The distinction between an employee and independent contractor status has been a prominent topic in recent years, highlighted by the Labour Tribunal's 2023 decision in Re Zeek (LBTC 3170 of 2022 & LBTC 70, 74, 82-83, and 90 of 2023) and the landmark 2007 Court of Final Appeal decision in Poon Chau Nam v. Yim Siu Cheung t/a Yat Cheung Airconditioning & Electric Co (2007) 10 HKCFAR 156.
In Poon Chau Nam, the CFA established the modern approach of examining all aspects of the parties' relationship against the background of legal indicia, ultimately forming an overall impression to decide whether a worker is an employee or an independent contractor. This approach was applied by the Labour Tribunal in Zeek, where six workers were recognised as employees due to factors like dominant control by Zeek, prohibition on finding substitutes, reimbursement of expenses, and a fixed basic salary akin to employees.
There is no single definitive test for determining a worker's status, and merely labelling the relationship is not decisive. Generally, if a worker is deemed an employee, the employer is liable to pay compensation for work-related injuries resulting in permanent incapacity or reduced earning capacity. To cover such liabilities, employers are required under the Employees' Compensation Ordinance (Cap. 282) to maintain sufficient insurance for employees.
Conversely, no equivalent law mandates insurance coverage for independent contractors. However, businesses may voluntarily choose to provide such insurance at their discretion, as seen with Deliveroo and a former worker who was covered under a voluntary policy.
Case Background
The District Court recently heard a claim from a rider seeking employees' compensation from Deliveroo following a traffic accident in February 2022 while handling deliveries for the company.
Key Issue
The Court first needed to assess the rider's employment status with Deliveroo, as this would determine whether Deliveroo was liable to pay compensation. Factors considered included Deliveroo's level of control over the rider, provision of equipment, the rider's integration into Deliveroo's business, and industry standards. The Court noted the Zeek case was distinguishable, as those workers followed fixed routes and schedules with no right to substitutes, unlike the current situation.
Court Decision
The Court concluded that most indicators favoured Deliveroo, suggesting the rider was an independent contractor. The rider had already received HK$100,000 under a voluntary insurance policy purchased by Deliveroo, which is not mandated by the Employees' Compensation Ordinance. Allowing a claim for employees' compensation on top of this would result in double jeopardy for Deliveroo. Consequently, the case was struck out as an abuse of process, being both groundless and vexatious.
Key Takeaways
In the EU, a presumption of employment for digital platform workers is triggered when control and direction are evident, granting more than 28 million workers access to labour rights. Singapore has introduced a new legal category for platform workers, effective 1 January 2025, to enhance labour protection.
In Hong Kong, determining whether an individual is an employee or an independent contractor depends on case facts and the weighing of relevant components. Employers must distinguish between the two roles and ensure compliance with insurance obligations under the Employees' Compensation Ordinance. While not compulsory for contractors, voluntary insurance can be considered as part of risk management.
(For full text of the judgment: Gurung, Sanjaya Man v. Deliveroo Hong Kong Ltd (15/11/2024, DCEC1738/2023) [2024] HKDC 1932)
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