He had a fixed monthly salary and a company truck, but was there really an employment relationship?
A Hong Kong court recently dealt with a compensation claim brought by a delivery driver who said he was injured in a traffic accident while delivering goods for a food company in 2021.
The dispute centred on a fundamental question: was he an employee entitled to compensation, or a subcontractor as the employer claimed?
The worker had been receiving a fixed monthly salary of HK$25,000 to drive a truck and deliver goods when he crashed the vehicle in February 2021, fracturing his right femur.
The employer denied that any employment relationship existed and refused to admit that the accident had happened or that the worker sustained injuries. The employer claimed it had engaged the worker as a subcontractor but could not produce any written agreement to support this assertion.
The District Court had to examine WhatsApp records, expense receipts, and the terms of the oral agreement between the parties to determine the true nature of their relationship.
The case tested how courts assess employment status when there are competing narratives about whether someone is genuinely employed or working as an independent contractor.
Worker claimed injury during delivery work
The worker gave evidence that he inquired about a post on Facebook recruiting a driver for delivery services on January 3, 2021. On 5 January 2021, he started following another driver around in a two-day trial period.
On 7 January 2021, under an oral agreement, the employer formally employed him as its driver for delivery services.
According to the oral agreement, the worker's salary was HK$25,000 per month as a fixed salary with no commission or bonus. He would not have any managerial responsibility or responsibility to arrange for a substitute driver.
His working hours would be from 8 am to 6 pm, or until he finished delivering all the goods for the day. The employer would assign delivery tasks to him daily and provide all necessary equipment, including a vehicle.
On 12 February 2021, while the worker was driving a truck, he lost control of the vehicle at Mei Ching Road Interchange, Tsing Yi, and the vehicle crashed into the curb.
The worker sustained injuries as a result. He was sent to Princess Margaret Hospital after the accident and suffered a midshaft fracture of his right femur. He had an operation on 16 February 2021, was transferred to Yan Chai Hospital for rehabilitation on 22 February 2021, and was discharged on 1 March 2021.
Employer claimed worker was a subcontractor
The employer denied that the worker was its employee and alleged it had engaged him on 7 January 2021 as a subcontractor to provide delivery services. The employer also did not admit the accident or the injuries sustained by the worker.
The sole shareholder and director of the employer had filed a witness statement but did not attend the trial, so the court did not take his witness statement into account.
The employer relied on a document titled "承包運輸合約提前解約協議書" dated 24 February 2021, described as a discharge agreement, to allege the worker was a subcontractor.
This discharge agreement provided that the worker was unable to continue to perform his services under an alleged one-year contract. The employer agreed to waive payment in lieu of notice and pay the remaining contract sum of HK$11,607 to the worker.
The court noted that "the Respondent never produced the alleged written sub-contractor agreement in these proceedings."
The court found it was "the Applicant's unchallenged evidence that in his application to set aside the default judgment in DCCJ 4781/2021, the Respondent's counsel informed the Court that the Respondent was unable to provide the alleged written sub-contractor agreement to the Court."
Court examined all features of the relationship
The court explained the modern approach to determining employment status, stating: "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."
The court emphasised this "involves a nuanced and not a mechanical approach" requiring an "informed, considered, qualitative appreciation of the whole."
The court accepted the worker's unchallenged evidence that he was employed under the oral agreement. The worker "received a fixed monthly salary and was not entitled to any commission or sharing of profit or loss of the Respondent's business.
He therefore did not assume any financial risks in respect of the Respondent's business." There was also no suggestion that he had to make any capital contribution.
The court found the worker "had no managerial responsibility or responsibility to find a substitute driver in place of him."
The court accepted the worker's evidence that "he only helped the Respondent to ask whether his friend was available to take up his role whilst he was hospitalised out of goodwill."
WhatsApp records showed employer's control
The court examined WhatsApp records between the worker and the employer's director, which showed "the Applicant had to report to the Respondent constantly in respect of his whereabouts, his meal breaks, when he picked up the Vehicle and when he returned the Vehicle after work."
The employer also gave all instructions about the worker's daily delivery tasks. The court found "the Respondent was therefore in control of the Applicant's work arrangements."
The court noted the equipment used by the worker was provided by the employer. There was no dispute that the vehicle was provided by the employer to the worker.
In fact, "the Respondent has commenced proceedings in DCCJ 4781/2021 to claim against the Applicant for inter alia damage caused to the Vehicle." The court accepted the worker's evidence that "the baskets he used for picking up the Respondent's goods were also provided by the Respondent."
