As a general rule, employees bringing a claim for damages against their employer will need to demonstrate that they have suffered financial loss as a result of the alleged wrongdoing. In some cases, however, an employee may also be able to obtain damages for injury to feelings and/or exemplary damages, for example, in relation to claims of unlawful discrimination or harassment or a civil claim brought under section 66 of the Personal Data (Privacy) Ordinance.
In the recent decision of Yip Shui Kwong v Legend World Asia Group Ltd, the District Court has provided a useful discussion of the principles that a court will consider when assessing damages for injury to feelings or exemplary damages. While this case did not arise in the employment context, these principles are equally applicable to claims by an employee against their employer.
The case of Yip Shui Kwon v Legend World Asia Group Ltd involved a claim brought against the owners of a club by a patron who alleged unlawful discrimination on the ground that the claimant (who was male) was charged a higher entrance fee for accessing the club than would be charged to a female patron. Although the court was satisfied that the disparity in entrance fees was discriminatory and unlawful under the Sex Discrimination Ordinance, the court declined to award damages in favour of the claimant, on the basis that:
- the court was not satisfied that the claimant had suffered any injury to his feelings as a result of the incident: he was aware of the disparity in fees at the time he paid the entry fee and entered the club and he admitted enjoying the time that he spent there; and
- if exemplary damages were awarded, the claimant would obtain a windfall even though he was not a "victim".
When will a court award damages for injury to feelings/exemplary damages?
As this case demonstrates, the starting point is that damages for injury to feelings should be compensatory, not punitive. Although feelings of hurt and their level of intensity are not easy to assess in monetary terms, the courts will seek to make an award that is fair and reasonable – they should strike a balance between an award not being too high, but also not being too low, bearing in mind the need for public respect for the level of awards made.
Exemplary damages are awarded to punish, rather than to compensate. Accordingly, they are usually seen as a remedy of last resort. The courts will consider making such award if, and only if, the wrongdoer's conduct is so outrageous that compensatory damages will not be an adequate response – i.e. where a further penalty is required in order to punish the defendant for his/her conduct and deter others.
In the case referred to above, the court was not satisfied that the club's discriminatory practice of charging disparate entrance fees was outrageous, on the basis that: (i) this was a common practice in the industry; and (ii) although the Equal Opportunities Commission (the "EOC") was aware of that (having provided legal assistance to the claimant in this matter), the EOC had not undertaken any industry education program or issued any enforcement notices condemning the practice.
Key take-away for employers
This case demonstrates that courts in Hong Kong are prepared to take a practical approach to assessing damages. Importantly, damages for injury to feelings will not be awarded automatically when a breach has occurred, but will instead be assessed by reference to a victim's actual suffering. Similarly, exemplary damages should only be awarded in an extreme case, where an employer's conduct is so outrageous that an order for compensatory is inadequate to punish and deter the employer from future wrongdoing.
That said, employers should take steps to ensure: (i) appropriate behaviour in the workplace to reduce the risk of claims from aggrieved employees; and (ii) allegations of inappropriate behaviour are addressed promptly to limit the potential for awards of damages of the kind discussed above.
Written by Gareth Thomas and Gillian McKenzie