僱員的定義Poon Chau Nam v. Yim Siu Cheung [2007]

僱員的定義
 現行《僱傭條例》並沒有「僱員」或「僱傭關係」的明確定義，如有爭議，須由法庭按每宗個案的客觀事實作出裁斷。終審法院在Poon Chau Nam v. Yim Siu Cheung [2007] HKLRD 951一案中，就上述問題作出權威裁決。終審法院認為，法庭在處理雙方是否存在僱傭關係的議題時，須採用的基本驗證標準是：提供服務的人是否以自行經商的身分提供服務？若是的話，服務提供者即屬自僱；若否的話，即屬僱員。終審法院同時指出，倘若僱傭關係客觀地存在，則僱主的法定責任不容雙方表達的條文來改寫。
● 盡快更新有關辨別僱傭身分的單張和內部工作指引，特別強調：
‧在判斷是否存在僱傭關係時，最關鍵的考慮因素是，服務提供者是否在自負盈虧經營生意；
‧即使僱員一方主動要求改簽自僱合約，亦不是判斷是否存在僱傭關係的決定性因素；
● 在處理「假自僱」個案時，一旦發現僱主沒有購買勞工保險或支付其他法定僱員權益，即將個案轉介至刑事檢控部門調查和跟進。

The Court of Final Appeal recently made a ruling in Poon Chau Nam v. Yim Siu Cheung t/a Yat Cheung Air-conditioning & Electric Co. casting light on determining whether a worker should be treated as an employee or an independent contractor under the Employees Compensation Ordinance ("ECO").

This is an appeal case from the District Court and the Court of Appeal. The appellant worker suffered personal injury in a work-related accident at a building. He was welding a part in an air-conditioner when the welding rod suddenly shattered and a fragment struck his left eye. In consequence, he had suffered a 30% loss of vision in that eye and a 45% loss of earning capacity. The issue was whether the appellant worker was an employee of the respondent company at the time of the accident. The District Court and the Court of Appeal both held that there was no employer and employee relationship between the parties.

Considerations of the District Court and the Court of Appeal
The District Court and the Court of Appeal had considered a number of facts and applied the relevant tests in determining whether there was an employment relationship. However, they considered two factors to be crucial, effectively ruling out the existence of any employment contract.

These were:

i. the absence of any mutual obligation to provide and take up work; and

ii. the appellant’s decision to make his own MPF arrangement as a self-employed person (to which the District Court Judge added the fact that the worker had done jobs for different enterprises).

The Court of Final Appeal
Whether an employment relationship exists is a question of fact and therefore it can only be interfered with on appeal if it can be shown that the court below misdirected itself in law or came to a decision which no court, properly directly itself on the relevant facts, could reasonably have reached.

The CFA considered that the courts below misdirected themselves in law by regarding the absence of a mutual obligation to provide and accept work as inconsistent with the existence of a contract of employment.

Provisions under the ECO
It was an undisputed fact that the worker had been engaged "on a casual as required basis". Therefore, the CFA considered necessary to consider the provisions in the ECO dealing with persons casually employed.

Section 2(1) of the ECO defines an "employee" as a person who works under a contract of service. It continues with a proviso which materially states that:

"Provided that the following persons are excepted from the definition of "employee" …(b) any person whose employment is of a casual nature, and who is employed otherwise than for the purposes of the employer's trade or business……"

The effect of the proviso above is to include within the definition of "employee" for ECO purposes, a person working under a contract of service even if his employment is of a casual nature, provided that such casual employment is for the purposes of the employer’s trade or business.

In addition, section 11(2) of the ECO provides a mechanism for calculating compensation where an injury is suffered in the course of casual employment.

Section 11(7) further recognises that a casual employee may find work with more than one employer and addresses the calculation of compensation in such cases.

In view of the above provisions and by considering various cases, the CFA was of the view that there was nothing in the ECO to suggest that a mutual obligation to supply and take up work had to exist before a worker could be qualified as an employee. On the contrary, the CFA considered that the ECO recognised casual work was by its nature irregular, with gaps concurring between stints when there was work, and provided a mechanism for determining compensation based on notional monthly earnings using external evidence of comparable remuneration. It also recognised that such workers might find stints of work with more than one employer.

The CFA considered that the provisions cited above were clearly provisions designed to operate where the parties were not mutually obliged to offer and take up work. They weighed heavily against the suggestion that absence of a mutual obligation to supply and accept work removed the worker from the ECO’s ambit.

Specific engagements / Umbrella contracts
The CFA also considered that the courts below had failed to distinguish between "specific engagements" and "Umbrella contracts" which might arise in the context of casual employment.

As and when a particular casual job is offered and accepted, the parties enter into a contract in relation to that engagement. Plainly, such a contract does not involve any general obligation to provide or accept work. It comes into existence in relation only to the specific engagement and normally terminates by performance when the engagement is completed. Such contract may be an employment contract and it has nothing to do with the mutual obligation.

On the other hand, it is possible for the parties to enter into an overall contract whereby they undertake mutual obligations to provide and accept work. Such a contract is called an "umbrella" or "global" contract. The existence of an umbrella contract does not necessarily mean that there is an employment contract. Similarly, the fact that there is no umbrella contract does not prevent the court from finding that the parties have entered into a contract of employment each time a specific engagement occurs.

The CFA considered that the absence of a mutual obligation to supply and to take up work, while fatal to the existence of an umbrella contract, was irrelevant to the existence of a contract of employment arising out of a specific engagement. The courts below fell into error in holding that the absence of the relevant mutual obligations was inconsistent with an employment relationship without differentiating between these two types of contract.

The appellant worker was injured while contractually engaged by the respondent to work on the air-conditioner in question. The material question was whether the contract was a contract of employment.

A contract of employment?
There is no single test that will conclusively point to the distinction between an employee and an independent contractor in all cases. In earlier case law, whether the master controlled the manner of doing the work was regarded as the single test for identifying a master and servant relationship. It became clear later that the control test was too narrow and other indicia had been developed (e.g. master’s power of selection of his servant; payment of wages or other remuneration; ownership of the tools; chance of profit; risk of loss etc). The modern approach is to examine all the features of their relationship against the background of the indicia developed with a view to deciding whether, as a matter of overall impression, the relationship is one of employment.

