I. Case
The employee is essentially one of the vital parts of an organisation. The services rendered and the knowledge imparted by the human resource proves to be the life source of a company. It is for this reason that benefits and incentives are offered by the firms such that the employees are secured about their jobs. In the same manner, certain laws are also ratified to make sure that the rights of the employees to such benefits and incentives are observed by companies. Severance arrangements are among the most debated issues in employment topics nowadays. The moment an employee severs its ties with the company, regardless on whether the cause was termination or resignation, their rights should be considered nonetheless. This means that there are certain procedures that companies should take into account in instances like these. The case of represents this situation. The discussions on this part will include relevant laws on acquiring the incentives and benefits she could acquire in her resignation. Similarly, a discussion as to whether the company could avoid giving her the long service payment she seeks will also be taken into account. In addition, the role of the employer in providing the pays appropriate to Adrienne’s case will be discussed. The arguments and claims made by the writer will be based on the Employment Ordinance of the Hong Kong Special Administrative Region and certain case laws that represent similar instances and claims of long service pays.
A. Severance to the Company
Severance from the company comes in many forms. However, in the case of she has to steer clear of a couple of severance procedures that will not allow her to claim for long service pay. According to Section 31S of the Employment Ordinance, the employer has the right not to pay long service payments to employees who have been dismissed by the company. The Employment Ordinance Section 31B (1) also indicated that an employee is considered dismissed when he/she undergoes organisational imperatives such as lay-offs and if he/she is considered redundant. If was in some odd turn of events been added to the list of employees getting laid off or those considered redundant, then she may well forego any possibility of acquiring the long service payment she apparently wants. She could still be eligible for severance payment nevertheless. The following discussion will present the laws on which lay-offs and redundancies are held such that would be able to know her rights.
1. Lay-off
In the instance where is laid off by the company, the company provide him pay for two instances as indicated in Section 31E (1) of the Employment Ordinance. One scenario presents that the employer must ensure that the employee works half of the entire number of prescribed working days within four consecutive weeks of his/her employment. Another scenario is that if he/she exceeds over a third of the entire accepted working days within the length of twenty six consecutive weeks. This means that he employer needs to compensate the laid-off employee apart from the severance pay indicated by the Employment Ordinance.
2. Redundancy
Existing studies on the concept of redundancy in employment literature covers primarily the legislation protections that attempts to circumvent any further practice of redundancy among the employees. Redundancy is basically the dismissal of an employee due to economic reasons. (2001, 45) The existing literature indicates that employers will employ the actions of redundancy based on economic reasons. These represent the protection in terms of the provision of legal obligations on the part of the employer to establish “admissible justifications” in redundancy procedures. In Europe, redundancy measures are commonly regarded as a last resort for the company. This shows protection for the employees such that the employers are restricted from using redundancy procedures in a recurrent manner. This means that in a considerable number of states, the dismissing employees based on economic reasons are covered by a certain criteria pointed out in their individual legislations and ratified laws. ( 2001, 45)
In the case of the company could render her redundant based on two justifications. As stated in Section 31B(2) of the Employment Ordinance, could be held redundant by the company if the company itself decides to end the actual purpose of the business in which position is based on. And apparently, as stated in the case, the company is indeed considering revising its function particularly with the use of agents. In a similar note, the company could also render her redundant if the company decides to close down the office in which is stationed. This is also applicable in the context where the company decides not to operate in a particular area where may have taken her post. In simple terms, the company must only provide reasonable justifications on why they have rendered employees like redundant. For the same reason, they may grant severance pay instead of long service payment incentives.
B. Long Service Payment
The laws of the Special Administrative Region define long service payments as attributable to employees of a company that has been connected with the company in not less than five years. (Employment Ordinance Section 31R (1)) The law also states that it rightfully given to employees who have decided to end their stay in the company because they have exceeded the age of 65 years.
