Philippines – Special Report On Labor Law And The Future Of Work.

1. How effectively does the current Labor Code and the Telecommuting Act (RA 11165) address the realities of today’s workplace given the rise of hybrid work and remote arrangements? What legal blind spots should multinational companies be aware of?

As it stands, the Labor Code of the Philippines, as amended, does not explicitly address hybrid work and remote arrangements. These arrangements are governed by Republic Act No. 1165 or the Telecommuting Act (“Telecommuting Act”), which provides that an employer in the private sector may offer a telecommuting program to its employees on a voluntary basis, and upon such terms and conditions as they may mutually agree. 

Significantly, the Telecommuting Act requires employers to ensure that telecommuting employees are given the same treatment as that of comparable employees working at the employer’s premises. In particular, telecommuting employees must: (1) receive the same rate of pay, (2) have the same right to rest periods, regular holidays, and special non-working days, (3) have the same or equivalent workload and performance standards as on-site employees, (4) have the same access to training and career opportunities as those of comparable on-site employees, (5) receive appropriate training on the technical equipment provided to them, (6) and have the same collective rights as the workers at the employer’s premises. Employers must also give telecommuting employees the opportunity to meet with their colleagues on a regular basis and allow access to company information. The telecommuting employee is also entitled to the protection of his or her personal information.

If the employer offers a telecommuting program, this may be in the form of a separate policy, or incorporated into existing policies or employment contracts, or in any other form as may be convenient to the parties provided that there is evidence that the employer and the employee voluntarily agreed to adopt the program.

While the current law ensures the protection of employees who are performing work from an alternative workplace, employers encounter several issues in its implementation, including the monitoring of work and work performance, and ensuring the safety of the employees.

2. How does Philippine jurisprudence currently distinguish between independent contractors and employees, especially in light of the gig economy and cross-border freelancers?

Based on jurisprudence, an independent contractor is an individuals who possesses unique skills and talents which set him apart from ordinary employees and whose means and methods of work are free from the control of the principal. Philippine case law provides that there is no inflexible rule to determine if a person is an employee or an independent contractor. The characterization of the relationship must be made based on the circumstances of each case. 

There are several factors that may be considered by the courts, but the right to control remains the dominant factor in determining whether one is an employee or independent contractor. These factors include the following:

1. Element of control – The Supreme Court has stated that where the person for whom the services are performed reserves the right to control not only the end to be achieved, but also the means by which such end is reached, an employer-employee relationship is deemed to exist. Further, the “control test” in ascertaining the existence of an employment relationship calls merely for the existence of the right to control the manner of doing the work, and not necessarily for the actual exercise of the right.

2. Presence of unique skills, expertise, or talent – While the method of selecting and engaging the worker does not determine his or her status, such has also been held to be indicative, but not conclusive, of an independent contractual relationship. It may be shown that an independent contractor was hired because of his unique skills and talents that set him apart from ordinary employees. Examples include doctors and other medical professionals, newspaper columnists, and basketball referees.

In one case, the Supreme Court held that the riders engaged by an online shopping platform as independent contractors are its regular employees, despite the fact that they signed an Independent Contractor Agreement providing that “no employer-employee relationship exists between [the company] and the [riders].” The Supreme Court held that the riders “cannot be considered independent contractors in a bilateral relationship [because] [t]he work performed by petitioners do not require a special skill or talent. Picking up and delivering goods from warehouse to buyers do not call for a specific expertise. It is also not shown that petitioners were hired due to their unique ability or competency.” 

3. The standing of the parties – In some cases, the Philippine Supreme Court has held that the power to bargain compensation and other terms and conditions of the engagement is indicative of an independent contractual relationship. As an independent contractual relationship is governed by the Civil Code provisions on contracts, this presupposes that the parties to the contract (namely, the employer and the worker) are on equal footing.

“In one case, the Supreme Court held that the riders engaged by an online shopping platform as independent contractors are its regular employees, despite the fact that they signed an Independent Contractor Agreement providing that “no employer-employee relationship exists between [the company] and the [riders].”

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3. What are some of the key tests or doctrines being applied?

