In a recent judgement of Tahir Kashif v Safdar Nasar Mahmud  HKDC 600 (the “Tahir Case”), the applicant for employees’ compensation is an asylum seeker from Pakistan. Under the laws of Hong Kong, he is prohibited from engaging in any employment. The Court needs to consider whether (and if so, how) to exercise its power under Section 2(2) of the Employees’ Compensation Ordinance (Cap. 282) (“ECO”).
The applicant’s case is that he was employed by the respondent to work in an iron sheet factory situated in New Territories. On the date of accident, his right arm was caught by a compressing machine operated by his co-worker while he was placing computer monitor parts. The respondent, on the other hand, denies the existence of any employment relationship between itself and the applicant.
Ruling on the exercise of discretion under Section 2(2) of the ECO
Having determined that there was in fact an employment relationship between the applicant and the respondent, the Court turned to consider whether it should exercise the power under Section 2(2) of the ECO, which provides that if, in any proceedings for the recovery of compensation under the ECO, it appears to the Court that the service contract of the injured person was illegal, the Court may, if having regard to all the circumstances of the case it thinks proper to do so, deal with the matter as if the injured person had been working under a valid service contract.
In the Tahir Case, the Court ruled that discretion under Section 2(2) ECO shall be exercised in favour of the applicant. While it did not set out in details the matters to be taken into account in determining how such discretion should be exercised, reference was made in its judgement to Yu Nongxian v Ng Ka Wing & Anor 4 HKLRD 159 (the “Yu Nongxian Case”), a Court of Appeal case in which the subject employment was also illegal in its nature. In that case, the Court of Appeal took into account a number of matters in determining how to exercise such discretion, including:
- Firstly, regards must be paid to the general circumstances of the case, including the nature of illegality complained of, the moral and criminal culpability, the applicant’s conduct and whether the parties are aware of the illegal nature of the employment;
- Secondly, one must consider the public policy concern behind the legislation being violated. In particular, it was suggested by the Court of Appeal that public policy would not be served by disallowing claims by illegal employees for the reason that if an illegal employee suffers injuries knowing that he has a remedy under the ECO, he is likely to come forward and make a claim against his employer. In that event he would probably be available as a witness for the prosecution against the employer for illegal employment. On the contrary, if no compensation is payable, the employee would not come forward at all and it follows that “the employer is very likely to get off scot-free”; and
- Thirdly, the Court would also consider whether the employer is insured from the relevant claim such that it has the means to satisfy the judgement against him.
The ruling in the Tahir Case and the Yu Nongxian Case illustrate the Court’s approach in exercising its discretion under Section 2(2) of the ECO. They serve as a good reminder to the employer that the mere fact that the relevant employment is illegal in its nature does not necessarily mean that it would not be held liable for the employees’ compensation in the event such employee sustains injury in the course of his employment.
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