Global Investigations Review - The law and practice of international investigations

Employee Rights

Last verified on Friday 14th June 2019

Hong Kong

Elsie Chan
Deacons (Hong Kong)

    The company’s investigation

  1. 1.

    How does the company retain its privileges, including the attorney-client privilege, when interacting with employees in an investigation?

  2. In Hong Kong, legal professional privilege (LPP) is a right under Basic Law and common law. The principle of LPP is enshrined under article 35 of the Basic Law, where Hong Kong residents shall have the right to “confidential legal advice”. The rationale for LPP is to encourage and enable a “client” to consult with his or her lawyer fully and frankly with complete confidence knowing that what is said to his or her lawyer will be kept private and not disclosed to any third parties without the client's consent.

    There are generally two types of LPP under Hong Kong law, which are as follows:

    • legal advice privilege – documents and communications that relate to communications between a client and his or her lawyer that have been made for the purpose of preparing advice are privileged, whether or not litigation is contemplated or pending; and
    • litigation privilege – documents and communications between a litigant and his or her lawyer and third parties. 

    Under Hong Kong law, the courts adopted a more liberal approach in that the “client” was the corporation and that communications between the corporation’s legal adviser and its employees who are regarded as authorised to act for the corporation for the dominant purpose of obtaining legal advice.  

    To retain the LPP when interacting with employees in an investigation, it is advisable to make clear that the communications are for obtaining legal advice, and the relevant employees are authorised by the company to act for the corporation for the purpose of obtaining legal advice. The privileged documents should be kept in a separate file, and those documents should be marked “privileged and confidential”. Privileged communications should not be shared with third parties or persons from outside of the client–lawyer relationship as this can also be construed as a waiver of privilege or confidentiality.

  3. 2.

    How does the company retain work product privileges when interacting with employees?

  4. There is no concept of “attorney work product privilege” in Hong Kong.  LPP may generally only be asserted in the circumstances described in question 1 for Hong Kong, and the employer must at all times maintain confidentiality with regard to the relevant materials, as loss of confidentiality may amount to a waiver of privilege.

  5. 3.

    What claims may an employee bring against the company during an investigation? How can the company protect against them?

  6. Although there is no legal requirement for any employer to have any rules and regulations for investigation, it was held in the case John Simpson Warham & Ors v Cathay Pacific Airways Limited and Anor (Miscellaneous Proceedings No. 4400 of 2001) that if an employer has contractual investigation procedures, it has to comply with the same. In view of the above, if the employer does not follow its contractual rules on investigation, an employee may allege breach of contract on the part of the employer and seek damages. In addition, if the investigation will result in disciplinary action or conviction, it is subject to argument that the investigation is subject to an implied term that procedural fairness should be observed. If the employee considers that there are issues on the procedural fairness, he or she may claim for the breach of the implied term.

  7. 4.

    What agency procedures or whistleblower rules should the company be aware of in this jurisdiction?

  8. There is no legal restriction or requirement on whistleblower procedures or rules in Hong Kong. It is up to an employer to decide whether it will impose whistleblower rules within the company. If those rules become contractual, the company will need to comply with those rules. The existing legislations, however, provide for a certain degree of protection to the whistleblowers. For example, under the Sex Discrimination Ordinance, Disability Discrimination Ordinance, Family Status Discrimination Ordinance and Race Discrimination Ordinance, it is unlawful for an employer to retaliate those employees who made a complaint on discrimination or harassment on the grounds of gender, marital status, pregnancy, disability, race, family status, save and except such complaint was made on a malicious basis.

  9. 5.

    What are the considerations when conducting without notice interaction with company employees in an investigation?

  10. There is no legal requirement to give advance notice to an employee regarding an internal investigation. In any event, to conduct a fair investigation, it is important to inform the relevant employee details of the allegations against him or her. Sensitive information about the investigation should not be disclosed unnecessarily, especially if such information is privileged or otherwise protected from disclosure. A written record should be kept of all interactions between the company and the employees, and all precautions should be taken to upkeep confidentiality.

  11. 6.

