Lee Sum Wah v. Tam’s Decoration Co. Ltd.

HCLA118/2004

IN THE HIGH COURT OF THE

HONG KONG SPECIAL ADMINISTRATIVE REGION

COURT OF FIRST INSTANCE

LABOUR TRIBUNAL APPEAL NO.118 OF 2004

(ON APPEAL FROM LBTC 4557 OF 2004)

--------------------------

BETWEEN

--------------------------

Before : Hon Yam J in Court

Date of Hearing : 22 June 2005

Date of Judgment : 30 June 2005

------------------------

J U D G M E N T

------------------------

1.This is an appeal by the claimant against the dismissal of his claims by the Presiding Officer Winston Leung, Esq.  The claimant’s claims against the defendant as his employer for the following items, namely :

(a)	wages in lieu of notice; and
(b)	long service payment or alternatively severance pay.

2.The findings of the Presiding Officer, which are not disputed by both parties, are as follows :

(i)	The claimant is a carpenter and he commenced working for the defendant from 1 August 1995.
(ii)	On the night of 13 April 2004 or in the morning of 14 April 2004, after finishing the claimant’s work at Oliver’s Supermarket in Prince’s Building, Mr Tam Kam Wing, director of the defendant, told the claimant that there would not be work for the time being and he should go elsewhere to look for a job.  When the claimant went to Mr Tam’s office the next day to get his pay cheque in the afternoon of 14 April 2004, Mr Tam repeated what he said earlier to the claimant.  Consequently, there was no work for the claimant to do since 14 April 2004.
(iii)	Between 1 August 1995 and 13 April 2004, the length of service was over eight years and eight months.  From the claimant’s records, the claimant worked almost without break from April 1998 to April 2004 except October 2003.
(iv)	The claimant was on daily wages of $800, being $770 recommended by the trade union and $30 for travelling expenses.  The claimant was in fact a supervisor and was entitled to a supervision fee of $2,000 per month.  The claimant also held the keys to Mr Tam’s office and to the workshop.  He had the right to engage the “usual workers” to work on a project for the defendant and the defendant will pay the workers directly.  For other workers, the claimant would have to consult Mr Tam before engaging them.
(v)	The Presiding Officer found on the aforesaid facts alone that the claimant was only a worker who had no commercial risk.  The claimant in effect worked under the instruction of Mr Tam and according to the requirement of the projects.  The supervision fee of $2,000 per month meant to be a record for the project leader and this would support the conclusion of an employment.
(vi)	The Presiding Officer thus found that the claimant was an employee of the defendant.

3.Further, from the contemporaneous documents, the Presiding Officer found that the claimant was at all material times an employee of the defendant.  These documents would include the tax returns of the claimant from 1 August 1995 to 31 March 1999, the salaries records disclosed by the defendant for 2 July 1998 to 17 July 1998, the salary receipts disclosed by the defendant for December 2000, January, February and March 2001, and MPF contribution records disclosed by the defendant for the period of 1 December 2000 to 14 March 2001. 

4.The Presiding Officer, for the aforesaid reasons, found that :

“

On these facts alone, it is clear that Mr. Lee was only a worker who had no commercial risk.  He in effect worked under the instructions of Mr. Tam and according to the requirements of the projects.  I do not find the supervision fee of $2,000 per month significant, as suggested by Mr. Tam, on this issue.  This fee is meant to be a reward for the project leader which could support the conclusion of an employment.  Going through the tests for contractor or employment, I have no doubt that Mr. Lee was an employee.”

5.However, the Presiding Officer dismissed the claimant’s claims and said at the end of the judgment that :

“

However both parties agree on the fact, and this fact is supported by witnesses called by Mr. Lee.  There is no obligation for Mr. Tam to provide Mr. Lee with work and Mr. Lee has no obligation to work for Mr. Tam.  Mr. Lee could decline the work and went to work for other who paid higher price.  Therefore in October 2003, Mr. Lee went to help his friend and only worked 2 days for Mr. Tam.  According to Mr. Tam, no question would be asked about his absence.  I find this fact is inconsistent with the parties having entered into any contract of employment which is the foundation of Mr. Lee’s claims and on this basis Mr. Lee’s claims must fail.”

