What is the difference between an employee and an independent contractor (or self-employed person)?

As an employer, you must be aware whether your worker is an employee or an independent contractor, as it would greatly affect the rights and benefits you must provide for your worker.

Difference between employee and independent contractor

Different factors may be considered to distinguish between an employee and independent contractor, but these factors are not conclusive indications of the employment status.

Ultimately, the decision rests on the court to determine the employment status of a worker.

A sample of an independent contractor contract can be found here.

Rights and benefits of an employee and independent contractor

Only employees would be entitled to the rights and benefits provided under the Employment Ordinance, as it usually only applies to employers and employees who are engaged under contracts of employment. To avoid unnecessary disputes, an employment contract should separate between an employee and a contractor (or self-employed person).

Changing your employee’s employment status

You can change the employment status of your employee, but you must get their consent before you do so.

It is a criminal offence to falsely label an employee as a self-employed person or independent contractor in the contract to prevent the employee from being entitled to protection under the Minimum Wage Ordinance or Employment Ordinance.

Key takeaways

• The employment contract should clearly establish whether the worker is an employee or independent contractor (or self-employed person)
• Employees are entitled to benefits and rights under the Employment Ordinance, whilst an independent contractor (or self-employed person)t is not

Bibliography

1. Labour Department ‘Clarify your Employment Status Protect your Rights and Benefits’:  https://www.labour.gov.hk/eng/public/wcp/SelfEmployedPerson.pdf

‍