Published 1 February 2019, The Daily Tribune
The age-old maxim that no man is an island has been thoroughly discussed and illustrated both within the confines of the classroom and pop-culture references. Even movies that are based on apocalyptic timelines involve an individual meeting another human being that he can interact with. One way or another, humans tend to find one another.
An often overlooked aspect of this inherent closeness of humanity is the concept of relationships, particularly how relationships build the foundation of a society. Depending on the relationship established, there are certain rights, obligations, and even liabilities that are brought to life amongst the parties. An ordinary citizen voted by his fellow citizens to a public position creates a representative-constituent relationship. Longtime high-school sweethearts who take their wedding vows after graduating college establishes a husband-wife relationship. Even an ordinary medical consultation can create a doctor-patient relationship.
In Philippine jurisdiction, the legal landscape is thorough enough to cover most, if not all, of relationships within the spectrum of human interaction. Public officers, spouses, and doctors have corresponding rights and obligations catered to the specific human relationship that they belong to. This often happens when a certain state interest is be affected by the relationship.
The same law-relationship combo applies to employers and employees. It can even be argued that employer-employee relationship (EER) is the most common of all kinds of relationships. Everybody has to work for somebody right? Only a limited percentage of the population can really be identified as bonafide bosses. The vast majority will still belong to the opposite aisle.
But what does it mean to be an employee? How does one become an employee? And if a person is an employee, who is his employer? These are common questions asked to members of the legal profession because the state also regulates this relationship. It makes no difference whether the client is the business owner or the employee because the law provides for rights, obligations, and liabilities for both parties.
This wide-ranging regulation of employers and employees makes it all the more important to, quoting the millennial jargon of establishing romantic status, “define the relationship” or “DTR”. This is usually the first step in most labor disputes because the rights of the parties are pegged on the roles that they play in the relationship. Before common disputes like employment benefits, illegal termination, or unfair labor practices can be discussed, EER remains to be a preliminary question. As such, the following discussion will help employers and employees alike to properly and legally identify the existence of EER.
Unfortunately, the Labor Code does not provide for the standards in determining EER. It would have been more convenient for employers and employees to only consult the Labor Code in looking for said standards. Instead, it is Jurisprudence which provides for the four-fold test of EER. The following are the elements that are considered in determining EER: (a) selection and engagement of the employee; (b) payment of wages; (c) power of dismissal; and (d) power to control the employee both as to the means and methods by which his work is accomplished. The control test is considered the most important element.
Jurisprudence has also developed a two-tiered test which the Supreme Court finds appropriate whenever there is no written agreement to base the EER on and when the relationship of the parties is complicated due to several positions and responsibilities of the worker. The two two-tiered test considers the following: (a) power to control the employee with respect to the means and methods by which the work is accomplished; (b) underlying economic realities of the activity or the relationship.
Under the two-tiered test the control test is retained while the economic reality test was reintroduced to the legal landscape. The latter test has already been part of our Jurisprudence for more than five decades. Although it was subsequently rejected by the Supreme Court in some cases, it appears that the same has staged a comeback.
The economic realities test considers the whole economic activity, some circumstances that can be considered are: (1) the extent to which the services performed are an integral part of the employer’s business; (2) the extent of the worker’s investment in equipment and facilities; (3) the nature and degree of control exercised by the employer; (4) the worker’s opportunity for profit and loss; (5) the amount of initiative, skill, judgment or foresight required for the success of the claimed independent enterprise; (6) the permanency and duration of the relationship between the worker and the employer; and (7) the degree of dependency of the worker upon the employer for his continued employment in that line of business.
Under the economic realities test, the standard of economic dependence is whether the person is dependent on the prospective employer for his continued employment in that line of business.
Bosses and workers alike can just apply the tests, elements, and standards to the circumstances of their work relationships. The existence of EER relies solely on the application of these factors. No employment contract can negate what the law contemplates as EER. Even titles or positions in the workplace are not considered conclusive proof of EER. In fact, there is no particular form of evidence that is required to prove EER, any competent and relevant evidence will do.
After application, parties can already have a reasonable and legal outlook on whether there exists an EER. At this point in time, the parties have defined the relationship. Of course, it doesn’t hurt to consult a lawyer every now and then.
Much like how it is inadvisable for young people to avoid defining their romantic relationships, bosses and workers should also refrain from accepting a state of limbo. They should define the relationship within the bounds of the law. Otherwise, the repercussions could be catastrophic.
Failure to define romantic relationships among youngsters will at most result into broken hearts or promises. But failure to define EER between bosses and workers can result into shattered dreams, if not broken homes due to lack of job security.
For comments and questions, please send email to cabdo@divinalaw.com
