The gig economy involves work done in digital labour platforms that include both web-based platforms – where work is outsourced through an open call to a geographically dispersed crowd (crowd work) – and location-based apps (work on demand via apps), which allocate work to individuals in a specific geographical area. Simply put, it concerns temporary technology-based work involving independent contractors or freelancers, including individuals who offer their services to foreign clients, as well as ride-sharing drivers and delivery riders who provide their services through apps.
Even prior to the pandemic, the Philippines had a thriving gig economy. For some, this was an opportunity to work with increased flexibility to determine their work hours, preferred rates, and not having any bosses constantly supervising them. When the pandemic forced employers to downsize and retrench employees, some of the displaced workers turned to the gig economy for their means of livelihood.
While flexibility may be a key characteristic, some gig workers would still prefer the stability and benefits of traditional employment, especially for those constrained to turn to the gig economy and perform more physical services, such as delivery riders. Unfortunately, most gig workers are engaged as independent contractors and are not legally entitled to the mandatory statutory benefits to which employees are entitled. Instead, they are compensated based on the contract between the independent contractor and the principal or hiring party.
Ideally, an independent contractor and the hiring party would negotiate compensation for the work performed. However, for gig workers, some hiring parties have the fee structures that they impose on their independent contractors and can adjust at their own discretion. A disagreement in the fee structure was the cause of a rift between some food delivery riders and a food delivery platform. This caused the Department of Labour and Employment (DOLE) to examine the practices implemented by the food delivery platform, and eventually issue Labour Advisory No. 14 series of 2021, entitled “Working Conditions of Delivery Riders in Food Delivery and Courier Activities”.
In the advisory, the DOLE did not determine whether the delivery riders were employees of the hiring party or digital platform company. Instead, it declared that the four-fold test, economic reality test, and independent contractor test must be applied to determine whether the gig worker is truly an independent contractor or an employee in the eyes of the law.
The control test is common to the three tests since it is the most important index of the existence of the employer-employee relationship, that is, whether the employer controls or has reserved the right to control the employee, not only as to the result of the work to be done, but also as to the means and methods by which the same is to be accomplished. However, Pacific Consultants International Asia v Schonfeld (2007) stated that there is no employer-employee relationship between the parties if the power to control the worker, with respect to the means and methods of accomplishing his/her work, is absent.
The DOLE did not declare that all delivery riders and/or gig workers are employees, since their status must be determined on a case-to-case basis. Nevertheless, some gig workers feel like the course of their day is determined by the hiring party through the digital application.
Since the DOLE can only carry out and enforce laws, it cannot interfere in situations where there is no employer-employee relationship, which is the case with most gig workers who are considered independent contractors. To be treated as employees, the gig workers must seek the intervention of labour tribunals, which may evaluate their circumstances and declare the existence of an employee relationship.
Another possible recourse would be to lobby congress to pass a law that is favourable to gig workers. In this regard, the House of Representatives recently passed House Bill No. 8817, or the Freelance Workers Protection Act. If passed into law, a written contract between the freelancers and the hiring party will be required, and the freelancers shall be entitled to a night shift differential and hazard pay. A counterpart bill is pending approval in the Senate.
Any regulation and/or legislation may have a necessary effect on the opportunities offered by hiring parties to their workers in the country. It must be considered that some of them outsource work because of the low costs involved. We would not want to kill the goose that lays the golden egg.
As the world continues to address the health and economic effects of covid-19, the government continues to strive for means to address unemployment. The gig economy may be one of the solutions, but it needs to be examined and regulated to be a viable solution for all parties and the government.
Martin Luigi Samson is senior associate in the Davao branch of ACCRALAW