Contract Law in Hk

Employment Contract (I)

1. The legal framework of employment law

1.1 Employment law is basically divided into two main branches:

a) labour law, which governs the rights and duties of employers and employees

b) social security law, which deals with the social security network of welfare assistance, insurance schemes and benefits for employees

1.2. Local employment law derives from:

a) common law

b) legislation, especially the Employment Ordinance (Cap 57), which gives an employee statutory protection which an employer can neither contract out of his duty nor exclude it

2. Distinction between an employee and an independent contractor

2.1 A contract of employment establishes the relationship of employer and employee. A contract of employment, also described as a contract of service, can be made orally or in writing. It is governed by both express terms written in the employment contract with terms implied into the contract by the Employment Ordinance.

2.2 A contract for services is contract between a client and an independent contractor where their duties and rights are only contractual.

2.3 Since only employers and employees under a continuous contract (see below) are under certain legal protection, a contract of service must be distinguished from a contract for services.

2.4 Different ‘tests' which help distinguish whether employment relationship exists:

(a) The control test

The word "control" was being defined to include "the power of deciding the thing to be done, the way in which it shall be done, the means to be employed in doing it, the time when and the place where it shall be done".

The degree of control exerted by the person paying the service over the person performing it should be assessed. The greater the degree of control there is, the more likely there was an employer-employee relationship in existence.

However, in many circumstances, an employer does not have the expertise that his employees have. So nowadays, other tests must be applied to determine whether there is an employer/employee relationship.

(b) The integration test

The test was concerned with the extent to which a person was "part and parcel" of the organization. In Stevenson, Jordan and Harrison Ltd v Macdonald and Evans (1952) I TLR 101, it was held that under a contract of service, a man is employed as part of the business and his work is done as an integral part of the business. However, if a contract for services exists, his work is not