The CFA found these facts:

i. The air-conditioning business belonged to the respondent company.

ii. The worker’s venture into an air-conditioning business on his own account had failed some years previously.

iii. The company decided which jobs should be assigned to the worker and paid him to do them at the daily rate of HK$550, plus any overtime.

iv. All the profits and losses of the business were for the company’s account.

v. The worker bore no financial risks and reaped no financial rewards beyond his daily-rated remuneration.

vi. The respondent managed the business and hired several other workers, some of whom would sometimes work alongside the worker on a job.

vii. The worker personally did the work assigned to him.

viii. He did not hire anyone to help.

ix. Travel expenses incurred in the course of the work were borne by the company.

x. The relevant equipment was owned by the company.

xi. Whenever items had to be purchased by the worker, he was reimbursed by the company.

xii. The worker was a skilled air-conditioning worker and did not require supervision or control over the manner of carrying out the work.

The CFA considered that the control test was in this case, of little relevance as the appellant was an experienced worker. In addition, the other indicia all pointed clearly to an employer-employee relationship entered into for each specific engagement.

The MPF arrangement
The courts below considered that the worker’s arrangement for an MPF scheme as a self-employed person was a strong indication that there was no employer-employee relationship. In addition, failure to give effect to the parties’ express intention that the worker should be treated as self-employed would unjustly result in the company being saddled with unexpected criminal liability for non-compliance with ECO obligations which are owed to employees but not to self-employed persons.

The CFA was of the view that the aforesaid came close to suggesting that the parties should be accorded freedom to contract out of the ECO, contrary to section 31(a) of the ECO.

Further, CFA considered that where the relationship was highly ambiguous and it was not at all clear that a worker was an employee, the parties’ express agreement as to the status of that person might be important. In the present case, the CFA was of the view that objective facts strongly supported the conclusion that the appellant worker was an employee at the time of the accident and the fact that he labelled himself a self-employed person for MPF purposes would not change the picture concerning the company’s liability under the ECO. Yet, the CFA made clear that its decision in this case was not intended to affect the position of casual employees under the Mandatory Provident Fund Schemes Ordinance which had its own provisions for dealing with such employees and their position did not arise for consideration in the appeal before the CFA.
FACV No. 14 of 2006
IN THE COURT OF FINAL APPEAL OF THE
HONG KONG SPECIAL ADMINISTRATIVE REGION
FINAL APPEAL NO. 14 OF 2006 (CIVIL)
(ON APPEAL FROM CACV NO. 86 OF 2005)
_______________________
Between:

     POON CHAU NAM    Appellant      
     and           
     YIM SIU CHEUNG trading as YAT CHEUNG AIRCONDITIONING & ELECTRIC CO.    Respondent   
_______________________

Court:  Chief Justice Li, Mr Justice Chan PJ, Mr Justice Ribeiro PJ, Mr Justice Mortimer NPJ and Lord Scott of Foscote NPJ
Date of Hearing:  5 March 2007
Date of Judgment: 13 March 2007

_______________________
 J U D G M E N T
_______________________
 
Chief Justice Li:
1.  I agree with the judgment of Mr Justice Ribeiro PJ.

Mr Justice Chan PJ:
2.  I agree with the judgment of Mr Justice Ribeiro PJ.