In determining the existence of an employer-employee relationship, the Supreme Court generally relies on the four-fold test, which considers the following factors: (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 with respect to the means and methods by which the work is to be accomplished.  Among the four,  the most determinative factor in ascertaining the existence of employer-employee relationship is the right of control test.  

In certain instances, though less common the four-fold test, the Supreme Court has also applied the economic dependance test. In general, this test considers whether the worker is dependent on the alleged employer for his continued employment in that line of business. The specific circumstances which courts would consider would be mainly: (a) the extent to which the services performed are an integral part of the employer’s business; (b) the extent of the worker’s investment in equipment and facilities; (c) the nature and degree of control exercised by the employer; (d) the worker’s opportunity for profit and loss; (e) the amount of initiative, skill, judgment or foresight required for the success of the claimed independent enterprise; (f) the permanency and duration of the relationship between the worker and the employer; and (g) the degree of dependency of the worker upon the employer for his continued employment in that line of business. Recently, the Supreme Court has also considered whether the tasks performed are necessary, desirable, or integral to the usual trade or business of the employer.

4. Many companies hire Filipino freelancers or contractors without establishing local entities. Should foreign in-house attorneys be concerned about the risks of such workers being deemed employees under Philippine law?

Foreign companies without legal presence in the Philippine may engage Filipino workers, but they have to ensure that the arrangement is one of independent contractorship arrangement.  The Filipino workers should possess unique skills and talents and should render the services pursuant to their means and methods, the principal being after only the results of the services. 

If the Filipino worker is able to establish that he is subject to the day-to-day control and supervision of the foreign entity, there is high risk that he may be deemed an employee of the foreign company and he may claim the employment benefits being provided by the foreign company to its own employees performing similar services.

If the foreign company is found to be the employer of the workers in the Philippines, there is also a risk that it may be deemed doing business in the Philippines without the necessary license, since it has employees engaged in operations in the Philippines. The consequence of such finding is that while it may be sued before Philippine courts and administrative agencies, it will not be allowed to seek recourse from Philippine courts and administrative agencies. In addition, there is also a remote risk that Philippine regulators may file a case against the foreign company for violation of the Revised Corporation Code (for doing business in the Philippines without a license).

5. Is there anything pending or proposed to the Labor Code or DOLE regulations that in-house legal departments should be monitoring, particularly those that would affect flexible work, digital employment, or worker classification? 

There are currently several pending bills before either the Senate or House of Representatives of the Philippines that would affect flexible work and digital employment conditions, as well as worker classifications in the Philippines:

1. Senate Bills Nos. 695 and 976 are currently pending in the Committee on Employment and Human Resources Development of the Senate (“Senate Committee on Labor”). They aim to amend the Labor Code provisions on normal hours of work, meal periods, and overtime work. Specifically, they would codify additional changes to harmonize the Labor Code with the compressed workweek arrangements in the private sectors, namely by: (i) allowing employees’ work hours to be extended to up to no more than ten hours a day; (ii) including the meal period as part of the working hours in a day if the employee has consented to a meal period of less than sixty minutes; and (iii) providing for overtime pay in cases of compressed workweek arrangements.
2. Senate Bill No. 536 is also currently pending in the Senate Committee on Labor. Based on research works that claim that workers perform better when given more discretion or control over their work set-up, Senate Bill No. 536 seeks to allow the employer and the employee to adopt a voluntary work arrangement not exceeding forty-eight hours a week either when national emergency requires or when the parties mutually agree. It also provides that such arrangement will not result in the diminution of existing benefits and the employee’s right to night shift differential and overtime pay.
3. House Bill Nos. 03952 and 03159 also seek to formalize the adoption of the Compressed Work Week Scheme and Telecommuting Act in the Labor Code. Particularly, the Labor Code would be amended to allow enterprises and their employees to adopt a compressed work week scheme not to exceed forty-eight hours a week and to account for the corresponding changes to overtime pay and weekly rest days.
4. House Bill No. 213 asks for the recognition of virtual assistants, online freelancers, and remote workers as a distinct labor category within the Philippine Statistical System of the Philippine Statistics Authority to allow for the publication of official data specific to these occupations.
5. Senate Bill No. 212 aims to prohibit contracting and fixed-term employment arrangements, except only in cases where a determination has been made by the National Tripartite Industrial Peace Council (“NTIPC”) that a specific activity may be legitimately contracted or subcontracted out. Further, any judicial entities that wish to obtain a license as a certified job contractor may only do so upon the unanimous recommendation of the NTIPC.
6. House Bill No. 9735 was filed before the 19th Congress of the Philippines and has not yet been re-filed before the current 20th Congress, which convened on July 2025. Drawing inspiration from a law in France, it seeks to grant employees in the Philippines the “right to disconnect” or the right not to be reprimanded, punished, or otherwise subjected to disciplinary action if he or she disregards work-related communication sent after work hours. However, this right is not absolute as the employer may determine the terms and conditions as well as exceptions therefrom. It is anticipated that this bill will be re-filed before the 20th Congress. 
   