The WhatsApp records between the worker and the employer's accounting staff supported the worker's case that "he had to submit receipts of his expenses to the Respondent, who was responsible for all of the expenses."
Such expenses included tunnel tolls, parking fees and petrol fees. The records showed the accounting staff "carefully matched the Applicant's expenses with the information and receipts submitted by the Applicant and made detailed enquiries with the Applicant before she paid him any petty cash."
Discharge agreement did not affect employment status
The court rejected the employer's reliance on the discharge agreement to allege the worker was a subcontractor. The court found "the Discharge Agreement simply does not support such an allegation.
The Discharge Agreement merely provided that the Applicant was unable to continue to perform his services in an alleged one-year contract to the Respondent." The employer agreed to waive payment in lieu of notice and pay the remaining contract sum of HK$11,607.
The court noted there was "no evidence in these proceedings that the terms referred to in the Discharge Agreement were the terms of the alleged written sub-contractor agreement between the parties."
The court explained that "the title of the Discharge Agreement is merely a label which does not affect the substance of the same." Critically, "the parties only entered into the Discharge Agreement on 24 February 2021. The Discharge Agreement could not affect the parties' relationship prior to 24 February 2021, in particular at the time of the Accident."
The court stated: "I therefore do not accept the Respondent's case that the Applicant was its sub-contractor at the time of the Accident." The court concluded: "For the reasons above, as a matter of overall impression, I find that the relationship between the parties was one of employment."
Medical evidence confirmed accident-related injuries
The parties appointed a single joint medical expert who examined the worker on 10 January 2024 and prepared a medical report.
The expert opined that "the diagnosis of midshaft fracture of right femur was compatible and consistent with how the Applicant was injured in the Accident." He also opined that "the right femur fracture was solely contributed by the Accident and not contributed by any pre-existing condition."
The worker complained of right greater trochanter pain and reduced agility of the hip and right lower limb. Based on the expert's examination, the worker "had symptoms of residual pain, stiffness and weakness, which were compatible with his post-fracture status."
The expert detected mild stiffness over the internal and external rotation of the worker's right hip and mild weakness of the worker's right hip in all directions. The worker's right thigh girth was 1.5 cm thinner than that of his left.
The expert opined that "the Applicant should be able to resume his pre-injury job as a truck driver and delivery worker with reduced capacity and efficiency." With residual right hip pain, weakness and stiffness, the expert expected the worker "to have reduced work capacity in lifting and carrying heavy items, prolonged walking or standing for over 1 to 1.5 hours."
The worker would also experience inconvenience from frequent climbing up and down a truck. Based on the expert's assessment, the worker sustained 1.5% whole body permanent impairment and loss of earning capacity.
Court awarded compensation under three sections
The court accepted the expert's assessment of a permanent loss of earning capacity of 1.5%. The worker was 26 years old at the time of the accident. According to section 7(1)(c) of the Employees' Compensation Ordinance, the amount of compensation should be assessed with reference to 96 months' earnings. The court calculated compensation under section 9 as: "HK$25,000/month x 96 x 1.5% = HK$36,000."
The worker was granted sick leave from 12 February 2021 to 29 March 2022 and 4 April 2022 to 19 January 2023, totalling 700 days as certified by the Employees' Compensation (Ordinary Assessment) Board.
The court calculated compensation under section 10 as: "HK$25,000/month x 700/30 months x 4/5 = HK$466,667."
The worker claimed HK$5,000 as medical expenses under section 10A. The worker provided documentary evidence for HK$1,790.
The court found his evidence "that he has spent roughly a remaining sum of HK$3,210 on his hospitalization in Yan Chai Hospital for seven nights, around eight follow-up medical visits and multiple wound cleaning sessions reasonable." The court allowed the sum of HK$5,000 in full.
Employment relationship existed
The court stated: "By reason of the above, the amount of compensation under sections 9, 10 and 10A of ECO are:- Section 9 HK$36,000, Section 10 HK$466,667, Section 10A HK$5,000, TOTAL: HK$507,667."
The worker was entitled to interest at half judgment rate from the date of the accident to the date of judgment, and after that at judgment rate until payment in full.
The court made a costs order that the employer pay the costs of the worker, including all costs reserved, with a certificate for counsel, to be taxed if not agreed. The worker's own costs were to be taxed in accordance with the Legal Aid Regulations.
The court found the worker was a credible witness and accepted his evidence generally on matters such as his relationship with the employer, how the accident happened, and the injuries he sustained.
The court's determination rested on examining all features of the relationship, including the fixed salary structure, absence of financial risk, employer's control over work arrangements, provision of equipment, and responsibility for expenses.
