Introduction

In our newsletter “First Hong Kong Labour Tribunal decision to rule gig worker couriers are employees”, we discussed the first Hong Kong case where the Labour Tribunal ruled that gig workers of Zeek, a delivery platform, are employees.

Know more about the Zeek case here.

Zeek has already stopped operations and is being wound up. The Federation of Trade Unions said about 300 gig workers have filed claims for wage arrears in region of HK$13 million. The controversial issue here is whether Zeek’s gig workers were employees or independent contractor (i.e. self-employed).¹

This has given rise once again to the debate on whether gig workers are employees or self-employed and whether new laws are necessary to protect gig workers. Our partner, Mr. Michael Szeto, was interviewed by RTHK in their programme “自由風自由PHONE” and gave his views.²

Indeed, this debate is not new. In mid-November 2021 during the COVID pandemic, about 300 Foodpanda delivery workers went on 2-day strike and sparked a public debate on whether we need new laws to protect gig workers. In November 2021 edition of our newsletter: “Does Hong Kong need new laws to protect gig workers?”, we concluded that sooner or later, Hong Kong will need to review its labour legislations as gig economy continues to bloom.

Know more about the discussion here.

Gig economy and gig workers

Gig economy is an on-demand, peer or platform economy where businesses can hire workers or freelancers to take up on-demand jobs or “gigs” through digital platforms. Individuals who work in the gig economy are commonly referred to as “gig workers”. Gig workers may enjoy a greater flexibility as to when and where to work. They are paid for the gig jobs they do, and may not have a regular income.

Are gig workers “independent contractors” or “employees”?

Whether gig workers are self-employed (independent contractor) or employees has a significant impact on their entitlements to statutory benefits and duties imposed on the employer. Whilst in the Zeek case the Labour Tribunal held that the gig workers concerned were employees, this does not mean all gig workers are employees. In Zeek, the Tribunal applied the legal principles laid down by the Court of Final Appeal in the leading case of Poon Chau Nam v Yim Siu Cheung [2007] 1 HKLRD 951. The legal position remains the same. There is no hard and fast rule on how to distinguish an ”employee” from an “independent contractor” and whether a gig worker is “independent contractor” or “employee” shall depend on the circumstance of each case.

Overview of the statutory entitlements for “employees”

Only employees will be entitled to the basic protection under the Employment Ordinance (Cap. 57). In particular, employees who are employed under a continuous contract (i.e. employed continuously by the same employer for 4 weeks or more with at least 18 hours worked in each week), are entitled to employment benefits such as paid annual leave, statutory holiday pay, sickness allowance, severance payment or long service payment. Further, only employees will be entitled to other statutory protection such as the minimum wage under the Minimum Wage Ordinance (Cap. 608) and compensation arising from work injuries under the Employee’s Compensation Ordinance (Cap. 282).

Labour protection of gig workers in other countries

Labour protection of gig workers is a global issue nowadays. Across the globe, certain countries have reviewed their labour laws and have made changes.

United Kingdom

In the United Kingdom (UK), their employment law distinguishes three categories of persons who enjoy varying degrees of labour protection, including:

1.       those employed under a contract of employment (which is akin to the concept of “employees” under Hong Kong employment law);

2.       those self-employed people who are in business on their own account and undertake work for their clients (which is similar to the concept of “independent contractors” under Hong Kong employment law); and

3.       those “workers” in an intermediate class who are self-employed but provide their services as part of a profession or business undertaking carried on by someone else, who tend to have some characteristics of both of the above categories (but there is no such intermediate category of “workers” under Hong Kong employment law).

Generally, individuals are classified as “workers” if:

1.       they have a contract or other arrangement to do work or services personally for a reward;

2.       their reward is for money or a benefit in kind, for example the promise of a contract or future work;

3.       they only have a limited right to send someone else to do the work (subcontract);

4.       their employer has to have work for them to do as long as the contract or arrangement lasts; and

5.       they are not doing the work as part of their own limited company in an arrangement where the ‘employer’ is actually a customer or client.

Workers are entitled to certain employment rights, including but not limited to minimum wage, statutory leave pay and protection against unlawful discrimination. That said, workers are not entitled to minimum notice periods and protection against unfair dismissal.

The UK courts have ruled that regardless of whether an individual works in the gig economy, he/she will be entitled to the corresponding statutory employment rights and protections as long as respective requirements for each category are satisfied.

Singapore

Singapore and Hong Kong labour laws are similar. Like Hong Kong, an individual may perform work either as an “independent contractor” or an “employee”. Similarly, Singapore gig workers currently fall in a grey area between full-fledged employees and self-employed as they can decide the number of hours they work, but cannot set their own prices or build their own client pool.

New legislation for gig workers is expected to be implemented in 2024 by Singapore. The expected changes will bring basic protections for gig workers more in line with employees, where gig workers’ insurance will be mandated to cover medical expenses, income loss and lump sum compensation for permanent disability or death. Their new legislation will also enable gig workers to make Central Provident Fund contributions, which is similar to MPF in Hong Kong.

Way forward

There have been calls for the Hong Kong Government to address the labour law issues surrounding gig economy. Gig workers may be self-employed, however, they are not “independent contractors” in the traditional sense; although they provide services as part of a profession or business undertaking carried on by someone else, they are not “employees”.

The root cause of the problem is how to classify gig workers – are they “independent contractors” or are they “employees”? This question may not arise until there is a labour dispute or labour related dispute, which this question will need to be determined by the Labour Tribunal or the courts. This is not ideal. If the Government wants to protect gig workers, particularly, those who are in a subordinate, dependent and vulnerable position, changes should be performed by the legislature (and not the courts).

The Government could perhaps review the current employment legislation framework and create an “intermediate class” for gig workers and set out what protections and benefits they are entitled to. Alternatively, changes can be made to legislation where gig workers are assumed to be “employees”, where the burden is on the employer concerned to prove that the gig worker claimant is an independent contractor and their relationship is not one of employment.

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¹        See “Zeek employees seeking HK$13 million: union”, RTHK (14 July 2023 HKT 17:10). https://news.rthk.hk/rthk/en/component/k2/1708890-20230714.htm

²        ‘勞資審裁處裁定物流平台配送工屬僱員’, “自由風自由PHONE”, RTHK (11 July 2023). https://podcast.rthk.hk/podcast/item.php?pid=289&eid=222956&year=2023&lang=en-US