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Illegal Activities of Employee Justify Dismissal ?
1 November 2014

When discussing unlawful conduct or illegal activities in relation to employment, most people will think of improper or wrongful conduct of employer eg. discrimination or harassment. A question recently often asked in Hong Kong is whether an employer can summarily dismiss an employee if he has been involved in illegal activities or unlawful conduct eg. a British banker was arrested and charged for illegal use of drugs and stabbing to death 2 lady companions or an employee in criminal breach of the Public Order Ordinance or in obvious contempt of an order of court etc.

Statutory grounds for dismissal

An employer’s statutory right to summarily dismiss an employee¡¦s employment is provided in the Employment Ordinance (Cap 57). Section 9 provides the following 5 grounds for summary dismissal :-

1. The employee wilfully disobeys a lawful and reasonable order.

2. The employee misconducts himself, such conduct being inconsistent with the due and faithful discharge of his duties.

3. The employee is guilty of fraud or dishonesty.

4. The employee is habitually neglectful in his duties.

5. Any other ground on which he would be entitled to terminate the contract without notice at common law.

Whilst the grounds for dismissal are clearly laid out in the Ordinance, the difficult question is what type(s) of conduct would justify summary dismissal ?

There is no rule of law defining the degree of misconduct which will justify dismissal. The test to be applied must vary with the nature of the business and the position held by the employee and reported cases are therefore only a general guide. The general rule is that if the employed does anything which is incompatible with the due or faithful discharge of his duty to his employer, he may be dismissed without notice, the employee’s conduct need not be dishonest, since it is sufficient if it is “conduct of such a grave and weighty character as to amount to a breach of the confidential relationship” between employer and employee (See Chitty on Contracts 25th edition paras 3506 and 3507).

Insubordination, breach of confidence in disclosing trade or other secrets, taking a secret commission and drunkenness affecting his duties are kinds of misconduct which have, in the circumstances of the case, justified summary dismissal.

In general however judges and case authorities have considered summary dismissal to be a very serious step to take against any employee. It is the “capital punishment” in that if the dismissal is justified, the employee will be deprived of all the protection provided by the Employment Ordinance. There will be no wages in lieu of notice, no annual leave pay, no severance payments, no end of year payment, no long service payment no matter how long the employee has been in employment.

The court when deciding such cases will try to balance the impact of the summary dismissal on the employee with the effect of the employee’s misconduct on the employer to decide if the summary dismissal is justified. An employee may obviously be dismissed for dishonesty or fraud in his employment. But conviction of a crime is sufficient only if the conduct constituting the crime is inconsistent with the proper performance of his duties as employee.

In the UK case of Securicor Guarding Ltd v R [1994] I.R.L.R. 633, the Employment Appeal Tribunal held that an employer had unlawfully dismissed its employee, a security guard, charged with a criminal offence as such criminal activity was not inconsistent with the proper performance of the employee’s duties.

The burden of proof that the conduct of the employee justify dismissal lies with the employer. The decided cases are not often held for the employer. Summary dismissal on statutory grounds is therefore not commonly relied on by employers in Hong Kong to terminate employment.

Contractual Terms of Employment

In most employment contracts, it would be specified that any unlawful act or criminal conduct would justify dismissal of the employee. However, such term in the employment contract would usually only assist the court in determining whether a specific breach is sufficiently serious to amount to summary dismissal but it is not itself a decisive factor. To justify summary dismissal under contract, the act complained of must show that the employee’s conduct is incompatible with his duties and continued employment. This is a question of fact which will depend upon the circumstances of each case, the nature of the employment and the nature of the responsibilities and of the tasks being performed, the standards and norms of the industry or profession within which the employment takes place, the terms of the particular contract of employment and the social conditions prevailing at the time of the contract. To this extent previous case law can give some guidance but is of limited precedent value.

We are of the view that deliberate falsification of poll results conducted by the employee on behalf of his employer institution and unauthorized access to employer’s computer system are gross misconduct which would justify summary dismissal under contract. The dismissal will be further supported if the employer issues a clear warning that the employee’s behavior will not be tolerated and the illegal activities continue.


Employers should obviously exercise care when summarily dismissing an employee as dismissing an employee for reasons other than those permitted under law would amount to a wrongful termination. Employees may then make a claim for losses and damages under section 8A of the Employment Ordinance.

There is in any case other options of termination by notice or termination at the end of a term contract which the employee will find hard to dispute or challenge. In such cases, all entitlements under the Employment Ordinance will be payable.

If you have any question on the above eNews or on employment matters, experienced lawyers in our Employment Practice will be pleased to assist you.

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