When a job title doesn't match workplace reality, who gets the final say?
Hong Kong's Court of First Instance (High Court) recently dealt with an appeal concerning an employment relationship dispute. A former chief executive officer (CEO) had been awarded HK$39.8 million by the Labour Tribunal after arguing that despite signing an "Independent Contractor Agreement," he was effectively an employee who had been constructively dismissed.
The worker had started legal proceedings after his employer allegedly changed his role from CEO to co-CEO, failed to pay his promised sign-on bonus, and declared intentions to reduce his monthly payments by half. These actions, he argued, violated his employment rights.
The case tested how courts evaluate employment status when contract labels conflict with workplace realities, particularly when modern compensation methods like cryptocurrency are involved.
In March 2022, both parties signed what was titled an "Independent Contractor Agreement." The agreement included a sign-on bonus, monthly "recurring fees," and participation in a Long-Term Incentive Plan (LTIP) involving cryptocurrency tokens called "$CHICKS."
A key provision stated that if the company terminated without reasonable cause within twelve months, unvested tokens would be available "up to a maximum value of USD 5 million set at a price of $0.13 per token."
The worker commenced proceedings at the Labour Tribunal in January 2024, providing evidence of his employee status. The court records show: "[The worker] gave a detailed explanation as to why he was an employee... that [the employer] had total control over [the worker's] tasks and duties."
At the initial tribunal hearing on 2 February 2024, the company failed to appear. The tribunal, satisfied that proper notice had been given, proceeded with the hearing where the worker testified under oath.
The resulting award ordered payment of approximately HK$39.8 million, comprising wages in lieu of notice (HK$730,324.05), a sign-on bonus (HK$17,258.29), and cryptocurrency tokens (HK$39,099,000.00).
The company later applied to set aside this award, explaining they had ended their Hong Kong operations and hadn't received notifications. However, their own defence documents referred to the arrangement as "employment" and described making "salary payments."
When seeking to set aside the award, the company received an opportunity to challenge it, conditional upon making a security payment by 5 July 2024. The decision notes: "The Tribunal recognised that the quantum of damages in relation to the sign-on bonus and the LTIP value depended a lot on the value of the $CHICKS tokens which might be volatile."
The company failed to make the required payment by the deadline. When they later secured funds in September 2024, the tribunal confirmed it could no longer deal with the matter as the original award now stood.
In reviewing the employment relationship, the court emphasised: "[The employer] itself described the relationship as one of employment, and [the worker's] remuneration as 'salary'... these were to oppose [the worker's] claim, which had expressly stated that [the worker] was an employee and not an independent contractor."
The Court of First Instance ultimately dismissed the company's appeal. The decision stated: "The labels in the Agreement might shed light on the nature of the relationship but were not decisive."
The court also noted the company's procedural failures: "The Tribunal had expressly noted that [the employer] might have an argument in relation to quantum for the sign-on bonus and the unvested tokens under the LTIP... but [the employer] did not comply with the terms."
The judgment concluded that even if an appeal were the correct procedure, which the court found it wasn't, no good cause had been shown for extending the time to appeal. As stated in the decision: "As the Presiding Officer observed in the Reasons, [the employer] is the author of its own misfortune."