Control in Contracting

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  • Controlling an employee is one of the rights and powers of the employer.
  • The contractor is the employer of the deployed personnel.
  • The principal cannot exercise control over teh deployed personnel not being the employer.
  • Labor-only contracting results if the principal exercises control over the deployed personnel.
  • Right, and not actual, control is sufficient.

Concept

Controlling an employee is one of the rights and powers of the employer.

Hence, in a job contracting arrangement, it is the contractor as the employer who exercises the right or power of control over the deployed personnel. The deployed personnel are required to follow lawful orders of the contractor to avoid being subjected to disciplinary action.

Not being thee employer, the principal does and should not have any right or power of control over the deployed personnel. The main interest of the principal is on the accomplishment of the desired results which the contractor is contractually obligated to deliver via its deployed personnel.

Accordingly, if the principal exercises the right or power of control over the deployed personnel, then there is labor-only contracting as one of the indicators thereof is that the contractor and subcontractor does not exercise sole control of the deployed personnel.

“(A) finding that a contractor is a ‘labor-only’ contractor is equivalent to declaring that there is an employer-employee relationship between the principal and the employees of the supposed contractor.’ In this case, the employer employee relationship between Petron and petitioners becomes all the more apparent due to the presence of the power of control on the part of the former over the latter.” (Alilin v. Petron Corporation, G.R. No. 177592, 09 June 2014)

There are many ways by which the power of control may be exercised and for which the principal should not do to avoid the consequences of labor-only contracting. These are just a few.

Monitoring attendance and observance of work schedules

“Also, (the complainants) were required to report for work every day at the bulk plant, observe an 8:00 a.m. to 5:00 p.m. daily work schedule… these imply control.” (Alilin v. Petron Corporation, G.R. No. 177592, 09 June 2014)

Transferring employees from work assignment to another

“… that (the complainants) were hired by Romeo or his father and that their salaries were paid by them do not detract from the conclusion that there exists an employer-employee relationship between the parties due to (the principal) Petron’s power of control over the petitioners. One manifestation of the power of control is the power to transfer employees from one work assignment to another. Here, Petron could order (the complainants) to do work outside of their regular ‘maintenance/utility’ job.” (Alilin v. Petron Corporation, G.R. No. 177592, 09 June 2014)

Requiring the wearing of uniform and safety helmets

“ (the complainants) were required to… wear proper uniform and safety helmets as prescribed by the safety and security measures being implemented within the bulk plant. All these imply control. In an industry where safety is of paramount concern, control and supervision over sensitive operations, such as those performed by (the complainants), are inevitable if not at all necessary. Indeed, Petron deals with commodities that are highly volatile and flammable which, if mishandled or not properly attended to, may cause serious injuries and damage to property and the environment. Naturally, supervision by Petron is essential in every aspect of its product handling in order not to compromise the integrity, quality and safety of the products that it distributes to the consuming public.” (Alilin v. Petron Corporation, G.R. No. 177592, 09 June 2014)

Work performance

“What further militates against (the principal) Petron’s claim that ABC, as an alleged independent contractor, is the true employer of (the complainants), is the fact that Petron has the power of control over respondents in the performance of their work. It bears stressing that the power of control merely calls for the existence of the right to control and not necessarily the exercise thereof. Here, Petron admitted in its Position Paper that the supervision of a Petron employee is required over LPG and tanker assistance jobs for inventory control and safety checking purposes. It explained that due to the hazardous nature of its products, constant checking of the procedures in their handling is essential considering the high possibility of fatal accidents. It also admitted that it was the one supplying the needed materials and equipment in discharging these functions to better insure the integrity, quality and safety of its products.” (Petron Corporation v. Caberte, G.R. No. 182255, 15 June 2015)

Terminating employment

“Aside from this, (the principal’s) claim that (the contractor) RCI exercised control and supervision over (the complainant) is belied by the fact that (the principal) admitted that its own Branch Manager had informed (the complainant) that his services would no longer be required at the Branch. This overt act shows that (the principal) had direct control over (the complainant) while he was assigned at the Branch. Moreover, the (Court of Appeals) is correct in finding that (the complainant’s) work is related to (the principal’s) business and is characterized as part of or in pursuit of its banking operations.” (Allied Banking Corporation v. Calumpag, G.R. No. 219435, 17 January 2018)

Right, not actual, control is sufficient

“It bears stressing that the power of control merely calls for the existence of the right to control and not necessarily the exercise thereof.” (Petron Corporation v. Caberte, G.R. No. 182255, 15 June 2015)

When not control

“Where the control of the principal is limited only to the result of the work, independent job contracting exists.” (Philippine Airlines, Inc. v. NLRC, G.R. No. 125792, 09 November 1998)

References

  • Presidential Decree No. 442, a.k.a. Labor Code
  • DOLE Department Order No. 174, Series of 2017
  • Jurisprudence or Supreme Court Decisions