Mr F (cross-border container truck driver)
Mr G (the officer-in-charge of a China-Hong Kong transportation company)
Mr F, a container truck driver who worked between the Mainland and Hong Kong, was employed by Mr G, the officer-in-charge of a China-Hong Kong transportation company. Mr G asked Mr F to set up his own company as a sole proprietor. The business registration fee was shared equally by the transportation company and Mr F. The company signed a truck leasing and rental agreement with Mr F, claiming that no employment relationship existed between them. Mr G said that Mr F was a self-employed person and therefore Mr G’s company did not need to make MPF contributions for him.
Mr F said that his duty was to deliver goods using the container truck of Mr G’s company and that all the work was arranged by the company. His pay was calculated in the form of profit sharing between them. The company paid him by depositing a cheque in his bank account every month. Mr F could not refuse the work arranged by Mr G’s company. Also, the container truck was owned by Mr G’s company, which never charged Mr F any rental fee.
All expenses relating to the container truck, such as maintenance fees, vehicle insurance and vehicle license fees, as well as all the daily expenses of Mr F in relation to his work, such as fuel charges, bridge tolls, tunnel tolls, customs fees and line-up fees, were paid by Mr G’s company. Mr F did not need to pay any capital expenditure or bear any other financial risks. He was never involved in determining the fees that Mr G’s company charged its customers, nor was he involved in the operation and management of the company.
Mr F thought that he was an employee of Mr G’s company and not a self-employed person, so he made a complaint to MPFA.
MPFA’s investigations and enforcement actions
MPFA contacted Mr G immediately and requested him to provide the related documents. The company provided a signed truck leasing and rental agreement with Mr F, and claimed that no employment relationship existed between the company and Mr F.
After meeting with Mr G, MPFA took a written statement from him, in which Mr G denied the charges and insisted that Mr F was not the company's employee.
Finally, as there was sufficient evidence, MPFA decided to prosecute Mr G’s company for not enrolling Mr F in an MPF scheme. The employer eventually pleaded guilty in court, and was convicted and fined $14,000.
Understanding the MPFSO
Definition of a self-employed person
Under the MPF System, a self-employed person is someone who receives income from the provision of services or goods in a capacity other than that of an employee. Self-employment is based not simply on an agreement between the employer and the employee, or the signing of a “self-employed contract”. It depends on whether an actual employment relationship exists between the two parties.
There are different factors to consider when determining the relationship between both parties, such as whether the company has considerable control over the employee’s work, whether the company provides work facilities to the employee, and whether the company bears the capital expenditure and financial risks, etc.
Legal consequences and penalties
Employers who require their employees to change their status to “self-employed persons” intentionally without enrolling them in an MPF scheme thereafter are regarded as evading their MPF responsibilities. Employers who fail to enrol their employees in an MPF scheme or default on MPF contributions commit an offence and are liable to a maximum fine of $350,000 and imprisonment for three years. Employers who deduct wages of employees as MPF contributions but do not submit the contributions to their MPF trustees are liable to a maximum fine of $450,000 and imprisonment for four years.