For employers in Hong Kong, the discovery of potential employee misconduct or the departure of a key executive can create an immediate and critical need to protect sensitive business information and client relationships. This necessity often involves temporarily removing the employee from the premises, a measure that, while commercially prudent, is fraught with significant legal risk. The central challenge lies in balancing the employer’s right to safeguard its interests against the employee’s rights, with any misstep potentially leading to a costly constructive dismissal claim. Navigating this complex landscape requires a nuanced understanding of the three primary legal mechanisms available: the severe and rigid statutory suspension, the flexible and modern administrative leave, and the strategically deployed garden leave. A successful approach depends not on a single tool, but on a well-planned strategy rooted in carefully drafted employment contracts, fair and transparent procedures, and a clear comprehension of the legal boundaries.
The High-Stakes Option of Statutory Suspension
The Employment Ordinance (EO) provides a direct but perilous route for employers to suspend an employee, a power that should be wielded with extreme caution. Under Section 11 of the EO, an employer is permitted to suspend an employee without notice or payment, but this drastic measure is only legally justifiable under three strictly defined and severe circumstances. These include situations where the suspension is a disciplinary action for misconduct so serious it would warrant immediate summary dismissal, during a period where the employer is actively deliberating on whether to proceed with such a dismissal, or while awaiting the outcome of criminal proceedings against the employee that are directly related to their employment. This statutory tool is fundamentally designed for the most egregious breaches of conduct and is not a flexible instrument for managing general internal investigations or less severe performance issues, making its application a high-stakes decision for any organization.
The courts have reinforced the stringent nature of this provision, adding another layer of risk for employers who might consider its use. In the landmark Court of First Instance case, Lengler Werner v. Hong Kong Express Airways Ltd, it was ruled that a “suspension from employment” under Section 11 entails a complete and total cessation of the employment relationship. This means the employee performs absolutely no duties, and in turn, the employer has no obligation to provide any salary. It is fundamentally distinct from a partial suspension of duties where the employee might be reassigned but continues to be paid. Furthermore, the suspension is capped at a maximum of 14 days, with the sole exception being an extension pending the conclusion of criminal proceedings. Critically, during this unpaid period, the employee gains the right to terminate their own contract immediately without providing notice. An employer who invokes Section 11 without meeting the high statutory threshold is left highly vulnerable to a claim of constructive dismissal, transforming a protective measure into a significant financial and reputational liability.
A Flexible Contractual Alternative
In sharp contrast to the rigid and perilous nature of statutory suspension, administrative leave emerges as the preferred and more adaptable solution for most contemporary workplace situations requiring an employee’s temporary absence. The legal basis for administrative leave is not found in statute but is instead grounded in an express right meticulously drafted within the employment contract. This contractual foundation provides a crucial advantage, allowing employers and employees to tailor the arrangement’s scope, duration, and financial terms to suit specific commercial needs. Consequently, administrative leave can be triggered by a much broader spectrum of scenarios than its statutory counterpart, such as the need to conduct a thorough internal investigation into a client complaint, examine allegations of misconduct that may not warrant summary dismissal, or manage a potential conflict of interest without immediately resorting to punitive measures. The employee continues to receive full wages and benefits, a cost that is best viewed as a prudent investment to mitigate the far greater financial and reputational damage associated with litigation stemming from an improperly executed suspension.
However, the existence of a contractual right to place an employee on administrative leave does not grant an employer unchecked authority. The power must be exercised reasonably, proportionally, and in good faith to withstand legal scrutiny. Any decision to implement administrative leave should be evidence-based and not capricious, with a clear and legitimate business purpose documented from the outset. The duration of the leave should be directly proportionate to the needs of the investigation or situation and must not be unnecessarily prolonged. Throughout this period, maintaining transparent and open communication with the employee regarding the process and expected timeline is vital. By ensuring that the application of administrative leave is both fair and well-documented, employers can significantly reduce the risk that a court might later interpret the action as a repudiatory breach of contract, which would once again open the door to a damaging constructive dismissal claim.
The Strategic Use of Garden Leave
Garden leave is a specialized form of administrative leave, but one that is uniquely deployed in the post-termination context—that is, after either the employer or the employee has served notice to end the employment relationship. Its principal objective is strategic: to protect the employer’s legitimate business interests during the sensitive notice period of a departing employee. By requiring the outgoing individual to stay away from the office, clients, and colleagues, the employer can effectively create a protective buffer. This measure serves to safeguard confidential information, prevent the active solicitation of clients and remaining staff, and mitigate the potential for business disruption that can accompany the departure of a key team member. During a period of garden leave, the individual remains a salaried employee and is still bound by all contractual duties, such as loyalty and confidentiality, with the sole exception of the obligation to actively perform work. They continue to receive their full remuneration and all associated benefits until the final day of their employment. A critical drafting consideration that can determine the enforceability of garden leave is its clearly defined relationship with any post-termination non-compete clauses within the employment contract. To preemptively counter legal challenges, the contract must explicitly state whether the time an employee spends on garden leave will be credited against the duration of the non-compete period. For example, if an employee with a six-month non-compete clause is placed on garden leave for the final three months of their notice period, the contract should clarify whether the post-employment restriction is reduced to three months. This clarification is essential to prevent a court from viewing the combined effect of a full garden leave period and a full non-compete period as an excessively long and therefore unreasonable restraint on the employee’s ability to work. Such a finding could render the non-compete clause entirely unenforceable, undermining a key protective covenant for the business.
Building a Defensible Procedural Framework
Ultimately, the successful navigation of workplace access restrictions hinged on a multi-faceted strategy rooted in proactive planning and fair execution, where the primary legal risk remained constructive dismissal. The most effective mitigation began with the employment contract itself; for senior executives in particular, these documents needed to contain explicit and unambiguous clauses for administrative and garden leave. Those clauses detailed the circumstances under which leave could be initiated, outlined the employee’s obligations while away from the workplace, and clarified the handling of pay and benefits. To avoid internal contradictions that could be legally exploited, it was essential that internal policies and staff handbooks were aligned with the terms of these employment contracts. Furthermore, HR personnel and line managers were trained to understand the critical legal distinctions between the three mechanisms, ensuring they applied the appropriate one for each specific situation. Finally, the exercise of any right to restrict workplace access was conducted in good faith and for a legitimate purpose. Meticulous documentation proved paramount; employers maintained a contemporaneous record of the reasons for the leave or suspension, the steps taken during any investigation, and all communications with the employee. This defensible trail became critical evidence should a dispute have arisen later.