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03 Oct 2019

The Court’s strict interpretation of a job offer allows an employee to back out of their obligations with impunity

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Recently in Law Ting Pong Secondary School v Chen Wai Wah [2019] HKCFI 2236, the Court of First Instance overturned the decision made by the Labour Tribunal concerning liability to make a payment in lieu of notice by a teacher when he backed out from commencing his employment before the agreed start date.

Employees committing to jobs in advance and then backing out of them is a serious issue commonly faced here in Hong Kong.

Facts

The material facts of the case were that on 17 July 2017 the teacher was provided with: (a) an offer of employment from the school (“Offer”) where the period of employment was expressly stated to be ‘From 1st September 2017 to 31st August 2018’; (b) Conditions of Service for teachers of the school (“Conditions”); and (c) a letter of acceptance (“Letter of Acceptance”) which stated: 

‘… I accept the appointment offered … 

I also understand once I accept this contract, the conditions of the new contract will come into immediate effect e.g. I need to give three months’ notice to terminate my employment with the school.’ (Emphasis added)

After accepting the above, the school’s position, with which the Labour Tribunal agreed, was that the employment contract (“Contract”) came into immediate existence so when the teacher backed out on 22 August 2017 the length of notice needed to terminate the Contract was the agreed three months’ notice period.

The Labour Tribunal awarded the school damages equal to three months’ wages in lieu of notice, the sum of HK$139,593.

Appeal to the Court of First Instance

The Court found that there was no liability for the teacher to make the school any payments. It considered when an employer is making an offer of employment, the key features are: (a) there must be an expression of willingness to contract; and (b) such willingness to contract must be subject to specified terms. The employee’s acceptance has to mirror the offer made.

Applying these principles to the facts, the Court held that the Letter of Acceptance did not form part of the specified terms the teacher had been offered, all the Offer had stated was:

‘[The school] … hereby offers you an appointment as Teacher … . If you wish to accept this offer of appointment in the above school under the conditions set out in the attached Conditions of Service for Teachers …, please sign … the Letter of Acceptance … .’

To decide whether or not to accept these terms the teacher needed to read the Offer in conjunction with the Conditions. There was nothing in the Conditions which referred to the Letter of Acceptance so its contents did not form part of the offer that was made.

Because the Contract was only subject to terms from the Offer and Conditions, the employment would only start on 1 September 2017 and therefore the teacher was not liable to make a payment in lieu by backing out on 22 August 2017 because his employment had not then commenced.

How to avoid employees backing out of their employment with impunity

While the school’s intention was the Contract be subject to three months’ notice, by putting the necessary term in the wrong place its intentions were frustrated.

It does not appear in making its decision that the Court considered section 6 of the Employment Ordinance which states:

‘… any party to a contract of employment may at any time terminate the contract by giving the other party notice …’. 

This suggests that once the employment contract exists, the agreed notice needs to be given, even if this is before the employment itself started.

To avoid being a victim of an employee backing out of a job, we advise employers to expressly record in their offer letters and employment contracts that the contract as well as the employment provided for within will both be subject to the agreed notice period thereby making it clear what the consequences will be if the employee does not start work as they agreed. The Court interpreted the Contract strictly here (one can have some sympathy with the school) showing the level of care and attention that employers need to have when drafting their offer letters and employment contracts.

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