SPECIAL TYPES

OF EMPLOYMENT
RECAP

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1 CONTRACTING
INDEPENDENT
LABOR ONLY
INDIRECT EMPLOYER

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 Article 107. Indirect employer.
The provisions of the immediately
preceding Article shall likewise apply to
any person, partnership, association or
“ corporation which, not being an
employer, contracts with an independent
contractor for the performance of any
work, task, job or project.

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 Article 108. Posting of bond.
An employer or indirect employer may
require the contractor or sub-
contractor to furnish a bond equal to
“ the cost of labor under contract, on
condition that the bond will answer for
the wages due the employees should the
contractor or sub-contractor, as the
case may be, fail to pay the same.
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 Article 109. Solidary liability.
The provisions of existing laws to the
contrary notwithstanding, every
employer or indirect employer shall be
held responsible with his contractor or
“ subcontractor for any violation of any
provision of this Code. For purposes of
determining the extent of their civil
liability under this Chapter, they shall
be considered as direct employers.
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Etched in an unending stream of cases are four
standards in determining the existence of an
employer-employee relationship, namely:
a) the manner of selection and engagement of the
putative employee;
b) the mode of payment of wages;
c) the presence or absence of power of dismissal;
and;
d) the presence or absence of control of the putative
employees conduct. Most determinative among
these factors is the so-called control test. (G.R.
No. 176240, Sasan et. al. vs. NLRC, October 17,
2008

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In Sasan, Sr. v. National Labor Relations
Commission 4th Division, the Court
distinguished permissible job contracting
or subcontracting from labor-only
contracting, to wit:

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Permissible job contracting or subcontracting
refers to an arrangement whereby a principal
agrees to put out or farm out to 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. A person is
considered engaged in legitimate job
contracting or subcontracting if the following
conditions concur:

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(a) The contractor or b) The contractor or
subcontractor carries on subcontractor has
a distinct and substantial capital or
independent business investment; and
and undertakes to
perform the job, work or (c) The agreement
service on its own between the principal and
account and under its contractor or
own responsibility subcontractor assures the
according to its own contractual employees
manner and method, and entitlement to all labor
free from the control and and occupational safety
direction of the principal and health standards, free
in all matters connected exercise of the right to
with the performance of self-organization, security
the work except as to the of tenure, and social and
results thereof; welfare benefits. 10
In contrast, labor-only contracting, a
prohibited act, is an arrangement
where the contractor or subcontractor
merely recruits, supplies or places
workers to perform a job, work or
service for a principal. In labor-only
contracting, the following elements are
present:
(a) The contractor or subcontractor does
not have substantial capital or investment
to actually perform the job, work or service
under its own account and responsibility;
and

(b) The employees recruited, supplied or

placed by such contractor or subcontractor
are performing activities which are directly
related to the main business of the
principal.
 The test of independent contractorship is
whether one claiming to be an independent
contractor has contracted to do the work
according to his own methods and without
“ being subject to the control of the employer,
except only as to the results of the work.
(G.R. No. 172349, POLYFOAM-RGC
INTERNATIONAL, CORPORATION vs.
CONCEPCION, June 13, 2012)
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