Lam Por and Others v. Hien Lee Engineering Co Ltd and Others

HCLA 27/2025

[2026] HKCFI 5468

IN THE HIGH COURT OF THE

HONG KONG SPECIAL ADMINISTRATIVE REGION

COURT OF FIRST INSTANCE

LABOUR TRIBUNAL APPEAL NO 27 OF 2025

(ON APPEAL FROM LABOUR TRIBUNAL CLAIM NO 453 OF 2025)

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BETWEEN

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JUDGMENT

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A. Introduction

1.On 29 January 2026, I granted leave for the 1^st Defendant to appeal against the order dated 9 September 2025 made by a deputy adjudicator (the “Deputy Adjudicator”) of the Labour Tribunal.

2.As will be elaborated below, the crux of the parties’ dispute is whether the 1^st to 5^th Claimants (collectively the “Claimants”) were the 2^nd Defendant’s employees (as held by the Deputy Adjudicator), as opposed to independent contractors (as contended by the 1^st Defendant).

B. Material Background

3.The 1^st Defendant was the main contractor of the construction project at Hill Road (the “Project”).

4.The 2^nd Defendant was the 1^st Defendant’s sub-contractor.

5.During the period from August to October 2024, the Claimants and the 3^rd Defendants were involved in the Project as workers.

6.The Project consisted of construction of successive layers (ie standard layers and the base layers).

7.Before June 2024, an employee of the 2^nd Defendant, namely張義發 (“Mr. YF Cheung”), was asked to locate a team of 5 to 6 workers. Mr. YF Cheung then introduced the 3^rd Defendant, who, in turn, referred the Claimants to the 2^nd Defendant.

8.It is not in dispute that before September 2024, the Claimants were the 2^nd Defendants’ employees. The parties executed employment contracts, pursuant to which each of the Claimants was entitled to a daily salary of HK$2,150.

9.However, according to the 1^st Defendant, from September 2024 onwards, the Claimants and the 3^rd Defendants were no longer the 2^nd Defendant’s employees. Instead, they had become independent contractors.

10.What happened was that on 4 September 2024, the Claimants commenced formwork erection works. It was agreed that the 2^nd Defendant should pay the Claimants HK$135,000 per standard layer and HK$165,000 per base layer. Nevertheless, the Claimants would first be paid daily salary of HK$2,150, and these payments would be deducted from the value of formation erection works that were actually carried out (the “Remuneration Arrangement”).

11.In their submissions, Mr Brain Chok and Mr Steven Lam (for the 1^st Defendant) emphasized that it is the 1^st Defendant’s case that the Remuneration was based on the actual measurement of the dimension of the formwork erection works being done ( “實量實度” ).

12.When the Claimants stopped working on the Project on 26 October 2024 (ie the day when the 3^rd Defendant resigned), 6 layers (ie 2 base layers and 4 standard layers) had been completed.

13.In these premises, the Claimants sued for sums based on the rates under the Remuneration Arrangement (ie the value of the erection works that were actually completed less the amount of daily salary that they had already received).

14.According to the Claimants, they were, at all material times (ie both before and after September 2024), the 2^nd Defendant’s employees. As such, the sums that they sued for represented their outstanding salaries. Since the 2^nd Defendant had failed to pay the same, they were entitled to seek payments from the 1^st Defendant, who was the principal contractor of the Project.

15.On the other hand, whilst the 1^st Defendant accepted that the Claimants were the 2^nd Defendant’s employees prior to September 2024, the 1^st Defendant contended that upon adopting the Remuneration Arrangement, from September 2024 onwards, the Claimants had become the 2^nd Defendant’s independent contractors. Thus, it was not liable to the Claimants at all.

C. The Deputy Adjudicator’s Findings

16.The Deputy Adjudicator found that after September 2024, the Claimants were still the 2^nd Defendant’s employees.

17.The material reasoning of the Deputy Adjudicator can be found at paragraphs 8 to 9 of her reasons for decision (the “Reasons for Decision”). The Deputy Adjudicator stated:-

“8. D2與C1至C5簽署了書面僱傭合約，D2按書面合約向他們各自支付在2024/9月前的工資，亦負責他們的強積金供款。雖然D2的公司代表兼董事張傑鴻先生力言，由D2與C1至C5和D3議定以「實量實度」或完成每層釘板工作計算工資開始，C1至C5和D3的身分已轉為D2的分判商。但D2另一證人，負責招聘工人的董事張沛華先生在庭上供稱，炒家即判工，判工和工人的分別是工人是出底薪，判工的工資則是以每米釘板工作或一層計算。張沛華又說，判工也是工人，D2會和他們簽署僱傭合約，也會替他們供強積金，只是工資不以日薪計算而已。

