2. Determination of Employer-Employee Relationship

A. Employer-Employee Relationship

• Tests to Determine Employer-Employee Relationship – DOLE D.O. No. 147-15, Rule I-A, sec. 3
• Kinds of Employment – Labor Code, arts. 295-296
• Regular
• Casual
• Probationary
• Project
• Seasonal
• Fixed-term
• Related Concepts
• Floating Status – Labor Code, art. 301; DOLE D.O. No. 215-20
• Employment Subject to a Suspensive Condition

Employee (Ee)

Any person who performs services for an Er in which either or both mental and physical efforts are used and who receives compensation for such services, where there is an Er‐Ee relationship. (Sec. 8(d), R.A. No. 11199, Social Security Act of 2018)

Only a natural person can qualify as an Ee. Natural persons may include Filipino citizens and foreigners.

Ee includes any person in the employ of an Er. The term shall not be limited to the Ees of a particular Er, unless the Code so explicitly states. It shall include any individual whose work has ceased as a result of or in connection with any current labor dispute or because of any unfair labor practice if he has not obtained any other substantially equivalent and regular employment. (Art. 219(f), LC)

NOTE: A self-employed person shall be both an Ee and Er at the same time.

Existence of an Employment Relationship

Employment relationship is determined by law and not by contract. (Insular Life Assurance Co. Ltd. v. NLRC, G.R. No. 119930, 12 Mar. 1998)

NOTE: Taxi or jeepney drivers under the “boundary” system are Ees of the taxi or jeepney owners/operators, as well as passenger bus drivers and conductors are Ees. (Jardin v. NLRC and Goodman Taxi, G.R. No. 119268, Feb. 23, 2000)

Kinds of Control Exercised by an Employer

Not every form of control will have the effect of establishing an Er-Ee relationship. Thus, a line should be drawn between:

• Rules that merely serve as guidelines, which aims only to promote the result. In such case, no Er-Ee relationship exists; and
• Rules that fix the methodology and bind or restrict the party hired to the use of such means or methods. These addresses both the result and the means employed to achieve it and hence, Er-Ee relationship exists. (Insular Life Assurance Co. v. NLRC, G.R. 84484, 15 Nov. 1989)

The main determinant therefore is whether the rules set by the Er are meant to control not just the results but also the means and methods. (Orozco v. CA, G.R. 155207, 13 Aug. 2008)

NOTE: However, in certain cases the control test is not sufficient to give a complete picture of the relationship between the parties, owing to the complexity of such a relationship where several positions have been held by the worker. The better approach is to adopt the two-tiered test. (Francisco v. NLRC, G.R. No. 170087, 31 Aug. 2006)

DOLE can Determine, Prima Facie, the Existence of an EER

If there is a prima facie showing of the absence of employer-employee relationship, the Secretary is precluded from exercising the visitorial and enforcement powers. (People’s Broadcasting v. Secretary of Labor, G.R. No. 179652, May 8, 2009)

Under Art. 128(b) of the Labor Code, as amended by RA 7730, the DOLE is fully empowered to make a determination as to the existence of an employer-employee relationship in the exercise of its visitorial and enforcement power, subject to judicial review, not review by the NLRC.

If a complaint is brought before the DOLE to give effect to the labor standards provisions of the Labor Code or other labor legislation, and there is a finding by the DOLE that there is an existing employer-employee relationship, the DOLE exercises jurisdiction to the exclusion of the NLRC.

If the DOLE finds that there is no employer-employee relationship, it cannot exercise its visitorial and enforcement power over the asserted labor-standards claim. Jurisdiction over any separately filed claim depends on the nature of that claim and its established jurisdictional facts, which the Labor Arbiter or NLRC must determine for itself.

If a complaint is filed with the DOLE, and it is accompanied by a claim for reinstatement, the jurisdiction is properly with the Labor Arbiter, under Art. 217(3) of the Labor Code, which provides that the Labor Arbiter has original and exclusive jurisdiction over those cases involving wages, rates of pay, hours of work, and other terms and conditions of employment, if accompanied by a claim for reinstatement.

If a complaint is filed with the NLRC, the continued existence of an EER does not, by itself, place the case within the DOLE’s jurisdiction. Jurisdiction depends on the nature of the claim and the applicable statutory grant.

The findings of the DOLE, however, may still be questioned through a petition for certiorari under Rule 65 of the Rules of Court. (People’s Broadcasting v. Secretary of Labor, G.R. No. 179652, 2012)

Evidence of Employment: ID, Voucher, SSS Registration, Memorandum

No particular form of evidence is required to prove the existence of such relationship. Any competent and relevant evidence to prove the relationship may be admitted. (Domasig vs. NLRC, G.R. No. 118101, 16 Sept. 1996)

Absence of Name in the Payroll

In Opulencia Ice Plant v. NLRC (G.R. No. 98368, 15 Dec. 1993), the Supreme Court disagreed with the Er’s argument that the absence of the complainant’s name in the payroll disproved his being an Ee.

It held that, “if only documentary evidence would be required to show that relationship, no scheming Er would ever be brought before the bar of justice, as no Er would wish to come out with any trace of illegality he has authored considering that it should take much weightier proof to invalidate a written instrument.”

Thus, since the Er-Ee relationship in this case was sufficiently proven by testimonial evidence, the absence of time sheet, time record or payroll became inconsequential. (Azucena, 2016)

Doctrine Not Applicable Where There Is No Retention of Control

There can be no continuity of the business operations of the predecessor employer by the successor employer if the latter has no controlling interest and the two companies have no privity and are strangers to each other. (Sundowner Development Corporation v. Drilon, G.R. No. 82341, 1989)