Unionists fear loss of benefits after ruling

PUBLISHED : Saturday, 04 March, 2006, 12:00am
UPDATED : Saturday, 04 March, 2006, 12:00am

Workers who earn most of their wages from commissions have suffered a huge setback following a court ruling that allows employers to exclude monthly commissions when calculating holiday pay.

Unionists said the judgment not only undermined workers' rights to rest days but may also severely restrict other benefits including sick leave.

'A great deal of income or, in some cases the entire income, of workers in the service industry comes from commissions. To exclude that in the calculation of the workers' holiday and annual pay leave means that they may have to sacrifice their rest days for work in the future,' said Ip Wai-ming, deputy director of the Federation of Trade Unions.

The Court of Final Appeal ruled on Tuesday that commissions calculated on sales over an entire month did not fit the definition of a daily wage. This means that holiday pay can be calculated based on basic monthly salary and commissions need not be included.

The judges decided the ordinance covered what an employee 'would' have earned, but any calculation that included commission would be based on what the employee 'might' have earned. They were hearing an appeal by Lisbeth Enterprises - which operates the Phillip Wain chain of women's health and beauty clubs - and a worker, Mandy Luk See-ming, who derived most of her income from commissions.

Mr Ip urged the Labour Department to revise the legislation.

'Something must be done to mend the loophole, otherwise employers may alter their workers' salary structure ... so that they can cut down on the workers' benefits.'

Tour guide Lam Chi-ting said people in his profession often worked public holidays. He earns a monthly income of about $10,000, of which $7,000 to $8,000 comprises tips or commissions. 'We are busiest on public holidays, so we accumulate a lot of holidays. To base holiday pay on my basic salary means they would only have to pay me $30 a day, instead of $385.'

But container truck driver Leung Wai-ting said holiday pay was not the only concern.

'What about sick leave, maternity leave, and severance pay? These are all based on wages. If commissions are not included, some of us are not going to get a cent if we have an accident because some in our industry do not have a basic salary.'

Barrister Andy Hung Hing-shek, who represented Ms Luk in the court case, said the courts might soon be flooded with applications from bosses and workers in pay disputes, although he believed the ruling's impact was confined only to annual leave and holiday pay.

The Labour Department said it was studying the judgment and would seek legal advice on the way forward.