Employment Law Alert - October 2009 - Reed Smith

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Practical implications Whilst this case involved the deliberate and consistent failure to pay an employee her proper wages, it does serve as a timely reminder that the failure to pay an employee properly and on time can lead to some very serious implications indeed. It should be noted that whilst this case involved the employment of a domestic helper, the stated provisions apply equally to employees in general. This case further demonstrates an increased willingness of the Courts to impose harsher penalties in circumstances where past decisions are now considered inadequate. Employers should ensure that they pay all entitlements and wages on time and more so, that such wages and entitlements are calculated correctly to ensure that the employee is properly remunerated. These entitlements also do of course include termination payments which may or may not include a calculation of an employee’s commission (as it may fall within the definition of wages under the EO due to recent legislative amendments). We suggest that employers, human resource manages and pay roll managers develop a comprehensive understanding of staff remuneration and calculation of entitlements under contracts of employment and the EO (which can override employment contracts to the extent that the employment contract attempts to override the EO). As a practical consideration, it is quite possible that the Labour Department and the Courts will take a stricter approach with a medium‐sized or large employer which they may assume has the resources to ensure compliance. Lastly, employers should be wary of discussions that they have with employees, particularly over disputed remuneration as they may find themselves being recorded, especially seeing as Courts will accept such recordings into evidence. In this regard, we suggest that any discussions with employees over such matters be done face to face and involve witnesses. Accurate written records of any such discussions should also be kept. Wong Yu Tui DCEC No. 886 of 2008 Whether an employee was an independent contractor for the purposes of the Employees’ Compensation Ordinance and insurance coverage Determining whether an individual is an employee or an independent contractor can raise critical questions in terms of a party’s liability – such as in relation to
Employees’ Compensation, compliance with safety legislation and of course the EO, as well as possible mandatory pension benefits. This case once again demonstrates some of the factors Courts consider in determining this important question and the need, practically speaking, to set out such arrangements clearly and concisely in independent contractor / labour hire agreements. In this way, a company and / or individual can reduce liability and shift risk. The Facts The Applicant was a construction worker specialising in demolition. The Applicant argued that he was an employee within the common law meaning of the phrase and therefore entitled to Employees’ Compensation under the Employees’ Compensation Ordinance (Cap. 282) (“ECO”) for injuries he had sustained whilst working for the two Respondents. The 1 st Respondent failed to appear. The 2 nd Respondent argued that the Applicant was not an employee of his, but rather an independent contractor engaged to perform demolition work on this basis. The issue for the Court to consider was whether the ‘person providing the services can be said to be conducting business on his own account, or merely working for the pay’. The Applicant was engaged by the 2 nd Respondent to perform demolition work on a house. The 2 nd Respondent was in turn engaged by the principle contractor (named as the 1 st Respondent) to perform the same job. The Applicant claimed he was employed by the Respondents. The 2 nd Respondent and the Applicant met on 16 <strong>October</strong> <strong>2009</strong> and travelled to the house where the work was to be performed and the Applicant represented that he would bring 2 additional workers with him to complete the demolition job. All parties agreed upon the terms of payment the following day. However, on the second day of work the Applicant was injured at work. The 2 nd Respondent informed the Applicant however that he did not have employees’ compensation insurance and denied that that the Applicant was employed by him. It should be noted that the 2 workers brought in by the Applicant filed a separate claim with the Labour Department against the 1 st Respondent for wages in arrears and that their claim were settled by the 2 nd Respondent after mediation.
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Employment Law Alert - October 2009 - Reed Smith

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