    What should the company know about the anti-bribery and anti-corruption laws in this jurisdiction? How, if at all, does the Voluntary Self Disclosure and FCPA Pilot Program apply to this investigation?

  12. The Independent Commission Against Corruption (ICAC) is charged with investigating corruption in Hong Kong. The Prevention of Bribery Ordinance (POBO) is the main piece of anti-corruption legislation in Hong Kong covers both the public sector and private sector.

    For the public sector, under the POBO, no prescribed officer is allowed to solicit or accept any advantage without the general or special permission of the chief executive, and any prescribed officer who maintains a standard of living or has assets not commensurate with his or her official emoluments shall be guilty of an offence. In addition, any public servant who solicits or accepts any advantage as an inducement to or reward for performing duties or giving assistance or using influence in matters relating to a contract, shall be guilty of an offence; the offeror of the advantage shall also be guilty of an offence. For the private sector, under the POBO, no agent (usually an employee) shall solicit or accept any advantage without the permission of his principal when conducting the principal's affairs or business; the offeror of the advantage is also guilty of an offence.

    Other more specialised legislation includes the Elections (Corrupt and Illegal Conduct) Ordinance (which applies to the elections specified in the Ordinance, and governs all conduct concerning an election), Banking Ordinance (which regulates the receipt of advantages in certain circumstances for those working in the banking sector and applies to directors and employees of banks), and the Organised and Serious Crimes Ordinance (which criminalises money laundering and deals with persons who deal with property that is the proceeds of an indictable offence).

    The “anti-bribery” provisions of the FCPA may apply to a Hong Kong organisation where:

    • it is a US issuer – ie, it issues securities that are listed and traded on a US exchange or its securities are traded on an over the counter market in the US and it is required to file reports with the SEC;
    • it is a US domestic concern – ie, that it is incorporated in the US or has its principal place of business in the US;
    • it is an agent of a US issuer or US domestic concern – ie, a Hong Kong entity that is a subsidiary of the above; or
    • it conducts a part of its business in the US. 

    For the accounting provisions of the FCPA, these apply to US issuers.

  13. 7.

    How do labour laws, collective bargaining agreements, and the procedural pre-emptions affect the internal investigation?

  14. There is no collective bargaining law in Hong Kong, and the labour law has imposed no restrictions or requirement in conducting internal investigations. Collective agreements are also uncommon in Hong Kong due to low incidence of trade union membership among employees.

  15. 8.

    Does this jurisdiction recognise the "employment at will" doctrine? Are there exceptions to this doctrine?

  16. The “employment at will” doctrine does not apply in Hong Kong. However, under Hong Kong law, either an employer or an employee may terminate the employment relationship by serving the termination notice specified in the employment contract or imposed under the Employment Ordinance, or by making payment in lieu of notice. 

    For those employees who have been under continuous employment for two years or more, an employer must have a valid reason to support the termination, failing which the employer will be deemed to terminate the employee for the purpose of reducing his or her benefits. Under the Employment Ordinance, valid reasons are:

    •  the conduct of an employee;
    •  the capability or qualifications of the employee for performing his work;
    •  redundancy or other genuine operational requirements of the business;
    •  statutory requirements, for example, if it would be contrary to the law to allow an employee to continue working in his original position; or
    •  other substantial reasons.

    In addition, an employer may summarily dismiss an employee without notice or payment in lieu of notice if the employee, in relation to his or her employment: 

    • wilfully disobeys a lawful and reasonable order;
    • misconducts himself;
    • is guilty of fraud or dishonesty; or
    • is habitually neglectful in his duties.

    Employers, however, should note that summary dismissal is a serious disciplinary action in Hong Kong. It only applies to cases where an employee has committed very serious misconduct and fails to improve after repeated warnings.

  17. 9.

    Does this jurisdiction recognise claims for unlawful retaliation by an employer against a whistleblower?

  18. Yes, however there is no single piece of legislature which seeks to protect whistleblowers in Hong Kong, and instead, piecemeal sections from the following ordinances apply:

     

    Legislation

     

    Protection afforded to whistleblowers in Hong Kong

    Employment Ordinance

    An employer may not terminate an employee due to the fact that the employee is giving evidence in a proceeding or enquiry pursuant to enforcement of provisions under the EO or with regards to any matters concerning safety at work.  If breached, the employer may be liable to a fine and may have to provide compensation to such employee.

