(A) Introduction
In Chung Hoi Yin Aggie v The General of The Salvation Army, HCLA 16/2023, date of judgment: 21 August 2025, [1] the Hong Kong Court of First Instance (the “Court”) addresses an appeal concerning the construction and termination of an employment contract. The Court held that the Labour Tribunal erred in law in its interpretation of the contractual terms, particularly in holding that certain service quality standards formed part of the employment contract and in treating the termination as a wrongful dismissal.
This case sets an significant precedent on the proper approach to contractual construction, the nature of fixed-term employment, and the circumstances under which termination constitutes wrongful dismissal entitling an employee to compensation.
(B) Facts
The Claimant had been employed by the General of The Salvation Army (the “Defendant”) as a registered contract social worker since 2005. [2]
On 30 March 2020, she accepted an employment contract (the “Employment Contract”) for a fixed term from 1 April 2020 to 31 March 2021. The Employment Contract contained references to the “合約僱員手冊 (2013 年5 月1日修訂）(Handbook)” and “Service Quality Standards 5 (the “SQS 5”)”. [3] The Employment Contract was renewed six times after the initial expiry, with each renewal clearly indicating a fixed-term period. [4] The last renewal ended on 30 September 2022. The Defendant notified the Claimant that there would be no further renewal, despite her being on sick leave at that time. [5]
The Labour Tribunal found that the SQS 5 formed part of the Employment Contract and that the termination was a wrongful dismissal, awarding wages in lieu of notice and compensation under Section 32P of the Employment Ordinance, Cap. 57 (the “Ordinance”). [6]
Subsequently, the Court grant leave for the Defendant to appeal on the following grounds: [7]
(1) Ground 1: Deputy Presiding Officer Ms Chan Pui Shan (the “Learned Officer”) erred in law in holding that SQS 5 formed part of the Employment Contract, which should have been construed as no more than guidelines for the human resources department of the Defendant to follow;
(2) Ground 2: the Learned Officer erred in law in construing that Clause 5 of SQS 5 conferred a contractual right on the Claimant to receive 28 days’ notice or payment in lieu, given that the employment under the Employment Contract was a fixed-term employment;
(3) Ground 3: the Learned Officer erred in law in holding that the Claimant was dismissed upon the expiry of the fixed-term employment;
(4) Ground 4: for compensation upon dismissal under Section 32P of the Ordinance, the Learned Officer erred in law in failing to investigate whether the Claimant was dismissed within or outside her statutory entitlement of sick leave allowance as provided by Section 33(4B) of the Ordinance and/or in failing to adjourn the issue of compensation under Section 32P until the determination of the Claimant’s employee compensation claim which would determine her statutory entitlement of sick leave allowance; and
(5) Ground 5: the Learned Officer should have found that there were proper grounds for the dismissal, if the termination was a dismissal.
(C) Decision
The Court allowed the Defendant’s appeal and dismissed the Claimant’s claim with costs of the appeal (including the costs of the application for leave to appeal) to the Defendant on the following grounds:
Ground 1 and Ground 2
The Court reaffirmed the general legal principles of contractual construction, emphasizing that such construction is a unitary exercise starting with the ordinary and natural meaning of the words and considering the purpose, context and factual matrix known to the parties, the quality of the drafting and the commercial common sense. The Court must ascertain the parties’ intention objectively. The relevant factors are “aptness” and commercial sense. [8] The Court further added that the same legal principles should apply to construction of an employment contract. [9]
The Court found that SQS 5 did not form part of the Employment Contract and was only non-binding guidelines for the Defendant. The Court further found that the Employment Contract was a fixed-term contract. [10]
Ground 3
The Court held that expiry of a fixed-term contract does not constitute dismissal. As such, there was no no wrongful dismissal, and the Claimant was not entitled to compensation under Section 32P of the Ordinance (i.e. compensation for wrongful dismissal). [11]
Ground 4
The Court rejected this ground because the directions given by the Learned Officer on 11 April 2023 and the supplemental witness statements were solely for investigating whether the medical leave was statutory. [12]
Ground 5
The Court rejected this ground because the Court found that Ground 5 was more a ground on the Learned Officer’s factual finding of whether there were valid grounds for the dismissal (if it were a dismissal) and hence the Learned Officer’s finding was not wrong as to constitute any error of law. [13]
(D) Key Takeaways
In conclusion, this case provides helpful guidance on the drafting and interpretation of employment contracts:
(1) Employment contracts should be interpreted objectively, based on the meaning of the words, the purpose of the agreement, the context known to the parties, the quality of the drafting, and commercial common sense.
(2) Reference to staff handbooks or service quality standards are generally not incorporated as contractual obligations unless expressly stated.
(3) Expiry of a fixed-term employment contract is not a wrongful “dismissal” and does not entitle the employee to notice or compensation for wrongful dismissal unless otherwise agreed.
(4) Employers should carefully draft fixed-term contracts to avoid ambiguity regarding renewal and termination, in particular, clearly specifying renewal procedures, duration, and termination conditions.
[12] Ibid, §29
[13] Ibid, §32
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