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Submitted by // P Yeung, Partner
03 March 2020

 

Hong Kong employment issues arising out of the Coronavirus disease (COVID-19)

Introduction

On 4 February 2020, Hong Kong reported its first fatality in relation to the Coronavirus COVID-19 ("COVID-19"), which originated in Wuhan, China. The number of globally confirmed cases of COVID-19 has surpassed the number of cases reported during the SARS outbreak in 2003. On 30 January 2020, the World Health Organisation declared the outbreak as a Public Health Emergency of International Concern.

In Hong Kong, COVID-19 has caused serious disruption to the economy, and has had a considerable impact on the workforce.

On 28 January 2020, the Hong Kong Government announced that its employees (except for staff of the departments providing emergency services and essential public services) were not required to return to their offices and were to work from home starting from 29 January 2020 in order to prevent the spread of COVID-19. Such measures extended until March. The Government also called on institutions in the private sector to adopt similar measures to assist in minimising the threat of COVID-19 spreading in the wider community. Businesses in Hong Kong have adopted a range of measures, up to and including temporarily shutting down their operations.

COVID-19 has proven to be unpredictable, it remains unclear how long it will continue to affect Hong Kong. Employers will therefore continue to have to deal with its effects on their businesses, and should ensure that they are fully aware of their legal obligations to their employees. This article sets out some of the key issues that employers should consider in dealing with the outbreak.

Employer's legal obligations in relation to safety and health of their employees

Employers have a statutory and common law duty to provide a safe place of work for all of their employees. Pursuant to the Occupational Safety and Health Ordinance (Cap. 509) ("OSHO"), employers must, insofar as it is reasonably practicable, ensure the safety and health of their employees at work. This includes maintaining a workplace that is safe and without risks to health.

To satisfy these obligations, employers should implement measures at the workplace to:

• reduce health risks at the office1 (e.g. increasing ventilation in the office, providing antiseptic soap)

• reduce health risks that may arise from employees (e.g. requiring all employees to report whether they have travelled to regions at high risk for COVID-19, any symptoms of COVID-19, such as fever immediately)

• manage any COVID-19 outbreaks that may arise from potentially infected employees (e.g. monitoring the news to identify whether any individual confirmed to have contracted COVID-19 has visited a retail space)

Employer's general employment obligations

Over the course of the COVID-19 outbreak, it has become common for shops / retailers with reported contact with individuals confirmed to have contracted COVID-19 to suspend business as a form of self-quarantine. Some employers have also instructed individual employees who have been in contact with individuals confirmed to have contracted COVID-19 to self-quarantine.

Employers are reminded that employees generally have an implied right to work. Accordingly, employers may not unilaterally decide to place employees on unpaid leave. Accordingly, as an alternative to this, employers should consider asking employees whether they will, for the purpose of reducing the risk of infection, agree to:

• take annual leave with the employer's consent

• enter into an agreement with the employer to take unpaid leave

• work from home (if such arrangements are available)

• a reduction in salary for the period of self-quarantine or work from home

Regardless of the option implemented, employers should always ensure that employees who are on annual leave, statutory sick leave or working from home, etc. continue to receive their wages, statutory and contractual benefits.

Where the employee agrees to a variation of their contractual terms, it would be prudent for employers to document any such variations (especially those in relation to reduction of salary and benefits) in writing. Written variations should be signed by both the employer and employee in order to avoid disputes later on.

Discrimination

Pursuant to its obligations under the OSHO, an employer may be required to prevent employees who have or are suspected of having contracted COVID-19 from entering the workplace.

COVID-19 is likely to fall within the wide meaning of "disability" set out in the Disability Discrimination Ordinance (Cap. 487) ("DDO"). An employee subjected to less favourable treatment by his / her employer, as a result of having or the suspicion of having contracted COVID-19, may allege unlawful discrimination.

The DDO does however provide an exemption for discriminatory acts in relation to a disability that is an infectious disease. Such discriminatory acts are not unlawful if they are reasonably necessary to protect public health.2 Pursuant to the guidance set out by the Equal Opportunities Commission,3 it is unlikely to be unlawful to prevent an employee from attending work to avoid creating a public health risk.

