Dear PAO,
May I be enlightened on how the existence of employer-employee relationships is determined or established? As between an alleged contract that says “You are not an employee” and the nature of work being rendered, which carries more weight?
Michelle
Dear Michelle,
For brevity, permit me to jointly discuss the answers to your questions for being interrelated. Having said that, please be advised that the existence of an employment relationship is determined by law and not by contract. Stated otherwise, the existence of an employer and employee relationship cannot be negated by simply repudiating the same in an employment contract.
In one case with a similar factual milieu as in your query, the Supreme Court was confronted with the question of whether a contract stipulation would be controlling in determining the existence of an employment relationship. To be concise, the pertinent terms of the aforementioned contract read:
“You are not an employee of the xxx Corporation nor does the company have any obligations toward anyone you may employ, nor any responsibility for your operating expenses or for any liability you may incur. The only rights and obligations between us are those set forth in this agreement. This agreement cannot be amended or modified in any way except with the duly authorized consent in writing of both parties’ x x x.”
Ruling in the negative, the Supreme Court, in the case of Paguio v. National Labor Relations Commission (GR 147816, May 9, 2003) penned by Justice Jose Vitug, held:
“Respondent company cannot seek refuge under the terms of the agreement it has entered into with the petitioner. The law, in defining their contractual relationship, does so, not necessarily or exclusively upon the terms of their written or oral contract, but also on the basis of the nature of the work petitioner has been called upon to perform. The law affords protection to an employee, and it will not countenance any attempt to subvert its spirit and intent. A stipulation in an agreement can be ignored as and when it is utilized to deprive the employee of his security of tenure.”
In line with the foregoing case law, what dictates the presence of an employment relationship is the nature of the work, which is defined by law, and not by any stipulation to the contrary. Precisely, in a line of cases, the four-fold test has been applied in determining the existence of an employer-employee relationship.
In Begino v. ABS-CBN (GR 199166, April 20, 2015) penned by Associate Justice Jose Perez, the Supreme Court reiterates:
“To determine the existence of [an employer-employee relationship], case law has consistently applied the four-fold test, to wit:
“(a) the selection and engagement of the employee;
“(b) the payment of wages;
“(c) the power of dismissal; and
“(d) the employer’s power to control the employee on the means and methods by which the work is accomplished.
“Of these criteria, the so-called control test is generally regarded as the most crucial and determinative indicator of the presence or absence of an employer-employee relationship. Under this test, an employer-employee 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.” (Citations omitted, emphasis supplied).
Consistent with the preceding pronouncements Paragele et al. v. GMA Networks Inc. (GR 235315, July 13, 2020), penned by Associate Justice Marvic Leonen, further says:
“Classifying employment, that is, whether an employee is engaged as a regular, project, seasonal, casual or fixed-term employee, is ‘determined by law, regardless of any contract expressing otherwise.'” (Emphasis and underscoring supplied).
To recapitulate, the existence of an employment relationship is determined by law. In connection with this, case law formulated tests to determine the presence of such. Such test or determination, when gauged against a putative employer’s denial or even a contractual stipulation to the contrary, will prevail. Thus, between an alleged contract that says “You are not an employee” and the nature of work actually being rendered, the latter carries more weight for the purpose of establishing employer-employee relations.
We hope that we were able to answer your queries. This advice is based solely on the facts you have narrated and our appreciation of the same. Our opinion may vary when other facts are changed or elaborated.
Editor’s note: Dear PAO is a daily column of the Public Attorney’s Office. Questions for Chief Acosta may be sent to [email protected].
