Employment Law - Application Of The Implied Anti-Avoidance Term In Hong Kong

In the United Kingdom, there appears to be an emerging trend of recognizing the implied anti-avoidance term in employment contracts. An anti-avoidance term is defined by Cabrelli in "Discretion, Power and the Rationalisation of Implied Terms" as a term that has the effect of binding employers not to engage in tactics which evade the operation of an express term conferring a certain or conditional benefit on the employees. However, in the case of Sunny Tadjudin v Bank of America, National Association [2009] 4 HKC 507, the Hong Kong High Court has declined to imply an anti-avoidance term into an employment contract in Hong Kong.

BACKGROUND OF THE CASE

In this case, the Plaintiff was employed by the Defendant as a vice-president from 5 June 2000 to 27 August 2007. The employment agreement ("Agreement") between the Plaintiff and the Defendant provided that, among other terms, the Plaintiff would be eligible for consideration under the Defendant's performance incentive program to receive payment of bonus, conditional upon the Plaintiff being employed by the Defendant at the time of payment. The Agreement also expressly provided that either party might terminate the Agreement by giving a minimum of one month's notice in writing or salary in lieu of notice.

The Defendant terminated the Plaintiff's employment on 28 August 2007 by paying salary in lieu of notice. The Plaintiff commenced proceedings against the Defendant alleging that an implied anti-avoidance term in the Agreement was breached by the Defendant when the Defendant terminated her employment with intention to avoid paying her incentive bonus, which would otherwise be due to be paid in February 2008. The Plaintiff claimed for an amount exceeding HK$10 million being her loss of incentive bonus.

The Plaintiff argued that the Defendant had a contractual duty not to exercise its express right to terminate the Plaintiff's employment in order to avoid payment to the Plaintiff under the Defendant's performance incentive program.

THE ISSUES

The claim was first commenced in the Labour Tribunal but was transferred to be heard in the Court of First Instance. Master Levy of the High Court granted an order to strike out and dismiss the Plaintiff's claims. The Plaintiff appealed to the Court of First Instance. The appellate Court considered the following issues :-

Whether the implied anti-avoidance term was part of the Hong Kong common law; and Whether as a matter of construction, the term could be...