This is the incentive that intends to take. Nevertheless, it must be apparent to that there are certain criteria in which she should fit into before the company openly grants her the pay she intends. As stated above, it must be a given fact that has served over five years as an agent for the company. This means that anything lower than five years will only entitle her to a considerable amount tantamount to a severance pay. In the same manner, she must also be sixty-five years old or older to acquire such long service payment premiums from the company. Otherwise, she could only qualify for the payment by declaring a medical condition that could compromise her ability to do the jobs required of her by the company. (Employment Ordinance Section 10(aa))
Under the provisions of Employment Ordinance Section 31R and 31RA, it is also required for to have an employment arrangement with the company resembling a continuous contract. Other than the indicated requirements, the law also indicated that in an instance fall victim to any event resulting to her demise, she is also liable to receive long service payment from the company. The calculation of the amount to which is entitled to for her long service payment will be presented in the succeeding part of the paper.
C. Calculation of the Payment
The calculation on the amount is going to get as long service payment is indicated in the Employment Ordinance of Hong Kong. Specifically, the provisions under Section 31V indicate that should only acquire a particular amount based on her monthly earnings. For the purposes of this study, let us assume that acquires a monthly salary from the company more than thirty thousand dollars by working as an agent.
Given that assumption, Section 31V (1) indicates that could get two-thirds of her last month’s full wages or two-thirds of 500. Given that she earns ,000, this means she is supposed to be entitled to more or less ,000. Nevertheless, the law stipulates that a lesser amount should be given to the employee. Specifically, the company is sanctioned to opt to provide two-thirds of ,500 given that it is a lesser amount than that of two-thirds of monthly earnings. This means that could only get more or less ,000 regardless on how much she earns as an agent. In addition, this amount is to be multiplied to the number of years that has served her time in the company.
Either way, is still protected by law to acquire a certain amount from the company. And based on the assumptions above, the amount on which she may acquire appears to be rather appealing. The Employment Ordinance could also protect her if the company refuses to pay her dues. She could resort to court actions if she feels like she is being treated unfairly by the company. Courts in Hong Kong readily hear labour cases as seen in (2003) HK CFI 9 June 2003.
D. Role of the Employer in Long Service Payment
The laws of Hong Kong places obligation to the companies to pay whatever the employees are due to accept. One such legislation is the Mandatory Provident Fund Schemes Ordinance. This law compels companies to set aside a certain amount to finance the payments that would be necessary once severance or long service payments are in order.
Back to the Employment Ordinance, the company could also find faults on the claims of payment of severance pays. Basically, this could be done by compelling the employees to provide documents that would justify their claim for severance or long service payment. As stated in Section 31R of the ordinance, proper medical documents should similarly be forwarded to the employer if the resignation and claim for long service payment are based on a medical condition.
Once the claim is approved by the company, then they should be able to provide the amount to the employee as stated in the stipulations indicated in Employment Ordinance Section 31Z. Specifically, the amount could be given through post, cheque, or by wiring the amount to the employee’s bank account. In addition to that the same ordinance section indicated that a written statement from the company is needed to confirm the amount bestowed to the employee and the manner in which it is calculated.
E. Conclusion
Employment for individuals is considered a source of livelihood, a means to cope in their daily lives. The wages that employment provides a breadwinner conveys the manner in which he will be able to survive the daily demands of living, particularly in financial terms. This goes to show that being employed is a necessity among individuals. Being employed denotes that an individual has a source of livelihood and is able to fulfil the demands of his life. The relationship that exists in the employer and the employee has been considerably addressed in the past and existing literature. However, there is constantly a recurrent representation of inequity in such areas. Laws and rules are thus observed to minimise such inequities in the said area. In the case of Adrienne , it showed that the severance from an employee to an organisation may well avoid any conflict or legal contest from any of the parties involved, provided that both see to it that they act in a fair and lawful manner.
II. Breaker Limited Case
Essentially, Breaker Limited has a relationship with both Evans and Carter and Vinton UK plc which is bound by law. These companies are bound by individual contracts particularly indicated in the document that they have signed prior to the actual acquisition and provision of products and services to every party involved. The discussion below is going to be discussed with the use of common law principles of contract law as well as the existing assumptions on the said case. For clarity and consistency of the discussions, the analysis of the case will be divided into the rights and liabilities of Breaker Limited to both Evans and Carter and Vinton UK plc.
A. Rights on its Relationship with Evans and Carter
The following discussion will provide the rights of Breaker Limited on their relationship with Evans and Carter. Essentially, they are protected by the Department of Trade and Industries. Similarly, they are covered by laws and legislations enacted by the Parliament. Such legislation includes the Unfair Contract Terms Act (CUTE) 1977.
