the court said.
"An employee can choose to resign for whatever reason he or she wants – including whether logical or illogical, or whether on a correct or mistaken belief of some wrong done to him or her by the employer – provided the employee serves out his or her notice or makes a payment in lieu of notice," it added.
