EMPLOYER-EMPLOYEE RELATIONSHIP address both the result and the means employed to

Test to Determine EER achieve it. There is EER.

- Insurance agents are not employees od the insurance companies, in the
 GR: Substantial evidence absence of evidence that rules and Regulations were promulgated or issued
 METEORO V CREATIVE CREATURES which effectively controlled or restricted the agent’s choice of methods or
- There is no hard and fast rule designed to establish the aforesaid elements. the methods themselves of selling insurances.
Any competent and relevant evidence to prove the relationship may be - NB: But not all insurance agents are not employees of insurance
admitted. companies.
- Identification cards, cash vouchers, social security registration,  SONZA VS ABS-CBN
appointment letters or employment contracts, payrolls, organization charts, - Elements of EER: (a) the selection and engagement of the employee; (b)
and personnel lists, serve as evidence of employee status. the payment of wages; (c) the power of dismissal; and (d) the employer’s
- These pieces of evidence are readily available, as they are in the possession power to control the employee on the means and methods by which the
of either the employee or the employer; and they may easily be looked into work is accomplished.
by the labor inspector (in the course of inspection) when confronted with - ABS-CBN did not exercise control over the means and methods of
the question of the existence or absence of an employer-employee performance of SONZA’s work.
relationship. - A radio broadcast specialist who works under minimal supervision is an
independent contractor.
 Control Test
 ROYALE HOMES MARKETING v ALCANTARA  Economic Reality Test
- Control is the most important determinant of employer-employee - A subordinate or alternative test. Existing economic conditions between
relationship. Not every form of control that a hiring party imposes on the the parties are used to determine whether EER exists. (EG: payment of PAG-
hired party is indicative of employee-employer relationship. Rules and IBIG Fund contributions,payment or remittance of contributions to the State
regulations that merely serve as guidelines towards the achievement of a Insurance Fund, deduction of withholding tax, deduction or remittance of
mutually desired result without dictating the means and methods of SSS contributions)
accomplishing it do not establish employer-employee relationship.  FRANCISCO VS NLRC
- Among the four, the most determinative factor in ascertaining the - In certain cases the control test is not sufficient to give a complete picture
existence of employer-employee relationship is the "right of control test". of the relationship between the parties. The determination of EER depends
- Not every form of control is indicative of employer-employee relationship. upon the circumstances of the whole economic activity, such as:
- The Control Test proved that no ER-EE relationship exists. (1) the extent to which the services performed are an integral part of the
- The rules, regulations, code of ethics, and periodic evaluation of Royale do employers business;
not involve control over the means and methods by which Alcantara was to (2) the extent of the workers investment in equipment and facilities;
perform his job (e.g. no working hours, no other tasks than soliciting sales, (3) the nature and degree of control exercised by the employer;
he had full control of how to accomplish tasks) (4) the workers opportunity for profit and loss;
 INSULAR LIFE ASSURANCE v NLRC (5) the amount of initiative, skill, judgment or foresight required for the
- Not every form of control will have the effect of establishing EER. Thus, a success of the claimed independent enterprise;
line should be drawn between: (6) the permanency and duration of the relationship between the worker
1. Rules that merely serve as guidelines, which only and the employer;
promote the result. No EER. (7) the degree of dependency of the worker upon the employer for his
2. Rules that fix the methodology and bind or restrict the continued employment in that line of business.
party hired to the use of such means of methods. These
CLASSIFICATION OF EMPLOYMENT - Employee hired on a fixed-term is regular if job is necessary and
Regular Employment desirable to business of employer.
- Engaged to perform tasks usually necessary and desirable to the Project Employment
business of the employer Regular employment does not mean - One whose employment has been fixed for a specific project or
permanent employment undertaking the completion of which has been determined at the
- A probationary employee is considered regular after 6 months, time of engagement of the employee; the period is not the
becomes regular. determining factor, so that even if the period is more than 1 year,
- May be terminated only for just / authorized causes employee does not necessarily become regular
Test to determine regular employment ­ Repeated hiring on a project-to-project basis is considered necessary
 The primary standard of determining regular employment is the and desirable to the business of the employer. Thus, employee is
reasonable connection between the particular activity performed by regular.
the employee to the usual trade or business of the employer. The Probationary Employment
test is whether the former is usually necessary or desirable in the - The standard that the probationary employee is to meet must be
usual business or trade of the employer. made known by the employer to the employee at the time of the
 Also, the performance of a job for at least a year is sufficient engagement.
evidence of the job’s necessity if not indispensability to the - Probationary employees may be terminated for the same causes as
business. This is the rule even if its performance is not continuous a regular employee, except that there is an additional ground –
and merely intermittent. The employment is considered regular, but failure to meet the standard.
only with respect to such activity and while such activity exists. GR: Not to exceed 6 months
 The practice of entering into employment contracts which would Exceptions:
prevent the workers from becoming regular should be struck down - Covered by an apprenticeship agreement stipulating a longer
as contrary to public policy and morals. period
Casual Employment - Voluntary agreement of parties (especially when nature of work
