When Employee Compensation Settlement Agreements Are Non-Binding By Ray Lee, Partner, ONC Lawyers

Background

When an employee suffers an injury from an accident during the course of their work, it is not uncommon for an employer to reach an agreement with the said employee and offer to pay compensation. However, is a settlement agreement binding on both parties and deemed to have resolved the employee’s compensation claim once and for all? For instance, can the employee pursue further compensation against the employer after a settlement agreement has been signed? In the case of Leung Siu Kam (Applicant) v 梁國強 & ANOR (Respondents) [2022] 1 HKC 81, the District Court demonstrates how an employee’s compensation claim shall be determined even though both parties have signed a settlement agreement.

Facts

In this case, Leung, the Applicant, was employed as a chef for the First Respondent, who operated a restaurant. When the Applicant was working in the kitchen preparing food using a knife, he slipped on some food scraps and fell. The knife he was holding at the time inflicted a 3 cm to 4 cm cut on his left palm. It was alleged that Leung had agreed to settle his claim for employees’ compensation in the sum of HK$59,980, as proved by a written settlement agreement signed by both parties (the Settlement Agreement). However, Leung sought further compensation against the First Respondent under Sections 9 and 10 of the Employee’s Compensation Ordinance (ECO).

The First Respondent did not participate in the legal proceedings, except for sending a letter to the Applicant’s solicitors informing them that a full and final settlement had been reached between both parties. As the First Respondent was not involved in the legal proceedings, the Employees Compensation Assistance Fund Board assisted the court as the Second Respondent. 

Legal principles

Section 31 of the ECO provides that “Any contract or agreement… whereby an employee relinquishes any right to compensation from an employer for personal injury by accident arising out of and in the course of his employment, shall, subject to subsection (2), be null and void in so far as it purports to remove or reduce the liability of any person to pay compensation under the provisions of this Ordinance.”

Section 31(2) of the ECO allows the employee to enter into an agreement with the employer to reduce or give up the right to compensation in respect of accident which is caused or contributed to by old age or serious physical defect or infirmity, but such agreement is only effective if the Commissioner for Labour is satisfied that it is fair and reasonable (ECO section 31(3)).

The effect of Section 31(1) of the ECO

In the case of Shiu Ying Kwong v Po On [1990] HKDCLR 15, it was held that s31(1) of the ECO does not preclude the parties from coming to a settlement whereby the employee obtains compensation in an amount in excess of the minimum, but conceivably less than he or she might obtain after a full hearing.

Therefore, so long as the agreed amount is not less than the statutory minimum or that which would be due to the employee under the ECO on the basis of the facts agreed between the parties, the settlement agreement will not be null and void and regarded as purporting to remove or reduce the liability of any person to pay compensation under Section 31(1) of the ECO.

The Second Respondent argued that by reason of the Settlement Agreement, no further compensation under the ECO is payable. Leung argued that the Settlement Agreement is null and void under Section 31(1) of the ECO. The court considered that in order to decide whether the Settlement Agreement is null and void it was necessary to assess the potential minimum compensation payable to the Applicant.

According to the medical evidence, Leung suffered a permanent loss of earning capacity ranging from 1.5% to 4%. The Court adopted a 1.5% loss of earning capacity to access the minimum Leung could be awarded under Section 9 of the ECO.

Regarding the periodical payment under Section 10 of the ECO, the court assessed the minimum potential payment on the basis of the required sick leave from the date of accident, according to the Settlement Agreement.

After arriving at the potential minimum compensation under Section 9 and Section 10 of the ECO, the court was satisfied that the potential minimum compensation to which Leung was entitled was above the settlement sum of HK$59,980 under the Settlement Agreement. Therefore, the court ruled that the Settlement Agreement was null and void under Section 31(1) of the ECO.

Key takeaways

The case of Leung Siu Kam v 梁國強 & ANOR demonstrates that an employer paying a compensation amount agreed by an employee will not necessarily absolve the employer from further liability to pay employees’ compensation if the agreed amount is considered less than the minimum the Applicant is entitled to receive under the ECO. 
As such, if either party wants to settle an employee’s compensation claim, it is advisable to seek legal advice to determine the appropriate settlement sum so that the Settlement Agreement will not become null and void under Section 31(1) of the ECO.

