The four-fold test in labor law

In determining the existence of employer-employee relationship, the elements that are generally considered comprises the so-called "four fold test" namely: (a) the selection and engagement of the employee; (b) the payment of wages; (c) the power of dismissal; and (d) the employer’s power to control the employee with respect to the means and methods by which the work is to be accomplished. It is the so-called "control test" that is the most important element.

[1] It is important to determine whether an employment relationship exists because this has an effect on the applicability of the Labor Code.
[2] Generally, if there is employer-employee relationship, the Labor Code applies. Hence, labor courts have jurisdiction. Also generally, if there is no employment relationship, the Labor Code does not apply and labor courts have no jurisdiction.
[3] Selection and engagement refers to the "choice" of the employer to hire the services of a worker and his commitment to keep the latter as his employee.
[4] "Payment" refers to the compensation that an employee gets for work performed.
[5] "Dismissal" is a component of the employer's power to move or organize employees. It is a management prerogative whom to hire and/or fire. "Dismissal" is a an act of labor force movement done by the employer that results in the termination of employment relationship. However, it must be noted that, for purposes of the Labor Code, simply because the disputants stand not in the proximate relations of employer and employee does not mean that there is no labor dispute. In fact, a worker dismissed from employment is still an employee under the law until and unless his dismissal is declared valid and final by proper authority.
[6] "Control" refers to the employer's power to regulate how the work is done. This is the most important aspect of the four-fold test.

Absent the power to control the employee with respect to the means and methods of accomplishing his work, there is no employer-employee relationship between the parties.

[1] If there is only control by the employer over the end-result of the work, there is no employment relationship.

The fact that one had been designated "branch manager" does not make such person an employee. Employment is determined by the right-of-control test and certain economic parameters. Titles are weak indicators.

[1] Titles are weak indicators. Hence, even if an employee is called a "non-employee" by the employer, if the juridical tie does exist, the latter cannot deny employment relationship.
[2] Employment relations are a question of law. Contracts cannot stipulate that there is or there is no employer-employee relationship if the opposite is true.

[W]here a person who works for another does so more or less at his own pleasure and is not subject to definite hours or conditions of work, and in turn is compensated according to the result of his efforts and not the amount thereof, we should not find that the relationship of employer and employee exists. In fine, there is nothing in the records to show or would "indicate that complainant was under the control of the petitioner" in respect of the means and methods in the performance of complainant’s work. Consequently, [the complainant] is not entitled to the benefits prayed for.

[1] Mode of compensation is not an indicator of employment relationship.
[2] Neither is the nature of the work performed, whether core or non-core.
[3] Although certain matters can be considered as hallmarks of employer-employee relationship, such as registration with the SSS and PhilHealth as employee, these are not absolute indicators.
[4] The Supreme Court has recognized that the question as to whether such a relationship exists has always bedeviled the courts. Nevertheless, it is not advisable to put an airtight definition on what constitutes employer-employee relationship because this would allow employers to escape from their legal obligations and would result in a violation of the constitutional policy on protection to labor.
[5] In one case (NLU v. Dinglasan), the Supreme Court ruled that there is employer-employee relationship despite the vague application of the four-fold test, not only to protect the employee but also to protect public policy.

Similarly, in Manila Golf & Country Club vs. IAC, 237 SCRA 207, the Supreme Court held that the caddies are not employees of the golf club.
"As long as it is, the list made in the appealed decision detailing the various matters of conduct, dress, language, etc. covered by the petitioner’s regulations, does not, in the mind of the Court, so circumscribe the actions or judgment of the caddies concerned as to leave them little or no freedom of choice whatsoever in the manner of carrying out their services. In the very nature of things, caddies must submit to some supervision of their conduct while enjoying the privilege of pursuing their occupation within the premises and grounds of whatever club they do their work in. For all that is made to appear, they work for the club to which they attach themselves on sufferance but, on the other hand, also without having to observe any working hours, free to leave anytime they please, to stay away for as long as they like. It is not pretended that if found remiss in the observance of said rules, any discipline may be meted them beyond barring them from the premises which, it may be supposed, the Club may do in any case even absent any breach of the rules, and without violating any right to work on their part. All these considerations clash frontally with the concept of employment."
[But] it should be borne in mind that 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. For instance, considering the finding by the Hearing Examiner that the establishment of Dy Keh Beng is ‘engaged in the manufacture of baskets known as kaing,’ it is natural to expect that those working under Dy would have to observe, among others, Dy’s requirements of size and quality of the kaing. Some control would necessarily be exercised by Dy as the making of the kaing would be subject to Dy’s specifications. Parenthetically, since the work on the baskets is done at Dy’s establishment, it can be inferred that proprietor Dy could easily exercise control on the men he employed. (Dy Keh Beng vs. International Labor and Marine Union of the Phils., et al., No. L-32245, May 25, 1979; Zanotte Shoes vs. NLRC, G.R. No. 100665, February 13, 1995.)

[1] The existence of control should be proved. However, circumstances surrounding the relationship may be resorted to in order to infer such existence.

An employer is one who employs the services of others; one for whom employees work and who pays their wages or salaries.

[1] If there another person or entity pays the worker, there is a huge doubt regarding the existence of employer-employee relationship.
[2] However, this has not prevented the Supreme Court to declare otherwise (i.e., there is employer-employee relationship) in the case of Corporal v. NLRC.

An employee is one who is engaged in the service of another; who performs services for another; who works for salary or wages. His work is subject to control of the employer not only as to the result but the manner and means of doing it.

[1] Control over the means and manner of doing the work is an important indicator of employment relationship.
[2] The employer, being the owner of the enterprise, has the prerogative as to how the work should be done. He decides not only the means but also the methods. This differentiates the employer from the mere buyer/contractor of products and services.
[3] A buyer/contractor wants the results and only the results. He typically does not care how the job is done as long as the result is to his liking.

For instance, a lawyer, like any other professional, may very well be an employee of a private corporation or even of the government. It is not unusual for a big corporation to hire a staff of lawyers as its in-house counsel, and pay them regular salaries, rank them in its table of organization, and otherwise treat them like its other officers and employees. At the same time, it may also contract with a law firm to act as outside counsel on a retainer basis. The two classes of lawyers often work closely together, but one group is made up of employees while the other is not. A similar arrangement may exist as to doctors, nurses, dentists, public relations practitioners and other professionals.

[1] The same job may be done by an employee or a mere worker. Therefore, whether or not core or non-core jobs are done, the finding of employment relationship, or the lack thereof, will be the same.

Exclusivity of service for the company, control of assignments and removal of agents, collection of premiums, furnishing of facilities and materials as well as capital described as unit development fund are hallmarks of a management system where there can be no escaping the conclusion that one is an employee of the insurance company.

"Independent contractors" can employ others to work and accomplish contemplated result without consent of contractee, while "employee" cannot substitute another in his place without consent of his employer.

[1] Subcontracting is allowed by law. "Sub-employment" or an employee hiring another employee to do the job is not recognized under our system of labor law.
[2] An employee goes through the hiring process and he is selected by reason of his qualifications and other personal traits. He cannot hire another to do the job instead.

The discussion above is based on an outline by Azucena (2013). His books are available in fine bookstores nationwide. SOURCE: Azucena, C. A. (2013). The Labor Code: with Comments and Cases (Vol. 1). National Book Store.