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Also, the matters contained in the following were written in accordance with the law, rules, and jurisprudence prevailing at the time of writing and posting, and do not include any future developments on the subject matter under discussion.
AT A GLANCE
- Regularization is not a management prerogative; rather it is the nature of employment that determines it.
- The presumption is that when the work done is an integral part of the regular business of the employer and when the worker, relative to the employer, does not furnish an independent business or professional service, such work is a regular employment of such employee and not an independent contractor.
- Control over the manner or method of doing the work characterizes employment. In contrast, control only of the desired result of the work often indicates a contracting arrangement.
An employee is any person in the employ of an employer. He/she is also 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. (Article 219(f), Labor Code of the Philippines)
An employee may also refer to those who has been dismissed from work, but the legality of the dismissal is being contested in a forum of appropriate jurisdiction. (Department Order No. 40-03, Rule I, Section (r))
An employer, on the other hand, is the one who employs the services of others, one for whom employees work and who pays their wages or salaries; or any person acting in the interest of an employer. (D.O. No. 40-03, Rule I, Section (r))
What are the types of regular employment?
The types of regular employment are divided as to the nature of work and as to the length of service.
As regards the nature of work, the law says:
SECTION 5. Regular and casual employment. — (a) The provisions of written agreements to the contrary notwithstanding and regardless of the oral agreements of the parties, an employment shall be considered to be regular employment for purposes of Book VI of the Labor Code where the employee has been engaged to perform activities which are usually necessary or desirable in the usual business or trade of the employer. (Section 5(a), Rule I, Book VI, Omnibus Rules Implementing Rules and Regulations of the Labor Code)
As regards the length of service, the law says:
(b) Employment shall be deemed as casual in nature if it is not covered by the preceding paragraph; Provided, That any employee who has rendered at least one year of service, whether such service is continuous or not, shall be considered a regular employee with respect to the activity in which he is employed and his employment shall continue while such activity exists. (Section 5(b), Rule I, Book VI, Omnibus Rules Implementing Rules and Regulations of the Labor Code)
Regularization is not a management prerogative; rather it is the nature of employment that determines it.
Jurisprudence says:
It must be borne in mind that the exercise of management prerogative is not absolute. While it may be conceded that management is in the best position to know its operational needs, the exercise of management prerogative cannot be utilized to circumvent the law and public policy on labor and social justice. That prerogative accorded management could not defeat the very purpose for which our labor laws exist: to balance the conflicting interests of labor and management, not to tilt the scale in favor of one over the other, but to guaranty that labor and management stand on equal footing when bargaining in good faith with each other. By its very nature, encompassing as it could be, management prerogative must be exercised always with the principles of fair play at heart and justice in mind. (Philippine Airlines, Inc. vs. Joselito Pascua, G. R. No. 143258, August 15, 2003)
What is the primary standard of determining regular employment?
Jurisprudence says:
The primary standard, therefore, of determining a regular employment is the reasonable connection between the particular activity performed by the employee in relation to the usual business or trade of the employer. The test is whether the former is usually necessary or desirable in the usual business or trade of the employer. (Moises De Leon Vs. National Labor Relations Commission, G.R. No. 70705 August 21, 1989)
The presumption is that when the work done is an integral part of the regular business of the employer and when the worker, relative to the employer, does not furnish an independent business or professional service, such work is a regular employment of such employee and not an independent contractor. (Begino vs. ABS-CBN Corporation, G.R. No. 199166, April 20, 2015)
Who are independent contractors?
Jurisprudence says:
Independent contractors are those who exercise independent employment, contracting to do a piece of work according to their own methods and without being subjected to control of their employer except as to the result of their work. (Elias Villuga vs. National Labor Relations Commission, G.R. No. 75038, August 23, 1993)
Independent contractors often present themselves to possess unique skills, expertise or talent to distinguish them from ordinary employees. The control test is the most important test our courts apply in distinguishing an employee from an independent contractor. This test is based on the extent of control the hirer exercises over a worker. The greater the supervision and control the hirer exercises, the more likely the worker is deemed an employee. The converse holds true as well – the less control the hirer exercises, the more likely the worker is considered an independent contractor.
Jurisprudence says:
Independent contractors often present themselves to possess unique skills, expertise or talent to distinguish them from ordinary employees. The specific selection and hiring of SONZA, because of his unique skills, talent and celebrity status not possessed by ordinary employees, is a circumstance indicative, but not conclusive, of an independent contractual relationship. (Jose Y. Sonza vs. Abs-Cbn Broadcasting Corporation, G.R. No. 138051, June 10, 2004)
Control over the manner or method of doing the work characterizes employment. In contrast, control only of the desired result of the work often indicates a contracting arrangement.
Related article: How is employer-employee relationship determined?
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