In view of the contagious nature and severity of COVID-19, it would appear reasonable for an employer to require employees displaying symptoms of COVID-19 to refrain from going to work. While such treatment may be discriminatory, it is unlikely that this amounts to unlawful discrimination because it is reasonably necessary to protect public health. Employers should ensure that they consider all relevant factors and alternatives before taking any potentially discriminatory actions to avoid imposing any unreasonable and/or or unnecessary hardship. They should also be careful not to single out specific employees or groups of employees when implementing risk reduction measures.

Data privacy issues

In view of preventing an outbreak of COVID-19 in the workplace, employers may consider asking their employees to submit health declaration forms or to undergo temperature testing.

Such measures involve the collection of personal medical data. They are therefore subject to the Personal Data (Privacy) Ordinance (Cap. 486) ("PDPO"). Data Protection Principle ("DPP") 1 of the PDPO provides that only necessary, adequate but not excessive personal data shall be collected by a data user for a lawful purpose directly related to its function or activity.

The medical data in this case is collected for the purpose of monitoring and preventing health risks in the work place. Given the employer's obligation under the OSHO, it is likely that any such collection of medical data is considered necessary and directly related to the employer's lawful functions. Such measures are therefore unlikely to be in breach of DPP 1.

DPP 3 requires that the personal data is only used for the purposes for which it was collected. Any other use of such personal data requires separate consent. In view of the COVID-19 outbreak, the Privacy Commissioner recently stated4 that separate consent under DPP 3 may not be required when the personal data is used for the safeguarding of public health.

The Privacy Commissioner stated that the right to personal data privacy must be balanced against the absolute right to life and the interests of the public. Section 59 of the PDPO also provides an exemption from DPP 3 where the use of data relates to the safeguarding of the physical or mental health concerns of the data subject or any other individual in the interest of the public.

Accordingly, when collecting and using medical data, employers are reminded to:

• refrain from asking for excessive medical data

• inform employees of the purposes of collection and classes of person to whom the data may be transferred

• ensure that the personal data is fairly collected

• ensure that the use of data remains within the scope of the intended purpose and/or purposes that fall within section 59 of the PDPO

Employee's right to refuse work

Pursuant to section 10 of the Employment Ordinance (Cap. 57), an employee who reasonably fears for his or her physical danger by violence or disease may terminate their contract of employment. Under those circumstances, employees are not required to provide notice or make a payment in lieu.

While COVID-19 is regarded as a serious public health problem, employees cannot choose to terminate their employment without notice merely on the basis that there is a general risk of infection. Employees may run the risk of being dismissed with or without notice if they persistently refuse to return to the office and/or wilfully disregard the lawful instructions of their employer. The specific circumstances of an employee's employment would need to involve a genuine risk of exposure to infection in order for such a right to terminate to arise. That position may change if, for instance, the Hong Kong Government raised the threat level or imposed more drastic health measures.

Longer-term implications for employers

In order to minimise any risk to safety and health in the current outbreak of COVID-19, whilst at the same time maintaining business continuity, employers should:

• consider adopting flexible working arrangements

• continually evaluate workplace response protocols in the event of an outbreak

• educate employees as regards how to reduce health risks

• inform employees of their expectations as regards working arrangements if a work from home system is implemented

• comply with the relevant employment laws when formulating measures to create a safe working environment

• consult with employees and where possible address their concerns and anxieties about the situation

_______________________________________
[1] See the Centre for Health Protection's fact sheet on Severe Respiratory Disease associated with a Novel Infectious Agent in Workplace
[2] section 61(1), Disability Discrimination Ordinance
[3] Disability Discrimination Ordinance Code of Practice on Employment (2011)
[4] Media Statement, 26 February 2020

 

About Us

Howse Williams is an independent law firm which combines the in-depth experience of its lawyers with a forward thinking approach.