- Activity performed is not usually necessary or desirable in the usual requires a longer period)
business or trade of the employer, not project and not seasonal
- The employer gives the employee a second chance to pass the
Except: If he has rendered at least 1 year of service, whether such service is
standards set
continuous or broken, he is considered a REGULAR employee with respect to
 Is it necessary that probationary employment be for a period of 6
the activity in which he is employed and his employment shall continue
months? No. Provided that the following requisites concur:
while such activity exists.
1. It is done before the lapse of 6 months;
Despite the distinction between regular and casual employment, every
2. Employee must be advised of such extension
employee shall be entitled to the same rights and privileges, and shall be
3. Employee must agree.
subject to the same duties as may be granted by law to regular employees
 Effect if probationary employee is allowed to work beyond 6
during the period of their actual employment.
months: If the probationary employee is allowed to work beyond
Fixed-Term Employment
the period of 6 months or the agreed probationary period, said
- Period is agreed upon knowingly and voluntarily by the parties
employee become a regular employee by operation of law. Under
without force, duress, or improper pressure exerted on the
the Labor Code, “an employee who is allowed to work after a
employee.
probationary period shall be considered a regular employee.” (Art.
- Brent case: fixed-term employment repealed by LC. But the Civil 281.)
Code, a general law, allows fixed- term employment
 Labor-only Contracting – an arrangement where the contractor or
subcontractor merely recruits, supplies or places workers to perform a job,
SUBCONTRACTING VS LABOR ONLY CONTRACTING work or service for a principal, and any of the following elements are
present:
SUBCONTRACTING (INDEPENDENT LABOR- ONLY CONTRACTORS 1. The contractor or subcontractor does not have substantial capital or
CONTRACTORS) investment which relates to the job, work or service to be performed
Has sufficient substantial capital OR Has NO substantial capital OR 1. The employees recruited, supplied or placed by such contractor or
investment in machinery, tools or investment in the form of machinery, subcontractor are performing activities which are directly related to
equipment directly or intended to be tools or equipment the main business of the principal; or
related to the job contracted 2. The contractor does not exercise the right to control over the
performance of the work of the contractual employee.
Carries an independent business Has no independent business
Substantial capital or investment – capital stocks and subscribed
different from the employer’s
capitalization in the case of corporations, tools, equipment, implements,
Undertakes to perform the job under Performs activities directly related to
machineries and work premises, actually and directly used by the contractor
its own account and responsibility, the main business of the principal
or subcontractor in the performance or completion of the job, work or
FREE from the principal’s control
service contracted out.
NO EER except when the contractor Principal treated as direct employer
Right to Control – right reserved to the person for whom the services of the
or subcontractor fails to pay the of the person recruited in all
contractual workers are performed, to determine not only the end to be
employees’ wages. instances (contractor is deemed
achieved, but also the manner and means to be used in reaching that end.
agent of the principal)
 The test to determine whether one is a job or labor-only contractor
LIMITED liability (principal solidarily Principal’s liability extends to all is to look into the elements of a job contractor. If ALL elements of a
liable with contractor or rights, duties and liabilities under job contractor are present, then he is a job contractor. Otherwise,
subcontractor only when latter fails labor standard laws including the he is a labor-only contractor. Absent one of the elements for being a
to comply with requirements as to right to self-organization job contractor, the person is a labor-only contractor.
unpaid wages and other labor ← On the other hand, not all requisites of a labor- only
standards violations. contractor need to be present. As long as any one of the elements is
PERMISSIBLE PROHIBITED present, then the person is a labor-only contractor.
Contracting or subcontracting – an arrangement whereby a principal agrees
to put out or farm out with a contractor or subcontractor the performance
or completion of a specific job, work or service within a definite or
predetermined period, regardless of whether such job, work or service is to
be performed or completed within or outside the premises of the principal
Contractor or subcontractor – any person or entity engaged in a legitimate
contracting or subcontracting arrangement
Contractual employee – one employed by a contractor or subcontractor to
perform or complete a job, work or service pursuant to an arrangement
between the latter and a principal
Principal – any employer who puts out or farms out a job, service or work to
a contractor or subcontractor
 TERMINATION OF EMPLOYMENT
 Burden of proof is upon the employer to show just cause for the imposition of a penalty upon the employee. There must exist substantial evidence.
 For valid termination, there must both be JUST CAUSE AND DUE PROCESS (Abagon case)
 Requirements for legality: Substantive and Procedural due process in termination cases.
JUST CAUSES FOR TERMINATION
- Kasalanan ng employee kaya walang separation pay.
Art. 282 LC. Termination by an employer – An employer may terminate an employment for any of the ff causes:
a.) Serious misconduct (SM) or willful disobedience (WD) by the employee of lawful orders of his employer or representative in connection with his work;
b.) Gross habitual neglect (GHN) by the employee of his duties;
c.) Fraud or willful breach by the employee of trust reposed in him by his employer or duly authorized representative;
d.) Commission of a crime or offense by the employee against the person of his employer or any immediate member of his family or his duly authorized
representative; and
e.) Other causes analogous to the foregoing.