Mr Justice Ribeiro PJ:
3.  This appeal concerns the rights of casual workers under the Employees’ Compensation Ordinance, Cap 282 (“ECO”).  Where in any employment, personal injury by accident arising out of and in the course of the employment is caused to an employee, section 5(1) makes the employer liable to pay compensation.
4.  In the present case, there is no dispute that the appellant suffered personal injury in a work-related accident which occurred on 18 September 2002 at a building known as Causeway Bay Plaza I.  He was welding a part in an air-conditioner when the welding rod suddenly shattered and a fragment struck his left eye.  In consequence, he had to spend a month and a half in hospital and suffered a 30% loss of vision in that eye.  He was assessed to have suffered a 45% loss of earning capacity.
5.  The issue between the parties is whether he was an employee of the respondent at the time of the accident.  The ECO defines “employee” (subject to a proviso to which I will return) as “... any person who has ... entered into or works under a contract of service ... with an employer in any employment, whether by way of manual labour, clerical work, or otherwise, and whether the contract is expressed or implied, is oral or in writing.”[1]
6.  In the District Court, Deputy Judge P Li (as H H Judge Li then was) held that he was not an “employee” and dismissed his application for compensation.[2]  The Judge was upheld by the Court of Appeal.[3]  Leave to appeal to the Court was granted by the Appeal Committee on 22 May 2006.
A.  The relationship between the parties
7.  The Judge found:
(a) that there was no obligation on the respondent’s part to supply the appellant with work and that the appellant, in turn, had no obligation to turn up for work or to accept any work offered by the respondent (an arrangement which the Judge found inconsistent with an employer-employee relationship);
(b) that the appellant was free to take up jobs for others and did not require the respondent’s permission to do so (a fact again found to be inconsistent with an employer-employee relationship);
(c) that from November 2000 to February 2001, the appellant had worked not only for the respondent but also for another enterprise, although the appellant would give the respondent preference if he was needed (a fact which the Judge thought “strange” and apparently regarded as a factor against finding an employment relationship);
(d) that, unlike others who were employees of the respondent, the appellant had chosen to make his own Mandatory Provident Fund (“MPF”) arrangements as a self-employed person because he wished to “maintain flexibility” (a fact considered to be “a strong indication that there was no employer-employee relationship”);
(e) that the appellant was paid a daily wage of $550 for working from 9.00 am to 6.00 pm (plus overtime if applicable) as well as travelling expenses where he had to travel while at work, keeping his own time sheets and records of expenses; and that during the period from February to September 2002, he had worked for 117 days, receiving payment at the end of each job or at irregular intervals when he submitted claims for payment (an arrangement described as one where “the [appellant] was employed when need arose ... ‘on a casual as required basis’”);
(f) that the respondent supplied most of the equipment used, particularly any heavy equipment (a fact which the Judge considered “neither here nor there”); and,
(g) that the appellant was an experienced air-conditioning worker and did not require supervision on the job.
8.  Woo VP, with whom the other members of the Court of Appeal agreed, placed particular emphasis on the absence of any mutual obligation to supply and take up work; and on the MPF arrangements made by the appellant qua self-employed person, when upholding the Judge.
B.  Classifying a work relationship as an employer-employee relationship
9.  In the great majority of cases, deciding whether or not A is B’s employee presents little difficulty.  Most people take up jobs which are regular and stable, doing the work assigned to them, supervised by the boss and receiving regular wages and other benefits in return.  They are obviously employees.  However, in certain instances, the answer to the question whether an employer-employee relationship exists is elusive, as recognized by Lord Griffiths in Lee Ting Sang v Chung Chi-Keung[4]:
“This has proved to be a most elusive question and despite a plethora of authorities the courts have not been able to devise a single test that will conclusively point to the distinction [between an employee and an independent contractor] in all cases.”
10.  The relationship may bear features suggestive of employment, as well as features indicating some other type of relationship.  Often, the court is asked to decide whether someone is an employee as opposed to an independent contractor: in traditional language, whether the person engaged is a servant under a contract of service or an independent contractor under a contract for services.  Or the question may be whether the relationship involves a contract of employment as opposed, for example, to a contract of carriage[5] or a contract of bailment[6] or, indeed, a relationship involving no enforceable contract of any kind.[7]
11.  In the earlier case-law, whether the master controlled the manner of doing the work was regarded as the single test for identifying a master and servant relationship, particularly in the context of vicarious liability, there being an evident logic in founding the master’s vicarious liability on his control over the servant who inflicted the damage.[8]  However, it became clear that the control test as originally conceived was too narrow.  As Mackinnon LJ observed in Wardell v Kent County Council,[9] many a person who is clearly an employee “possesses, and is engaged to exercise, some qualification of skill” so that his method of working cannot be said to be under his employer’s control.  His Lordship was there dealing with a qualified hospital nurse and gave as other examples “a chef, or a cabinet-maker, or a compositor, or even a professional football player”.
12.  The test was therefore widened to embrace indirect forms of control.  Thus, in Short v J and W Henderson Ltd,[10] Lord Thankerton applied “the four indicia” of a contract of service suggested by Lord Justice-Clerk Alness in Park v Wilsons and Clyde Coal Company Ltd,[11] consisting of the following:
“(a) The Master’s power of selection of his servant; (b) the payment of wages or other remuneration; (c) the Master’s right to control the method of doing the work; and (d) the Master’s right of suspension or dismissal.”
13.  But control as a test has no obvious relevance to determining for instance, whether a person ought to be considered an employee so as to qualify for minimum wages,[12] or for employment protections against redundancy[13] or unfair dismissal,[14] or whether he ought to be insured by the employer under a national health scheme,[15] or, in ECO cases, whether his employer ought compulsorily to insure him against accidental injury at work.[16]  While control (broadly conceived) continues to be regarded as one of the indicia of employment, the courts have increasingly turned to the economic or commercial aspects of the relationship as more suitable guides to the allocation of such statutory rights and duties.
14.  Thus, in the Privy Council in 1947, having pointed to the inadequacy of control as a single test, Lord Wright stated:
“In the more complex conditions of modern industry, more complicated tests have often to be applied. It has been suggested that a fourfold test would in some cases be more appropriate, a complex involving (1) control; (2) ownership of the tools; (3) chance of profit; (4) risk of loss.”[17]
15.  Two English first instance decisions have proved influential.  First, in the Ready Mixed Concrete case Mackenna J identified three conditions for the existence of a contract of employment as follows:
“(i) The servant agrees that, in consideration of a wage or other remuneration, he will provide his own work and skill in the performance of some service for his master. (ii) He agrees, expressly or impliedly, that in the performance of that service he will be subject to the other’s control in a sufficient degree to make that other master. (iii) The other provisions of the contract are consistent with its being a contract of service.”[18]
