a. Fourfold Test

Er-Ee Relation as a Question of Law (Stipulation that No Er-Ee Relationship Exists)

The existence of an Er-Ees relation is a question of law and being such, it cannot be made the subject of agreement. (Tabas v. California Manufacturing Co., Inc., G.R. No. 80680, 26 Jan. 1989)

It is axiomatic that the existence of an Er-Ee relationship cannot be negated by expressly repudiating it in the management contract and providing therein that the Ee is an independent contractor when the terms of the agreement clearly show otherwise. For, the employment status of a person is defined and prescribed by law and not by what the parties say it should be. In determining the status of the management contract, the Four-Fold Test on employment has to be applied. (Insular Life Assurance Co. Ltd. v. NLRC, G.R. No. 119930, 12 Mar. 1998)

Four-Fold Test (Select(a)-Wag-Dis-Co)

Factors determining the existence of an Er-Ee relationship:

• Selection and engagement of the Ee;
• Payment of wages;
• Power of dismissal; and
• Power of control, or the Control Test.

NOTE: It is the so-called “control test” that is the most important element. Absent the power to control the Ee with respect to the means and methods by which his work was to be accomplished, there is no Er-Ee relationship between the parties. (Continental Marble Corp., et.al v. NLRC, G.R. No. 43825, 09 May 1988)

Control Test

The control test assumes primacy in the overall consideration. There is an Er-Ee 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. (Television and Production Exponents, Inc. v. Servaña, G.R. No. 167648, 28 Jan. 2008)

The power of control refers to the existence of power and not necessarily to the actual exercise thereof. It is not essential for the Er to actually supervise the performance of duties of the Ee; it is enough that the Er has the right to wield that power. (Republic v. Asiapro Cooperative, G.R. No. 172,101, 23 Nov. 2007)

Exclusivity of service, control of assignments and removal of agents under private respondents’ unit, collection of premiums, furnishing of company facilities and materials as well as capital described as Unit Development Fund are but hallmarks of the management system where there can be no escaping the conclusion that one is an Ee of the insurance company. (Insular Assurance Co., Ltd., v. NLRC, G.R. No. 119930, 12 Mar. 1998)

The control test calls merely for the existence of the right to control the manner of doing the work, not the actual exercise of the right. (Zanotte Shoes v. NLRC, G.R. No. 100665, 13 Feb. 1995)

Elements

• The putative Er’s power to control the Ee with respect to the means and methods by which the work is to be accomplished (one factor of the Four-fold Test, which also considers selection and engagement, payment of wages, and power of dismissal); and
• The underlying economic realities of the activity or relationship. (Economic Reality Test).

Mode of Compensation: Not Determinative of Er- Ee Relationship

The presence or absence of Er-Ee relationship is not determined by the basis of the Ee’s compensation. The compensation, whether called wage, salary, commission or other name, may be computed on the basis of time spent on the job or it may be based on the quality and/or quantity of the work done. It may further be dependent on skills possessed, seniority earned, or performance and initiative shown by the Ee.

Piece-rate, boundary, and pakyaw are merely methods of pay computation and do not prove whether the payee is an Ee or not. (Azucena, 2016)

Q: Africa, et al. are engaged as garbage truck drivers to collect garbage from different cities and transport the same to the designated dumping site. They filed separate cases against Expedition for illegal dismissal for having been prevented from entering the premises of Expedition without cause or due process. They claimed that they were regular Ees and were required to work a minimum of 12 hours a day, seven days a week, even on holidays, and were not paid the minimum wage, holiday or premium pay, overtime pay, SIL pay and 13th month pay.

Expedition denied that respondents were its Ees claiming that respondents were not part of the company’s payroll but were being paid on a per- trip basis. They claimed that respondents were not under their direct control and supervision as they worked on their own. Are the respondents Ees of Expedition?

A: YES. Applying the four-fold test, Africa, et al. were engaged/hired by Expedition as garbage truck drivers. It is undeniable that they receive compensation from Expedition for the services that they rendered to the latter. The fact that they were paid on a per trip basis is irrelevant because this was merely the method of computing the proper compensation due to them. Also, Expedition’s power to dismiss was apparent when work was withheld from the respondent. Finally, Expedition has the power of control over respondents in the performance of their work. (Expedition Construction Corp., et. al v. Africa, G.R. No. 228671, 14 Dec. 2017)

Application of the four-fold test and the two- tiered test

Present Philippine law recognizes a two-tiered test. The first tier of the test is the Four-Fold Test. The second tier is the Economics of the Relationship Test. Under the two-tiered approach, examine the putative employer’s right to control the means and methods of work and the underlying economic realities of the relationship, considering the totality of the circumstances. (Francisco v. NLRC, G.R. No. 170087, 31 Aug. 2006)