Signed legal documents admitted employment, then the employer blamed rushed paperwork for the error
A Hong Kong court recently dealt with an appeal concerning whether a worker was genuinely employed by a company or merely receiving financial support through a personal relationship.
The case raised questions about what happens when a company formally admits to an employment relationship in its legal documents, then later claims those admissions were mistakes made in haste.
The worker argued that the Labour Tribunal had failed to properly consider her employer's own written defence, which explicitly stated she was employed as an assistant general manager with a monthly salary of HK$38,000.
She also challenged the tribunal's reasoning that her employment ended simply because she moved out of a shared residence, and questioned findings that certain cash deposits to her bank account represented wage payments despite no evidence linking them to her alleged salary.
Worker claimed unpaid wages from company
The worker claimed she was employed as a personal assistant between April 2014 and March 2017, earning a monthly salary of HK$38,000.
She filed a claim seeking arrears totalling HK$418,000, representing unpaid monthly salaries from 1 February 2016 to 31 March 2017.
The employer company was held equally by a male director and the director's wife, who both served as directors.
The worker had been in a relationship with the male director since 1998, during which time he was married to the director's wife.
They had a son together and lived in the same apartment along with the worker's elder son from a previous relationship.
The male director maintained he had provided for the worker financially throughout their relationship, purchasing properties for her to live in.
He claimed that while the worker "had on occasion helped out for some trivial tasks" for the employer company, she "was not obliged to help and there was no fixed job duty or working hours for her."
He arranged for the employer company to pay the worker HK$38,000 monthly from around April 2014, but characterised these as living allowances rather than wages.
The tribunal found the worker's evidence about her job duties unconvincing, concluding that what she described "was more tantamount to taking care of the daily livings of [the male director] than performing the work of a personal assistant to the director of a company."
The tribunal noted that the worker "could not explain clearly matters concerning her salaries, benefits, scope of work and leave arrangements in the alleged employment."
The tribunal accepted the male director's evidence and ruled that no employment relationship existed between the worker and the employer company.
Company's defence admitted employment existed
The director's wife prepared and signed a statement of defence on behalf of the employer company, which bore the company's official chop with a declaration above her signature stating that all information in the statement was true.
This statement of defence explicitly admitted that an employment relationship existed, stating that "in or around April 2014 [the male director] verbally employed the [worker] to work for the [employer company]."
It identified the worker's title as Assistant General Manager with "a monthly salary of HK$38,000 payable by cash" and specified that her duty "was to assist [the male director] on the general affairs of the [employer company], including classification of receipts."
The statement explained that "as [the male director] and the [worker] were living together, there was no designated date of payment of salary and [the male director] could not remember the exact dates of payments."
It stated that "before August 2016, the [employer company] paid all outstanding wages to the [worker] in cash" and that the worker "left the employment in July 2016 without submitting her resignation."
The statement further explained that "as the [worker] did not perform her duties and did not receive her wages for a period of time, the [employer company] considered that the [worker] would not resume duty and therefore employed another person to replace the [worker] as Assistant General Manager."
Despite these detailed admissions in the formal statement of defence, the tribunal dismissed the worker's claim entirely and ruled that no employment relationship existed.
At a review hearing on 25 November 2022, when the worker drew attention to the statement of defence, the tribunal dismissed the review application as well.
Tribunal accepted hasty explanation for admissions
When confronted with the statement of defence at the review hearing, the director's wife claimed she had prepared it "under a constraint of time," explaining that "at that time she has to submit documents within a very short time and so she only asked [the male director] briefly about the matter."
The male director addressed the statement only briefly in his witness statement, saying: "Maybe it was because I explained the matters to [the director's wife] hastily that led [her] to misunderstand that what I asked the [worker] to assist was actually on work and as a result, [she] stated in the Statement that the [worker] was employed to work."
The tribunal accepted these explanations and dismissed the review application. In her decision, the tribunal member stated she accepted that the male director "might have explained the matters to [the director's wife] hastily as [the male director] was talking about his affairs with the mistress to his wife."