9. 根據D2的兩位證人、D3和各申索人的證供，D2仍然保留釘板工作的控制權：包括控制施工進度、標準、提供大型工具、安排開工人數、保存工人開工紀錄等。不論雙方對「實量實度」計薪的C1至C5冠以「炒家」或「判工」的名稱，不改變五位申索人是D2僱員的事實。”

18.Based on her Reasons for Decision, it appears that the Deputy Adjudicator’s conclusion that the Claimants were still the 2^nd Defendant’s employees after September 2024 are based on the following major findings:-

(1) The Claimants and the 2^nd Defendant entered into employment contracts. All along, the 2^nd Defendant paid salaries to the Claimants in accordance with the terms of the employment contracts at the daily rate of HK$2,150. The 2^nd Defendant was also responsible for their MPF contributions.

(2) The 2^nd Defendant retained control over the formwork erection works under the Project.

D. Legal Principles

19.In Mak Wai Man v Richfield Realty Ltd (HCLA 28/2015, 30 October 2015) at para 16, B Chu J stated:-

“(1) Under s 32 of the Labour Tribunal Ordinance, a party may only apply for leave to appeal on the ground that the award of the Tribunal is erroneous on point of law or outside its jurisdiction;

(2) The threshold onus of an application for leave is to show that the intended appeal has arguable grounds;

(3) Apart from errors of law, leave will also be granted if the Tribunal’s determination (a) was made without regard to relevant factors, (b) was made without evidence, or (c) there was failure to discharge the statutory duty to investigate and such failure has given rise to injustice, in that a fair and proper determination of the claim cannot be attained.” (emphasis added)

20.In Chan Chi Ling Elwin v Richfield Realty Ltd [2014] 1 HKLRD 70 at para 10, DHCJ Marlene Ng (as she then was) also held that although findings of facts of the Labour Tribunal are generally immune from challenge, the Court of First Instance may intervene if the finding in question is perverse or irrational, or if there is no evidence to support the finding or the decision was made by reference to irrelevant factors or without regard to relevant factors.

21.Under section 20(3) of the Labour Tribunal Ordinance (Cap. 25), a presiding officer shall investigate any matter which he or she may consider relevant to the claim, whether or not it has been raised by a party.

22.It is trite that the proceedings in the Labour Tribunal are inquisitorial in nature. Thus, a presiding officer would err in law if he or she fails to discharge the duty to investigate properly. It is open to the Court of First Instance to consider if the presiding officer had discharged such duty by investigating the relevant matters which ought to have been investigated: see Chan Suk Bing Angie v Harbour Phoenix Ltd [1992] 2 HKC 459, at pp 462B-C and 462F-G (per DHCJ Jerome Chan (as he then was)); and Poon Shing Hin v Li Wai Chun Transportation Co Ltd [2024] HKCFI 2564 at para 26 (per Wilson Chan J).

23.The Labour Tribunal shall give adequate reasons for its decision to address the substantive issues and explain why it has come to its decision. What is adequate is a fact-sensitive issue: see Vermeerbergen Peter Alfred v Swisstribe Ltd (HCLA 36/2015, 9 March 2016) at paras 16 to 17 (per DHCJ Marlene Ng, as she then was).

E. Deliberation

24.Having examined the Deputy Adjudicator’s Reasons for Decision, the evidence available to the Labour Tribunal, and counsel’s submissions, I have come to the views that:-

(1) the Deputy Adjudicator had failed to discharge her duties to investigate properly;

(2) the reasons provided by the Deputy Adjudicator are incapable of justifying her conclusion, and it cannot be seen that the same is rational; and

(3) the Deputy Adjudicator had failed to give adequate reasons.

25.I take these views for the following reasons.

E1 Fixed Daily Payments and Lump Sum Payments under the Remuneration Arrangement

26.As evidenced by paragraph 8 of the Deputy Adjudicator’s Reasons for Decision, the starting point of her analysis was that the 2^nd Defendant and the Claimants had entered into written employment contracts and that the Claimants had been paid salaries pursuant thereto. In this connection, it is not in dispute that under the Remuneration Arrangement, the Claimants had received payments of HK$2,150 per day.

27.However, as Mr Brian Chok (for the 1^st Defendant) pointed out, it can be argued that the fixed daily payments received by the Claimants were, in commercial reality, buffer monies that induced them to accept the contractual engagement on a continuous basis.

28.Bearing in mind that the fixed daily payments would eventually be deducted from the lump sum payment in respect of the actual formwork erection works being carried out, I do see where Mr Chok came from, and his submission made commercial sense to me.