Our key practice areas are corporate/commercial and corporate finance; commercial and maritime dispute resolution; clinical negligence and healthcare; insurance, personal injury and professional indemnity insurance; employment; family and matrimonial; property and building management; banking; fraud; financial services/corporate regulatory and compliance.

As an independent law firm we are able to minimise legal and commercial conflicts of interest and act for clients in every industry sector. The partners have spent the majority of their careers in Hong Kong and have a detailed understanding of international business and business in Asia.

Disclaimer: The information contained in this article is intended to be a general guide only and is not intended to provide legal advice.  Please contact pr@howsewillilams.com if you have any questions about the article.

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Submitted by // J Wong, Partner
21 February 2020


Challenging a Search Warrant? Easier said than done.

A recent challenge1 to the seizure of various digital devices by the Securities and Futures Commission, or SFC, pursuant to two search warrants, failed in the Hong Kong courts.

Background

During the course of an investigation2
 , the SFC applied to the Magistrates Court for search warrants authorising the SFC to search for, seize and remove records and documents from numerous premises of the applicants.

During the searches, the SFC seized various digital devices, including mobile phones, tablets, notebook computers and desktop computers from the premises, and issued various notices under section 183 of the Securities and Futures Ordinance (Cap 571) ("SFO") to compel the applicants to provide the passwords to access the digital devices and their email accounts.

The applicants sought to challenge the SFC's actions on the grounds that:-

(1) the SFC's seizure of the digital devices in the course of execution of the search warrants and thereafter their retention were -

• ultra vires (that is, beyond the powers of) the SFO or the search warrants
• unlawful and/or
• unconstitutional;

(2) the SFC's issuance of section 183(1) notices to the applicants requiring them to provide passwords were -
ultra vires the SFO or the search warrants
• unlawful and/or
• unconstitutional; and

(3) the search warrants were unlawful and invalid for want of specificity.

Issue 1

On the first point, the applicants argued that the decisions to seize the digital devices were ultra vires, because the digital devices were not "records" or "documents" under section 183(1) as a matter of statutory construction3
 .

This argument was dismissed by the Court. The Court ruled that the words "records" and "documents" were given very wide meanings in the SFO, and are not confined to records or documents in paper or traditional form, but include4
:-

(a) any record of information "however compiled or stored";

(b) information "which is recorded otherwise than in a legible form but is capable of being reproduced in a legible form";

(c) any document, disc, tape, sound track or other device in which sounds or other data (not being visual images) are embodied "so as to be capable (with or without the aid of other equipment) of being reproduced"; and

(d) "any form of input or output into or from an information system", and any other document or similar material "whether produced mechanically, electronically, magnetically, optically, manually or by any other means".

The Court said that it would be "totally out of touch with reality" to exclude digital devices from the meaning of "records" or "documents", given the way information and data are created and stored nowadays.

The argument that the seizure disproportionately interfered with the right to privacy5
, and was thus unlawful or unconstitutional, also failed. The Court pointed out that the right to privacy is not absolute; in this case, there was a legitimate aim (the SFC investigation) to which the seizures and retention of the devices was rationally connected and no more than reasonably necessary. In addition, the SFC had proposed to use keyword searches to filter out personal or irrelevant information and therefore the applicants would not have suffered an unacceptably harsh burden.

Issue 2

Some of the applicants argued that the section 183 notices issued to them were ultra vires the provisions of the SFO, because they were required to produce vast amounts of materials which were irrelevant to the investigation
6. They further argued that to permit the use of section 183(1)(a) in this way would be disproportionate and a violation of the right to privacy. Finally, they also claimed that the SFC had no power under the relevant search warrants to access email accounts, mobile phones and tablets.

The Court rejected all of these arguments. The Court noted that storage of information and records nowadays is mostly in electronic form in email accounts and digital devices; inevitably there would be large amounts of personal7 materials and security protection by way of login IDs and passwords
8 . Seizing the entire device or having access to the entire email account is practically inevitable9 , and as the SFC had offered to do keyword searches to protect the privacy of the applicants, the Court did not agree that the section 183(1) notices were ultra vires, unlawful or unconstitutional.

