Employer Employee Relationship

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, workmens
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 relationship
between the parties.
Another thing is that the existence of employer-employee relationship between the 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 relationship
There are three test commonly used to determine the existence of employer-employee relationship, viz.:

1.
2.
3.

Four-fold test
Economic reality test
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 elements are generally considered:

1.
2.
3.
4.

Right to hire or to the selection and engagement of the employee.

Payment of wages and salaries for services.
Power of dismissal or the power to impose disciplinary actions.
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 Viaa 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 employers power to control the employees 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.
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 todays 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 employeremployer 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 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 latters
line of business.
Applying this test, if the putative employee is economically dependent on putative employer for
his continued employment in the latters line of business, there is 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 employers 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.
WAGE
Generally, what is the rule on wages?
Under Philippine law, wages are remunerations or earnings for services rendered. Employers and employees
may agree on rate but should not fall below the minimum wages set by the Regional Tripartite Wages and
Productivity Boards (RTWPB) which has jurisdiction over the place of work. You can find the rate of minimum
wage by going to the website of the National Wages and Productivity Commission (NWPC)
http://www.nwpc.dole.gov.ph/rtwpb.html.
The pay of employees is intended to be given whole to the employee in Philippine legal tender. So while
payment by check and through automated teller machines (ATMs) are allowed, vouchers, promissory notes
and gift certificates are not. Deductions from employee wages are generally frowned upon with only a few
allowed by law including income tax, contributions to social welfare agencies such as SSS and Pag Ibig, and
union dues under appropriate agreements.
Minimum Wage Earners Exempt from Income Tax
A new law passed in 2008 exempts minimum wage earners from paying income taxes. Because of this, no
deductions will be made from their pay on the basis of income tax.
What is a Bonus?
Bonus is the amount granted for employees industry and loyalty, which is generally discretional. However,
there have been times when the grant of bonuses have been considered as long standing practice and
therefore cannot be simply withheld without cause.
What is 13th month pay?
13th month pay is the 1/12 of the basic salary earned by the employee during the year. It is compulsory and to
be given not later than December 24 of the year.

What are the normal hours work of an

employee?

The normal hours work of an employee shall

not exceed 8 hours a day. However, Health
Personnel shall have a maximum of 40 hours
a week. If made to work in excess of 40
hours, they are entitled to 30% additional
pay.
Can the normal hours be less than 8?
Yes. The law sets a maximum number of
hours but does not prohibit work done less
than eight hours. Thus, part-time work is
allowed and pay corresponding to the actual
hours worked will be paid.
How much should a part-time worker
earn?
The wage and benefits of a part-time
worker are in proportion to the number
of hours worked. Assuming that he
should be earning P400.00 for an eighthour work, he shall then get P200.00
for work done in four hours.

What hours are supposed to be

paid?
So called Compensable
Hours include all time during
which an a) employee is required
to be on duty, to be at employers
premises or prescribed place or b)
all time during which an employee
is suffered or permitted to work.

What is overtime?
Overtime Work is work rendered
beyond 8 hours. Every hour
worked in excess of 8 hours earns
an additional pay of P25%. The
rate is 30% if done on a rest day
or holiday.

Can overtime not be paid because of

undertime on another day?
No, the law prohibits offsetting
overtime with undertime on another
day. The hourly rate of overtime is
higher than the hours missed in case of
undertime.

Who are covered by the rules on overtime?

Generally, everyone is covered by the law on overtime. However, the following have been
exempted by the law: managerial personnel, government employees, non agricultural field
personnel whose hours of work cannot be determined, family members dependent upon the
employer for support, househelpers, those in the personal employ of another, and piece rate
workers.
Is work done between 10:00 p.m. and 6:00 am paid higher than normal?
Yes. Under the Labor Code, every employee shall be paid a night shift differential of not less
than 10% of his regular wage for each hour of work performed between 10:00 p.m. and 6:00
am the following day.

What is a weekly rest day?

It is the required rest period of not less
than 24 consecutive hours after every
six normal workdays.

How much is the pay for work on a rest

day?
The compensation is the regular wage
plus 30% thereof.

Who chooses the rest day?

The employer shall determine the
weekly restday. However, the employer
shall respect the preference of
employees as to their weekly restday
when such preference is based on
religious grounds.

How much is work on a Sunday paid?

The compensation is the regular wage
unless Sunday happens to be the rest
day of the employee. If Sunday is the
rest day, the employee shall be entitled
to the additional 30% pay.

What is Holiday Pay?

