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Redundancy

  1. #1
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    Redundancy

    Hi All,

    Hope you can help out for my situation and clarify a few points.

    My company (a large international financial institution) has given me a termination letter dated in 3 months (as that is my notice period). I was well aware of this termination letter beforhand as my division is being sold to another company, so there would be no more work for us here.

    In my company, there are global policies in place that we thought would apply. However it seems that the company (here in HK) is now taking a stance that we should only get what the HK law prescribes and anything over and above that minimum is completely voluntary by the company. Is it that global policies do not apply in redundancy processes?

    Second question: Once the company has terminated me, do they have the right to retract such a termination without my agreement? (i am due quite some severance pay, which i do not want to lose)

    Last question: Do i have any legal right towards bonuses for 2009 that the company will announce end of Feb? Is there some term that even a terminated person has a right to it and if yes, that i would have to be trated non-discriminatory?

    Thanks for any feedback

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    Quote Originally Posted by matemate View Post
    In my company, there are global policies in place that we thought would apply. However it seems that the company (here in HK) is now taking a stance that we should only get what the HK law prescribes and anything over and above that minimum is completely voluntary by the company. Is it that global policies do not apply in redundancy processes?
    Based on my experience global policies apply unless they are specifically excluded in your contract. Furthermore your contract may include conditions that are better than what the local laws guarantee, which then should be effective, too.

    Second question: Once the company has terminated me, do they have the right to retract such a termination without my agreement? (i am due quite some severance pay, which i do not want to lose)
    Dunno. (Good question.)

    Last question: Do i have any legal right towards bonuses for 2009 that the company will announce end of Feb? Is there some term that even a terminated person has a right to it and if yes, that i would have to be trated non-discriminatory?
    You are still employed end of Feb, so I think you are entitled to the bonus, unless your contract or the policies, as far as they apply, say otherwise. Ask your HR.
    Last edited by Raccon; 08-02-2010 at 12:31 PM.

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    If they are selling the division, is it contemplated that the new owner will then hire people like yourself at new salaries and working conditions?

    A new purchaser will often demand that the employees get dumped and then they hire those they choose at prices too they choose.

    That is more likely than them retracting a termination which I doubt they'd do.

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    Quote Originally Posted by Raccon View Post
    You are still employed end of Feb, so I think you are entitled to the bonus, unless your contract or the policies, as far as they apply, say otherwise. Ask your HR.
    i asked HR and they said yes (verbally), but i wonder what my legal fallback position is in case things come to a head

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    Quote Originally Posted by Football16 View Post
    If they are selling the division, is it contemplated that the new owner will then hire people like yourself at new salaries and working conditions?
    that's exactly what is happening and all employees have been offered positions by the buyer.

    the issue is, i already have an offer from the buyer but hesitate to accept it because i might find something more lucrative outside. so i like to get the severance pay AND have the option to accept the offer from the buyer or go somewhere else.

    our HR has not yet clarified all the conditions of the terminations (and only intends to do so like 1 week before terminate date), e.g. severance pay, annual leave buy out, etc. i have heard however that they only want to pay severance pay if the employees accept the offer from the buyer (as the two companies have a contract between themselves to ensure that as many people go over as possible).

    maybe my question is whether they can kill off my severance pay down to the legal minimum in case i go outside, or even retract the termination to basically force me to resign from my end and lose all severace pay.

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    Any global policies your company has are not legally enforceble if they contradict local law. You are legally entitled to what it says in your contract and what is required under local law - nothing more. Anything above that is at your companys discretion.

    What does it say in your contract? If it says you are to get all the juicy payouts as stated in the company policy, then you can get that.

    What does your contact say on bonuses? Again, it is your contract that will provide the exact answers. That will be your legal standpoint.

    If you ask HK regarding bonuses, or you have other queries, email them and request clarification via email reply. No point whinging about what "someone said" later on.

  7. #7
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    Answer to the first question: Generally if you are on a Hong Kong contract, Hong Kong law applies. Global Policies are general internal mechanisms of a company that can change at any time. Severernce pay in Hong Kong is the following:-

    "Additionally, long-service payments were introduced in 1986 for workers, who have been employed under a continuous contract for more than five years, and dismissed for reasons other than redundancy, lay-off or serious misconduct justifying summary dismissal (sec. 31R, EO). The method of calculation of a long-service payment is similar to that of severance pay (sec. 31V, EO).

    The amount of a severance payment to which an employee is entitled in any case is calculated as follows (sec. 31G, EO):

    * For monthly rated employee, two-thirds of his/her last full month's wages, or two-thirds of $22500, whichever is less; and
    * In any other case, 18 days' wages based on any 18 days chosen by the employee and occurring during his/her last 30 normal working days, or two-thirds of $22500, whichever is less,
    * For every year (and pro rata as respects an incomplete year) of employment under a continuous contract by his/her employer.

    An employee is not entitled to a severance payment in case of dismissal (sec. 31C, EO):

    * Where his/her employer, being so entitled by reason of the employee's conduct, terminates his/her contract of employment without notice or payment in lieu;
    * If, not less than 7 days before the relevant date, the employer has made to him/her an offer in writing to renew his/her contract of employment, or to re-engage him/her under a new contract, where the offer is for suitable employment, no less favourable to the employee than before, and the employee has unreasonably refused that offer; and
    * Where, having been given notice of the termination of his/her contract of employment by his/her employer and where he/she leaves the service of his/her employer before the expiration of that notice."

    This is the bare minimum. However banks will often want you to sign a "compromise agreement" in the agreement you are required to undertake certain provisions such as not poach customers or compete against your former employer, poach remaining employees etc. In return for signing such an agreement the bank will offer you more than statutory redundancy pay.

    If the bank only offers you the minimum, I would not sign any form of compromise agreement.

    Second Question: Depends on your employment contract and any compromise agreement you sign

    Last Question: Bonuses are generally considered totally discresionary unless they are explicitly written out in a contract.

    If you want to fight this through the courts bear in mind that although the employment tribunal system can be used they are likely to refer a complicated case like yours to the courts, and your legal fees may well eclipse the bonus and severance pay at stake.

    You may want to raise an internal grievance (at bank HQ) instead with regards to your severance.

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    Quote Originally Posted by Crocodile View Post
    Any global policies your company has are not legally enforceble if they contradict local law. You are legally entitled to what it says in your contract and what is required under local law - nothing more.
    my contract says that i have to follow and abide by all company global as well as local policies and of course follow the laws of the country where i work.

    the question is of course whether the vice-versa applies too, i.e. that the company has to follow its own policies and apply them to me

    in general, i am not trying or intending to go to courts at all. however i do see the whole thing as a negotiation like a compensation negotiation when one joins a new company. hence i am trying to understand how much the company can screw me if they want to, and what my worst case scenario is.

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    Quote Originally Posted by matemate View Post
    my contract says that i have to follow and abide by all company global as well as local policies and of course follow the laws of the country where i work.

    the question is of course whether the vice-versa applies too, i.e. that the company has to follow its own policies and apply them to me
    No, you have missed the point. Policies are just guidelines - they are not enforceable. Unless your contract says something like: "Upon redundancy you will be entitled to the payment of amounts as stated in Section 13.2 of the XYZ Banking Company Employee Policy".

    Of course you don't want to go to court, but if the company wants to get rid of you, they are not going to give you a big juicy payout for no reason. Some companies have good policies and look after their employees, but there are also financial institutions who don't.

    If your contract does not mention termination payments, then you are only entitled the Hong Kong legal minimum requirement.

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    fair point, thanks for pointing out that difference

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