Issue 3

The applicants also challenged the search warrants for lack of specificity, in that
10 :-

(1) they failed to specify or limit the scope of the search, seizure and removal;
(2) they failed to identify any particular offence; and
(3) parts of the warrants were vague and unspecific.

The Court's view is that what needs to be stated on a search warrant depends on the empowering statute. In the current case, the search warrants were issued pursuant to section 191 of the SFO, which requires the search warrants to specify various things, but there is no requirement that they must specify the specific offence committed
11 . In any event, the Court noted that the warrants did specify the general grounds, albeit a large number of possible offences were covered by those grounds. The applicants' arguments were rejected.

Key Takeaways

Do think carefully before deciding to challenge a search warrant or the SFC's use of its various investigation powers under the SFO; weigh up the pros and cons before proceeding.

In the meantime, recognise that the SFC's current practice to seize electronic materials and digital devices to assist in their investigations, will continue. Here are some general preparatory tips to minimise the adverse impact on your business and the privacy of individuals -

• Make sure you have a list of all devices used by your company so that you can keep track of these if they are seized.
• Ensure you have back-up records so you can continue to do business.
• Any document over which legal privilege can be asserted should be clearly titled or, ideally, kept in a separate folder or device so it is easy to identify. Claim legal privilege over those documents.
• Do filing regularly, so there is clear separation of personal or irrelevant materials from work matters. Ideally, each project should have its own file.
• Consider, and then have and enforce internal policies, regarding the use of personal devices for work purposes (and vice versa).
• Treat emails, digital messages, etc. with the same care as you would hard copy documents.

- Jill Wong & Kevin Leung
_______________________________________

[1] The applicants were Cheung Ka Ho Cyril, To Hang Ming, To Lung Sang, To Man Choy Jacky, Wan Wai Lun, HCAL 2132, 2133, 2134, 2136 & 2137/2018 [2020] HKCFI 270.
[2] The facts can be found at paragraphs 5 to 13 of the judgment.
[3] See judgment at paragraph 37. The applicants also argued that if the digital devices fall within the definitions of "records" and "documents", any provisions in the SFO authorising the SFC to require production of digital devices without a warrant would be unconstitutional. This point was dismissed by the Court in paragraph 49 for being irrelevant, because in all the searches, the SFC had valid search warrants.
[4] See judgment at paragraph 41.
[5] Under Article 30 of the Basic Law and/or Article 14 of the Bill of Rights.
[6] Thus falling outside the remit of any record or document which "is, or may be, relevant to the investigation" under section 183(1)(a) SFO.
[7] Albeit irrelevant.
[8] See judgment at paragraph 68.
[9] And generally in line with previous cases, see paragraphs 65 to 72 of the judgement.
[10] See judgment at paragraph 75.
[11] See judgment at paragraphs 78, 87 to 92


About Us

Howse Williams is an independent law firm which combines the in-depth experience of its lawyers with a forward thinking approach. 

Our key practice areas are corporate/commercial and corporate finance; commercial and maritime dispute resolution; clinical negligence and healthcare; insurance, personal injury and professional indemnity insurance; employment; family and matrimonial; property and building management; banking; fraud; financial services/corporate regulatory and compliance.

As an independent law firm, we are able to minimise legal and commercial conflicts of interest and act for clients in every industry sector. The partners have spent the majority of their careers in Hong Kong and have a detailed understanding of international business and business in Asia.

 

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News //
Submitted by // J Wong, Partner
14 February 2020


BITCOINS: STOP AND FREEZE

A recent English high court case1 has found that cryptocurrencies are a form of property. This is a significant ruling with a useful analysis of this issue and provides some indication of how Hong Kong courts and regulators may approach the current debate of whether, and how, cryptocurrencies fall into various financial services laws.

The case

A hacker installed malware on a company's computer systems and subsequently sent a ransom note:

"Hello [company] your network was hacked and encrypted. No free decryption software is available on the web. Email us at […] to get the ransom amount. Keep our contact safe. Disclosure can lead to impossibility of decryption..."