Holiday Pay refers to pay received by an employee on the occasion of a regular holiday or special
day. In the case of regular holiday, the employee is paid even if she did not work. She
receives double her pay if she works on a regular holiday. In the case of a special day (see below),
the employee is not paid if she does no report for work. But if the employee works on a special day,
she is entitled to 130% of her usual pay.
What are leaves?
These are days when employees may still be paid despite their absence from work. The leaves
allowed by law are discussed below, but the employer may add (not subtract) to these leaves out of
the goodness of her heart or under a negotiated Collective Bargaining Agreement (CBA).

Leaves Under Law

Service Incentive Leave
Service Incentive Leave Pay is the benefit of
employees to avail of leave with pay for 5
days provided she has rendered service for
at least one year.

Solo Parents' Leave

Persons who fall under the definition of solo
parents and who have rendered service of
at least one year are entitled to 7 working
daysof leave to attend to their parental
duties.

Maternity Leave
A female member of the Social Security
System (SSS) who has paid at least 3
monthly contributions in the twelve-month
period immediately preceding the semester
of her childbirth or miscarriage shall be paid
a daily maternity benefit equivalent to
100% of her average daily salary. The
benefit is for 60 days for normal delivery
and 78 days for caesarian delivery for the
first four deliveries and miscarriages.

Paternity Leave
The law provides for paternity leave of 7
days with full pay to all married male
employees in the private and public sectors.
It is only available for the first four (4)
deliveries of the legitimate spouse with
whom the employee is cohabiting.

Leaves under RA 9262

Women victims of violence provided under
R.A. 9262 of the Anti-Violence against
Women and their Children Act are entitled
to a paid leave of absence from work up to
10 days.

Leaves under RA 9710

The Magna Carta of Women introduced a 2
month leave for women with full pay based
on gross monthly compensation, for women
employees who undergo surgery caused
by gynecological disorders,provided that
they have rendered continuous aggregate
employment service of at least six (6)
months for the last twelve (12) months

Special Groups of Employees

Apprentice (Art. 58 - 72)
An apprentice is a worker covered by a written apprenticeship agreement with an individual
employer or any of the entities recognized in the Labor Code. To qualify as one, an apprentice should:
(a) be at least 14 years of age; (b) possess vocational aptitude and capacity for appropriate tests; and,
(c) possess the ability to comprehend and follow oral and written instructions.
The law specifically defines an apprenticeship as a practical training on the job supplemented by
related theoretical instruction. Hence, an employer and an apprentice enters into
an apprenticeship agreement wherein the employer binds himself to train the apprentice who in
turn accepts the terms of training. An apprenticeship should not exceed six months.
It is only employers in the highly technical industries that may employ apprentices and only in DOLEapproved apprenticeable occupations. An apprenticeable occupation is any trade, form of
employment or occupation that requires more than three months of practical training on the job
supplemented by theoretical instruction.
An apprentice may be paid below minimum wage, but not lower than 75% thereof. However, DOLE
may authorize the hiring of apprentices without compensation so long as that the on the job training
is required by the school or training program curriculum or as a requisite for graduation or board
examination. For this reason, an employer may engage student interns without paying them provided
the requisites are complied.

Learner (art. 73 - 75)

A learner is a trainee in semi-skilled and other industrial occupations which are non-apprenticeable
as they may be learned through practical training on the job in a relatively short period of time not
exceeding three months.
The learnership agreement between the employer and the learner requires that the following
terms and conditions be stipulated: (a) the names and addresses of the learners; (b) the duration of
the learnership period, which should not exceed three months; (c) the wages or salaries of the learners

which shall begin at not less than 75% of the applicable minimum wage; and (d) a commitment to
employ the learners if they so desire as regular employees upon completion of the learnership. To be
clear, the employer is obliged to hire the learner who wants to be a regular employee after the
learnership period.
Unlike apprentices, learners may be hired only during these situations: (a) when no experienced
workers are available; (b) the employment of learners is necessary to prevent curtailment of
employment opportunities, and (c) the employment does not create unfair competition in terms of
labor costs or impair/lower working standards. The reason for the limitations is due to the fact that
learners may be paid below minimum wage.
A learner becomes a regular employee if his training is terminated by the employer before the end of
the stipulated period without any fault of the former provided he has been allowed or suffered to work
during the first two months.

Househelper ( LABOR CODE. Paragraph 2, Article 139. An ordinary househelper includes family
drivers, domestic servants, laundry women, yayas, gardeners, houseboys, and similar househelps .)
There are two kinds of househelper: ordinary or industrial. There are different and separate rules that
govern each one of them.
An ordinary househelper is one who provides domestic or household service rendered in the
employers home and such service is usually necessary or desirable for the maintenance and
enjoyment thereof, such as ministering to the personal comfort and convenience of the members of
the employers household, including but not limited to, family drivers, domestic servants, laundy
women, gardeners.
An industrial househelper is a regular employee working within the premises of the business of
the employer in relation to or in connection with its business (e.g. staff houses) for its guest or its
officers and employees.
While an ordinary househelper may be paid below minimum wage, an industrial helper is required to
be paid at least the minimum wage if the establishment is not otherwise exempted.