16.  It was in respect of the third condition that his Lordship explained how one party’s reservation of a right to control the manner of working could be overridden by economic or commercial realities which point to the other party being engaged as an independent contractor and not as an employee.  This was illustrated by Dixon J’s decision in the Australian High Court in Queensland Stations Pty Ltd v Federal Commissioner of Taxation,[19] which involved a drover employed to drove 317 cattle to a certain destination pursuant to a written agreement which included a term requiring him to obey and carry out all lawful instructions.  This, Dixon J pointed out, could not “outweigh the countervailing considerations which are found in the employment by him of servants of his own, the provision of horses, equipment, plant, rations, and a remuneration at a rate per head delivered.”  Such a “reservation of right to direct or superintend the performance of the task cannot transform into a contract of service what in essence is an independent contract”.[20]  Mackenna J also referred (among other authorities) to the decision of the United States Supreme Court in US v Silk,[21] which involved the question whether men working for the plaintiffs were “employees” for the purposes the Social Security Act 1935, noting that there:
“The test was whether the men were employees ‘as a matter of economic reality.’  Important factors were said to be ‘the degrees of control, opportunities of profit or loss, investment in facilities, permanency of relation and skill required in the claimed independent operation.’”[22]
17.  The other influential first instance decision is that of Cooke J in Market Investigations Ltd v Minister of Social Security.[23]  It earned the Privy Council’s accolade in Lee Ting Sang v Chung Chi-Keung,[24] where Lord Griffiths stated that their Lordships “agree with the Court of Appeal when they said that the matter had never been better put than by Cooke J” in that case.  The passage approved of runs as follows:
“... the fundamental test to be applied is this: ‘Is the person who has engaged himself to perform these services performing them as a person in business on his own account?’  If the answer to that question is ‘yes,’ then the contract is a contract for services.  If the answer is ‘no,’ then the contract is a contract of service.  No exhaustive list has been compiled and perhaps no exhaustive list can be compiled of the considerations which are relevant in determining that question, nor can strict rules be laid down as to the relative weight which the various considerations should carry in particular cases.  The most that can be said is that control will no doubt always have to be considered, although it can no longer be regarded as the sole determining factor; and that factors which may be of importance are such matters as whether the man performing the services provides his own equipment, whether he hires his own helpers, what degree of financial risk he takes, what degree of responsibility for investment and management he has, and whether and how far he has an opportunity of profiting from sound management in the performance of his task.”[25]
18.  The modern approach to the question whether one person is another’s employee is therefore to examine all the features of their relationship against the background of the indicia developed in the abovementioned case-law with a view to deciding whether, as a matter of overall impression, the relationship is one of employment, bearing in mind the purpose for which the question is asked.  It involves a nuanced and not a mechanical approach, as Mummery J emphasised in Hall v Lorimer[26] (in a passage approved by the English Court of Appeal[27]):
“In order to decide whether a person carries on business on his own account it is necessary to consider many different aspects of that person’s work activity.  This is not a mechanical exercise of running through items on a check list to see whether they are present in, or absent from, a given situation.  The object of the exercise is to paint a picture from the accumulation of detail.  The overall effect can only be appreciated by standing back from the detailed picture which has been painted, by viewing it from a distance and by making an informed, considered, qualitative appreciation of the whole.  It is a matter of evaluation of the overall effect of the detail, which is not necessarily the same as the sum total of the individual details.  Not all details are of equal weight or importance in any given situation. The details may also vary in importance from one situation to another.”
C.  The primary grounds of decision below
19.  The foregoing approach is applicable to deciding whether the appellant was the respondent’s employee at the time of the accident so as to render the respondent liable to pay compensation under the ECO.
20.  Woo V-P sets out a list of eight criteria derived from Chitty,[28] as follows:
“(1)   the degree of control exercised by the employer;
 (2)   whether the worker’s interest in the relationship involved any prospect of profit or risk of loss;
 (3)   whether the worker was properly regarded as part of the employer’s organisation;
 (4)   whether the worker was carrying on business on his own account or carrying on the business of the employer;
 (5)   the provision of equipment;
 (6)   the incidence of tax and national insurance;
 (7)   the parties’ own view of their relationship;
 (8)   the traditional structure of the trade or profession concerned and the arrangements within it.”[29]
21.  However, the Judge and Woo V-P considered two factors to be crucial, effectively ruling out the existence of any employment contract.  These were (i) the absence of any mutual obligation to provide and accept work; and (ii) the appellant’s decision to make his own MPF arrangements as a self-employed person (to which the Judge added the fact that the appellant had done jobs for different enterprises).
D.  Grounds for intervention on appeal
22.  It is “firmly established that the question of whether or not the work was performed in the capacity of an employee or as an independent contractor is to be regarded by an appellate court as a question of fact to be determined by the trial court.”[30]  Accordingly, so far as the trial judge’s classification of the contract is concerned, an appellate court can only intervene on Edwards v Bairstow[31] grounds.  In other words, a finding that an employer-employee relationship does or does not exist can only be interfered with on appeal if it can be shown that the tribunal misdirected itself in law or came to a decision which no tribunal, properly directing itself on the relevant facts, could reasonably have reached.
E.  Error of law relating to the absence of mutual obligation to provide and accept work
23.  In my judgment, the courts below misdirected themselves in law by regarding the absence of a mutual obligation to provide and accept work as inconsistent with the existence of a contract of employment.
24.  As noted in section A above, that is what the Judge held and, in upholding that finding, Woo V-P stated:
“As the judge found, the respondent did not require the applicant to work in the month of March 2002.  This supports the fact that the respondent was not obliged to give the applicant any work, which was inconsistent with an employer/employee relationship.  On the other hand, the applicant was not obliged to work for the respondent, especially in view of the evidence that he had work offered by another company.  The judge considered this lack of obligation on both sides as more consistent with the absence of an employer/employee relationship.  This view can find support in the majority decision of the Privy Council in The Royal Hong Kong Golf Club.”[32]
25.  His Lordship had earlier observed in relation to the Golf Club case[33] that “the lack of mutual obligations between the parties was decisive of the matter in the circumstances of that case.”[34]  Whether Woo V-P’s approach is supported by the Golf Club case is dealt with separately later.
E.1  ECO provision for persons whose employment is of a casual nature
26.  As the Judge held and everyone accepted, the appellant had been engaged “on a casual as required basis”.  It is therefore necessary to consider the provisions in the ECO dealing with persons casually employed, an exercise which the courts below did not adequately undertake.
27.  Although the drafting is somewhat convoluted, there is no doubt that the ECO covers most classes of persons in casual employment.  This was accepted in Lee Ting Sang v Chung Chi-Keung.[35]  As we have seen, section 2(1) of the ECO defines an “employee” as a person who works under a contract of service.  It continues with a proviso which materially states as follows:
“Provided that the following persons are excepted from the definition of ‘employee’ ... (b) any person whose employment is of a casual nature, and who is employed otherwise than for the purposes of the employer’s trade or business, not being a person employed for the purposes of any game or recreation and engaged or paid through a club and not being a part-time domestic helper.”
28.  The effect of that proviso is to include within the definition of “employee” for ECO purposes, a person working under a contract of service even if his employment is of a casual nature, provided that such casual employment is for the purposes of the employer's trade or business.[36]  It is closely based on s 13 of the Workmen's Compensation Act, 1906,[37] which was similarly explained by Cozens Hardy MR in Hill v Begg:
“If a man for the purposes of his trade or business employs another, it matters not that the employment is of a casual nature, such as, for example, that of a dock labourer, and the man so employed is a ‘workman’ within the meaning of the Act.”[38]
29.  The ECO provides a mechanism for calculating compensation where an injury is suffered in the course of casual employment.  Compensation is generally calculated by reference to an employee’s monthly earnings, but obviously, it may be difficult to establish what such earnings are in the case of a casual employee.  Section 11(2) accordingly provides:
“(2)   Where by reason ... of the casual nature of the employment, ... it is impracticable to compute the rate of remuneration of such employee at the date of the accident, regard may be had to the average monthly amount which, during the 12 months previous to the accident, was being earned by a person of similar earning capacity in the same grade employed at the same work by the same employer, or, if there is no person so employed, by a person of similar earning capacity in the same grade employed in the same class of employment and in the same district.”
30.  The ECO furthermore recognizes that a casual employee may find work with more than one employer and addresses the calculation of compensation in such cases:
“Where the employee had entered into concurrent contracts of service with 2 or more employers under which he worked at one time for one such employer and at another time for another such employer, his monthly earnings shall be computed as if his earnings under all such contracts were earnings in the employment of the employer for whom he was working at the time of the accident: [subject to provisos of no present relevance].”[39]
31.  These provisions are also modelled on the UK’s Workmen’s Compensation Act 1906.[40]  In the related case-law, casual workers were routinely regarded as covered by the Act notwithstanding that there was obviously no mutual obligation between the employer and such workers for work to be provided or accepted.  Thus, in Perry v Wright[41] the successful claimant “had no regular employment, but worked some days for one firm and some days for another, just as a job turned up”.  Similarly, in Cue v Port of London Authority[42]it was said of the claimant that: “He was only employed by the employers when there was a job and a vacancy, and there was no obligation on him to work for them, and no obligation on them to employ him.”  In Manton v Cantwell,[43] Lord Birkenhead LC, stated without qualification: “... if a man be employed for the purposes of the trade or business the employer is liable to him even though the employment be of a casual nature.”
32.  There is similarly nothing in the ECO to suggest that a mutual obligation to supply and take up work must exist before a worker qualifies as an employee.  On the contrary, the Ordinance recognizes that casual work is by its nature irregular, with gaps occurring between stints when there is work, and provides a mechanism for determining compensation based on notional monthly earnings using external evidence of comparable remuneration.  It also recognizes that such workers may find stints of work with more than one employer.  These are clearly provisions designed to operate where the parties are not mutually obliged to offer and take up work.
33.  These ECO provisions were not drawn to the Judge’s attention.  This is pointed out by Woo V-P,[44] but his Lordship does not go on to discuss their significance.  Properly understood, such provisions weigh heavily against the suggestion that absence of a mutual obligation to supply and accept work removes the appellant from the ECO’s ambit.
E.2  “Umbrella contracts” and specific engagements
34.  That erroneous view rests on a failure to distinguish between two different types of contract which may arise in the context of casual employment.
35.  As and when a particular casual job is offered and accepted, the parties enter into a contract in relation to that engagement.  That contract may well be classifiable as a contract of employment on an analysis of the type discussed in section B above.  Plainly, such a contract does not involve any general obligation to provide or accept work.  It comes into existence in relation only to the specific engagement and normally terminates by performance when the engagement is completed.  It has nothing to do with the mutual obligation under discussion.
36.  On the other hand, it is possible (although uncommon) for the parties to enter into an overall contract whereby they do undertake mutual obligations to provide and accept work.  Such a contract has been called an “umbrella” or “global” contract, to indicate that it is an over-arching and continuous agreement between the parties, encompassing a series of specific engagements within its span.  Where an umbrella contract exists, the question may arise as to whether it is a contract of employment (whether or not each specific engagement within its ambit gives rise to its own such contract).  Such a question is generally only relevant where a person claiming a particular statutory right needs to establish a period of continuous employment by relying on an umbrella contract and cannot do so merely by showing that he has worked in a series of specific engagements.
37.  An umbrella contract therefore embodies an obligation mutually undertaken by the parties to supply and take up work.  It obviously follows that if no such obligation is undertaken, no umbrella contract comes into existence.  But the fact that there is no umbrella contract does not prevent the court from finding that the parties have nevertheless entered into a contract of employment each time a specific engagement occurs.  And in the ECO context, such a finding suffices.  Where the employee is injured in an accident arising out of and in the course of a specific engagement, he is entitled to claim compensation provided that engagement constitutes a contract of employment.
38.  The foregoing propositions are well-established on the authorities.  Thus, the potential existence of contracts at two levels when dealing with casual workers was acknowledged in McMeechan v Secretary of State for Employment,[45] where Waite LJ stated:
“Temporary or casual workers pose a particular problem of their own, in that in their case there will frequently be two engagements (to use a neutral term) which the tribunal may be called upon to analyse. There is the general engagement, on the one hand, under which sporadic tasks are performed by the one party at the behest of the other; and the specific engagement on the other hand which begins and ends with the performance of any one task. Each engagement is capable, according to its context, of giving rise to a contract of employment.”
39.  The possibility of inferring an umbrella contract out of a sustained course of conduct involving a series of specific engagements was noted in Hellyer Brothers Ltd v McLeod[46] by Slade LJ:
“On the particular facts of such a case it may be open to the industrial tribunal properly to infer from the parties’ conduct (notwithstanding the absence of any evidence as to any express agreement of this nature) the existence of a continuing overriding arrangement which governed the whole of their relationship and itself amounted to a contract of employment.  Such a contract is frequently referred to as a ‘global’ or ‘umbrella’ contract.”
Such an inference was in fact drawn in Airfix Footwear Ltd v Cope,[47] an occurrence that is likely to be rare.
40.  O'Kelly v Trusthouse Forte plc[48] illustrates why establishing an umbrella contract may be necessary.  The claimants were seeking to bring claims for unfair dismissal which required them to have had 52 weeks of continuous employment working a specified minimum number of hours in each week for that week to be counted.  It was not sufficient for them to show that they had worked in a sporadic series of specific engagements.  Additionally, they needed to show that they had been dismissed which posed problems if each specific engagement had been terminated by performance without any dismissal.  They were unable to establish a global contract and their claim failed.
41.  In Carmichael v National Power plc,[49] Lord Irvine of Lairg LC stressed that the claim by the part-time tour guides for statutory particulars under the Employment Protection Act 1978 “was not advanced on the basis that when they actually worked as guides they did so under successive ad hoc contracts of employment.”  His Lordship observed that “it may well be that, when performing that work, they were being employed. But that would not be enough for the applicants. They could succeed only if the 1989 engagement created an employment relationship which subsisted when they were not working”,[50] that is, if there was an umbrella contract based on an engagement letter of 1989.  The House of Lords held that no umbrella contract and indeed, no contract of any description had come into existence, and their claim therefore failed.
