Tipping the Scales: How the Latest Labour Tribunal Ruling Impacts Gig Workers

Introduction

The defining characteristics of this new form of work — flexibility and fluidity — often blur the boundaries of traditional employment, making it difficult to classify gig workers as either employees or independent contractors. A recent ruling by the Labour Tribunal of Hong Kong has shed new light on how the tribunal assesses the status of gig workers. The Labour Tribunal recently ruled in favour of 6 gig workers (the “Couriers”) who worked for Zeek, a food and parcel delivery platform company (“Zeek”). The tribunal considered 11 factors when deciding whether there was an employment relationship between Zeek and the Couriers, and eventually held that the Couriers were indeed employees. These 11 factors are the same factors that were considered in the Court of Final Appeal case of Poon Chau Nam v Yim Siu Cheung [2007] 1 HKLRD 951. We have set out a summary of the tribunal’s findings below.

Findings

In determining whether there was an employment relationship between the Couriers and Zeek, the tribunal considered 11 factors, the first being the degree of control that was exercised over the Couriers. On the facts, Zeek determined the delivery routes, work locations, orders and the Couriers’ remuneration. Further, the Couriers could not obtain money from the customers directly. The Couriers contended that Zeek also had a penalty system whereby Couriers who refused orders were penalised and were at risk of job termination. Zeek conducted irregular spot checks and those who refused orders would be placed on a lower priority to receive orders or they may be suspended from work for not abiding by the company’s rules. The Couriers logged into a platform program that monitored their delivery routes and their start times, and they could not log out of the program at will. The Couriers argued that although they were free to work for other companies, the long hours they had to commit to Zeek effectively left them with no time to work elsewhere. The tribunal maintained that this dominant degree of control exercised by Zeek indicated that the Couriers were likely to be employed by Zeek.

The tribunal also considered that the equipment provided by Zeek to the Couriers hinted at an employment relationship. While the Couriers provided their own transportation tools and phones, Zeek provided the fundamental digital platform software that allowed customers to place orders and calculate fees, through which Zeek would also track the packages and calculate the Couriers’ remuneration. The Couriers were allowed to find “assistants” for their jobs but were barred from subcontracting their work, driving another person’s vehicles for work or sharing their work accounts with others. Incomplete work orders were recorded down as bad performance. The tribunal found that the prohibition on the Couriers from engaging substitutes pointed towards an employment relationship.

Unlike independent contractors who could change their fees as they wish, the Couriers were paid a fixed amount based upon the volume of jobs they completed. The tribunal considered that this was fundamentally no different from a salesman who earned a commission, and the lack of financial risk assumed by the Couriers suggested an employment relationship. Moreover, the fact that the Couriers had no opportunity to profit from the sound management in the performance of their tasks was also held to indicate an employment relationship. The Couriers had no other sources of income and the company’s profits and losses did not concern the Couriers. The Couriers neither charged service charges, offered discounts nor established personal relationships with the customers. All of the transactions between customer and company that related to the Couriers’ work were exclusively carried out through Zeek’s platform.

The tribunal also found that the Couriers worked at Zeek’s direction and did not invest or participate in the management of Zeek. The Couriers also had to wear uniforms to enable customers to easily identify them when collecting and delivering packages. However, it was noted that, Zeek did not file tax returns, pay the Mandatory Provident Fund, or provide personal accident insurance for any of their Couriers. The Couriers had to pay their own third-party insurance and file their own tax returns to the government. Unlike independent contractors, traffic fines and parking fees incurred by couriers were reimbursed to them which hinted at an employment relationship.

Finally, the tribunal considered how the Couriers themselves viewed their relationship to Zeek. The Couriers regarded the working relationship as one of employment as they earned wages through their labour and the company controlled and monitored the way they completed the orders as assigned to them. Zeek offered the Couriers short-term “guaranteed income”, unlike independent contractors who would not be paid this, and therefore argued they should be considered employees. Furthermore, traditionally, workers in the business of this trade are normally considered employees. Delivery workers for SF Express, ZTO Express, DHL, etc. are engaged as employees and the work of the claimants were held to be similar to those logistic companies.

In light of these circumstances, the tribunal affirmed the employee status of the Couriers. Zeek was ordered to pay the Couriers their outstanding wages, payment in lieu of notice, paid annual leave and paid statutory holidays respectively.

Takeaways for employers

This case has significant implications for the gig economy and platform workers in Hong Kong. It offers guidance to the factors that would be considered by the tribunal in determining the existence of an employment relationship between platform companies and their workers. However, there is no one size that fits all. The commercial terms and Zeek’s engagement with the Couriers will not necessarily be the same as other platform companies and their workers. This would be assessed on a case by case basis looking at each of the factors and the circumstances of the individual case.

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We would be pleased to support you with any employment related legal issues including reviewing the engagement model of your business, supplier agreement or any other applicable documentations to pre-empt and resolve any potential misclassification risk.

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