Are GrabFood and FoodPanda drivers employees?

By Atty. Eduardo T. Reyes III

 

App-based food delivery services GrabFood and FoodPanda have become household names since the strictest lockdowns were imposed last year.

The mechanics for availing their services is simple: you download the app, click the restaurant you desire to order from, place your order, and in minutes, the food delivery service driver will call you that he is on his way.

For the driver, his capitalization is not much. He can make a measly down payment for a motorcycle to drive, invest in his protective gear, cough up some initial cash which could be as low as P1,000.00, have himself accredited, and he is ready to take his first order. From his P1,000.00, the driver purchases the order in cash from the customer’s restaurant of choice, while the latter in turn sells to him for a “higher-than-usual” rate so that the on-line food delivery service can have a rebate, and the driver will have his overhead pay or “commission”.

Hypothetically, in this work arrangement, are the drivers employed by the firms that accredited them as to entitle them to worker’s benefits? Or are they job contractors working independently on a capital of their own, or more popularly called “self-employed”?

In Britain, the Supreme Court came down with a decision that held that Uber drivers are employed by the firm and not self-employed contractors because of a certain degree of control that’s being exercised over them. Although in California, USA, the State Supreme Court ruled that the drivers are not employees but independent contractors (The Economist, Mar 18^th 2021).

                Locally, while Philippine jurisprudence is abundant in providing guidelines to determine whether a particular work-arrangement qualifies as an employment or independent contracting, the Supreme Court has yet to rule on the plight and/ or fate of the app-based food delivery service drivers.

First, four factors serve as a checklist to determine whether an employer-employee relationship exists, thus:

“The four-fold test used in determining the existence of employer-employee relationship involves an inquiry into: (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 method by which the work is to be accomplished. (Maria Lea Jane I. Gesolgon and Marie Stephanie N. Santos v. Cyberone Ph., Inc., Maciej Mikrut and Benjamin Juson, G.R. No. 210741. October 14, 2020).

Of these four, the so-called “control test” is primordial. The inquiry in each case must be on the “means and methods that the work is to be accomplished” by the driver. Is he at liberty to employ such means, manner and method without as much instructions, supervision let alone interference from the firm that accredited him? If the answer is in the affirmative, then that could be a hallmark of being an independent contractor.

Second, case law also points out the salient features of legitimate job-contracting which should be distinguished from “labor-only contracting” which is prohibited by law. Thus:

“In Diamond Farms, Inc. v. Southern Philippines Federation of Lahar (SPFL)-Workers Solidarity of DARBMUPCO/Diamond-SPFL,  the Court distinguished a labor-only contractor and a legitimate job contractor in this wise:

The Omnibus Rules Implementing the Labor Code distinguishes between permissible job contracting (or independent contractorship) and labor-only contracting.

Job contracting is permissible under the Code if the following conditions are met: (a) The contractor carries on an independent business and undertakes the contract work on his own account under his own responsibility according to his own manner and method, free from the control and direction of his employer or principal in all matters connected with piece of the work except as to the results thereof; (b) The contractor has substantial capital or investment in the form of tools, equipment, machineries, work premises, and other materials which are necessary in the conduct of his business. In contrast, job contracting shall be deemed as labor-only contracting, an arrangement prohibited by law, if a person who undertakes to supply workers to an employer: (1) Does not have substantial capital or investment in the form of tools, equipment, machineries, work premises and other materials; and (2) The workers recruited and placed by such person are performing activities which are directly related to the principal business or operations of the employer in which workers are habitually employed.(VALENTINO S. LINGAT AND APRONIANO ALTOVEROS v. COCA-COLA BOTTLERS PHILIPPINES, INC., MONTE DAPPLES TRADING, AND DA YID LYONS, G .R. No. 205688, July 04, 2018, underlining supplied).

                The major point of concern for these drivers is whether their capitalization satisfies the requirement of “substantial capital or investment” as to hold them to be responsible for themselves as independent contractors. Another is whether or not they perform activities which are necessary and desirable to the business of the companies that had accredited them such that the latter’s enterprise stand to profit from the drivers’ labor. Still another matter to reckon is whether the firms wield the power to “dismiss” the drivers for deviating from the imposed guidelines or policies.

Yet, on the other hand, had these companies envisaged to erect their businesses by employing drivers such that they had factored their employment benefits to begin with? This is because to insist on employment when it would go against the fundamentals of economics could probably do more harm than good by killing the proverbial goose that lays the golden egg.

This may be a legal conundrum that could befuddle our labor tribunals and eventually land in the Supreme Court to call for an epochal ruling to be handed down.

Indeed, it has been a century and two decades since Lochner v. New York was decided in 1905 where the US Supreme Court upheld the right of the employer and the worker to agree on unbridled terms of employment free from government regulation. Today, the prevailing doctrine is for the law to be flexible and capable of being bended backwards to overarchingly protect the working man.  In short, the state can interfere with voluntarily entered into employment contracts.

In any case, in matters like these, when societal problems would need to look to the law for a solution on a dispute that can be resolved either way- for even the California State Supreme Court cannot agree with the British Supreme Court on a like issue-, the end-goal of the law should always be “justice and human dignity” according to Justice Frank William Murphy.  Because for him,  “The law knows no finer hour than when it cuts through formal concepts and transitory emotions to protect unpopular citizens against discrimination and persecution”.

 

(The author is the senior partner of ET Reyes III & Associates- a law firm based in Iloilo City. He is a litigation attorney, a law professor and a law book author. His website is etriiilaw.com).