Transfer of employment during pregnancy

by Judith Wong, Senior associate, The Employment Law Group, Allen & Overy

Article exclusively contributed by
Allen & Overy

In the recent case of Sun Min v Hong Kong Ming Wah Shipping Co Ltd [2004], the Employee was a mainland citizen who first joined CMH, a company in mainland China, back in 1994. At some point in 1998, she was transferred to Hong Kong and began employment with CMH's Hong Kong subsidiary (the "Company"). She was later transferred, in 1999, to other CMH group companies in Hong Kong and worked for them until August 2000 when she was once again transferred back to the Company.

The Employee became pregnant and informed the Company of this on 13 October 2001. Subsequently, on 17 and 18 December 2001, she received two notices from the Company advising her that, with effect from 18 January 2002, she would no longer work for them but, instead, would begin working for an associated company in Shenzhen.

Refusing to follow the directive transferring her, the Employee lodged a claim with the Labour Tribunal. The Company had relied on an express term in the contract of employment which stated that the Company was entitled to transfer the Employee back to the mainland within three to five years of sending her to Hong Kong (the "Term").

After reviewing the case, the Court held that the notices to transfer the Employee had the same legal effect as termination notices. The Company was exercising its right under the Term to transfer the Employee to Shenzhen and, upon such transfer, her employment with the Company would necessarily come to an end. There was no doubt that the Employee was pregnant at the time the transfer notices were served. The Company's argument that its decision was unrelated to her pregnancy was found to be irrelevant as termination of contract during an employee's pregnancy was unlawful.

There are certain lessons to learn from this example. Even if an employer has reserved an express right in the employee's contract to allow for a transfer of employment from one company to another (even within the same group), this necessarily involves termination of employment.

The employee will be entitled to decide whether she wishes to transfer. An employer has no right to treat an employee's refusal to transfer as a voluntary resignation. If an employee is no longer required in her current position or company, the contract of employment must be terminated properly.

Q & A on transfers and termination of employment during pregnancy
Q1 Our company served notice to transfer an employee to another group company before she advised us of her pregnancy. Is this in breach of the law and, if so, what should we do?
A1 If an employee does not want to be transferred and immediately advises the company of her pregnancy upon receiving a notice to transfer (by producing a medical certificate to support her pregnancy), the company must withdraw the notice of transfer. It may, however, be possible to negotiate with the employee for mutually agreed terms of transfer.

Q2 What is the difference between "transfer of employment" and "secondment"?
A2 "Transfer of employment" usually refers to the termination of employment with your original employer and commencement of employment with another company (see also question 3 below). "Secondment" means going to work for another company temporarily while your employer remains unchanged. Therefore, "secondment" will not involve any termination of employment though your duties and place of work may be changed as a result.

Q3 I have been working for Company A for four years and was recently asked to transfer within the group to Company B. Will my past years of service with Company A be carried across and recognised automatically or do I need to insist my contract with Company B states this fact?
A3 If Company A and Company B are "associated companies" within the definitions of the Employment Ordinance, the law requires that your years of service be automatically carried across, even if your contract with Company B is silent on the point. In addition, if your transfer of employment is brought about by a transfer of business (or part of the business) from Company A to Company B, the law also provides that your years of service be automatically carried over to Company B.

If you are unsure whether the two companies are "associated" and whether there is a transfer of business, it is always prudent to confirm your understanding with Company B that continuity of employment will not be broken. Also, it will be best to request that such confirmation is clearly set out in the employment contract to avoid any future dispute.

Taken from Career Times 18 June 2004

(Last review date: 23 August 2013)

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Disclaimer: The opinions expressed in this article are those of the contributor.

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