42.  In Clark v Oxfordshire Health Authority,[51] after analysing the authorities, Sir Christopher Slade stated that they: “... require us to hold that some mutuality of obligation is required to found a global contract of employment.  In the present case I can find no such mutuality subsisting during the periods when the applicant was not occupied in a ‘single engagement’”.[52]  However, the non-existence of any umbrella contract did not mean that there could be no contract of employment.  The court remitted to the Industrial Tribunal the question of whether “there existed a specific engagement which amounted to a contract of service and could provide the basis for a claim for unfair dismissal.”[53]
43.  In his powerful dissent in the Golf Club case, Lord Hoffmann[54] recognized that it may be quite sufficient for certain purposes (including the assertion of rights under the Employment Ordinance) to establish a contract of employment based on specific engagements, regardless of the absence of any over-arching global contract.  He referred to the golf caddie in question as “a casual employee, in the same way as a casual waitress, gardener or labourer, employed from time to time as and when he presented himself for work and the Club had work to offer.”  His Lordship continued: “for the purpose of deciding whether he was a casual employee, the fact that neither party was under an obligation to employ or be employed is of course irrelevant. That is the nature of casual employment.”  The caddie’s statutory entitlements could be secured if the specific engagements when taken together could be deemed to constitute the necessary period of continuous employment by virtue of Schedule 1 to the Employment Ordinance.  I respectfully agree with those comments and, for reasons discussed in section E.3 below, consider that nothing said by the majority in the Golf Club case runs counter to them.
44.  The foregoing approach was explained and applied in Wong Man Kwan v Chun Shing Holdings Ltd[55] with accuracy and cogency by Deputy High Court Judge Lam (as Lam J then was).
45.  It follows that the absence of a mutual obligation to supply and to take up work, while fatal to the existence of an umbrella contract, is irrelevant to the existence of a contract of employment arising out of a specific engagement.  The courts below fell into error in holding that the absence of the relevant mutual obligation was inconsistent with an employment relationship without differentiating between these two types of contract.  The appellant was undoubtedly injured while contractually engaged by the respondent to work on the air-conditioner in question.  The material question is whether that contract was a contract of employment, to be answered by applying the principles discussed in section B above.
E.3  The Golf Club case
46.  Before turning to those principles, it is necessary to refer to Cheng Yuen v The Royal Hong Kong Golf Club.[56]  As noted in section E above, Woo V-P claims support from that decision for his conclusion that absence of the relevant mutual obligation precludes the existence of any contract of employment.  In his Lordship’s view, the Privy Council affirmed the Hong Kong Court of Appeal’s decision in that case:
“... on the main basis that there was no mutual obligation between the parties.  The club was not obliged to give the caddie any work or to pay him other than the amount owed by the individual golfer for whom he caddied.  And he was not obliged to work for the club and he had no obligation to the club to attend in order to act as a caddie for golfers playing on the club premises.”[57]
He adds:
“... the majority view of the Privy Council was that the lack of mutual obligations between the parties was decisive of the matter in the circumstances of that case.”[58]
47.  With respect, confusion appears to have crept into the notion of an “absence of mutual obligation” in Woo V-P’s reading of the Golf Club case.  It is perfectly true that Lord Slynn of Hadley, giving judgment for the majority, held (among other things) that:
“...The Club was not ... obliged to give him [the caddie] work or to pay him other than the amount owed by the individual golfer for whom he caddied. Conversely he was not obliged to work for the Club and he had no obligation to the Club to attend in order to act as a caddie for golfers playing on the Club premises.”[59]
48.  However, that was stated in the context of the majority deciding that there was no contract of any sort between the club and the caddie (as opposed to individual contracts arising between each golfer and the caddie).  Lord Slynn stated:
“It is to their Lordships clear that the only reasonable view of the facts is that the arrangements between the Club and Mr Cheng went no further than to amount to a licence by the Club to permit Mr Cheng to offer himself as a caddie for individual golfers on certain terms dictated by the administrative convenience of the Club and its members.”[60]
The analysis accepted by the majority (which I respectfully consider somewhat surprising) was that the club merely acted as “an agent collecting the fee and guaranteeing its payment to the caddie.”[61]
49.  Accordingly, the majority held that there was “no mutual obligation” between the club and caddie, but only in the sense that there was no contract of any sort between them.  They specifically acknowledged that contracts of employment might arise as between the caddie and the individual golfer for each caddying engagement, while rejecting the existence of any such contract as between the caddie and the club.  Thus, Lord Slynn stated:
“There is no reason why there should not be a separate contract of employment each time Mr Cheng agreed to act as caddie for a particular golfer and whether that was a contract of service or for the provision of services it is not necessary to decide.”[62]
And earlier, his Lordship had stated:
“Mr Cheng was not an employee of the Club whether on a continuing basis or by separate contracts, like a casual worker, each time he actually worked.”[63]
50.  It follows that, far from supporting the proposition that absence of the relevant mutual obligation precludes the existence of any contract of employment, both the majority and Lord Hoffmann in the Golf Club case recognized that notwithstanding such absence, a contract of employment could arise each time a caddying engagement was offered and accepted.  The majority considered such a possibility  to exist only as between the caddie and the golfer, while Lord Hoffmann’s view was that such contracts arose between the caddie and club on each caddying engagement.
F.  Was the appellant working under a contract of service with the respondent at the time of the accident?
51.  The courts below having misdirected themselves in law, it is open to this Court to undertake for itself classification of the contract under which the appellant was working at the time of the accident.
F.1  The indicia of employment
52.  I return later to consider the significance of the MPF arrangements made by the appellant and the Judge’s concern as to employment by more than one employer.  Leaving those matters aside, in my view, the only reasonable conclusion to be reached on the undisputed facts is that, in carrying out the Causeway Bay Plaza I assignment, the appellant was working for the respondent under a contract of service when the accident occurred.
53.  The air-conditioning business belonged to the respondent.  The appellant’s venture into an air-conditioning business on his own account had failed some years previously.  The respondent decided which, if any, jobs should be assigned to the appellant and paid him to do them at the daily rate of $550, plus any overtime.  All the profits and losses of the business were for the respondent’s account.  The appellant bore no financial risks and reaped no financial rewards beyond his daily-rated remuneration.  The respondent managed the business and hired several other workers, some of whom would sometimes work alongside the appellant on a job.  The appellant personally did the work assigned to him.  He did not hire anyone to help.  Travel expenses incurred in the course of the work were borne by the respondent who sometimes drove the appellant to the work site in his van, particularly where heavy equipment had to be transported there.  Such equipment was owned by the respondent and not the appellant.  Whenever items had to be purchased by the appellant for work purposes, he was reimbursed by the respondent, even where the amounts were very small.  The appellant was a skilled air-conditioning worker and, like the others who were undoubtedly the respondent’s employees, did not require supervision or control over the manner of carrying out the work.  So the control test is, in the circumstances, of little relevance.  But the other indicia all point clearly to an employer-employee relationship entered into for each specific engagement.  The main difference between the appellant and the other workers was that his employment was of a casual nature whereas theirs was permanent and paid on a monthly basis.
