What is pregnancy discrimination and how to avoid it

In the recent widely reported District Court judgment in 周露娜 v. 中旅貨運物流中心有限公司 [2023] HKDC 1115, the court held that the respondent employer was liable in discrimination against the claimant employee as a pregnant woman by, among other things, refusing to renew her employment contract. The court awarded the following in favour of the employee:

• loss of income: HK$306,680
• year-end bonus: HK$498,500
• interests on (1) and (2)
• injury to feelings: provisionally at HK$130,000 on the basis that the employer will issue an apology and a reference letter in appropriate form and terms
• legal costs.

In this issue, we will take a look at what is pregnancy discrimination? Why did the court rule against the employer? And how may an employer avoid pregnancy discrimination?

Pregnancy discrimination

Under the Sex Discrimination Ordinance (Cap. 480) (SDO), a person discriminates against a pregnant woman if he treats her less favourably on the ground of her pregnancy than he treats or would treat a person who is not pregnant. It is unlawful to discriminate against a pregnant employee by dismissing her (including not renewing her employment contract upon its expiry) or subjecting her to any other detriment.

The employee was originally employed by two other group companies under China Travel Service (Holdings) Hong Kong Limited (where the employer is one of the group companies) from September 2007 to March 2011, during which she was promoted twice.

Since April 2011, the employee was employed by the employer as its Senior Manager of Storage Logistics Department under successive yearly contracts.

From 2011 to 2016, she had received excellent employee awards and annual year-end bonuses from the employer every year.

In March 2017, the employer integrated its Marketing and Sales Department, Storage Management Department, Land-based Transport Department and Shenzhen-Hong Kong Courier Department into one single unit, namely, the Logistics Business Unit. The employee was appointed as the responsible personnel for the integrated unit and Marketing and Sales Department at the same time.

On 21 March 2017, the employee informed the employer that she was pregnant. Around July 2017, the employee confirmed with the employer that she would take maternity leave from 11 November 2017.

On 9 November 2017, the employer informed the employee that it would not renew her employment contract from 1 January 2018 because of its restructuring and downsizing in business.

The employee commenced proceedings against the employer in November 2019 for pregnancy discrimination under the SDO for refusing to renew her employment contract upon expiry - which is treated as a dismissal for the purpose of the SDO - and to pay her year-end bonus for 2017.

Causation requirement

If the employee establishes that her pregnancy was one of the reasons for the dismissal and less favourable treatment, the dismissal and less favourable treatment will be taken as done by reason of her pregnancy, even though it was not the dominant or substantial reason or that there were other reasons which were legitimate and justified for the dismissal.

The employer’s case

The employer denied that the dismissal and refusal to pay bonus was caused by any discrimination. The employer alleged that:

• The employee was dismissed because of its restructuring and downsizing in business.
• The employee was not legally or contractually entitlement to the 2017 year-end bonus, which was discretionary.
• The employee was not paid year-end bonus for 2017 because of her unsatisfactory performance.

Court’s findings on dismissal

The court came to the inference that the employee’s pregnancy was one, if not the substantial reason for the dismissal for, among other things, the following main reasons:

• There was no documentation or record showing any discussion or plan concerning the employer’s alleged restructuring. The employer also failed to give any details or particulars as to what the alleged restructuring entailed.
• The employer employed a new employee in April 2017, which was proximate in time to the employee informing the employer of her pregnancy. The court found that the employer did so for the purpose of having the new employee to take over the employee’s role and function.

The court held the employer liable for discrimination against the employee for her dismissal (i.e. by not renewing her employment contract) due to her pregnancy.

Refusal to pay bonus

The court found that the employer’s refusal to pay the 2017 year-end bonus was consequential upon the dismissal and was also discriminatory for the following main reasons:

• The proper staring point is to ascertain what the usual treatment given by the employer to other staff of the employee’s grade was in relation to the year-end bonus, regardless of his or her legal entitlement.
• All the staff, except those dismissed, had received year-end bonus for 2017.
• The allegations of unsatisfactory performance against the employee were either unfair or baseless.

Reliefs

The Court awarded damages to the Employee for loss of income, loss of bonus, and damages for injury to feeling.

For loss of income, the court accepted that the employee’s employment contract would have been renewed for one more year but for the discrimination and awarded her 12 months’ salary as loss of income.

The court awarded the same amount of bonus that the employee received in 2016, being HK$498,500.

In 袁慧嫺 訴 南方安老事務有限公司 [2005] 2 HKLRD 277, the Court of Appeal made it clear that the minimum amount of damages to be awarded for injury to feelings involving pregnancy discrimination is HK$50,000.

In the present case, the court found that the long employment record should be taken into account as a significant backdrop to measure the injury to the employee’s feelings. Also, the employer made many baseless and unfair accusations against the employee to cover for the dismissal, which should be regarded as a continuation of the discriminatory conduct. The foregoing factors justified the upward adjustment to the damages for injury to feeling.

The court provisionally awarded HK$130,000 to the employee as damages for injury to her feelings, on the basis that the employer will issue to the employee an apology and reference letter in appropriate form and terms. If no apology or reference are to be issued by the employer, the court stated in its judgment that it could be expected that there would be a revision of this figure and/or possibly a further award of exemplary damages (per the guidelines given by the Court of Final Appeal in Ma Bik Yung v Ko Chuen [2002] 2 HKLRD 1).

Takeaway

Dismissal of a pregnant employee is almost always a highly sensitive matter. It does not only involve employment law issues but may also involve discrimination issues – it must be handled with care. If it is not properly handled, the company employer (as well as the management or officers involved in making the decisions) may attract civil and (in some cases) criminal liabilities.

Subject to the provisions under the Employment Ordinance (Cap. 57), generally speaking an employer is prohibited from dismissing a pregnant employee from the date that she is confirmed pregnant by a medical certificate to the date that she is due to return to work upon the expiry of her maternity leave.

An employer may also be liable for discrimination under the SDO if the court finds the employer treats a female employee less favourably on the ground of her pregnancy than it treats or would treat another employee who is not pregnant. It is unlawful to discriminate against a pregnant employee by dismissing her or subjecting her to any other detriment. If the female employee can establish that her pregnancy is one of the reasons for her dismissal or less favourable treatment, the dismissal or less favourable treatment will be taken as done by reason of her pregnancy, even though it is not the dominant or substantial reason or that there are other reasons which are legitimate and justified for her dismissal.

In 周露娜, whilst there may not be any direct evidence against the employer (which is often the case), the court inferred that the employee’s pregnancy was one, if not the substantial reason for the employer not renewing her employment contract, in particular, where, among other things, there was no contemporaneous documents or written records to show any discussion or plan concerning the employer’s alleged restructuring.

This case reminds employers that the court takes a vigilant approach towards pregnancy discrimination and carefully scrutinizes the reasons for dismissal put forward by the employer. Pregnancy discrimination cases (like all other discrimination cases) are a highly fact-sensitive. Employers should be mindful of their treatment of employees of different sexes, races and family statuses. When in doubt, it is always prudent to seek legal advice from your employment lawyers.

Michael Szeto is a litigation partner and head of the employment practice at ONC Lawyers in Hong Kong. Michael has been recognized as a Lexology Legal Influencer in Employment (Asia-Pacific) for Q1, Q3, Q4 2021, Q1-Q4 2022 and Q2 2023.