Three test to determine employer-employee relationship

There are three test commonly used to determine the existence of employer-employee relationship, viz.:
Four-fold test elements
1.
2.
3.
4.

Right to hire or to the selection and engagement of the employee.

Payment of wages and salaries for services.
Power of dismissal or the power to impose disciplinary actions.
Power to control the employee with respect to the means and methods by which the work is to be
accomplished. This is known as the right-of-control test
The control test initially found application in the case of Viaa vs. Al-Lagadan and Piga, where the
court held that there is an employer-employee relationship when the person for whom the services
are performed reserves the right to control not only the end achieved but also the manner and means
used to achieve that end.

Control test thus refers to the employers power to control the employees conduct not only as to the result of
the work to be done but also with respect to the means and methods by which the work is to be
accomplished.
In applying this test, it is the existence of the right, and not the actual exercise thereof, that is important.
Economic reality test
In view of todays highly specialized workforce, the courts are often faced with situations where the right-ofcontrol-test alone can no longer adequately determine the existence of employer-employer relationship.
Subsequently, another test has been devised to fill the gap, known as the economic reality test.
In Sevilla v. Court of Appeals, the Court observed the need to consider the existing economic conditions
prevailing between the parties, in addition to the standard of right-of-control, to give a clearer picture in
determining the existence of an employer-employee relationship based on an analysis of the totality of
economic circumstances of the worker.
Economic realities of the employment relations help provide a comprehensive analysis of the true
classification of the individual, whether as employee, independent contractor, corporate officer or some other
capacity.
Under economic reality test, the benchmark in analyzing whether employment relation exists between the
parties is the economic dependence of the worker on his employer. That is, whether the worker is
dependent on the alleged employer for his continued employment in the latters line of business.
Applying this test, if the putative employee is economically dependent on putative employer for his continued
employment in the latters line of business, there is employer-employee relationship between them.
Otherwise, there is none.
Two-tiered test (or Multi-factor test)
The economic reality test is not meant to replace the right of control test. Rather, these two test are often use
in conjunction with each other to determine the existence of employment relation between the parties. This is
known as the two-tiered test, or multi-factor test. This two-tiered test involves the following tests:

The putative employers power to control the employee with respect to the means and methods by
which the work is to be accomplished; and
The underlying economic realities of the activity or relationship.
References
Francisco vs. NLRC, G.R. No. 170087 August 31, 2006
Religious of the Virgin Mary vs. NLRC, G.R. No. 103606, October 13, 1999
Viaa vs. Al-Lagadan and Piga, 99 Phil. 408 (1956).