The gig economy involves work done in digital labor platforms which includes both web-based platforms, where work is outsourced through an open call to a geographically dispersed crowd (crowdwork), and through location-based apps (work on-demand via apps) which allocate work to individuals in a specific geographic area. (https://nwpc.dole.gov.ph/publications/gig-economy/) Simply put, it concerns temporary technology-based work involving independent contractors or freelancers. This includes individuals who work as computer programmers, social media managers, graphic designers, virtual assistants, and other similar jobs where individuals offer their services to foreign clients. This also includes ridesharing drivers and delivery riders who offer their services through apps.
Even prior to the pandemic, the Philippines already had a thriving gig economy. For some, this was an opportunity to work with increased flexibility, the opportunity to determine their hours of work, preferred rates, and not having any bosses constantly supervising them. When the pandemic forced employers to downsize and retrench employees, some of the displaced workers turned to the gig economy for their means of livelihood.
While flexibility may be a key characteristic of the gig economy, some gig workers would still prefer the stability and benefits usually associated with traditional employment. This is especially true for those who were constrained to turn to the gig economy and perform services that are more physical in nature such as delivery riders. Unfortunately for them, most gig workers are engaged as independent contractors and are not legally entitled to the mandatory statutory benefits to which employees are entitled. Instead, they are compensated based on the contract between the independent contractor and the principal or hiring party.
Ideally, an independent contractor and the hiring party would negotiate the compensation for the work performed. However, this is not true for all gig workers. Some hiring parties have their own fee structures which they impose on their independent contractors and can adjust at their own discretion. In fact, a disagreement in the fee structure was the cause of a rift between some food delivery riders in Davao City and a food delivery platform. This caused the Department of Labor and Employment (DoLE) to examine the practices implemented by the food delivery platform, and eventually issue Labor Advisory No. 14 Series of 2021, entitled “Working Conditions of Delivery Riders in Food Delivery and Courier Activities” (LA 14-21).
In LA 14-21, the DoLE did not determine whether the delivery riders are employees of the hiring party or digital platform company. Instead, the DoLE declared that the Four-fold test, Economic Reality test, and Independent Contractor test must be applied to determine whether the gig worker is truly an independent contractor or an employee in the eyes of the law.
The “control test” is common to the three tests since it is the most important index of the existence of the employer-employee relationship, that is, whether the employer controls or has reserved the right to control the employee not only as to the result of the work to be done but also as to the means and methods by which the same is to be accomplished. (Pacific Consultants International Asia, Inc. v. Schonfeld, G.R. No. 166920, Feb. 19, 2007) Stated differently, there is no employer-employee relationship between the parties if the power to control the worker with respect to the means and methods of accomplishing his work is absent.
Understandably, the DoLE did not declare that all delivery riders and/or gig workers are employees since their status must be determined on a case-to-case basis. Nevertheless, some gig workers do not feel like they have control over anything. They feel like the course of their day is totally determined by the hiring party through the digital application.
Since the DoLE can only carry out and enforce laws, it cannot interfere in situations where there is no employer-employee relationship, which is the case with most gig workers who are considered independent contractors. To be treated as employees, the gig workers must seek the intervention of labor tribunals which may evaluate their circumstances and declare the existence of an employee relationship. This will give them the right to be entitled to all mandatory benefits provided by law.
Another possible recourse would be to lobby Congress to pass a law which is favorable to gig workers. In this regard, the House of Representatives recently passed House Bill No. 8817 or the “Freelance Workers Protection Act.” If passed into law, a written contract between the freelancers and the hiring party will be required and the freelancers shall be entitled to a night shift differential and hazard pay. A counterpart bill is pending at the Senate for approval.
Of course, any regulation and/or legislation may have a necessary effect on the opportunities offered by hiring parties to the workers in the country. It must be considered that some of them outsource work because of the low costs involved. We would not want to kill the goose that lays the golden eggs.
While the world continues to address the health and economic effects of COVID-19, our government continues to strive for means to address unemployment. While the gig economy may be one of the solutions, this needs to be examined and regulated for it to be a viable solution for all parties and the government.
The views and opinions expressed in this article are those of the author. This article is for general informational and educational purposes only and not offered as and does not constitute legal advice or legal opinion.
Martin Luigi Samson is a Senior Associate of the Angara Abello Concepcion Regala & Cruz Law Offices (ACCRALAW), Davao Branch. ACCRALAW’s Head Office is located at Bonifacio Global City, Taguig City, Metro Manila, Philippines.