Based on the terms in the contract that they have signed with Evans and Carter, they as sellers are protected by virtue of the contract from any inaccuracy in terms of the goods sold by Evans and Carter. This means that they have the right to challenge the said company if their products were in any way not as specified in their agreement.
In the same manner, given the consequent circumstances of Evans and Carter delivering alleged substandard products, as noted by one of the customers of Breaker Limited, then they could take legal actions against the said company. Particularly, they could challenge the unreasonable nature of the terms indicated in the warranties of the contract. Specifically, they could indicate the rather unreasonable exclusion clause presenting the length of the grace period provided to the exchange or refund of defective products. As stated in Section 7.2 of the contract, Breaker Limited was given only 14 days from the date of the delivery to discover any defect or failure to the Evans and Carter.
B. Liabilities on its Relationship with Evans and Carter
The problem that breaker limited have in this scenario is stated in the contract itself. The contract specifically states the exclusion clauses which essentially protects Evans and Carter from any liability. On relying on the exemption clause, a party to a contract have to establish that the clause is actually formed part of the contract. In the case where the contract is represented by a signed document, the case of L’Estrange v Greco Ltd [1934] 2 KB 394 served as a precedent in this area. The decision in the said case established the common law indicating that the exemption clause is considered a term of the contract thus making it valid and consequently effective. Similarly, the case also indicated that the clause is enforceable regardless of whether the other party has read the clause or not. (L’Estrange v Greco Ltd [1934] 2 KB 394) In the event that Breaker take legal action against Evans and Carter, they could merely state that both parties have actually agreed on the contract thus making it valid and binding. The issue on the reasonableness of the stipulations of the contract on the other hand is to be left in the hands of the courts. Nevertheless, seeing as the parties are bound by contract, it could be likely that the court will side with the defendant.
Another liability on the part of Breaker Limited is that Evans and Carter could claim that the former did agree on the transaction with knowledge of the terms of the contract. And it is implied in the contract that it is in the onus of Breaker Limited to see whether there are any defect or any deviation from the terms held by the contract. In this case, it is Breaker Limited who is at fault for the failure of doing its job and failing to notify Evans and Carter of the deficiencies in time. Thus, the negligence of the buyer was seen to be the key to this case.
C. Possible Action Based on the Relationship with Evans and Carter
In the case of L’Estrange v Greco Ltd [1934] 2 KB 394, they have indicated that the exclusion clauses used in the contract are actually a part of the contract thus making it binding. Nevertheless it is another case has indicated that this may not be applicable when issues of misrepresentation are present in the situation. (Curtis v Chemical Cleaning Co [1951] 1 KB 805) In this instance, the clause is deemed void. Taking this into consideration, Breaker Limited could bring a claim of misrepresentation against Carter and Evans.
As seen in the case, there is indeed some form of misrepresentation. Before the signing of the contract, Evans and Carter has already stated that the galvanized steel was actually of the highest standards as provided by the industry. The representative of Evans and Carter made the said claim despite the fact that actually knew that their merchandise were not actually compliant to these standards. Similar to what is stated above, Breaker Limited could use these pre-contractual statements to take legal actions against Evans and Carter. (Halibut, Symons & Co. v Buckle ton [1913] AC 30) K has to establish the materiality of the statements on their decision to acquire the galvanized steel (Muse prime Properties v Achill Properties [1990] 36 EG 114) On the other hand, Breaker Limited will also have to establish that Evans and Carter is aware of the misrepresentation that they did during the process. (Shortfall v Thomas [1862] 1 H&C 90) On the whole, Breaker Limited could sue for fraudulent misrepresentation so as to claim for damages in the tort of deceit. (Derry v Peek (1889) 14 App CASs 337) Similarly, they could acquire damages which include loss opportunity costs. (East v Maurer [1991] 2 All ER 733)
D. Rights on its Relationship with Vinton UK plc
Breaker Limited has a considerable number of rights that could help them with their conflict with Vinton UK plc. Specifically, the company is protected by the exclusion clauses of the contract. Seeing the claim of Vinton UK plc, they have been covered by the grace period provided for by the contract. However, as stated in the contract, it is in the discretion of Breaker Limited as to whether it would grant Vinton UK a refund. At any rate, Breaker Limited is, as stated in Section 10.2 of the contract with Vinton UK, the liability of Breaker Limited may go as far only as to refund of the purchase price and exchange of the defective goods.