    Sex Discrimination Ordinance, Disability Discrimination Ordinance, Family Status Discrimination Ordinance, and Race Discrimination Ordinance

     

    Under these ordinances, it is unlawful for a person (for example, the employer) to discriminate against another person (for example, the employee) due to the fact that such person has given evidence against the former in connection with proceeding against the former. The Hong Kong courts have the power to demand the reemployment of the latter (or to pay him or her compensation or damages) should this occur.

    Competition Ordinance

     

    An employer may not terminate or threaten to terminate the employment of any employee, or discriminate against such employee in any way, who wishes to provide information or material to the Competition Commission in connection with its function (or agrees to give evidence during proceedings brought by the Competition Commission).

     

  19. 10.

    Who may represent the employees in an investigation, and what are the company’s obligations to facilitate their representation?

  20. Generally, in Hong Kong, employees attend the company’s internal investigation on their own. The employer may refuse an employee to be represented by a third party. There is no obligation on the part of the company to facilitate employees’ representation.

  21. 11.

    What obligations does external counsel to the company have towards employees that are not considered to be clients of the attorney? Is this the same for in-house counsel?

  22. External counsel has no obligation to any employees of the company (if they are not considered to be their client). To avoid any potential conflict of interest issues, external counsel shall not provide any advice to such employee and instead suggest that the employee seek independent legal advice. The situation is the same for in-house lawyers.

  23. 12.

    What should the company consider when interacting with employees represented by an attorney?

  24. As explained earlier, there is no legal duty on the part of a company as an employer to allow legal representation in an internal investigation. It is also common that employees are not legally represented in an internal investigation. If an employee is being legally represented, there should not be any change in the standard and procedures in conducting the investigation.

  25. 13.

    How does this change for employees who are not represented by an attorney?

  26. The same standard and procedures in conducting the investigation shall apply.

  27. 14.

    If documents or electronically stored information containing employee information is sent from this jurisdiction to another, for analysis or use in legal proceedings, what are the aspects to be considered?

  28. Section 33 of the Personal Data (Privacy) Ordinance prohibits the transfer of personal data to places outside Hong Kong unless certain conditions are met. However, this provision is not yet in operation. In any event, it is prudent for an employer to set out in the personal data collection statement that the employer has the right to transfer the employee’s information outside Hong Kong to fullfil the purposes of collection. If the employer intends to send personal data to the European Economic Area, considerations should be made for compliance with the GDPR.

  29. 15.

    What are the company’s public disclosure obligations about the internal investigation in this jurisdiction?

  30. For private companies, there is no general obligation to disclose the existence of an internal investigation. However, there may be certain obligations for disclosure for a licensed corporation or listed company. For example, licensed entities should provide the Securities and Futures Commission (SFC) with information about whether a licensed individual who will cease to be accredited was under any investigation commenced by such licensed entity within six months of his or her cessation of accreditation when the licensed corporation notifies the SFC of his or her cessation of accreditation. If an internal investigation commences subsequent to such notification to the SFC, the licensed entity should notify the SFC as soon as practicable.

    The SFC expects licensed corporations to proactively disclose information of all investigative actions (no matter how they are described) to the SFC. The following is a non-exhaustive list of examples of investigations involving an outgoing employee that a licensed corporation should disclose to the SFC:

    • investigations about suspected breach or breach of applicable laws, rules and regulations;
    • investigations about suspected breach or breach of the licensed corporation's internal policies or procedures;
    • investigations about misconduct that are likely to give rise to concerns about the fitness and properness of the outgoing employee;
    • investigations about any matter that may have an adverse market or client impact; and
    • investigations about any matter potentially involving fraud, dishonesty and misfeasance.
  31. 16.

    Are public company statements relating to employee misconduct protected from defamation claims?

  32. No.

    From the employee’s perspective

  33. 17.

    What responsibilities do directors have in the internal investigation of alleged sexual harassment by senior staff? Are there any restrictions on a director’s role in the investigation?

