HMRC internal manual

Employment Status Manual

ESM7140 - Case Law: Lee Ting Sang v Chung Chi-Keung

[1990] IRLR 236

Point at issueDuring the course of his work at a construction site in Hong Kong, Lee Ting Sang was injured and he claimed compensation under the Employees’ Compensation Ordinance. The courts had to determine as a preliminary issue whether he was working as an employee under a contract of service.

FactsThe applicant was a stone mason who was working for a subcontractor on a construction site in Hong Kong. He used tools supplied by the subcontractor and his work was inspected periodically, but not supervised, by the main contractor’s foreman. Depending on the nature of the work he had to do he was paid either a piece-work rate based on the amount of concrete chiselled or, occasionally, a daily rate based on an 8am to 5pm day. He sometimes worked for other contractors but gave priority to urgent work of the subcontractor.

‘Employee’ is defined in the Ordinance and includes a person who ‘works under a contract of service’. The definition also includes casual workers and also employees who have entered into concurrent contracts of service with two or more employers.

The findings of fact were that

  • Lee Ting Sang did not provide his own equipment
  • he did not hire his own helpers
  • he had no responsibility for investment in the work on the site
  • there was no evidence that he priced the job - he was paid a piece-rate or a daily rate
  • he was not supervised but then this was not surprising as he was a skilled man.

DecisionOn his application, the judge dismissed the claim holding he was not an employee. The Court of Appeal upheld that decision. On appeal to the Privy Council (effectively, the House of Lords), it was held that Lee Ting Sang was working as an employee under a contract of service.

CommentaryThere are two points worth commenting on in this case.

Firstly, the statement by Lord Griffiths on p.382 of his judgment regarding the English common law standards to apply in order to determine whether someone is an employee or an independent contractor. He said that

“their Lordships agreed with the Court of Appeal when they said that the matter had never been better put than by Cooke J”in the Market Investigations case at pages 184-185 (see

ESM7040for details).

The second point is that Lord Denning’s ‘part and parcel of the organisation’ test has its limitations particularly when considering the employment status of temporary or casual staff.

Lord Griffiths made the point that the lower courts had placed reliance on the ‘part and parcel of the organisation’ test first developed by Lord Denning in earlier cases (Stevenson, Jordan & Harrison Ltd v MacDonald and Evans [1952] 1TLR101 and Bank voor Handel en Scheepvaart v Slatford [1953] 1QB248). However, the facts in those cases were quite different. Lord Griffiths said that

“In the building and construction industry the test may lead to the error of only considering those on the permanent staff as employed under a contract of service”and not the casual staff. It was considered that the reliance placed on Lord Denning’s test by the lower courts had misled them in their assessment of the facts.