Employment Status in the Gig Economy Global 2020 NRF Publication – Hong kong

What is the state of law on the status of gig workers today?

In Hong Kong there is an increasing trend for employers preferring to fill some or all of their staffing needs by hiring consultants and contractors on a self-employed basis. There are important distinctions between a worker being hired as an employee on the one hand and an independent contractor on the other: An employee is afforded rights and protections under the Employment Ordinance (Chapter 57 of the Laws of Hong Kong) and at common law; whereas independent contractors are expected to look after their own needs in relation to job safety, accident insurance, retirement schemes, leave periods, job security and other benefits normally associated with employment.

However, whether a worker is characterised as an employee or an independent contractor is fact sensitive and ultimately a matter for the courts to determine on a case-by-case basis. The courts will look to the substance of the relationship rather than the label applied to the contract.

What are the grey areas in the law?

Despite the importance of determining a worker’s employment status, unfortunately, the legislation in Hong Kong does not provide a definition of employee or any guidance in making the distinction between a worker engaged under a contract of employment and an independent contractor.

It is therefore necessary to refer to the common law for an understanding of how the distinction is made.

When looking at the legal characterisation of the worker, whether he or she is an employee or an independent contractor, the courts would typically look at the overall situation by considering a non-exhaustive list of factors. These include the degree of control the employer has over the worker, who provides the tools and equipment, whether the worker has freedom to delegate work or hire workers, whether the worker takes on any financial risk and has any prospect of profit and the employment status as expressed in a written contract.

The object of the exercise is to paint a picture from the accumulation of detail, which is not necessarily the same as the sum total of the individual details. In other words, a factor considered important in one case may carry very little weight in another.

What legal developments are expected in the future?

The categorisation of workers in the gig economy is an area of the law, which remains uncertain in Hong Kong. When hiring a gig worker, employers must ensure that the relationship is in substance one of self-employment to avoid misclassifying a worker.