  34. Sexual harassment in the workplace is prohibited in Hong Kong by the Sex Discrimination Ordinance (SDO). 

    Generally, employers are viciously liable for the actions of their employees during their employment in breach of the SDO (whether or not the offending acts were carried out with their knowledge). It shall be a defence for the employer to prove that it took such steps as were reasonably practicable to prevent the employee from doing that act, or from doing in the course of his or her employment acts of that description. According to the guidelines issued by the Equal Opportunity Commission of Hong Kong, an employer will be considered to have taken reasonably practical steps to prevent the employee from doing any act in breach of the SDO (including sexual harassment) if it has put in place a policy in line with the suggestion of the Commissioner. Within such policy, there should be rules and regulations concerning investigation. The guidelines issued by the Equal Opportunity Commission of Hong Kong do not specify any particulars duty on “directors” as such. However, it sets out some general principles concerning the manner in conducting investigation including that all investigation should be conducted without delay, the investigation should be conducted in a confidential manner etc.

  35. 18.

    What is the law, policy and enforcement track record on individual accountability for corporate wrongdoing?

  36. Generally speaking, under the Criminal Procedures Ordinance, where a person by whom an offence under any Ordinance has been committed is a company and it is proved that the offence was committed with the consent or connivance of a director or other officer concerned in the management of the company, or any person purporting to act as such director or officer, the director or other officer shall be guilty of the like offence.

    Other legislations also have similar provisions, for example, under the Employment Ordinance, where an offence under certain provisions are committed by a body corporate or partner in a firm is proved to have been committed with the consent or connivance of, or to be attributable to any neglect on the part of, any director, manager, secretary or other similar officer of the body corporate, any other partner in the firm or any person concerned in the management of the firm, the director, manager, secretary or other similar officer, that partner or the person concerned in the management of the firm, shall be guilty of the like offence. In addition, under Part IX of the SFO, the SFC may exercise its disciplinary powers to sanction a regulated person if the person is, or was at any time, guilty of misconduct or is considered not fit and proper to be or to remain the same type of regulated person. All members of the senior management of a licensed corporation (even if they are not licensed) are regulated persons because of their involvement in the management of the business of a licensed corporation. Where a licensed corporation is (or was) guilty of misconduct as a result of the commission of any conduct occurring with the consent or connivance of, or attributable to any neglect on the part of a person involved in the management of the business of the licensed corporation, then that person is also guilty of misconduct (see section 193(2) of the SFO). Furthermore, in determining whether a regulated person, including a person involved in the management of a licensed corporation, is a fit and proper person for the purpose of considering taking disciplinary action, the SFC may, among other matters, take into account the past or present conduct of the person (see section 194(3) and section 129 of the SFO). For instance, if a manager in charge fails to ensure a licensed corporation’s compliance with the codes or guidelines published by the SFC, it may call into question his or her fitness and propriety.

  37. 19.

    What is the employee’s obligation to speak with the company in an internal investigation?

  38. There is no legal obligation for the employee to speak with the company under Hong Kong law for the purpose of an internal investigation. However, employees should be mindful and check their employment agreements to determine whether any such obligation exists under their terms of employment.

  39. 20.

    What are attorneys’ roles representing the company and representing the employee, and who should explain these roles to the employee?

  40. Employers have not legal duty to provide legal assistance to the employee under investigation. Attorney’ acting for the employers only provide advice to the company and employees under investigation will be clearly informed that the attorneys only act for the company.

  41. 21.

    May an employee appoint its own counsel in an internal investigation?

  42. An employee may appoint its own counsel if he wishes, and there no restrictions under Hong Kong law to do so. However, the employer has no duty to allow the employee’s counsel to attend or participate in the internal investigation. The parties involved will need to agree on whether such arrangements are permissible and set clear guidelines for any potential counsel’s involvement in the investigation process.

  43. 22.

    Who pays for employee representation?

  44. There is no legal obligation on the employer to pay or reimburse the employee for representation during the investigation. It is therefore unlikely that anyone will pay for representation other than the employee, unless there is any contractual provision in this regard.