The tribunal did not ask the male director any questions about the statement of defence when he gave evidence at trial.
The Court of First Instance noted that the director's wife "was not giving her answer under oath and her account had not been tested in cross-examination."
Similarly, the male director's explanation "did not go much into details" and "he was not questioned at all on this aspect in his evidence."
Court found tribunal failed investigating admissions
The Court of First Instance found that the tribunal "had not applied her mind sufficiently or at all to the admissions in the Statement in arriving at her conclusion that there had not been an employment relationship."
The judge noted that when the male director gave evidence at trial, the tribunal "did not ask him anything about the Statement" and "the Statement was not mentioned at all in her Reasons for Decision" following the original hearing.
The court noted that "the defence originally put forward by the [employer company] was not denial of employment."
The court found that as the director's wife was "a director and representative authorised by the [employer company] to have conduct of the proceedings before the Tribunal, the admissions in the Statement are binding on the [employer company]."
The judge explained that "the admissions constituted statements and evidence against self-interest" and there "could be no better evidence than such express declaration against the [employer company's] own interest, which is highly relevant for consideration of the issue as to whether an employment exists."
The court found that "the inadequacy on the part of the Presiding Officer in dealing with and considering the admissions of the [employer company] in the Statement gives rise to injustice to the [worker] and the Presiding Officer has committed an error of law."
The court also found the tribunal had failed to discharge its statutory duty to investigate under section 20 of the Labour Tribunal Ordinance, noting that the tribunal "should have put to [the male director] and [the director's wife] the admissions of the [employer company] and assess how the admissions might affect the evidence as a whole and the credibility of the relevant witnesses."
Moving out did not end employment
The tribunal had found that even if an employment relationship existed, it ended when the worker moved out of the shared property in July 2016, based primarily on testimony from the worker's younger son, who said the worker left the property voluntarily in July 2016.
The Court of First Instance found the tribunal had confused two separate issues—the end of the domestic relationship and the termination of the employment relationship.
The judge observed that the tribunal "did not explain why leaving the Property equates to termination of employment. In fact, she did not expressly make such a finding."
The court concluded that the tribunal "has failed to make any or any proper investigation and finding as to how and when the employment relationship has ended."
This was particularly significant because the employer company's own statement of defence suggested it was not until the beginning of 2018 that the employer company viewed the worker as having permanently left her employment, contradicting the July 2016 date the tribunal had adopted.
Cash deposits lacked evidence as wages
The tribunal had identified three cash deposits to the worker's bank account—HK$38,500 on 21 July 2016, HK$100,000 on 31 August 2016, and HK$26,000 on 31 August 2016—and found these represented wage payments, concluding that if employment existed, all outstanding wages had been satisfied by these cash payments.
The Court of First Instance found this conclusion had no evidential basis.
The judge noted that while the male director claimed he paid some living allowances by cash, "he did not give any particulars as to the amounts of the alleged cash payments and the time when such payments were made."
Critically, the male director "had never stated in his evidence that the 3 deposits identified by the Presiding Officer has anything to do with the alleged cash payments to the [worker]."
When asked about the deposits at trial, the worker had explained "that she had a part-time job of selling cosmetic products" as their source.
The court stated: "In my judgment, there is simply no evidential basis to suggest that the 3 cash deposits represented the cash payments allegedly paid by [the male director] to the [worker]. The finding of the Presiding Officer as such is perverse."
Appeal allowed on all grounds
The Court of First Instance explained that while factual findings are generally protected from appeal, this protection does not apply where findings are "perverse or irrational, or where there is no evidence to support the decision or where the decision was made by reference to irrelevant factors or without regard to relevant factors." The court found all these requirements were met in this case.
The judge stated: "The [worker's] appeal is allowed on all grounds."
The court ordered that "this matter be remitted back to the Tribunal for determination before another presiding officer," meaning the worker would have her case reheard from the beginning by a different tribunal member.
