Four-Fold Test: Meaning

The test comes from Supreme Court rulings, not from the text of the Labor Code. In Sonza v. ABS-CBN (2004), the Court said: "Case law has consistently held that the elements of an employer-employee relationship are: (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 on the means and methods by which the work is accomplished."

In plain words:

1. Selection and engagement. Who chose and hired the worker?
2. Payment of wages. Who pays the worker?
3. Power of dismissal. Who can end the worker's services?
4. Power of control. Who decides not only the result but also how the work is done?

In Sonza, the Court called the control test "the most important element" and explained: "The greater the supervision and control the hirer exercises, the more likely the worker is deemed an employee." The reverse is also true: the less control the hirer exercises, the more likely the worker is an independent contractor.

In that case, a radio and television host engaged through his management company was found not to be an employee. The Court said "Being an exclusive talent does not by itself mean that SONZA is an employee of ABS-CBN," and that individuals with special skills, expertise or talent may offer their services as independent contractors.

In Fuji Television Network v. Espiritu (2014), the Court said it is the burden of the employer to prove that a person whose services it pays for is an independent contractor rather than a regular employee. It also said "[t]here is no hard and fast rule" to establish the elements, and that identification cards, cash vouchers, social security registration, appointment letters or employment contracts, payrolls, organization charts and personnel lists can serve as evidence of employee status.

Fuji also noted two kinds of independent contractors: those engaged in legitimate job contracting, and those with unique skills and talents that set them apart from ordinary employees. In that case, a news correspondent on yearly contracts was held to be a regular employee.

When a contractor supplies workers to a business, the test helps decide who the real employer is. In Sonza, the Court described a labor-only contract as one with three parties: the "labor-only" contractor, the employee who is ostensibly under the contractor, and the principal "who is deemed the real employer." The rules on contracting are in Article 106. See labor-only contracting and endo and labor-only contracting.

Once a person is found to be an employee, other rules decide the kind of employment, such as regular or project employment under [Article 295 [280]](/law/labor-code/article-295).

Made-up illustration: Paolo signs a "freelance" contract to edit videos for a production company. The company chose him, pays him every two weeks, can end his contract at any time, and tells him which hours to work, which software to use and how each video must be cut. All four elements point to employment, and control is strong. Bea, a well-known voice talent, is engaged for a set of commercials; she records in her own studio, on her own schedule, and the company only approves the final result. The control element is weak, so she is more likely an independent contractor. Each case depends on the facts.

See also the comparison employee vs independent contractor.