F.2    The MPF arrangement
54.  Is this picture altered by the fact that the appellant made his own arrangements for an MPF scheme as a self-employed person?  That fact, the Judge thought, was “a strong indication that there was no employer-employee relationship”.  Woo V-P thought it “very significant”.  He referred on the one hand to Lord Denning MR’s observation in Massey v Crown Life Insurance Co that:
“…if the parties’ relationship is ambiguous and is capable of being one or the other, then the parties can remove that ambiguity, by the very agreement itself which they make with one another.  The agreement itself then becomes the best material from which to gather the true legal relationship between them.”[64]
And he cited, on the other hand, Ferguson v Dawson & Partners (Contractors) Ltd,[65] where Megaw LJ stated:
“My own view would have been that a declaration by the parties, even if it were incorporated into the contract, that the workman was to be, or was to be deemed to be, self-employed, an independent contractor, ought to be wholly disregarded – not merely treated as not being conclusive – if the remainder of the contractual terms, governing the realities of the relationship, showed the relationship of employer and employee.  … I find difficulty in accepting that the parties, by a mere expression of intention as to what the legal relationship should be, can in any way influence the conclusion of law as to what the relationship is.”
55.  Woo V-P considered it right to give substantial weight to the appellant’s MPF arrangements in the present case, stating:
“Were the parties’ intentions not be respected by the courts to hold that there was an employer/employee relationship, there would be serious ramifications.  The employer respondent would then be liable to criminal sanction for failing to take out employees’ compensation insurance (see section 40 of the Employees’ Compensation Ordinance) and to join the MPF scheme for the employee applicant.”[66]
Given that the appellant’s MPF arrangement was:
“... a conscious decision on his part and an agreed arrangement he had made with the respondent, [it ought to] be regarded by the court, in Lord Denning’s words, as ‘the best material from which to gather the true legal relationship between’ the parties.  Otherwise, where the parties carried out their activities in accordance with their agreed arrangement, as in the present case, but such arrangement was disregarded by the court, a wrong would be done to the respondent which might result in criminal liability being attached to him.”[67]
56.  Woo V-P’s concern was therefore that failure to give effect to the parties’ expressed intention that the appellant should be treated as self-employed (and therefore outside the coverage of the ECO) would unjustly result in the respondent being saddled with unexpected criminal liability for non-compliance with ECO obligations which are owed to employees but not to self-employed persons.  This sentiment comes close to suggesting that the parties should be accorded freedom to contract out of the ECO, a proposition which would run counter to section 31(1):
“Any contract or agreement whether made before or after the commencement of this Ordinance, whereby an employee relinquishes any right to compensation from an employer for personal injury by accident arising out of and in the course of his employment, shall, subject to subsection (2), be null and void in so far as it purports to remove or reduce the liability of any person to pay compensation under the provisions of this Ordinance.”[68]
57.  If, on the facts viewed objectively and applying the indicia of employment discussed above, the person injured is properly to be regarded as an employee, the ECO applies and any agreement seeking to remove that person from its scope is void.  It may be, as Lord Denning suggested in the Massey case,[69] that where the relationship is highly ambiguous and it is not at all clear that the injured person is an employee, the parties’ express agreement as to the status of that person may be important.  However, if there is objectively an employer-employee relationship, the compulsory statutory duty which the employer bears cannot be overridden by the express stipulation of the parties.  As Megaw LJ observed:
“The parties cannot transfer a statute-imposed duty of care for safety of workmen from an employer to the workman himself merely because the parties agree, in effect, that the workman shall be deemed to be self-employed, where the true essence of the contract is, otherwise, of a contract of service.”[70]
58.  This was also the approach in Young & Woods Ltd v West[71]where the claimant had freely opted for self-employed terms but when dismissed, was allowed to resile from that choice and to sue for unfair dismissal because he had objectively entered into an employment relationship.  Stephenson LJ stressed that it was “the court’s duty to see whether the label correctly represents the true relationship between the parties”[72] for to do otherwise would be “to presuppose some kind of estoppel against invoking the statute equivalent to, or closely analogous to, a power to contract out of the Act; and to give effect to it would, in my judgment, be plainly wrong.”[73]  And as Sir David Cairns stressed:
“... it is of great importance as a matter of public policy that an employer should not be able to avoid his statutory responsibilities as an employer – responsibilities for safety, redundancy payments, compensation for unfair dismissal and other matters – by offering to those who are, or are about to become, in substance employees a form of contract purporting to put them in another category and offering tempting fiscal advantages.”[74]
59.  The Hong Kong Court of Appeal has expressed similar sentiments in Chan Kwok Kin v Mok Kwan Hing,[75] where Clough JA stated:
“It was for the court and not the applicant to evaluate the facts and determine the legal relationship of the applicant to the first respondent.  The applicant no doubt knew who he was working for, namely the first respondent, but in all the circumstances we think his classification of their legal relationship and of his legal relationship with Law can have no significant evidential value.”
60.  In the present case, the objective facts strongly support the conclusion that the appellant was an employee at the time of the accident and the fact that he labelled himself a self-employed person for MPF purposes does not change the pictureconcerning the respondent’s liability under the ECO.  Lest there be any doubt, I should make it clear that this judgment is not intended to affect the position of casual employees under the Mandatory Provident Fund Schemes Ordinance (Cap 485).  That Ordinance has its own provisions for dealing with such employees and their position does not arise for consideration in this appeal.
F.3  Working for more than one employer
61.  Little needs to be said regarding the Judge’s suggestion that working for more than one employer on a casual basis made the appellant’s status as an employee questionable.  It is in the nature of casual employment that the worker may take up work wherever it can be found, with one or more employers.  As we have seen, the ECO makes provision for compensation to be payable employees who work on concurrent contracts of employment[76] and in Workmen’s Compensation cases like Perry v Wright[77] referred to in section E.1 above, such a pattern of work has never been treated as a bar to a claim.
G.  Conclusion
62.  It follows, in my judgment, that the only reasonable conclusion open to a tribunal properly directed on the facts of the present case is that the appellant was, at the time of the accident, an employee of the respondent for the purposes of the ECO.
63.  I would accordingly order:
(a) that the appeal be allowed;
(b) that the decisions of the Judge and the Court of Appeal be set aside;
(c) that there be judgment for the appellant on his claim against the respondent; and,
(d) that the appellant’s claim be remitted to the District Court for the quantum of compensation to be assessed.
64.  I would also make orders nisi:
(a) that the respondent do pay the appellant his costs here and below; and,
(b) that the appellant’s own costs be taxed in accordance with the Legal Aid Ordinance.
Any submissions regarding costs should be made in writing and filed and served within 14 days after the date of this judgment.