  45. 23.

    May employees enter into joint defence agreements? With whom?

  46. There are no restrictions in Hong Kong regarding a joint defence between the employer and the employee, assuming that legal action is brought against both parties. In reality, this may often form a more cohesive and focused strategy as the parties will have common goals in mind. However, this should be assessed on a case-by-case basis.

  47. 24.

    Do employees have any constitutional or basic legal rights that they can rely on during government and internal investigations?

  48. Under article 35 of the Basic Law of Hong Kong, Hong Kong residents shall have the right to confidential legal advice, access to the courts, choice of lawyers for timely protection of their lawful rights and interests or for representation in the courts, and to judicial remedies.

    Under article 11(2) of the Bills of Rights, in the determination of any criminal charge against a person, he or she shall be entitled to the following minimum guarantees, in full equality:

      1. (a) to be informed promptly and in detail in a language which he understands of the nature and cause of the charge against him;
      2. (b) to have adequate time and facilities for the preparation of his defence and to communicate with counsel of his own choosing;
      3. (c) to be tried without undue delay;
      4. (d) to be tried in his presence, and to defend himself in person or through legal assistance of his own choosing; to be informed, if he does not have legal assistance, of this right; and to have legal assistance assigned to him, in any case where the interests of justice so require, and without payment by him in any such case if he does not have sufficient means to pay for it;
      5. (e) to examine, or have examined, the witnesses against him and to obtain the attendance and examination of witnesses on his behalf under the same conditions as witnesses against him;
      6. (f) to have the free assistance of an interpreter if he cannot understand or speak the language used in court;
      7. (g) not to be compelled to testify against himself or to confess guilt.

    Generally, when a person is simply asked to assist in an investigation by a government authority, he or she is under no legal obligation to assist. However, the SFC has a power to require “a person under investigation” or a person whom the investigator has reasonable cause to believe has in his possession any record or document that is relevant to an investigation to attend before an SFC investigator to answer questions under section 183 of the SFO. He or she will usually be served with what is commonly known as a section 183 notice. A person who, without reasonable excuse, fails to comply with the notice or answer a question raised by the investigator, commits an offence and is liable to a maximum fine of HK$200,000 and to imprisonment for one year on conviction on indictment. When invited by the SFC to attend an interview, it is of vital importance to be aware of the privilege against self-incrimination under section 187.

    If a person is arrested by a government authority, generally the detained person shall have the following rights:

    • requesting that the detained person's relatives or a friend be informed of the detention;
    • communicating and consulting with a legal adviser (unless any unreasonable delay or hindrance will likely be caused to the processes of investigation or the administration of justice);
    • asking to be released on bail; and
    • being provided with drinking water upon request, adequate food and refreshment as well as medical care if necessary.

    The rights under the Basic Law may not cover company’s internal investigation because the Basic Law is not actionable per se against the private sector.

  49. 25.

    What rights do employees who claim sexual harassment have during an internal investigation?

     

  50. As explained, the procedures for internal investigation depend on the company’s policy. The complainant generally has the right to set out details of his or her complaint to the company, to provide names of his or her witnesses, and to be informed of the results of the investigation without delay. During the internal investigation, if the complainant so wish, he or she may lodge his or her claim with the Equal Opportunities Commission (EOC), take action at the District Court, or to report to the police (depending on the nature of the sexual harassment). He or she does not have to wait until the conclusion of the internal investigation.

  51. 26.

    Who owns the documents and electronically stored information within employees’ possession or control and how can employees protect their privacy rights in this context?

  52. If the documents or information in employees’ possession are work related, it is very likely that they are the company’s property. It is very common in Hong Kong for employment contracts to expressly stipulate that all documents or information concerning the business of the company shall belong to the company. Therefore, upon the company’s request, the employees should return the same to the company or delete the same from his or her devices. 

    If the employees are using the company’s systems or devices, it is also common for employers to impose a monitoring right on its part for legitimate purpose (eg, security purpose or ensuring quality of work) under the company’s policy. Therefore, the employee should minimise the use of the company’s system or devices for personal purpose.

