In disputes on the employment status of workers, the employer has the burden to prove that his or her personnel are service contractors and not regular employees.
This legal parameter in resolving employer-employee disputes was reiterated by the Supreme Court (SC) in a decision written by Associate Justice Amy C. Lazaro Javier.
The SC reversed the ruling of the Court of Appeals (CA) which declared that five personal fitness trainers of Fitness First Phils., Inc. (Fitness First), a health club, are independent contractors and not regular employees.
The CA’s ruling affirmed the order issued by the National Labor Relations Commission (NLRC) on the cases of Rico B. Escauriaga, Cristine Dela Cruz, Rene B. Severino, Ralph Errol Mercado, and Geraldine Guevarra.
In declaring that Escauriaga and his group are regular employees of Fitness First, the SC ordered their reinstatement to their former positions and payment of full backwages, separation pay, pro-rata 13th month pay, and attorney’s fees.
The copy of the SC’s decision on the case has not been made public as of posting, but its Public Information Office (PIO) issued a summary of the ruling.
The PIO said that in granting the petition and reversing the CA ruling, the SC applied the four-fold test governing employer-employee relationship to determine if Fitness First sufficiently proved that petitioners (Escauriaga and his group) were independent contractors.
It said that under the four-fold test to establish an employer-employee relationship, four factors must be proven: (a) the employer’s selection and engagement of the employee; (b) the payment of wages; (c) the power to dismiss; and (d) the power to control the employee’s conduct which, the SC stressed, is the most significant factor.
It pointed out that the SC found the four factors present in the case of Escauriaga and his group.
The PIO’s summary of the decision stated:
“Fitness First engaged petitioners initially as fitness consultants, and on different dates, they transitioned to become freelance personal trainers.
“The corresponding Freelance Personal Trainer Agreement specifically mentioned that petitioners were paid on commission basis. Fitness First also held the power to dismiss petitioners when it became manifest that the latter were unqualified or unfit to discharge their duties or failed to comply with the monthly Minimum Performance Standards under the Agreement.
“Finally, petitioners performed tasks necessary and desirable to Fitness First’s principal business of providing health programs/packages and physical training to its clients. To ensure the quality of services that Fitness First provides, petitioners were required to attend all educational training sessions and other relevant events.
“The SC further noted that Fitness First even kept track of petitioners’ performance such that some of them were lauded for their exemplary performance.
“The SC also held that even applying the economic dependence test, where the circumstances of the whole economic activity are considered in the determination of the relationship between employer and employee, the conclusion would still be the same.
“Petitioners were made to act as personal trainers in accordance with specifications on the physical health availed of by Fitness First members/customers as marketed by petitioners.
“Further, under the Freelance Personal Trainer Agreement, petitioners were required to sell only the company products per its price schedule and were prohibited from providing training outside of the club.
“Petitioners were also wholly dependent upon Fitness First for their continued employment in their line of business.
“Finally, the exclusivity clause in their Agreement only strengthened the conclusion that petitioners are regular employees of Fitness First.”