Insolvency after resignation

[mmielke]

- Some employees resign mid-month with a notification period as per contract
- 2 weeks later the employer announces insolvency, termination the contracts of all employees
- The employee contracts which had not resigned were terminated with 'immediate effect'
- The contracts of those who had already resigned where just terminated (without mentioning any period or point in time)

In both cases the wages (and other payments) were not paid.

What is the legal status of the latter? Do they still hold valid contracts? More specific: Are the contractual notice periods still in place and binding or does the insolvency supersede employees contractual rights?

Appreciating any information on this specific constellation, thanks!

[answerer]

A contract is a contract regardless of what happens to either party. Under HK law, the employer can give payment in lieu of notice. However, getting actual payment from an insolvent employer is likely challenging, because they probably owe things like MPF, taxes, etc.

See this page which outlines recommended steps:
https://www.gov.hk/en/residents/empl...eowedwages.htm

[MandM!]

Go file a claim in the labour department and labour tribunal immediately. You will need to do this to block the closing of the company. You could potentially seek to hold the directors of the company personally liable. This is a long process but if you didn't file the claim and pay the stamp duty at the labour tribunal, you'll get nothing for sure.

There is also an insolvency fund that you would receive a small portion of your entitlement, so you will still be able to claim those monies. But again you have to first file your claim and win the case.

I've seen many employers use the insolvency excuse but in the end never filed. You never know what their situation is.

[MandM!]

Your contract is valid until you sign something revoking your rights. Non payment of salary is a serious issue that could impose a custodial sentence on your employer. It is the employers responsibility to ensure employees are terminated before the financial situation prohibits wage payment.

[TheBrit]

Go file a claim in the labour department and labour tribunal immediately. You will need to do this to block the closing of the company. You could potentially seek to hold the directors of the company personally liable. This is a long process but if you didn't file the claim and pay the stamp duty at the labour tribunal, you'll get nothing for sure.

There is also an insolvency fund that you would receive a small portion of your entitlement, so you will still be able to claim those monies. But again you have to first file your claim and win the case.

This really sounds like nonsense to me, like most of your advice.

Holding company directors personally liable? I doubt it.

Normal process of company bankruptcy is employees become creditors of the company and may or not get paid some of what they are owed.

Usually employees rank higher than most other creditors of the company in bankruptcy situations.

[TheBrit]

Some proper advice here. Ignore the rubbish M+M posted.

https://www.gov.hk/en/residents/empl...eowedwages.htm

[TheBrit]

Your contract is valid until you sign something revoking your rights. Non payment of salary is a serious issue that could impose a custodial sentence on your employer. It is the employers responsibility to ensure employees are terminated before the financial situation prohibits wage payment.

This is just utter rubbish.

[MandM!]

It's effective. Your method is to get screwed and not collect. Been there done that. The OP can pray and follow your method or file a suit and apply some pressure on the company to pay up.

[MandM!]

Therefore, the criminal liability mentioned above will also attach to directors and the relevant company’s responsible persons. In the ATV case, one of its officers was convicted and fined HK$150,000.

https://www.hg.org/legal-articles/di...ong-kong-38238

Plenty of cases you can read about. I had an overseas employer pull this BS on a couple friends. I stepped in and they got a settlement for more than their entitlement same day. It was in the 7 figure range.

TB is old school. Use the law to protect you and fight. HK courts are extremely effective. Many countries you can apply overseas judgements to go after directors personal assets in their home countries.

[TheBrit]

Therefore, the criminal liability mentioned above will also attach to directors and the relevant company’s responsible persons. In the ATV case, one of its officers was convicted and fined HK$150,000.

https://www.hg.org/legal-articles/di...ong-kong-38238

Plenty of cases you can read about. I had an overseas employer pull this BS on a couple friends. I stepped in and they got a settlement for more than their entitlement same day. It was in the 7 figure range.

TB is old school. Use the law to protect you and fight. HK courts are extremely effective. Many countries you can apply overseas judgements to go after directors personal assets in their home countries.

The article you linked is concerned with wages that were not paid before the company become insolvent. Wages had not been paid since Dec 2014 when the company was only wound up in April 2016.

This is not the case laid out by the OP, where outstanding wages seem to have been paid correctly before the company went insolvent, only the current paycheck has gone unpaid. Once a company declares insolvency employees join the queue with other creditors.