Art. 297. Termination of employment based on Just Causes. **memorize daw ‘to sabi ni Comm.
The requirement of 2 written notices served on the employee shall observe the ff.:
a.) The first written notice should contain:
1. Specific grounds for termination under Art. 297 LC and company policies if any;
2. Detailed narration of facts and circumstances that will serve as basis for the charge against the employee. A general description of the charge will not
suffice;
3. A directive that the employee is given opportunity to submit a written explanation within a reasonable period ( at least 5 calendar days from receipt of
notice)
b.) After determining that termination of employment is justified, the employer shall serve the employee a written notice of termination indicating that: (1) all
circumstances involving the charge against the employee have been considered; and (2) the grounds have been established to justify the severance of their
employment.
“Ample opportunity to be heard” means meaningful opportunity (verbal or written) given to the employee to answer the charges against him/her and submit
evidence in support of his/her defense, whether in hearing, conference or some other fair, just and reasonable way. A formal hearing or conference becomes
mandatory only when requested by the employee in writing or substantial evidentiary disputes exist or a company rule or practice requires it, or when similar
circumstances justify it.
c.) After determining the termination of employment is justified, the employer shall serve the employee a written notice of termination indicating that (1) all
circumstances involving the charge against the employee have been considered; and (2) the grounds have been established to justify the severance of their
employment.
The foregoing notices shall be served personally to the employee or the employee’s last known address.
(Cases: King of Kings v Mamac, and Perez v PTTC <- Doctrinal)
A. Misconduct refers to the transgression of some established and definite rule of action, a forbidden act, dereliction of duty, willful in character and implies
wrongful intent. ** for MC to be a just cause for termination, the same must be serious.
REQs OF SM: REQ OF WD or INSUBORDINATION: Example of SM: Sexual Harassment, falsification of
1. There must be misconduct; 1. There must be disobedience or time records, immorality, moonlighting, theft of
2. MC must be of such grave and aggravated insubordination; company property (see page 301 of Abad. General
 character; 2. The DO or I must be willful, intentional rule kasi to, may exception), Conspiracy, Attitude
3. It must relate to the performance of the characterized by a wrongful and perverse problem, drug abuse, fighting withing company
employee’s duties; attitude; premises (must be more than just an exchange of
4. There must be showing that the employee 3. The order violated must be reasonable, words)
becomes unfit to continue working for the lawful, and made known to the employee;
employer. 4. The order must pertain to the duties which
he has been engaged to discharge.

