Global Employer Services News September 2021

Will the COVID-19 pandemic replace traditional employment with the “slashie” culture?

The final episode of a local TV series about the work life of “slashies” was broadcast at the end of April 2021. The storyline focused on people who have multiple careers in order to pursue a variety of interests and secure several income streams, rather than staying in regular nine-to-five jobs.

What is a “slashie”? American author Marci Alboher popularised this phrase in her book One Person/Multiple Careers: The Original Guide to Slash Careers, published in 2007. A slash career is one in which a person with many passions and career focuses makes multiple incomes from different careers at the same time. To take one of the main characters in the TV series as an example, he held down many jobs at the same time; he was a waiter, a takeaway courier, a photographer, a personal image consultant and a private investigator, to name just a few of his roles.

To a certain extent, being a slashie is similar to being a freelancer or an independent contractor in the gig economy, but there are some differences.

Freelancers or independent contractors work on an hourly or per project basis, and they are usually hired to match a company’s peaks and troughs or for the purpose of bridging a skills gap or staff shortfall in a corporation’s existing workforce. On the other hand, the work that slashies do is more formalised, and they would apply for similar roles that full-time employees would apply for.

Since the outbreak of COVID-19 in January 2020, corporations and government offices in many countries have changed their traditional working practices, and the new norm of “working from home” has changed people’s mind-sets about work. Technological advances and the economic downturn caused by lockdowns and the need for social distancing during COVID-19 have also led to more people being interested in becoming a slashie, a gig worker or self-employed in order to meet their financial needs and achieve a better work-life balance. This is especially true for people whose permanent employment has become less secure.

There are pros and cons of being a slashie, a gig worker or self-employed. Because they don’t have a formal employment relationship with their clients, they have more flexibility and choice about where they work, the careers they pursue and how long they work for, making it easier to find a good work-life balance. On the other hand, they don’t usually have the stability of a regular salary from a traditional employment relationship, and they cannot benefit from the employee protection that an employer has to provide by law. In addition, there is no guarantee about the amount of work and income they will have, especially when government measures to prevent the spread of COVID-19 stop them from providing services to clients.

In Hong Kong, increasing numbers of slashies, gig workers or self-employed workers are being hired on a full-time or part-time basis due to the growth of online platform businesses (such as food delivery and ride-hailing services). More conventional business sectors, such as retail, banking and finance, and information technology, have also started to hire these workers to bolster their permanent workforce to meet temporary increases in demand. The growth of the demand for such a flexible working population has contributed to a rapid increase in slashies and self-employed workers in Hong Kong.

The statistics do not differentiate between slashies, gig workers and self-employed workers, so estimates of their numbers can only make reference to the Census and Statistics Department’s 2019 statistics on self-employed people. According to the 2019 statistics, there were 224,100 self-employed workers, representing 6.4% of the total employed population. The above statistic does not account for the impact of the economic downturn caused by the COVID-19 pandemic. However, we anticipate that there has been a significant increase in the number of self-employed workers since the 2019 statistics were published.

For organisations that are considering hiring one or more individuals to provide services, it is important to evaluate the costs and benefits, and to consider the law that applies when employing someone or engaging a self-employed worker. In Hong Kong, however, the law is unclear about the distinction between “employee” and “self-employed worker”. According to the Labour Department, there is no single and conclusive test that distinguishes an employee from a contractor or self-employed worker, and in court cases all the relevant factors are considered on a case-by-case basis. In general, the important factors to consider include:

(a) The control test: does the organisation control the individual’s work procedures, their working hours and how they provide services?
(b) Does the organisation provide the individual with the equipment, tools and materials they need to do their job, or does the individual have to supply those things?
(c) The economic test: is the individual carrying on a business in their own right, with investment and management responsibilities?
(d) Is the individual properly regarded as part of the employer’s organisation?
(e) Is the individual free to hire others to assist them in their work?

When hiring an individual, it is vital that organisations document properly whether they are doing so under an employment relationship or a principal/self-employed person/contractor relationship. Organisations should provide unambiguous terms of employment or engagement in the employment contract or service agreement between the two parties in order to avoid misunderstandings and legal action for misclassifying an individual’s employment status as a self-employed worker or contractor.

Since early 2020, Hong Kong has been facing very challenging economic circumstances due to a heavy blow from the COVID-19 pandemic, amid a combination of internal and external factors including geopolitical uncertainty and volatility in the global financial market. Many business sectors are operating in a harsh business environment and are having to find ways to reduce their operating costs. Employers who are less ethical may be tempted to avoid providing the employment benefits that their employees are entitled to by making them “self-employed”. During the pandemic, the Labour Department has received far more complaints from employees about such false self-employment. In response, the Labour Department has taken measures to educate employees about the difference between genuine and false self-employment – and it has taken strong action against those employers who have been involved in cases of false self-employment. Still, perhaps the government of the Hong Kong SAR needs to consider introducing a new law to regulate the scenarios of employment and self-employment, or following the recent approaches taken by the United States and the European Union to enhance the legal labour rights of slashies, gig workers and self-employed workers. On the other hand, employers themselves should be mindful of the possible negative consequences of unilaterally proposing a change in their employees’ status to contractors or self-employed workers. Employees could, for example, make a claim for remedies against the employer based on unreasonable changes in the terms of their employment contract under the Employment Ordinance. They could also make a claim for “termination compensation” from their employer under the Common Law, on the grounds of constructive dismissal. A conviction could be detrimental to the employer’s business – possibly resulting in financial costs of compensation, lengthy legal proceedings and damage to the company’s reputation.

Joseph Hong