The company notified its insurer. Given the importance to the company to obtain access to its computer systems, the insurer agreed to pay a ransom of US$950,000 in Bitcoins (about 109 Bitcoins) in return for the decryption tool.

After the ransom was paid, the insurer hired a specialist investigation company to track the Bitcoin ransom payment. The investigation revealed that whilst some of the Bitcoins had been transferred into fiat currency, a substantial portion, namely, 96 Bitcoins, had been transferred to a specified address linked to an exchange known as "Bitfinex". The insurer issued various court applications to further trace and recover the Bitcoin ransom payment.

Injunction application

One of the applications in front of the court was a proprietary injunction application over the 96 Bitcoins held in the account with Bitfinex. As injunctions can only be granted over property, the court had to determine whether or not the Bitcoins were property.

English law traditionally views property as being only of two kinds:

1. choses in possession; and
2. choses in action.

In the judgment, the court explained that this presents a difficultly in treating Bitcoins as a form of property; they are neither a chose in possession nor are they a chose in action. They are not choses in possession because they are virtual, they are not tangible, they cannot be possessed. They are not choses in action because they do not embody any right capable of being enforced by action.

However, the court found that English law does recognise forms of property other than choses in possession and choses in action, following a discussion of the UK Jurisdictional Task Force's "Legal Statements on Crypto-Assets and Smart Contracts"
2 . The court also concluded that Bitcoin met four criteria of property : it is definable, it can be identified by third parties, it is capable in its nature of assumption by third parties and it has some degree of permanence3 .

Takeaways

Although this case is not legally binding in Hong Kong, English judgments are nevertheless persuasive, and this case is promising for companies wanting to recover stolen crypto-assets.

The Hong Kong courts
4 have also recently granted a Mareva injunction freezing the assets of a cryptocurrency trader in a dispute concerning Bitcoins held on an insolvent trading platform. In the case, the court found the plaintiff had made a good arguable case that the Bitcoin should be preserved, although there were competing claims to ownership. The Hong Kong judgment does not discuss the nature of Bitcoins, as this was not relevant to the legal test for granting the Mareva injunction.

The English judgment may also have consequential implications on other Hong Kong legislation that refers to the definition of "property", for example, "property" is defined in the Securities and Futures Ordinance as: "property includes (a) money, goods, choses in action and land, whether in Hong Kong or elsewhere; and (b) obligations, easements and every description of estate, interest and profit, present or future, vested or contingent, arising out of or incident to property as defined in paragraph (a)". This definition (which mirrors the definition of "property" in the Interpretation and General Clauses Ordinance) is inclusive, and so arguably, may include Bitcoins and other cryptocurrencies.

_______________________________________

[1] AA and (1) Persons Unknown Who Demanded Bitcoin On 10th And 11th October 2019 (2) Persons Unknown Who Own/Control Specified Bitcoin (3) iFINEX trading as BITFINEX (4) BFXWW INC trading as BITFINEX [2019] EWHC 3556 (Comm).
[2] The full legal statement can be found at the following link.
[3] As set out in Lord Wilberforce's classic definition of property in National Provincial Bank v Ainsworth [1965] 1 AC 1175]
[4] Nico Constantijn Antonius Samara v Stive Jean Paul Dan [2019] HKCFI 2718


About Us

Howse Williams is an independent law firm which combines the in-depth experience of its lawyers with a forward thinking approach. 

Our key practice areas are corporate/commercial and corporate finance; commercial and maritime dispute resolution; clinical negligence and healthcare; insurance, personal injury and professional indemnity insurance; employment; family and matrimonial; property and building management; banking; fraud; financial services/corporate regulatory and compliance.

As an independent law firm, we are able to minimise legal and commercial conflicts of interest and act for clients in every industry sector. The partners have spent the majority of their careers in Hong Kong and have a detailed understanding of international business and business in Asia.

 

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Submitted by // P Yeung, Partner
12 February 2020

 

Hong Kong's Employment (Amendment) Bill 2019 Gazetted

On 27 December 2019, the Hong Kong SAR Government gazetted the Employment (Amendment) Bill 2019. The purpose of the Bill is to amend the maternity benefits for female employees who are employed under a continuous contract. The changes seek to bring Hong Kong in line with the International Labour Organisation standards, which provide for a minimum maternity leave period of 14 weeks.