Homeworker (Art. 153)

A homeworker is one who processes or fabricates any goods, articles, or materials in or about a
home. An employer of a homeworker includes any person, whether natural or artificial who, for his
account or benefit, or on behalf of any person residing outside the country, directly or indirectly, or
through an employee, agent contractor, or sub-contractor or any other person either to:

Deliver or cause to be delivered, any goods, articles or materials to be processed or fabricated in or

about a home and thereafter to be returned or to be disposed of or distributed in accordance with his
directions; or

Sell any goods, articles or materials to be processed or fabricated in or about a home and then rebuys
them after such processing, either by himself or through some other person.

Ordinarily, homeworkers are those who make handicrafts or handiworks such as rattan bags,
souvenir items, printed shirts, and the like. They are ordinarily a small group and sometimes a
cooperative who produce these commodities.
With the rise of the Internet, there are many who work online from the comforts of their home. Some
of these include freelance writers, bloggers, photographers, computer programmers, and designers.
So long as they process or fabricate goods, articles, or materials, they may be considered
homeworkers. For instance, writers can sell their articles or photographer can trade their photos.
However, those working from home who offer services cannot be considered as homeworker as they
are not included in the definition. For example, those who offer services as a virtual secretary or staff
are in the service industry. They do not primarily manufacture any good, article, or material.
Mga Quizzes that we memorized FOCUS sa naka BOLD!!!

Art. 82. Coverage. The provisions of this Title shall apply to employees in all establishments
and undertakings whether for profit or not, but not to government employees, managerial
employees, field personnel, members of the family of the employer who are dependent on him
for support, domestic helpers, persons in the personal service of another, and workers who
are paid by results as determined by the Secretary of Labor in appropriate regulations.

As used herein, "managerial employees" refer to those whose primary duty consists of the
management of the establishment in which they are employed or of a department or
subdivision thereof, and to other officers or members of the managerial staff.

"Field personnel" shall refer to non-agricultural employees who regularly perform their duties
away from the principal place of business or branch office of the employer and whose actual
hours of work in the field cannot be determined with reasonable certainty.
Art. 97. Definitions. As used in this Title:
1. "Person" means an individual, partnership, association, corporation, business trust, legal
representatives, or any organized group of persons.
2. "Employer" includes any person acting directly or indirectly in the interest of an
employer in relation to an employee and shall include the government and all its
branches, subdivisions and instrumentalities, all government-owned or controlled
corporations and institutions, as well as non-profit private institutions, or
organizations.
3. "Employee" includes any individual employed by an employer.
4. "Agriculture" includes farming in all its branches and, among other things, includes
cultivation and tillage of soil, dairying, the production, cultivation, growing and
harvesting of any agricultural and horticultural commodities, the raising of livestock
or poultry, and any practices performed by a farmer on a farm as an incident to or in
conjunction with such farming operations, but does not include the manufacturing
or processing of sugar, coconuts, abaca, tobacco, pineapples or other farm

products.
5. "Employ" includes to suffer or permit to work.
6. "Wage" paid to any employee shall mean the remuneration or earnings, however
designated, capable of being expressed in terms of money, whether fixed or
ascertained on a time, task, piece, or commission basis, or other method of
calculating the same, which is payable by an employer to an employee under a
written or unwritten contract of employment for work done or to be done, or for
services rendered or to be rendered and includes the fair and reasonable value, as
determined by the Secretary of Labor and Employment, of board, lodging, or other
facilities customarily furnished by the employer to the employee. "Fair and
reasonable value" shall not include any profit to the employer, or to any person
affiliated with the employer.

Art. 106. Contractor or subcontractor. Whenever an employer enters into a contract with another
person for the performance of the formers work, the employees of the contractor and of the latters
subcontractor, if any, shall be paid in accordance with the provisions of this Code.
In the event that the contractor or subcontractor fails to pay the wages of his employees in
accordance with this Code, the employer shall be jointly and severally liable with his contractor or
subcontractor to such employees to the extent of the work performed under the contract, in the same
manner and extent that he is liable to employees directly employed by him.

The Secretary of Labor and Employment may, by appropriate regulations, restrict or prohibit the
contracting-out of labor to protect the rights of workers established under this Code. In so prohibiting
or restricting, he may make appropriate distinctions between labor-only contracting and job
contracting as well as differentiations within these types of contracting and determine who among the
parties involved shall be considered the employer for purposes of this Code, to prevent any violation
or circumvention of any provision of this Code.