It is this context that Vinton UK could not demand for any charge on damages as stated by the correspondence sent by Mr. Kramer. Moreover, Breaker Limited thus has the right to disregard of the Vinton UK as to the compensation for loss asked. In addition, Breaker Limited has given enough time for Vinton UK to actually inform them with at least a month’s time. Breaker Limited is thus not in any way liable for the delay. To the same extent, the company may not be liable for breach, as being alleged by Vinton UK, for the reason that Breaker Limited is not able to monitor the process in which the products are handled. It may possible be caused by the negligence of the Vinton UK. This means that the court may have to be the ones to decide as to whether the claim is acceptable under CUTE s2(1), s3 and s6(2)a.
E. Liabilities on its Relationship with Vinton UK plc
The exemption clause is one item in the contract that tends to be used by parties for abuse. This is apparent in the case of Breaker Limited and Vinton UK plc. The use of an exemption clause is normally employed when parties to a contract intend to limit their legal responsibility the moment a breach or a claim of negligence is put forward. The effectiveness of these clauses is presented in the subsequent discussions. In order for these clauses to be considered valid and consequently limit the liability of the parties involved, a couple of elements must be taken into consideration: incorporation and interpretation of the exemption clause. In the case where the contract is represented by a signed document, the case of L’Estrange v Greco Ltd [1934] 2 KB 394 indicated that the clause is enforceable regardless of whether the other party has read the clause or not. (L’Estrange v Greco Ltd [1934] 2 KB 394)
The problem in this context is that the action of Breaker Limited may be interpreted by courts as done in bad faith. This means that delivering faulty fury exhaust systems may indicate signs of misrepresentation. And given this possibility, Breaker Limited may not be able to use the exclusion clause. (Le Mans Grand Prix Circuits Pty Ltd v Iliad’s [1998] 4 MVR 661) In this instance, the clause is deemed void.
Moreover, Vinton UK plc is also protected by the Unfair Contract Terms Act of 1977 indicating that Breaker Limited must use an exclusion clause such that it meets a “requirement of reasonableness.” The clause provided by the contract of Breaker Limited and Vinton UK may reveal an unfair and unreasonable situation for the latter. This is manifested in the attempt of Breaker Limited to dodge all possible liability from the contract. This is further aggravated by the inability of Breaker Limited to supply and deliver functional fury exhaust pipes as agreed upon on the contract. Thus, that part of the contract is possibly breached by Breaker Limited.
F. Possible Action Based on the Relationship with Vinton UK plc
In the case of Breakers Limited against Vinton UK plc, it is advisable that they offer to refund the payment made by Vinton or offer to replace the defective products. The courts will be able to discern these actions as good faith on their part. If ever Vinton takes the matter to court that they hold on to the terms of the contract. Particularly, they should adhere to the exclusion clauses and claim that theirs are reasonable in nature. Vinton could sue for fundamental breach, however recent trends in the decisions of courts hold that the true intentions of the parties be considered entirely. To illustrate, the courts may see it that the entire lot of products given by Breakers Limited are not defective completely. Some may have been useful for Vinton. This means that there was an honest mistake and the entire fury exhaust systems were useable to a certain extent. ( [1956] 2 All ER 866, CA) In the same light, the courts may also see it in such a way that the exclusion clauses are reasonable on the grounds that both parties possess equal bargaining power in the transaction. (Photo Production v Securicor [1980] 1 All ER 556, HL) There was no intention on the part of Breakers Limited to incur a breach in the agreement.
All in all, this study found out that an exemption clause only binds a person if the person has authorized a written contract enclosing the exemption clause or the exemption clause is forwarded the person’s notice before the contract. Secondly, exemption clauses are typically construed stringently by the courts, and if it has not been outlined circumspectly and accurately the exemption clause may not protect the loss protested of. Thirdly, the employment of exemption clauses is intimately controlled by legislation, predominantly in the context of consumer contracts. An accurately drafted exemption clause can guard an individual from negligence claims; from suits forwarded by third parties and even though the person’s actions add up to a fundamental breach of the contract.
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