The determination of whether employer-employee relation exists between the parties is very important. For one, entitlement to labor standards benefits such as minimum wages, hours of work, overtime pay, etc., or to social benefits under laws such as social security law, workmen’s compensation law, etc., or to termination pay, or to unionism and other labor relations provisions under the Labor Code, are largely dependent on the existence of employer-employee employer-emp loyee relationship between the parties. Another thing is that the existence of employer-employee employer-employee relationship relationship between the parties parties will determine whether the controversy should fall within the exclusive jurisdiction of labor agencies or not. If for example the parties are not employer-employee of each other, respectively, but perhaps partners or associates, then any dispute between them will be not be covered by the jurisdiction of labor agencies but by regular courts. Three test to determine employer-employee employer-employee relationship There are three test commonly used to determine the existence of employer-employee relationship, relationship, viz.: 1.
Four-fold test
2.
Economic reality test
3.
Two-tiered test (or Multi-factor test) Four-fold test elements The usual test used to determine the existence of employer-employer relationship is the so-called four-fold test. In applying this test, the following foll owing elements are generally considered: considered:
1.
Right to hire or to the selection and engagement of the employee.
2.
Payment of wages and salaries for services.
3.
Power of dismissal or the power to impose disciplinary actions.
4.
Power to control the employee with respect to the means and methods by which the work is to be accomplished. This is known as the right-of-control test. Right of control test is considered as the most important element in determining the existence of employment relation.
Of the above-mentioned elements, the right of control test is considered as the most important element in determining the existence of employment relation. The control test initially found application in the case of Viaña vs. Al-Lagadan and Piga, where the court held that there is an employer-employee relationship when the person for whom the services are performed reserves the right to control not only the end achieved but also the manner and means used to achieve that end. Control test thus refers to the employer’s power to control the employee’s conduct not only as to the result of the work to be done but also with respect to the means and methods by which the work is to be accomplished accomplished.. In applying this test, it is the existence of the right, and not the actual exercise thereof, that is important. Economic reality test In view of today’s highly specialized workforce, the court are often faced with situations where the right-of-control-test alone can no longer adequately determine the existence of employer-employer relationship. Subsequently, another test has been devised to fill the gap, known as the economic reality test.
In Sevilla v. Court of Appeals, the Court observed the need to consider the existing economic conditions prevailing between the parties, in addition to the standard of right-of-control, to give a clearer picture in determining the existence of an employer-employee relationship based on an analysis of the totality of economic circumstances of the worker. Economic realities of the employment relations help provide a comprehensive analysis analysis of the true classification of the individual, whether as employee, independent contractor, corporate officer or some other capacity. Under economic reality test, the benchmark in analyzing whether employment relation exists between the parties is the economic dependence of the worker on his employer. That is, whether the worker is dependent on the alleged employer for his continued employment in the latter’s line of business. Applying this test, if the putative putative employee is economically economically dependent dependent on putative employer for for his continued employment in the latter’s line of business, there is i s employer-employee employer-employee relationship between them. Otherwise, there is none. Two-tiered test (or Multi-factor test) The economic reality test is not meant to replace the right of control test. Rather, these two test are often use in conjunction with each other to determine the existence of employment relation between the parties. This is known as the two-tiered test, or multi-factor test. This two-tiered test involves the following tests:
The putative employer’s power to control the employee with respect to the means and methods by which the
work is to be accomplished; and
The underlying economic realities of the activity or relationship.
Contrary to popular belief, the employment contract is not the sole indicator of an employer employee relationship. So how do you establish an employer employee relationship?
Employer Employee Relationship
4 Elements of Employer Employee Relationship
Control Test Labor Law
Employment Contract Philippines
Labor Disputes in the Philippines
Employer Employee Relationship The agreement binding both the employer and the employee is known as an employment contract. However, the absence of an employment contract does not indicate an absence of an
employer employee relationship. When the existence of the employer employee relationship relationship is
in question, the court has generally applied the four fold test.
If the employer employee relationship can be established, the employer may not terminate the service of the employee without a just or authorized a uthorized cause.
4 Elements Of Employer Employee Employee Relationship Therefore, to determine the existence of an employer-employee employer-employee relationship, the four fold test is usually applied:
1.
the selection and engagement of the employee;
2.
the payment of wages;
3.
the power of dismissal; and,
4.
the employer’s power to control control the employee on the means and methods by which the work is accomplished.
And in the case of Victor Meteoro et. al. vs Creative Creatures, Inc. the court stated that to , ,
establish the 4 elements of employer employee relationship, relationship, any competent and relevant evidence may be considered including but not limited to:
Identification Identificati on Cards;
Cash Vouchers;
Social Security Registration;
Appointment Letters;
Employment Contracts;
Payrolls;
Organization Charts; and
Personnel List.
Control Test Labor Law Of the 4 elements of employer employee relationship, relationship, the control test is generally regarded as the most crucial and determinative indicator of the presence or absence of an employer-empl employer-employee oyee relationship. relationshi p. Under this test, an employer-employee relationship relationship is said to exist where the person
for whom the services are performed reserves the right to control not only the end result but also the manner and means utilized to achieve the same.
However, as seen in the case of Royale Homes Marketing Corporation Corporation vs. Fidel P. Alcantara, not every form of control is indicative of an employer-employee relationship. The subjection
of the service provider to the client’s rules, regulations, and code of ethics does not make the service provider provider an employee when the level of control does not dictate the methodology in performing the tasks. The client has the right to establish guidelines towards the achievement achievement of a mutually desired result.
Employment Employme nt Contract Philippines An employment contract is not just a legally binding agreement between the employer and employee. It is also one that is imbued with public interest and therefore is subject to the police power of the state.
It is the employer’s duty to ensure that terms and conditions of employment are in compliance with the Labor Code of the Philippi Philippines. nes. Employment terms and conditions that are in violation of the Labor Code shall be unlawful and deemed null and void even when both the employer and employee mutually mutually consented to it. Moreover, any doubts, uncertainties, ambiguities and insufficiencies shall be resolved in favor of labor.