29.It is important to emphasize that an important aspect of the mechanism under the Remuneration Arrangement was that the Claimants’ contractual entitlement was dependent upon the actual amount of formwork erection works that had been completed.

30.In other words, instead of merely receiving fixed sums of money based on their work days, under the Remuneration Arrangement, the Claimants would receive money in one lump sum, depending on the tasks that they actually completed.

31.As submitted by Mr Chok, it would be rare to regard parties who receive remunerations on a “by task” basis as employees, as opposed to the independent contractors. Arguably, the Remuneration Arrangement points towards the direction that the Claimants were independent contractors, as opposed to employees: see Bloch & Brearley: Employment Covenants and Confidential Information (4^th Ed) at para 2.41.

32.Regrettably, in her Reasons for Decision, the Deputy Adjudicator had completely failed to engage in any analysis as to the implications of the arrangement that the Claimants would receive money in one lump sum, depending on the tasks that were completed. She did not explain why the parties’ legal relationship had remained the same, despite the change in the payment arrangement. She did not explore the commercial rationale behind the Remuneration Arrangement and the parties’ understanding in respect thereof.

33.Likewise, in her Reasons for Decision, the Deputy Adjudicator did not engage in any discussion as to whether the fixed daily payments received by the Claimants were, in commercial reality, buffer monies offered to induce them to accept the contractual engagement. There is a strong impression that the Deputy Adjudicator simply took the view that as the Claimants received some fixed payments, they must be employees. With no disrespect, this view is far too simplistic.

34.As pointed out, an important component of the mechanism under the Remuneration Arrangement was that the Claimants would eventually receive money in one lump sum based on the tasks that they actually completed. Furthermore, the fixed payments would eventually be deducted from the lump sum to be awarded based on the tasks that were actually completed. Without engaging in any analysis as to the interaction between the two components, I am not of the view that the Deputy Adjudicator’s conclusion is rational, sound, and safe. In my view, the Deputy Adjudicator should have holistically analysed the mechanism under the Remuneration Arrangement in detail. This exercise would be important for ascertaining the legal relationship between the Claimants and the 2^nd Defendant after September 2024. Unfortunately, this was not done.

35.I am of the view that:-

(1) the Deputy Adjudicator had failed to properly discharge her duties to investigate important matters that have direct bearing on the outcome of the present dispute;

(2) the Deputy Adjudicator had failed to give adequate reasons that justify her conclusion; and

(3) without giving to give adequate reasons that justify her conclusion, it is not seen that the Deputy Adjudicator’s conclusion is rational.

E2 Control Exercised by the 2^nd Defendant

36.Relying also on the fact that the 2^nd Defendant had some control over various aspects of the works in question, the Deputy Adjudicator arrived at the conclusion that the Claimants were the 2^nd Defendant’s employees. In this connection, in paragraph 9 of her Reasons for Decision, the Deputy Adjudicator found that the 2^nd Defendant retained control over the progress of the works, the standard of the works, and the number of workers and that the 2^nd Defendant provided large equipment.

37.I accept that it can be argued that prima facie the aforesaid findings point towards the direction that the Claimants were employees. However, they are not conclusive.

38.In Supreme China Securities Ltd v Ng Wing Yip & Ors [2024] HKCFI 1196 at paras 44 to 47, DHCJ Winnie Tsui (as Winnie Tsui J then was) stated:-

“44. As regards the indicium of control, it must now be recognised that the existence of control in itself does not equate employment because one party’s reservation of a right to control the manner of working could be overridden by economic or commercial realities which point to the other party being engaged as an independent contractor: see Poon Chau Nam at para 16; cited and applied in 李偉基at para 25.

45. The case of 李偉基 is itself a good illustration of this point. The claimant there was engaged by the defendant company as an education consultant. The defendant company was in the business of selling English education materials licensed by Disney. The claimant’s job was to promote the sale of these materials: see para 4.

46. The Labour Tribunal found as a fact that the defendant company exercised control over various aspects of the claimant’s work. For instance, he had to observe internal directions and guidelines when promoting the materials and he had to buy all name cards and uniforms from the defendant company. The presiding officer held, however, that such control was imposed for good commercial reasons, eg, to maintain the image of the defendant company and its brand and that such control was not necessarily control exercised by an employer over an employee. In the end, it was held that the claimant was not an employee. Lok J affirmed the decision and the reasoning on the issue of control: see paras 23 and 24.

