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The court rulings released today in Green Light Multiplex Co Limited v Lam and Kwan v HKEX provide a critical "reality check" for HR managers handling difficult exits.
Key Takeaways for 2026 Management:
- Forced Resignation is Dismissal: If an employee is told to "resign or face termination," the law treats this as a constructive dismissal.
- The Settlement "Shield": The court found that if an employee signs a settlement package—even after a forced resignation—and that package includes benefits the employer wasn't obliged to offer, it may extinguish any claim for constructive dismissal.
- Duty Changes: Reassigning administrative tasks while keeping core business responsibilities intact does not count as a repudiatory breach.
Action:
Before restructuring a senior role, document the business justification clearly. If you are proposing a "mutual agreement" to terminate, ensure the settlement wording covers "all actual and potential claims" to protect the firm from future litigation.