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Author: Erica So, Trainee Solicitor
Co-Author: Sapphire Wong, Summer Intern
The 'Gig Economy' is a free-market system, where people engage in freelancing activities, temporary employment or less formal segments of the labour market, such as project-based services offered on digital platforms. Employers’ increasing demands to bring flexibility to their employment structure by downsizing permanent staff, yet hiring more temporary and part-time workers; and the overall technological advancement, where online platforms and the e-commerce industry prevail in the pandemic era, have largely contributed to this burgeoning business model that is slowly re-shaping the global workforce dynamic.
Most developed countries have struggled to determine the nature of the employment status of a gig workers in the past decade. The conventional labour protection system classifies workers into either “employees” or “self-employed persons and independent contractors”, neither of which is a fitting category for gig workers. Case law suggests that in some jurisdictions like Australia and Canada, gig workers are commonly viewed as self-employed persons and independent contractors, and as a result, are unable to benefit from the protection provided by labour laws for “employees”.
Despite the lack of consensus on defining the position of gig economy workers, their increasing prevalence over time, particularly in the current economic climate, has seen some successful lawsuits by gig workers in seeking to reclassify their employment status and claim labour protection that was previously denied. Some countries have jumped on the bandwagon to amend their legislation to facilitate the rise of such trends. In France, gig workers are now entitled to insurance and trade union rights. In the UK, a Supreme Court ruling identified Uber drivers as “workers”, rather than “self-employed” individuals, thus providing them with benefits such as minimum wages, paid holidays and working hours limitations.
Gig workers continue to face challenges in Hong Kong
In November last year, the couriers of Foodpanda Hong Kong took a united stance to protest against their employer. The two-day strike by more than 300 couriers due to the company’s failure in addressing their demands for fair pay and improvements in working conditions, unveiled a lack of regulation in this area.
In Hong Kong, an individual may perform work as an “employee” or an “independent contractor”. Where employees are afforded the statutory benefits and protections enshrined in the Employment Ordinance (Cap.57), the Employees’ Compensation Ordinance (Cap.282) and at common law, independent contractors must take care of their own needs in relation to job security, insurance and other benefits usually associated with employment. For example, they are required to make MPF contributions on a self-reporting basis as compared to the mandatory equal contributions under an employer-employee relationship.
How the courts in Hong Kong would perceive gig workers’ relationships with their principals is yet to be seen.
Despite the importance in determining a worker’s employment status, the local legislation does not provide any guidance in making the distinction between a worker engaged under a contract of employment and an independent contractor. Whether gig workers are considered as “employees” in law, or “independent contractors” depends largely on how the terms of the employment contract are construed. In the leading authority, Poon Chau Nam v Yim Siu Cheung [2007] 1 HKLRD 951, the Court of Final Appeal decided that the existence of an employer-employee relationship is based on the background of indicia of employment. In Tang Chau Yuet v Fu Kin Po [2011] 1 HKLRD 519, the court further expanded on the list of non-exhaustive factors to decide whether there is an employer-employee relationship, including the degree of control exercised by the employer, the provision of equipment for performing the services and the opportunity for the individual to profit from sound management in the performance of their tasks.
How the courts in Hong Kong would perceive gig workers’ relationship with their principals is yet to be seen. For example, considering the case of food delivery platforms like Foodpanda, the company may have little control over the working hours of its couriers. When an order for delivery is sent out, the choice of whether to take such orders and the way of delivery is at the discretion of these couriers. However, Foodpanda couriers are required to wear uniforms with the company logo while delivering. It has been suggested that the apps where couriers received their job orders are driven by algorithms for the purpose of supervising them. It is uncertain as to whether these gig workers are to be identified as employees or self-employed workers in Hong Kong.
The root problem behind Hong Kong’s lack of labour protection for gig workers stems from its unclear definition under the existing legislation. Companies are inclined to make use of this legal loophole to exploit gig workers and therefore putting them at a significant disadvantage regarding rights and benefits that other employees would enjoy.
To name a few, the inconsistent and inadequate wage payment is one of the biggest issues that gig workers may come across. Companies not bound by the related regulations often take advantage of the efforts of gig workers by setting unjust payment standards such as the removal of minimum salary rates, unreasonable criteria for obtaining pay bonuses and so on. Deliveroo, for example, requires their couriers to take at least 80% of assigned orders on a weekly basis to secure a “boost fee” bonus.
As opposed to employees, gig workers are not entitled to any reimbursement of expenses incurred during work. The accumulation of such expenses may easily deplete the already low salary that they can earn. The one-month notice period prior to termination of employment and compensation for late payment of salary does not apply to gig workers either.
It has been mentioned above that the mandatory provident fund (“MPF”), a compulsory saving scheme for retirement of Hong Kong residents which usually requires the equal contributions by both employers and employees on a monthly basis, is a labour entitlement stipulated by the Employment Ordinance. The lack of protection under the regulations for gig workers means that they would have to shoulder the onus and enrol themselves in MPF schemes.
Other basic labour rights, including work safety, decent working environment and access to insurance coverage are not commonly available to gig workers, which essentially paints a picture of all the hidden pitfalls within the gig economy.
"There has yet to be any official plans announced by the government in expanding the scope of its current legislation to cover “non”-employees."
Legal categorisation of gig workers remains uncertain in Hong Kong
The categorisation of gig workers is an area of law that still remains uncertain in Hong Kong. There have been calls on the Hong Kong government to review its existing labour legislation and to address the booming gig economy. Advocates for the gig economy have referenced from the UK Supreme Court’s decision and suggested that an intermediary definition of gig workers as “workers” should be taken into consideration. However, there has yet to be any official plans announced by the government in expanding the scope of its current legislation to cover “non”-employees.
In the meantime, it is advisable for companies intending to hire gig workers to closely assess whether their relationship is one of employer-employee or independently contracted, to avoid a worker being misclassified. Because such acts can make companies liable and potentially incur significant fines.
Disclaimer: This publication is general in nature and is not intended to constitute legal advice. You should seek professional advice before taking any action in relation to the matters dealt with in this publication.
For specific advice about your situation, please contact:
Anna Lau
Partner
+852 2388 3899
Erica So
Trainee Solicitor
+852 2388 3899