47. The takeaway here is that in the modern commercial context, a worker would often be subject to some form of control when carrying out his work. It should be appreciated that in some of these cases, such control is imposed because it is necessary to give effect to the commercial arrangement between the parties. It is not imposed because the parties are in an employer-employee relationship. Where that is the case, the existence of control should not be readily taken as a manifestation of an employment relationship.” (emphasis added)

39.I respectfully agree with the observations made by DHCJ Winnie Tsui (as she then was).

40.As a sub-contractor who could be liable to the 1^st Defendant, the 2^nd Defendant had every commercial reason to supervise and monitor various aspects of the formwork erection works under the Project (including progress and quality). Obviously, the 2^nd Defendant would not want to incur any liabilities viz-a-viz the 1^st Defendant.

41.Thus, the exercise of control by the 2^nd Defendant does not ipso facto show that the 2^nd Defendant had an employment relationship with the Claimants. In my view, the factor of control alone does not justify the Deputy Adjudicator’s conclusion that an employment relationship necessarily existed.

42.I am of the view that the Deputy Adjudicator had failed to carry out her duties to investigate properly. In my view, the Deputy Adjudicator should have investigated and considered the reasons why the 2^nd Defendant sought to exercise some control over various aspects of the formwork erection works under the Project. This exercise is necessary for the purpose of drawing appropriate inferences from the factual circumstances of the case. Unfortunately, in her Reasons for Decision, the Deputy Adjudicator did not engage in any analysis at all.

43.More fundamentally, it should also be mentioned that it is trite that if a worker can decide how, when, and where to work, such a lack of restrictions points against the existence of any employment relationship: see Leung Suk Fong v The Prudential Assurance Co Ltd (HCME 11/2010, 30 September 2011) at para 18 (per Poon J, as Poon CJHC then was).

44.In this connection, there was evidence from Mr Cheung Kit Hung (張傑鴻) (who was the 2^nd Defendant’s director) that the 3^rd Defendants and/or Claimants were at liberty to decide the number of workers to be engaged and the hours during which works were performed. Mr Cheung also said that the Claimants were only required to complete the works before the deadline imposed by the 1^st Defendant and in accordance with the stipulations imposed by the 1^st Defendant.

45.In order to discharge her duty to investigate, the Deputy Adjudicator should have ascertained the extent and degree of control exercised by the 2^nd Defendant and the extent or degree of restriction that was imposed on the Claimants. It appears to me that the Deputy Adjudicator should have made specific findings on, inter alios, whether the 2^nd Defendant dictated the way in which the Claimants built the successive layers and whether the 2^nd Defendant dictated the work hours during which to carry out the works in question. Unfortunately, not only did Deputy Adjudicator fail to make any specific findings in respect thereof in her Reasons for Decision, she also did not engage in any meaningful discussion on the relevant evidence. She did not even address the evidence of Mr Cheung Kit Hung (張傑鴻) in relation to the questions of control at all.

46.I am of the view that the Deputy Adjudicator had failed to properly discharge her duties to investigate. I am of the view that the Deputy Adjudicator’s decision and reasoning were unsound and unsafe. I am also of the view that it cannot be seen that the Deputy Adjudicator’s conclusion is rational.

F. Conclusion and Disposition

47.For all the above reasons, I conclude that:-

(1) the Deputy Adjudicator had failed to discharge the duties to investigate;

(2) the Deputy Adjudicator had failed to give adequate reasons that justify her conclusion; and

(3) it cannot be shown that the Deputy Adjudicator’s conclusion is rational.

48.Accordingly, I allow the 1^st Defendant’s appeal and set aside the Deputy Adjudicator’s order dated 9 September 2025.

49.I further order that the present case be remitted to the Labour Tribunal for retrial before a different adjudicator, who shall investigate and resolve the issue of whether the Claimants were the 2^nd Defendant’s independent contractors or employees after September 2024.

50.As regards costs, I am inclined to the view that the Claimants cannot be blamed for the errors committed by the Deputy Adjudicator. Obviously, the question of whether the Claimants’ claims against the 1^st Defendant are sustainable will only be determined at the retrial.

51.In the premises, I make a costs order nisi that the costs of the present appeal be in the cause of the retrial.

52.Lastly, I thank Mr Brian Chok, Mr Steven Lam, and Ms Clara Wong for their helpful assistance.

Mr Brian Chok and Mr Steven Lam, instructed by Tso, Au, Yim & Yeung, for the 1^st defendant

基保工程有限公司(TRI BLESSING ENGINEERING LIMITED), 2^nd defendant, in person, absent

魏建智(WEI JIANGZHI), 3^rd defendant, in person, present

Ms Clara Wong, instructed by Haiwen Partners LLP for the 1^st to 5^th claimants