Mr Justice Mortimer NPJ:
65.  I agree with the judgment of Mr Justice Ribeiro PJ.

Lord Scott of Foscote NPJ:
66.  I agree with the judgment of Mr Justice Ribeiro PJ.

Chief Justice Li:
67.  The Court unanimously allows the appeal and makes the orders and the costs orders nisi set out in the last two paragraphs of Mr Justice Ribeiro’s judgment.



(Andrew Li)
Chief Justice    (Patrick Chan)
Permanent Judge    (R A V Ribeiro)
Permanent Judge   



(Barry Mortimer)
Non-Permanent Judge    (Lord Scott of Foscote)
Non-Permanent Judge   

Ms Alice Mok SC and Mr Neal Clough (instructed by the Legal Aid Department) for the appellant
Mr Kam Cheung (instructed by Messrs Chiu, Szeto & Cheng) for the respondent

[1]     ECO s 2(1).
[2]     DCEC 410/2003, 8 February 2005.
[3]     CACV 86/2005, Woo VP, Yeung and Yuen JJA, 4 November 2005.
[4]     [1990] 2 AC 374 at 382.
[5]     As in Ready Mixed Concrete (South East) Ltd v Minister of Pensions & National Insurance [1968] 2 QB 497.
[6]     As in Smith v General Motor Cab Co Ltd [1911] AC 188.
[7]     As in Carmichael v National Power plc [1999] 1 WLR 2042 (HL), subject to what is said below about global or “umbrella” contracts and specific engagements.
[8]     See P S Atiyah, Vicarious Liability in the Law of Torts (Butterworths, 1967), Ch 5.
[9]     (1938) 3 All ER 473 at 481.
[10]    (1946) 62 TLR 427, 429, HL.
[11]    1928 SC 121 at 133.
[12]    As in Pauley v Kenaldo [1953] 1 WLR 187.
[13]    As in Hellyer Brothers Ltd v McLeod [1987] 1 WLR 728.
[14]    As in O’Kelly v Trusthouse Forte plc [1984] QB 90.
[15]    As in Ready Mixed Concrete (South East) Ltd v Minister of Pensions & National Insurance [1968] 2 QB 497.
[16]    As required by Part IV of the ECO.
[17]    Montreal v Montreal Locomotive Works Ltd [1947] 1 DLR 161 at 169 (PC).
[18]    Ready Mixed Concrete (South East) Ltd v Minister of Pensions & National Insurance [1968] 2 QB 497 at 515.
[19]    (1945) 70 CLR 539.  The other was Humberstone v Northern Timber Mills (1949) 79 CLR 389.
[20]    (1945) 70 CLR 539 at 552.
[21]    (1946) 331 US 704.
[22]    [1968] 2 QB 497 at 521.
[23]    [1969] 2 QB 173.
[24]    [1990] 2 AC 374 at 382.
[25]    [1969] 2 QB 173 at 184-185.
[26]    [1992] 1 WLR 939 at 944.
[27]    [1994] 1 WLR 209 at 216 (CA).
[28]    Chitty on Contracts (28th Ed, Vol 2, para 39-009).
[29]    At §15.
[30]    Lee Ting Sang v Chung Chi-Keung [1990] 2 AC 374 at 384.
[31]    Edwards (Inspector of Taxes) v Bairstow [1956] AC 14.
[32]    Court of Appeal Judgment §47.
[33]    Cheng Yuen v The Royal Hong Kong Golf Club [1997] HKLRD 1132; [1997] 2 HKC 426.
[34]    Court of Appeal Judgment §22.
[35]    [1990] 2 AC 374 per Lord Griffiths at 381: “The definition of employee includes casual workers: see section 2(1) proviso (b); and also employees who have entered into concurrent contracts of service with two or more employers: see section 11(7).”
[36]    The further refinement relating to part-time employees working for a club and part-time domestics does not require discussion here.
[37]    Section 13: ‘Workman’ does not include .... a person whose employment is of a casual nature, and who is employed otherwise than for the purpose of the employer’s trade or business .... but save as aforesaid means any person who has entered into or works under a contract of service or apprenticeship with an employer, whether by way of manual labour, clerical work, or otherwise, and whether the contract is expressed or implied, is oral or in writing."
[38]    [1908] 2 KB 802 at 804.
[39]    Section 11(7).
[40]    Schedule 1, s 2 provided: “(2) For the purposes of the provisions of this schedule relating to ‘earnings’ and ‘average weekly earnings’ of a workman, the following rules shall be observed:- (a) average weekly earnings shall be computed in such manner as is best calculated to give the rate per week at which the workman was being remunerated. Provided that where by reason of ... the casual nature of the employment, ... it is impracticable at the date of the accident to compute the rate of remuneration, regard may be had to the average weekly amount which, during the twelve months previous to the accident, was being earned by a person in the same grade employed at the same work by the came employer, or, if there is no person so employed, by a person in the same grade employed in the same class of employment and in the same district ....”
[41]    [1908] 1 KB 441 at 443.
[42]    [1914] 3 KB 892 at 893.
[43]    [1920] AC 781 at 786.
[44]    Court of Appeal Judgment §45.
[45]    [1997] ICR 549 at §10.
[46]    [1987] 1 WLR 728 at 741.
[47]    [1978] IRLR 396.
[48]    [1984] QB 90.
[49]    [1999] 1 WLR 2042 at 2044.
[50]    Ibid at 2051.
[51]    [1998] IRLR 125.
[52]    Ibid at §41.
[53]    Ibid at §45.
[54]    [1997] HKLRD 1132 at 1139.
[55]    [2003] 3 HKLRD 403.
[56]    [1997] HKLRD 1132.
[57]    Court of Appeal Judgment §13.
[58]    Court of Appeal Judgment §22.
[59]    [1997] HKLRD 1132 at 1138.
[60]    Ibid.
[61]    Ibid.
[62]    Ibid at 1139.
[63]    Ibid at 1138.
[64]    [1978] 1 WLR 676 at 679.
[65]    [1976] 1 WLR 1213 at 1222.
[66]    Court of Appeal Judgment §51.
[67]    Ibid.
[68]    This is subject to exceptions that are not presently material.  Such exceptions are in any event ineffective without the Commissioner’s blessing.
[69]    [1978] 1 WLR 676.
[70]    Ferguson v Dawson & Partners (Contractors) Ltd [1976] 1 WLR 1213 at 1223.
[71]    [1980] IRLR 201.
[72]     Ibid at §18.
[73]    Ibid at §23.
[74]    Ibid at §37.
[75]    [1990] 2 HKC 65 at 70.
[76]    ECO s 11(7).
[77]    [1908] 1 KB 441 at 443.