Hong Kong employers receive new privileges
On August 29, 2022, the Hong Kong Competition Commission ("HKCC") published an advisory bulletin on the disclosure of confidential information from a competition perspective. This information relates to the employment conditions of employees (such as future wages) among employers in the context of "Joint Bargaining" ("Joint Bargaining" ("Joint Bargaining Advisory Bulletin")).
Joint bargaining involves multiple employers negotiating together as a group with a Hong Kong labor body (e.g. trade union). All this in order to determine the terms of employment, such as future wage rates or other parameters related to employment. In order to facilitate joint negotiations, employers would often have to exchange confidential information with each other from the point of view of competition in the labor market. This may include, for example, discussing or agreeing on a specific target rate of pay to be proposed to the staff body during joint negotiations.
From the point of view of competition law, employers who compete with each other to hire employees are considered competitors in the relevant labor market (regardless of whether they are rivals in the market for the products or services they offer). As such, the sharing of competitively sensitive employment conditions information (such as future wage rates) between employers may be against competition law, as the HKCC previously made clear in an earlier advisory bulletin issued on April 9, 2018[1].
However, the HKCC also recognizes the purpose of joint negotiations and the potential benefits they can bring in terms of improving the employment conditions of workers. In light of this fact, in its most recent advisory bulletin (i.e. the Joint Negotiation Advisory Bulletin), the HKCC provides a set of guidance on the circumstances in which the exchange of certain information on terms and conditions of employment between employers may be justified in the context of participation in employers' joint bargaining.
The exchange of confidential information regarding competition in the labor market between employers and the issuance of recommendations by a group of employers for future salaries may be justified under certain objective conditions.
In particular, the Joint Bargaining Advisory Bulletin explains that, under certain specific conditions, the following two specific types of behavior among groups of employers ("potentially legitimate behaviour") in the context of joint bargaining can be justified under competition law:
- Issuing remuneration recommendations (including recommendations of specific percentage increases or reductions in remuneration) to members of a group of employers, which take into account the results of joint negotiations with the employee body; and
- Providing information on employers' expectations regarding future remuneration as part of preparations or during joint negotiations.
While outside the context of joint bargaining, a group of employers engaging in either of the above two types of conduct would likely be vulnerable to competition law violations, the Joint Bargaining Advisory Bulletin sets out the following conditions under which conduct may be considered fully justified:
- There is a need for the relevant group of employers to negotiate jointly with the workers' body, taking into account the characteristics of the industry;
- Employment conditions would be worse if employers were deprived of the opportunity to negotiate jointly with the labor authority (ie the procedure is aimed at improving employment conditions); and
- The staff body is a genuine participant in the joint negotiation process.
To mitigate the risk that potentially legitimate behavior (described above) may violate competition law, the HKCC recommends that a group of employers use an independent third party to gather information about their expectations or intentions regarding appropriate terms and conditions of employment (such as future pay rates) from individual members. The independent third party should then aggregate and anonymise the previously collected data before sharing the information with the employer group.
Conclusion
The Joint Bargaining Advisory Bulletin explains that the exchange of information on terms of employment between employers and the making of recommendations on specific terms and conditions of employment in the context of joint bargaining is not currently an enforcement priority for the HKCC. In addition, the HKCC also clarifies that it currently has no intention of investigating or enforcing these two types of conduct by the group of employers, provided that the purpose of such conduct is to improve or maintain fair terms and conditions of employment for workers and that the workers' body is a genuine participant in the joint bargaining process. However, any exchange of information regarding employment conditions in Hong Kong that goes beyond the above should be approached with caution.