  53. 27.

    What are the employee’s responsibilities if there is a parallel civil proceeding against the company or against the employee?

  54. There is minimal responsibility on the part of the employee in such situation. This is particularly the case as there may be a conflict of interests between the company and the employee. The employee can receive his or her own legal advice on the proceedings.

  55. 28.

    What should employees do if they are sued by shareholders or other private parties as a result of an investigation?

  56. If an employee is threatened with legal action by shareholders or other private parties, he or she should check whether there is any provision in his or her employment contract in which the company shall provide legal assistance or indemnity. He or she should also seek independent legal advice as there may be a potential conflict of interests between the employee and the employer.

  57. 29.

    What are the employees’ responsibilities to comply with law enforcement investigations, subpoenas and searches?

  58. If a court order or subpoena is made against an employee, the employee generally has a duty to comply with the same but it is advisable to seek independent legal advice. However, if the court order or subpoena is made against the company, the employee receiving them should report the same to the company, and the company should then decide what action to take.

Interested in contributing to this Know-how?

E-mail our Insight Manager


Questions

    The company’s investigation

  1. 1.

    How does the company retain its privileges, including the attorney-client privilege, when interacting with employees in an investigation?


  2. 2.

    How does the company retain work product privileges when interacting with employees?


  3. 3.

    What claims may an employee bring against the company during an investigation? How can the company protect against them?


  4. 4.

    What agency procedures or whistleblower rules should the company be aware of in this jurisdiction?


  5. 5.

    What are the considerations when conducting without notice interaction with company employees in an investigation?


  6. 6.

    What should the company know about the anti-bribery and anti-corruption laws in this jurisdiction? How, if at all, does the Voluntary Self Disclosure and FCPA Pilot Program apply to this investigation?


  7. 7.

    How do labour laws, collective bargaining agreements, and the procedural pre-emptions affect the internal investigation?


  8. 8.

    Does this jurisdiction recognise the "employment at will" doctrine? Are there exceptions to this doctrine?


  9. 9.

    Does this jurisdiction recognise claims for unlawful retaliation by an employer against a whistleblower?


  10. 10.

    Who may represent the employees in an investigation, and what are the company’s obligations to facilitate their representation?


  11. 11.

    What obligations does external counsel to the company have towards employees that are not considered to be clients of the attorney? Is this the same for in-house counsel?


  12. 12.

    What should the company consider when interacting with employees represented by an attorney?


  13. 13.

    How does this change for employees who are not represented by an attorney?


  14. 14.

    If documents or electronically stored information containing employee information is sent from this jurisdiction to another, for analysis or use in legal proceedings, what are the aspects to be considered?


  15. 15.

    What are the company’s public disclosure obligations about the internal investigation in this jurisdiction?


  16. 16.

    Are public company statements relating to employee misconduct protected from defamation claims?


  17. From the employee’s perspective

  18. 17.

    What responsibilities do directors have in the internal investigation of alleged sexual harassment by senior staff? Are there any restrictions on a director’s role in the investigation?


  19. 18.

    What is the law, policy and enforcement track record on individual accountability for corporate wrongdoing?


  20. 19.

    What is the employee’s obligation to speak with the company in an internal investigation?


  21. 20.

    What are attorneys’ roles representing the company and representing the employee, and who should explain these roles to the employee?


  22. 21.

    May an employee appoint its own counsel in an internal investigation?


  23. 22.

    Who pays for employee representation?


  24. 23.

    May employees enter into joint defence agreements? With whom?


  25. 24.

    Do employees have any constitutional or basic legal rights that they can rely on during government and internal investigations?


  26. 25.

    What rights do employees who claim sexual harassment have during an internal investigation?

     


  27. 26.

    Who owns the documents and electronically stored information within employees’ possession or control and how can employees protect their privacy rights in this context?


  28. 27.

    What are the employee’s responsibilities if there is a parallel civil proceeding against the company or against the employee?


  29. 28.

    What should employees do if they are sued by shareholders or other private parties as a result of an investigation?


  30. 29.

    What are the employees’ responsibilities to comply with law enforcement investigations, subpoenas and searches?