There is "labor-only" contracting where the person supplying workers to an employer does
not have substantial capital or investment in the form of tools, equipment, machineries, work
premises, among others, and the workers recruited and placed by such person are performing
activities which are directly related to the principal business of such employer. In such cases,
the person or intermediary shall be considered merely as an agent of the employer who shall
be responsible to the workers in the same manner and extent as if the latter were directly
employed by him.

SEC. 10. Money Claims. Notwithstanding any provision of law to the contrary, the Labor
Arbiters of the National Labor Relations Commission (NLRC) shall have the original and
exclusive jurisdiction to hear and decide, within ninety (90) calendar days after the filing of the
complaint, the claims arising out of an employer-employee relationship or by virtue of any law
or contract involving Filipino workers for overseas deployment including claims for actual,
moral, exemplary and other forms of damage. Consistent with this mandate, the NLRC shall
endeavor to update and keep abreast with the developments in the global services industry.
The liability of the principal/employer and the recruitment/placement agency for any and all claims
under this section shall be joint and several. This provision shall be incorporated in the contract for
overseas employment and shall be a condition precedent for its approval. The performance bond to
de filed by the recruitment/placement agency, as provided by law, shall be answerable for all money
claims or damages that may be awarded to the workers. If the recruitment/placement agency is a

juridical being, the corporate officers and directors and partners as the case may be, shall themselves
be jointly and solidarily liable with the corporation or partnership for the aforesaid claims and
damages.
Such liabilities shall continue during the entire period or duration of the employment contract and
shall not be affected by any substitution, amendment or modification made locally or in a foreign
country of the said contract.
Any compromise/amicable settlement or voluntary agreement on money claims inclusive of damages
under this section shall be paid within thirty (30) days from approval of the settlement by the
appropriate authority.
In case of termination of overseas employment without just, valid or authorized cause as
defined by law or contract, or any unauthorized deductions from the migrant workers salary,
the worker shall be entitled to the full reimbursement of his placement fee and the deductions
made with interest at twelve percent (12%) per annum, plus his salaries for the unexpired
portion of his employment contract or for three (3) months for every year of the unexpired
term, whichever is less.
In case of a final and executory judgement against a foreign employer/principal, it shall be
automatically disqualified, without further proceedings, from participating in the Philippine
Overseas Employment Program and from recruiting and hiring Filipino workers until and
unless it fully satisfies the judgement award.
Noncompliance with the mandatory periods for resolutions of case provided under this section shall
subject the responsible officials to any or all of the following penalties:
(a) The salary of any such official who fails to render his decision or resolution within the prescribed
period shall be, or caused to be, withheld until the said official complies therewith;
(b) Suspension for not more than ninety (90) days; or
(c) Dismissal from the service with disqualification to hold any appointive public office for five (5)
years.
Provided, however, That the penalties herein provided shall be without prejudice to any liability which
any such official may have incured under other existing laws or rules and regulations as a
consequence of violating the provisions of this paragraph.
"(i) 'Dependents' means the legitimate, legitimated, legally adopted or acknowledged
natural child who is unmarried, not gainfully employed, and not over twenty-one years of
age or over twenty-one years of age provided he is incapacitated and incapable of selfsupport due to a physical or mental defect which is congenital or acquired during
minority; the legitimate spouse living with the employee; and the parents of said
employee wholly dependent upon him for regular support." (As amended by Sec. I, P.D.
1921).
"(j) 'Beneficiaries' means the dependent spouse until he remarries and dependent
children, who are the primary beneficiaries. In their absence, the dependent parents and
subject to the restrictions imposed on dependent children, the illegitimate children and
legitimate descendants who are the secondary beneficiaries; Provided, that the
dependent acknowledged natural child shall be considered as a primary beneficiary
when there are no other dependent children who are qualified and eligible for monthly
income benefit." (As amended by Sec. I, P.D. 1921).
"(k) 'Injury' means any harmful change in the human organism from any accident arising
out of and in the course of employment." (As amended by Sec. I, P.D. 1921).
(l) "Sickness" means any illness definitely accepted as an occupational disease listed by
the Commission, or any illness caused by employment, subject to proof that the risk of

contracting the same is increased by working conditions. For this purpose, the
Commission is empowered to determine and approve occupational diseases and workrelated illness that may be considered compensable based on peculiar hazards of
employment. (As amended by Sec. I, P.D. 1368).
(m) "Death" means loss of life resulting from injury or sickness.
(n) "Disability" means loss or impairment of a physical or mental function resulting from
injury or sickness.

STUDY!!!!
SSS
1. Coverage
2. Exclusion
3. Benefits
4. Beneficiaries
GSIS
1. Coverage
2. Exclusion
3. Benefits
4. Beneficiaries
Kasambahay Law
RA 10022
Anti Sexual Harassment Act