Hong Kong Employer Required To Reimburse Expenses That Benefit The Business

Published date23 January 2024
Subject MatterEmployment and HR, Contract of Employment, Employee Rights/ Labour Relations
Law FirmIus Laboris
AuthorJezamine Fewins (Lewis Silkin) and Karen Chu

A Hong Kong court decision holding an employer liable for various payments and benefits owed to a former employee highlights the importance of making prompt payment of all amounts due upon termination of employment.

Background

The Plaintiff, Anthony Mackay, was the former Chief Executive Officer of the Defendant, Chi-X Asia Pacific Holdings Limited.

Between 2015 to 2016, Mackay assisted a New York based private equity firm to acquire certain business assets. Chi-X was incorporated to hold those assets after their acquisition, and Mackay began working as its CEO. However, Chi-X did not set up any bank accounts in its name at the time. As a result, Mackay paid for Chi-X's business and professional expenses out of his own pocket and then sought reimbursement. Those expenses included travel, hotel and entertainment expenses as well as notary, solicitors and bank fees.

In November 2016, Mackay was served notice and he was placed on garden leave for the six month notice period. Chi-X made some termination payments to Mackay but failed to reimburse him for the business and professional expenses as well as other contractual obligations which were owed to him.

Mackay commenced legal proceedings against Chi-X for his outstanding entitlements and later applied for summary judgment.

The Decision

The court found in Mackay's favour in respect of a number of his claims and awarded summary judgment to him. Chi-X was allowed to continue to defend a few remaining claims.

In respect of the claims in which Mackay was successful, the court found as follows:

Unpaid business expenses

Mackay had made numerous requests for reimbursement of the expenses which he had incurred for and on behalf of Chi-X (totaling more than HKD 430,000), but Chi-X refused to do so and provided no explanation for its refusal.

During the summary judgment application, Chi-X suggested to the Court that Mackay should not be reimbursed as the company had no written expense policy at the time the expenses were incurred. They also claimed that at a later point in time they had changed their expense policy such that some of the entertainment expenses would be excluded. The court gave Chi-X's arguments short shrift in light of how past expenses were claimed and reimbursed and that Mackay provided full supporting documentation for the expenses.

Chi-X also attempted to persuade the court that there was a large volume of expenses being claimed which should be fully investigated at trial. The court took the view...

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