B. Gross Neglect refers to the absence of that diligence that an ordinary prudent man would use in his/her own affairs. Habitual Neglect
refers to the repeated failure to perform one’s duties over a period of time, depending upon the circumstances.
REQs OF GHN of Duties: e.g. Absenteeism, habitual absenteeism and tardiness (best evidence are time
1. There must be neglect of duty; records), Abandonment
2. The negligence must be both gross and habitual.

C. Fraud refers to any act, omission, or concealment, which involves a breach of legal duty, trust of confidence justly, reposed, and is injurious to another.
REQs OF FRAUD / WILLFUL BREACH OF TRUST: REQs OF LOSS OF CONFIDENCE:
1. There must be an act, commission and concealment; ** fiduciary in nature
2. The ACC involves a breach of legal duty, trust, or confidence justly 1. There must be ACC
reposed; 2. ACC justifies the lost of trust and confidence of employer to
3. It must be committed against the employer of his representative; employee;
4. It must be in connection with the employee’s work 3. Employee concerns must be holding a position of trust and
e.g. Qualified theft confidence
4. The loss of trust and confidence should not be simulated;
5. It should not be used as a subterfuge for causes whish are improper,
illegal, or unjustified;
6. It must be genuine and not a mere after thought to justify an earlier
action taken in bad faith.

D. Commission of a crime or offense refers to an offense by the employee against the person of his employer or any immediate member of
his family or his duly authorized representative.
REQ OF COMMISSION OF A CRIME OR OFFENSE:
1. It must be an act or omission punishable or prohibited by law;
2. The act or omission was committed by the employee against the person of the employer, any immediate member of his family, or his/her duly
authorized representative.
E. Analogous Causes
REQ OF AC:
1. There must be an act or omission similar to those specified just causes;
2. The act or omission must be voluntary and/or willful on the part of the employees.
NB: No act or omission shall be considered as analogous cause unless expressly specified in the company rules and regulations or policies.
 TERMINATION BASED ON AUTHORIZED CAUSES.
- As defined in Arts. 298 and 299 of LC, the requirements of due process shall be deemed complied with upon service of a written notice to the
employee and the appropriate Regional Office of the DOLE at least 30 days before effectivity of the termination, specifying the ground or grounds of
termination.
a) Installation of Labor-saving devices refers to the reduction of the number of workers in any workplace made necessary by the introduction of labor
saving machinery or devices.
REQs to be a valid ground for termination:  Separation pay = 1 month pay or at least 1 month pay for every year
1. There must be introduction of machinery, equipment or other of service, whichever is higher, a fraction of 6 months service is
devices; considered as 1 whole year
2. The intro must be done in good faith;
3. The purpose of the intro must be valid such as to save on cost,
enhance efficiency and other justifiable economic reasons;
4. There is no other potion available to the employer than the intro pf
machinery, equipment or device and the consequent termination of
the employment of those affected thereby;
5. There must be fair and reasonable criteria in selecting employees to
be terminated.
b) Redundancy refers to the condition when the services of an employee are in excess of what is reasonably demanded by the actual requirements of the
enterprise or superfluous.
REQs:  Separation pay = 1 month pay or at least 1 month pay for every year
1. there must be superfluous positions or services of employees; of service, whichever is higher, a fraction of 6 months service is
2. The positions or services are in excess of what is reasonably considered as 1 whole year
demanded by the actual requirements of the enterprise to operate on
an economical and efficient manner;
3. There must be good faith in abolishing redundant positions;
4. There must be fair and reasonable criteria in selecting the employees
to be terminated;
5. There must be an adequate proof of redundancy such as but not
limited to the new staffing pattern, feasibility studies/ proposal, on
the viability of the newly created positions, job description and the
approval by the management of the restructuring.