Point of law on appeal

6.Mr Lawrence Ng, counsel for the claimant, submitted that the Presiding Officer’s dismissal of the claimant’s claims is premised on mutuality of obligation as an essential ingredient of a contract of employment.  This finding is wrong as a matter of law because before one considers the question of mutuality of obligation, it is important to distinguish two issues which might arise in the context of causal workers as follows :

(a)	whether or not each individual engagement has given rise to a contract of employment between the parties; and
(b)	whether or not the general engagement constituted a continuing overriding arrangement governing the whole of their relationship and itself amounted to a contract of employment.

7.A contract of the latter nature is frequently referred to as a “global” or “umbrella” contract.  However, mutuality of obligation is only essential to issue (b) but not issue (a).  Mr Ng relied on the following cases, namely : Wong Man Kwan & Others v. Chun Shing Holdings Ltd [2003] 3 HKLRD 403 and Poon Siu Kuen & Others v. Pine Corporation Ltd, HCLA71/2001.

8.Deputy High Court Judge Lam (as he then was) said in Wong Man Kwan at p.408 :

“	It is, therefore, legally possible that during each individual engagement (viz when the worker was actually working) there was a contract of employment even in the absence of a global contract. …”

9.In this case it is a finding of fact by the Presiding Officer that during each individual engagement (viz. when the claimant was actually working) there was a contract of employment.  Thus I accept Mr Ng’s submission that as mutuality of obligation is not essential to each individual engagement, the Presiding Officer’s finding that mutuality of obligation is essential to both individual engagement and global contract is wrong as a matter of law.

10.Accordingly the claimant’s appeal against the Presiding Officer’s dismissal of his claim is allowed.  The claimant is therefore entitled to the following sum as claimed, namely :

long service payment pursuant to section 31V(1) as follows :

$800 per day x 18 days per month x 8 full years of service

= $115,200.00

11.In respect of the claim for long service payment, there are two further points which apparently were not disputed by the defendant.  In the first place there was no breakage on continuity because of the claimant’s absence from work in October 2003.  It was apparently the finding of the Presiding Officer that there was a mutual agreement as to this absence of work during that month.  Pursuant to the First Schedule of the Employment Ordinance, Cap.57, the continuity would not be broken because of the mutual arrangement between the two parties pursuant to paragraph 3(1)(b).

12.Secondly, there was a change of ownership of the business from Tam’s Decoration Company to the defendant.  The Presiding Officer also found that the contract of employment was kept alive despite change of ownership of the business and he considered that the commencement date of the claimant’s employment should be 1 August 1995 pursuant to section 31J of the Employment Ordinance.

13.In respect of the claim for payment in lieu of notice, Mr Ng for the claimant had fairly drawn the attention of this court to the decision of the aforesaid case of Wong Man Kwan in which Deputy Judge Lam said at paragraph 17 :

“	As regards the claim for wages in lieu of notice, the case of the claimants is based on dismissal by the defendant, a concept difficult to apply to a causal worker without any global contract if the employer simply did not re-engage the worker.  Lord Denning MR said in Wiltshire County Council v National Association of Teachers in Further and Higher Education [1980] ICR 455 :
		… if there is a contract by which a man is to do a particular task or to carry out a particular purpose, then when that task or purpose comes to an end the contract is discharged by performance … There is no ‘dismissal’.  A contract for a particular purpose, which is discharged by performance and does not amount to a dismissal.
	To the same effect is the judgment of Ackner LJ.  See also Brown v Knowsley Borough Council [1986] IRLR 102; Chan Lok Mei v Sze Chi Sing (unrep., MECA No 9 of 1995), 22 January 1996.  Dismissal in the context of severance payment is different in respect of fixed term contract, see s.31D(1)(b).”

Conclusion

14.By reason of the aforesaid matters, only the claimant’s appeal against the dismissal of his claim for long service payment is allowed, and judgment is entered for the claimant against the defendant for the sum of $115,200, with costs to the claimant, to be taxed if not agreed.  The claimant’s own costs shall be taxed in accordance with the Legal Aid Regulations.

Mr Lawrence Ng, instructed by Messrs To, Lam & Co., for the Plaintiff/Appellant

Defendant/Respondent in person