- within Employment and HR topic(s)
- in United States
- within Employment and HR, Wealth Management and Transport topic(s)
- with Senior Company Executives, HR and Inhouse Counsel
In Caidao Capital Ltd v Harmen Christiaan Overdijk [2026] HKCFI 1326, the Hong Kong Court of First Instance confirmed that the statutory definition of “wages” under the Employment Ordinance (EO) is sufficiently broad to encompass commission‑only remuneration paid under a profit‑share structure and that withholding such payments may amount to constructive dismissal.
Decision
In September 2014, the first and second defendants (Employees) joined Caidao Capital Limited (Company) as senior investment managers to establish and operate a new wealth management team. Under their contracts of employment, the Employees' remuneration was entirely commission-based, with no fixed salary.
Instead, the Employees were entitled to a Transaction and Fee Revenue Share (Commission), pursuant to which:
- 90% of the revenue generated from clients introduced by the Employees was allocated to the wealth management team; and
- the Employees would receive an equal share of the wealth management team’s net income on a quarterly basis.
Although the employment terms contemplated quarterly Commission payments, no such payments were made. Instead, in April 2015, the parties agreed that the Company would pay each of the Employees HKD$100,000 per month on account of future Commission entitlements (Monthly Payments), to be set off against amounts ultimately due. The Company made at least 20 Monthly Payments from April 2015 onwards.
Following regulatory concerns and internal compliance reviews, the employer sought to implement a number of changes, including:
- reducing the revenue split from 90/10 to 80/20, with retrospective effect;
- suspending the Monthly Payments; and
- making final Commission payments conditional on the satisfactory completion of an audit.
The Employees subsequently resigned and claimed constructive dismissal and unpaid wages, while the Company counterclaimed for repayment of sums already paid.
Key Findings
The Court rejected the Company's argument that, in the absence of a fixed salary, the Defendants did not earn “wages” under the EO, and that the Monthly Payments were merely advances. The Court held that both the Monthly Payments and the underlying Commission entitlements fell within the statutory definition of "wages" under the EO, which expressly includes commission and other variable remuneration, irrespective of how such payments are described or structured.
The Court emphasised that the absence of a fixed salary does not preclude an employee from earning wages. Where payments are made regularly and are referrable to work performed, statutory wage protections are likely to apply.
On the facts, the Court held that the Company's unilateral suspension of the Monthly Payments without contractual justification amounted to a repudiatory breach. The executives were therefore entitled to treat themselves as constructively dismissed.
Key Takeaways
This decision underscores that commission‑only or profit share only remuneration structures are not immune from wage protections under the EO, and that unilaterally withholding or suspending remuneration without valid justification may expose employers to wage-related and constructive dismissal claims, particularly where accrued entitlements are concerned.
Employers should ensure that any changes to remuneration arrangements are clearly and expressly documented, and that conditions affecting payment are drafted with precision to avoid unintended exposure to wage and dismissal claims.
The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.
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