c) Retrenchment (or Rightsizing) refers to the economic ground for dismissing the employees and is resorted to primarily to avoid or minimize losses.
REQs:  Separation pay = 1 month pay or at least 1/2 month pay for every
1. The retrenchment must be reasonably necessary and likely to prevent year of service, whichever is higher, a fraction of 6 months service is
business losses; considered as 1 whole year
2. The losses, if already incurrent, are not merely de minis, but
substantial, serious, actual and real, or if only expected, are
 reasonably imminent;
3. The expected of or actual losses must be proved by sufficient and
convincing evidence (e.g. income tax returns)
4. The retrenchment must be fair and reasonable criteria in ascerting
who wouls be dismissed and who would be retained among the
employees, such as status, efficiency, seniority, physical fitness, age,
and financial hardship for certain workers

d) Closure or Cessation of Operation refers to the complete or partial cessation of the operations and/or shut-down of the establishment of the employer.
REQs:  IF NOT DUE TO SERIOUS BUSINESS LOSSES: Separation pay = 1 month
1. There must be a decision to close or cease operation of the enterprise pay or at least 1/2 month pay for every year of service, whichever is
by the management; higher, a fraction of 6 months service is considered as 1 whole year
2. The decision was made in good faith;  IF DUE TO SERIOUS BUSINESS LOSSES: no SP
3. There is no other option available to the employer except to cloase or
cease operations

e) Disease
REQs:  Separation pay = 1 month pay or at least 1/2 month pay for every
1. The employee must be suffering from any disease; year of service, whichever is higher, a fraction of 6 months service is
2. The continued employment of the employee is prohibited by lawor considered as 1 whole year
prejudicial to his/her health as well as his/her co-workers;
3. There must be certification by a competent public health authority
that the disease is incurable within a period of six months even with
proper medical treatment.

In cases of installation of labor-saving devices, redundancy and retrenchment, the LAST-IN, FIRST-OUT RULE shall apply except when an employee volunteers to
be separated from employment
ILLEGAL DISMISSAL - Dismissal with just cause but without due process. the employee that it could foreclose any choice by him except to
- Twin requirements of notice and hearing are essential forego his continued employment.
requirements of due process in terminating cases. - TEST OF CD: Whether a reasonable person in the employer’s
position would have felt compelled to give up his position under
TWIN NOTICE: the circumstances.
1st Notice: Notice of appraisal, which is written notice served on the
employee specifying the ground or grounds of termination, and giving the PREVENTIVE SUSPENSION – disciplinary measure for a protection of
employee reasonable opportunity within which to explain his side. the company’s property pending investigation of any alleged
2md Notice: Notice of termination, which is a written notice of termination malfeasance committed by the employee.
served upon the employee, indicating that upon due consideration of all the
circumstances, grounds have been established to justify termination. - REQs: The employer may place the worker concerned under PD if
(See pages 368 onwards of Abad, nandun din case ng King of Kings) his continued employment posses a serious and imminent threat to
the life or property of the employer or of his co-workers.
RELIEFS FOR ILLEGAL DISMISSAL – the employee is entitled to twin reliefs of
REINSTATEMENT and BACKWAGES. ** mej ‘di na ko nakikinig dito e.

Reinstatement to his former or equivalent position without loss of

seniority rights and other privileges.
- Where reinstatement is no longer possible, the alternative is to
pay separation pay to an illegally dismissed employee.
- In case of strained relations or non availability of positions, the
employer is given the option to reinstate the employee merely
in the payroll precisely to avoid intolerable presence in the
workplace of the unwanted employee.
Full Backwages inclusive of allowances, and other benefits.
- may be granted only when there is a finding of illegal dismissal.
In cases where there is no evidence of dismissal, the remedy is
reinstatement without BW
- BW = whole amount of salaries plus all other benefits and bonus
and general increases.
Separation pay
- Payment of SP as a substitute for reinstatement is allowed only
under exceptional circumstances

CONSTRUCTIVE DISMISSAL – quitting because continued employment is

rendered impossible, unreasonable or unlikely, as an offer involving
demotion in rank and diminution in pay.
(Case: Ang v San Joaquin)
- There may be CD if an act of clear discrimination, insensibility or
disdain by an employer becomes so unreasonable on the part of