Lazada Riders as Employees Under the Four-Fold Test
When the status of the employment is in dispute, the employer bears the burden to prove that the person whose service it pays for is an independent contractor rather than a regular employee with or without fixed terms. This came from the decision penned by J. Leonen in the case of Ditiangkin, Molines, Juanio, Verde, and Nabong (Petitioners/riders) vs. Lazada E-Services Philippines (Lazada).
In this case which was decided by the Supreme Court’s Second Division, the status of employment of the Lazada’s riders were put to question when the said riders were suddenly removed from their usual routes by a dispatcher. These riders, according to the facts of the case, were hired by Lazada, they were primarily tasked to pick up items from sellers and deliver them to Lazada’s warehouse, they were made to sign an Independent Contractor Agreement by Lazada in which it was stated that they will be paid by Lazada in the amount of ₱1,200.00 per day as service fee and that they are required to render 12-hours of work for six (6) days using their own privately owned vehicles.
When their dispatcher stopped giving them schedules, the riders filed a case before the National Labor Relations Commissions (NLRC) against Lazada, its employees, and its officers for illegal dismissal. But their complaint was for naught as both the Labor Arbiter and NLRC gave credence to Lazada’s argument that the riders were independent contractors as regards to their Contract. But upon appeal to the Court of Appeals it was dismissed on grounds of technicalities.
As their complaint did not prosper, they appealed to the Supreme Court arguing that they were regular employees of Lazada and not independent Contractors. According to the riders, on the basis of means and methods by which they carry out their work, it is subject to Lazada’s discretion and control, on the other hand, Lazada argued that their role as delivery riders were merely an ancillary activity and not its main line of business.
The Supreme Court, in its decision, ruled in this wise: The riders are regular employees of Lazada and not independent contractors. The Supreme Court used the four-fold test in this case in order to establish employer-employee relationship. Quoting the decision, it stated that “Under the four-fold test, to establish employer-employee relationship, the following must be proven: i.) the employer’s selection and engagement; ii.) the payment of wages; iii.) the power of dismissal; and iv.) the power of control. Above all, the power of control is the most important element.”
Here, the Petitioners are not hired by contractors or subcontractor, they were directly hired by Lazada where they were made to sign individual Contracts. They cannot be considered as independent contractors as well since picking up and delivering goods from warehouse to buyers do not call for a specific expertise, nor were they hired because of their unique ability or competency. Lazada also failed to discharge their burden of proving that Petitioners are independent contractors.
Additionally, the Supreme Court in these regards, held that Petitioners services were necessary and desirable. The services performed by Petitioners are integral to the business of Lazada, as they are not merely a platform where parties can transact but they also offer the delivery of the said items. The delivery eases the transactions between the sellers and buyers making it an integral part of their business.
Lastly, Petitioners are economically dependent on Lazada since they are required to render 12 hours a day for six days a week preventing the riders to find other work. More importantly, Petitioners are dependent on Lazada for their continued employment in this line of business.
This article was based on the case of Ditiangkin, Molines, Juanio, Verde, and Nabong vs. Lazada E-Services Philippines, G.R. No. 246892, Sep. 21, 2022, and can be accessed here:
DISCLAIMER: The advisory is not a substitute for an expert opinion and is purely a general research that may have not considered the entirety of other related topics. Any tax and/or compliance advice is not intended or written by the author to be used, and cannot be used, by a client or any other person or entity for the purpose of (i) avoiding penalties that may be imposed on by the regulatory bodies, or (ii) promoting, marketing, or recommending to another party any matters addressed herein.
The opinion or advice expressed in this advisory is based on the facts and circumstances gathered. Any inaccuracy in any of the assumptions set forth above may have the effect of changing all or part of this report, and this report may not apply. The advice is based on our interpretation of the provisions of the Code, the Revenue Regulations promulgated and issued by the tax bureau, BIR positions as set forth in published Revenue Rulings, other pronouncement, orders and circulars, and judicial decisions in effect on the date of this report, any of which could be changed at any time. Any such changes may be retroactive and could significantly modify the statements and opinions/ advice expressed herein In effect, this might render the advisory obsolete or incorrect in partial or in full. We undertake no obligation to advise you of changes that may hereafter be brought to our attention.
No Comments yet!