Implied duties of an employee

By NTS Kularatne, Solicitor, Weir & Associates

Article exclusively contributed by Weir & Associates

Once they have signed a contract of employment ("the contract") and settled into a new job, most employees start to think only in terms of their entitlements and what they believe their employer should provide for them. They tend to forget that the contract is not only what both parties have expressly agreed upon, but also that there are a number of important duties of an employee under the common law of Hong Kong.

The standard contract sets out the following: the job or position, duties and responsibilities, salary or wages, leave entitlements, period of notice to terminate the contract, and grounds for termination. The parties are required to act within such terms. In practice, though, there are additional terms, implied in law, which further determine the rights and duties of the parties. These are found in the common law and under various statutory enactments. Here we deal with those duties under the common law:

Duty to exercise skills
An employee who obtains a position on the basis of certain skills undertakes that he does possess those skills and will exercise them in his work. This duty is owed throughout the period of employment. Moreover, he is also required to improve or adapt new methods and techniques in performing his duties. For example, an accountant must learn and use new accounting systems and rules that have a bearing on his job. Unless he acquires this knowledge, he will not be able to perform his duties properly. The employer's obligation is to provide training in new skills, provided the nature of work is not substantially different from what was agreed in the contract.

Duty to exercise reasonable care
Every employee has to exercise reasonable care in the performance of his duties. If, say, a factory worker is responsible for operating a machine, he must take sufficient care in using the machine so that it gives optimum production. A breach of this duty does not justify a summary termination of services unless the breach goes to the root of the contract. However, the employee may be obliged to indemnify the employer.

Obedience to lawful and reasonable orders
It is a requirement for an employee to obey the lawful and reasonable orders of his employer within the scope of his job. This includes the learning and adopting of new modes and techniques for performing duties. An employer cannot, though, call upon an employee to do anything illegal. For example, providing false or incorrect information to a government department or the Inland Revenue Department is illegal. If the employer ordered an employee to commit such an unlawful act and a claim was made against the employee by a third party, the employer would be liable to indemnify the employee.

Duty not to disclose confidential information
It is an implied duty not to disclose or make public any professional or trade secret and/or any confidential information which an individual may come across by reason of his employment. This duty has been the subject of litigation and, in the case of Thomas Marshall Ltd v Guinle [1978], it was held that there are four elements in the identifying of confidential information or trade secrets which the court will safeguard. They are:
(a) owner's belief that the release of information would be harmful to him or advantageous to his rivals
(b) owner's belief in the confidentiality of the information
(c) reasonableness of these beliefs
(d) assessment of the information in the light of the usage and practices of the particular industry or trade.

(Update: The case of Lancashire Fires Ltd v SA Lyons and Co Ltd [1996] held that in spite of the above elements, the requirement to safeguard confidential information will depend on the circumstances. For instance it would be impractical to implement the same control standards for both informal organizations and bigger and more bureaucratic associations.)

A court may issue an injunction to restrain the employee from publishing or using such confidential information.

Duty to account
An employee is obliged to account for all property entrusted to him by his employer and for all property given by a third person for or on account of his employer. The employee is under a fiduciary duty in this regard. He is also bound to account fully for any bribe, secret profit or secret commission, which he has received in relation to his employer's affairs, or earned by virtue of his position as employee.

Duty to indemnify the employer
By failing to exercise a particular skill or take reasonable care in his work, an employee may cause harm or injury to a third party through his negligence. If damages have to be paid to the third party, the employer can recover an indemnity from the employee. This is based on the employee's contractual duty to take reasonable care in his work. In one case where an employee injured a fellow worker by driving negligently, the employer was entitled to recover from the employee the damages payable to the injured colleague as well as the costs of the action.

Q & A on implied duties
Q1 What is the implied duty of fidelity?
A1 An employee is under a duty to serve the employer loyally and in good faith. Specifically, he must not speak ill of his employer or fellow workers, solicit the company's business for a separate enterprise, or work for another employer whilst the first job continues.

Q2 What are the penalties for a breach of duty by an employee?
A2 Penalties range from a warning, fine, or suspension from work, to termination of services. The penalty will depend on the act of misconduct, the employee's position, past conduct, and the nature of the business. No rule of law sets down the degree of misconduct that warrants a particular type of punishment. Previous cases can only be used as a guideline.

Taken from Career Times 26 November 2004

(Last review date: 23 August 2013)

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