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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:
n the Philippines, Virtual Assistants are those who perform remote administrative tasks such as sending emails, scheduling appointments, and other forms of assistance for corporations or businesses inside and outside the Philippines.
Are virtual assistants employees or independent contractors? What are their rights under the Labor Code?
First, let’s differentiate an employee from an independent contractor.
Laws and jurisprudence provide two tests to determine whether one is an employee or not.
First, the FOUR-FOLD TEST. In applying the “four-fold test” in determining the existence of an employer-employee relationship has the following requisites:
- the selection and engagement of the employee;
- the payment of wages;
- the power of dismissal; and
- the power to control the employee’s conduct.
Of these four, the “control test” is the most important. According to the case of Atok Big Wedge Company, Inc. vs. Jesus P. Gison, G.R. No. 169510, August 8, 2011, the so-called “control test” is commonly regarded as the most crucial and determinative indicator of the presence or absence of an employer-employee relationship. Under the control test, an employer-employee relationship exists where the person for whom the services are performed reserves the right to control not only the end achieved, but also the manner and means to be used in reaching that end.
Second, the ECONOMIC REALITY TEST. The economic realities prevailing within the activity or between the parties are examined, taking into consideration the totality of circumstances surrounding the true nature of the relationship between the parties. This is especially appropriate when, as in this case, there is no written agreement or contract on which to base the relationship. In our jurisdiction, the benchmark of economic reality in analyzing possible employment relationships for purposes of applying the Labor Code ought to be the economic dependence of the worker on his employer. (Orozco v. The Fifth Division of the Hon. CA, G.R. NO. 155207, April 29, 2005)
Therefore, if the Virtual Assistant complies with the requisites of either of the aforesaid tests, he or she should be considered an employee whose rights and obligations are covered by the Labor Code. He or she shall be entitled to employee benefits such as security of tenure, 13th month pay, overtime pay, holiday pay, service incentive leave, night shift differential, government-mandated benefits, but subject to certain conditions.
On the other hand, the Virtual Assistant should be considered an independent contractor if he or she does not pass either of the said tests. Individuals with special skills, expertise or talent enjoy the freedom to offer their services as independent contractors. The right to life and livelihood guarantees this freedom to contract as independent contractors. As an independent contractor, his or her rights and obligations shall be governed by the contract with the business owner or the client to whom he or she provides his services. The downside of being independent contractors is they do not receive employee benefits. Nevertheless, smaller taxes are imposed on their income so that they may allot part of it to benefits such as SSS, Pag-IBIG, PhilHealth, etc.
RELATED ARTICLES:
- What is the difference between employees and independent contractors?
- Who are independent contractors?
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Alburo Alburo and Associates Law Offices specializes in business law and labor law consulting. For inquiries regarding legal services, you may reach us at info@alburolaw.com, or dial us at (02)7745-4391/ 0917-5772207/ 09778050020.
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