a. New or Expected Developments
The recent case of Wong Kin v Him Kee Food Distribution Co Ltd29 reaffirms the idea that the Court would look at all the relevant factors overall in determining the relationship between contracting parties and Independent Contractors.
In the said Judgement, the Court reaffirms that there is no single test that can conclusively point to the distinction between an employee and an independent contractor. The approach taken by the Court is to examine all features of the parties’ relationship against the background, and the Court will then decide, as a matter of overall impression, whether the relationship is one of employment.
b. Recent Amendments to the Law
The Contracts (Rights of Third Parties) Ordinance (Cap. 623) (“CRTPO”) came into force on January 1, 2016. Before the enactment of the CRTPO, only parties to a contract (such as a company and its customer in a sale of goods contract) should have the rights to enforce the contract terms. Even if a contract confers certain rights and benefits on a third party, the contract cannot be enforced either by or against such third party. With CRTPO coming into force, subject to certain requirements below, independent contractors may be able to enforce their rights as third parties in a range of business-related contracts.
CRTPO does not apply to all types of contracts. It only applies to contracts entered into on or after the commencement of CRTPO. Existing contracts will not be affected. The following types of contract are explicitly excluded from the operation of CRTPO30:
• bills of exchange;
• promissory notes;
• negotiable instruments;
• deeds of mutual covenant;
• any covenant in relation to land;
• contracts of carriage;
• leners of credit;
• a company’s articles of association; and
• a term of contract of employment against an employee.
Under the CRTPO, third party rights will only be conferred if the contract expressly provides that the third party may enforce a term of contract, or if the contract contains a term that purports to confer a benefit on the third party. In addition, the third party must be expressly identified in the contract by name, as a member of a class or by as answering a particular description31. If these conditions are satisfied, the third party would be entitled to any remedy that would have been available to him in an action for breach of contract if he had been a party to the contract32.
For example, if there is a contract between a company and the company’s customer and the contract anticipates the engaging of an independent contractor to perform work for the company, where the independent contractor is expressly identified, CRTPO would allow the independent contractor, although being a third party to the contract, to claim his rights against the customer. Section 4 of CRTPO also provides an option, wherebycontracting parties do not wish to enable third party enforcement, to make a clear express provision to that effect in the contract. In that case, the third party or independent contractor in our example above will no longer be able to rely on CRTPO to claim his rights under the contract (if he was not made a contracting party).