[中文版本]

僱員補償申索和解協議在甚麼情況下不具約束力 

撰文：柯伍陳律師事務所合夥人 李展鵬    

• 區域法院裁定一宗僱員補償申索和解協議不具法律效力，因協議補償金額低於僱員按照《僱員補償條例》應得的最低補償。
• 該案提醒僱主，應審慎議定及仔細覆核補償申索和解協議，確保協議條款清晰明確，並具法律約束力。

簡介

很多時候，若僱員在受僱工作期間意外受傷，僱主會向受傷僱員提出支付若干補償以作和解。和解協議是否對雙方均具約束力，並徹底了結僱員補償申索？僱員在簽署和解協議後，可否向僱主追討進一步補償？在Leung Siu Kam v 梁國強 & ANOR [2022] 1 HKC 81一案中，區域法院（「法院」）說明在勞資雙方即使簽署了和解協議的情況下，將怎樣裁定僱員補償申索。

背景

在本案中，梁姓申請人獲第一答辯人僱用為其餐廳的廚師。申請人在廚房用刀切食材時，意外踏在地上的食物碎屑而跌倒，並被自己拿著的刀割傷左手掌，傷口達3至4公分。據稱梁姓申請人同意僱主支付59,980港元了結其補償申索，雙方並簽署書面和解協議（「和解協議」）為證。然而，梁姓申請人根據香港法例第282章《僱員補償條例》（「該條例」）第9及第10條進一步向第一答辯人索償。

第一答辯人一直沒有出庭應訊，只是致函申請人的律師，表示已與申請人達成全面及最終和解。由於第一答辯人沒有出庭，僱員補償援助基金管理局加入為第二答辯人以協助法院。

法律原則該條例第31條規定，「任何合約或協議…… 如憑此合約或協議僱員放棄其在受僱工作期間因工遭遇意外以致身體受傷而可從僱主獲得補償的權利，則除第 (2) 款另有規定外，該合約或協議中凡其意是免除或減少任何人根據本條例條文支付補償的法律責任的條款，均屬無效。」

該條例第31(2) 條允許僱員與僱主訂立協議，減少或放棄僱員因年老或身體嚴重缺陷或殘疾所導致或促成的意外而獲得補償的權利，但上述協議必須獲勞工處處長信納為公平合理，方為有效（該條例第31(3) 條）。

《僱員補償條例》第31(1) 條的效力

在Shiu Ying Kwong v Po On [1990] HKDCLR 15一案中，法院裁定，即使雙方達成和解的金額明顯低於僱員在全面聆訊後應可獲得的補償，但只要該金額高於最低補償，該條例第31(1) 條並不禁止雙方和解。

因此，只要議定金額不低於法定最低補償或在該條例下根據雙方議定事實而應向僱員支付的補償，和解協議便不會無效，亦不會被視為有意消除或減少任何人在該條例第31(1) 條下支付補償的責任。

爭論點

第二答辯人認為，由於雙方已簽署和解協議，答辯人無須根據該條例支付進一步補償。梁姓申請人則認為，根據該條例第31(1) 條，和解協議屬無效。法院認為，要判斷和解協議是否無效，法院須評估應向申請人支付的潛在最低補償金額。

最低潛在補償金額

根據醫療證據，申請人永久喪失1.5% 至4% 的賺取收入能力。法院採納1.5% 來評估梁姓申請人在該條例第9條下可獲得的最低補償金額。

就該條例第10條的按期付款而言，法院根據和解協議，以申請人自意外日期起所需病假為基礎，評估最低潛在補償金額。

在評估該條例第9條及10條下的潛在最低補償金額後，法院信納申請人在該條例下應得的潛在最低補償金額高於和解協議訂下的和解金額59,980港元。因此，法院據該條例第31(1) 條裁定和解協議無效。

要點

Leung Siu Kam v 梁國強 & ANOR一案說明，即使僱主支付了與僱員議定的補償金額，但如果議定金額低於申請人在該條例下應得的最低補償金額，僱主仍不獲免除支付進一步僱員補償的責任。

因此，如任何一方希望就僱員補償申索和解，最好先徵詢法律意見以確定適當的和解金額，確保和解協議不會因為該條例第31(1) 條而屬無效。