   6. What compliance challenges have you encountered for companies implementing hybrid or fully remote setups under RA 11165?

There is no clear guidance on compliance with Occupational Safety and Health Standards for hybrid or fully remote setups and telecommuting employees. DOLE Department Order No. 252, series of 2025 (“DOLE DO 252”) or the Revised Implementing Rules and Regulations of Republic Act No. 11058 provides that the duties of the employer extend to all sites or locations where employees/workers need to be present or go to by reason of their work and which is under the direct or indirect control of the employer. DOLE DO 252, however, is silent as to the employer’s obligations with respect to employees who are working outside the regular office premises.  

“(…) employees do not currently have the right to disconnect or the right to refuse work-related communications outside of their regular working hours without repercussions”

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7. Are there any areas in which the law remains silent or ambiguous?

As discussed in item 6 above, the obligations of the employer with respect to compliance with the Occupational Safety and Health requirements for telecommunicating employees are not well defined.

Further, employees do not currently have the right to disconnect or the right to refuse work-related communications outside of their regular working hours without repercussions. 

8. How does Philippine labor law deal with platform-based work and the obligations of foreign clients toward Philippine freelancers?

There are no labor laws or regulations in the Philippines that specifically govern online platforms linking workers to potential clients. Nevertheless, if the freelancers are subject to the control of the clients for whom the services are rendered, then a possible claim for employment relationship may arise.

If the online platforms refer Filipino workers to foreign companies for potential employment, the online platform provider may be considered engaged in recruitment and placement, which are activities subject to nationality restrictions. 

9. Do you anticipate any regulatory shifts or trends in the next 12-24 months that may significantly alter labor risk for international employers with a Philippine workforce or vendor base?

There are several bills pending before the 20th Congress which seek to govern virtual assistants, online freelancers, and remote workers, and abolish contracting arrangements and fixed-term employment except only for certain activities to be determined by the NTIPC. These bills, if approved, may affect current contractual relations between international employers with their Philippine workforce.

10. What best practices would you recommend for in-house counsels who want to ensure compliance when structuring cross-border engagements with Filipino talent, particularly to avoid misclassification or labor disputes?

Foreign companies should ensure compliance with the conditions for a valid independent contractorship arrangement. As the existence of control is fact driven and may be proven by the independent contractor through other evidence apart from the contract, such as emails, the foreign company must avoid exercising control over the means and methods by which the job is performed by the independent contractor. The foreign company must only be after the end results of the contracted services and not as to how the work itself is performed.

1. Tiangco v. ABS-CBN Broadcasting Corporation, G.R. No. 200434, December 6, 2021.
2. Sonza v. ABS-CBN Broadcasting Corp., G.R. No. 138051, June 10, 2004.
3. ABS-CBN Corp. v. Concepcion, G.R. No. 230576, October 5, 2020.
4. Samonte v. La Salle Greenhills, Inc., G.R. No. 199683, February 10, 2016.
5. Orozco v. Court of Appeals, G.R. No. 155207, August 13, 2008.
6. Bernarte v. Philippine Basketball Association, G.R. No. 192084, September 14, 2011.
7. Borromeo v. Lazada E-Services Philippines, Inc., G.R. No. 265610, April 3, 2024.
8. Francisco v. NLRC, G.R. No. 170087, August 31, 2006.
9. Id Borromeo v. Lazada E-Services Philippines, Inc., G.R. No. 265610, April 3, 2024.