Gig Economy – Are You Protected?
By Will Elton, published: 2020-05-20
There is no doubt that the gig economy is a new reality with more and more people taking up on-demand jobs through online platforms and smartphone applications. For those, unfamiliar with the term, the gig economy refers to companies that engage freelancers for temporary or project-based tasks. When compared to permanent employees, the labour benefits, protections and compensation enjoyed by flexible workers tends to be inferior.
In this article, we will look at the laws around this mode of employment in Hong Kong.
Employee or independent contractor?
The first step is to understand your contract. Are an employee or an independent contractor/ self-employed person? All employees are covered by the Hong Kong Employment Ordinance which stipulates protections including statutory leave, sickness allowance, minimum statutory wage, and compensation arising from work injuries, etc. Employees under continuous contracts are entitled to an even broader range of benefits. However, contractors and self-employed persons are not covered by the Employment Ordinance, hence their statutory protections are very minimal. The difference makes it all the more important to know exactly your employment status.
Gig workers may think the law will consider them as self-employed persons for tasks carried out on an ad-hoc basis. This may not be true. The determination of employment status is more intricate than simply by job title or industry. The law in Hong Kong categorises employees or independent contractors by substance rather than form. This means the term ‘contractor’ on your written contract is not conclusive. It is also false to think you must not be an employee if you have never signed a conventional contract. There is also not a hard and fast rule in delineating between the status of an employee and a contractor. Rather the court takes into account various aspects when coming to a decision.
Subsequent to the Hong Kong case Lee Ting Sang v Chung Chi-Keung, common factors that point to a relationship of employment include:
- a high degree of control by the employer (eg. working time and mode);
- ownership and provision of resources and tools by the employer;
- the majority of financial risk lies in the employer; and
- low degree of independence and freedom enjoyed by the worker.
On the other hand, if these criteria are largely satisfied, the court would likely infer that a contract of employment did not exist:
- no employment-type benefits were previously provided;
- the worker does not have to carry out the work personally and can freely hire sub-contractors;
- remuneration is not paid periodically;
- neither the worker or the service receiver is allowed to terminate the contract before the end date by giving prior termination or money in lieu of notice;
- the worker is not subject to supervision and control that is usually exercised by an employer; and
- neither the worker or the service receiver has represented to outsiders that there is an employment relationship.
The above is a non-exhaustive list of considerations that will affect the court’s judgement but factual circumstances will govern the relative weight of each factor or other additional factors.
No matter which industry you work in within the gig economy, ultimately it is a question of overall impression for the court in settling each dispute.
As there does not exist a black and white answer to the determination of employment status, it is practical to look at some Hong Kong and overseas case law to get a view of how the court resolves this issue.
Uber B.V. and others v Aslam, Farrar and others
In this UK landmark case, it was ruled that uber drivers are not self-employed contractors but are, in fact, employees. This meant they are entitled to national minimum wage and paid leave. The reasons for such a decision included the follows:
- drivers are required to accept trips assigned to them;
- drivers would breach their agreement with Uber if they cancelled trips on their own;
- drivers had to accept terms and fares set by Uber; and
- Uber handled complaints from passengers for drivers.
Hong Kong has not come across a case about ride hailing services and it is also unclear what implications this UK case has on Hong Kong law. Moreover, differences do exist between the two jurisdictions’ employment law. However, it is still worthwhile to understand the reasoning given by the UK court as Hong Kong judges may be inclined to adopt a similar legal basis and logic.
In a nutshell, it could be seen that the level of control exercised by the company has a significant impact on the decision.
Poon Chau Nam v Yim Siu Cheung trading as Yat Cheung Airconditioning & Electric Co.
In this Hong Kong case, the worker, Mr Poon, worked for the defendant, an air-conditioner company. Mr Poon was injured during work and sought compensation, which the company refused as he was not their employee. Despite the fact that the written contract between them stated Mr Poon as a self-employed person, and Mr Poon also made his own MPF arrangements as a self-employed person, the case was decided in favour of Mr Poon by reason of the following:
- jobs were assigned to the worker by the company;
- the worker was paid at a daily rate and compensated for overtime work;
- the company bore all the financial risks; and
- the worker required minimal supervision or control but this was because he is skilled enough.
From this case, the takeaway is that what is written on the contract is not conclusive. Different features of the relationship between the employer and the person undertaking the work may sway the decision one way or the other. Workers who are labelled as self-employedmay have grounds for dispute when the company they work for denies their compensation or benefits. Employment law around the gig economy is largely unsettled and still open to different possibilities.
This article does not constitute legal advice.
The opinions expressed in the column above represent the author’s own.