The Bill proposes the following changes to the statutory maternity leave protections as provided for in the Employment Ordinance (Cap. 57):

  • Increase of statutory maternity leave from 10 weeks to 14 weeks. 
  • The additional four weeks' maternity leave pay will continue to be calculated at four-fifths of the employee's average daily wages, subject to a cap of HK$36,822 per employee (the cap is essentially equivalent to four-fifths of the wages of an employee with a monthly wage of HK$50,000 in four weeks). While the cap is stipulated in the Bill, the employer is not prohibited from paying a higher amount to the employee under the contract of employment. The current proposal is that the additional four weeks' statutory maternity leave pay will be reimbursed by the Government to employers by way of an administrative scheme. 
  • Shortening the period of pregnancy mentioned in the definition of "miscarriage" from 28 weeks to 24 weeks (which means that a female employee whose child is incapable of survival after being born at or after 24 weeks of pregnancy may be eligible for statutory maternity leave if other conditions are satisfied).
  • The acceptance of a certificate of attendance as proof for entitlement to sickness allowance for a day on which a female employee attends a medical examination in relation to her pregnancy (in contrast with the current position which requires a medical certificate). 
The Bill was introduced into the Legislative Council for First Reading on 8 January 2020, with the Secretary for Labour and Welfare commenting that the changes, if accepted, could take effect by the end of 2021.

Chief Executive announced plans to increase progressively the number of statutory holidays

On 14 January 2020, the Hong Kong SAR's Chief Executive announced plans to increase the number of statutory holidays per year from 12 days to 17 days, subject to discussions with the business sector. At present, employees in Hong Kong, in particular the white-collar workers enjoy 17 general holidays per year, while the blue-collar workers, are entitled to 12 statutory holidays per year.

According to a Press Release issued by the Hong Kong SAR Government, this initiative aims to address society's longstanding concern about unfair treatment, in which there are different numbers of holidays for different employees. The Government will ask the Labour Advisory Board to work out a proposal to increase progressively the number of statutory holidays so that it is eventually on par with the number of public holidays. It is estimated that more than one million employees in Hong Kong will benefit from the proposal.

Hong Kong's Sex Discrimination (Amendment) Bill 2020 Gazetted

On 31 January 2020, the Hong Kong SAR Government gazetted the Sex Discrimination (Amendment) Bill 2020. The purpose of the Bill is to provide breastfeeding women with protection from harassment by amending the Sex Discrimination Ordinance (Cap. 480) ("SDO") to make it unlawful for a person to harass a breastfeeding woman.
 
  • Expanding the definition of "harass" in the SDO to comprise both sexual harassment and harassment of breastfeeding women. 
  • Adding a new section to the SDO which sets out the meaning of harassment of a woman on the ground that the woman is breastfeeding.
  • Amending certain provisions in the SDO that only refer to sexual harassment so that such provisions apply in relation to both sexual harassment and harassment of breastfeeding women.
The Bill is expected to be introduced into the Legislative Council for First and Second Reading on 12 February 2020.

The EOC believes that the Bill will strengthen legal safeguards for the right to breastfeed, and help empower women to nourish their children without fear and intimidation.

 

About Us

Howse Williams is an independent law firm which combines the in-depth experience of its lawyers with a forward thinking approach.

Our key practice areas are corporate/commercial and corporate finance; commercial and maritime dispute resolution; clinical negligence and healthcare; insurance, personal injury and professional indemnity insurance; employment; family and matrimonial; property and building management; banking; fraud; financial services/corporate regulatory and compliance.

As an independent law firm we are able to minimise legal and commercial conflicts of interest and act for clients in every industry sector. The partners have spent the majority of their careers in Hong Kong and have a detailed understanding of international business and business in Asia.

Disclaimer: The information contained in this article is intended to be a general guide only and is not intended to provide legal advice.  Please contact pr@howsewillilams.com if you have any questions about the article.

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