Labor laws and the gig economy

On May 1 every year, organized labor always rallies for the same demands: higher wages, security of tenure, lower prices, end of “endo-contractualization” or “5-5-5,” etc.

HOWEVER, MY THOUGHTS THIS YEAR VEER TOWARD UNORGANIZED LABOR, mainly the self-employed, those belonging to the so-called “gig” economy like musicians, dance instructors, singers, ballet dancers, and others similarly situated, like online sellers, influencers, delivery drivers, seasonal workers, and construction laborers who are paid on a per-gig or per-day basis.

Apparently, the word gig originated from musicians who ask one another, “May gig ka ba ngayon? (‘Do you have a gig today?’ or ‘Do you have a performance today?’ or, from the young, ‘Are you attending a party tonight?’)” The slang has been expanded to include those using an app to hitch a ride from Grab or Angkas, to buy fast food from Jollibee, or to purchase clothing, drugs, or homemade crafts. Or wider, to college professors, movie stars, directors, stuntmen, or even dance instructors.

Unlike regular employees, they do not work eight hours a day. Neither do they have a single employer nor observe regular hours. They work as they please and are paid according to the gig they perform. The gigs were exponentially expanded by the digital age.

Some components like movie stars are paid extravagantly, as much as P1 million for a day of taping and as low as P500 a day for garbage collectors and canal diggers. It is for these lowly workers that I ask: How can the law grant them the benefits enjoyed by organized labor?

Posed this question, AI-trained Jay de Claro, president of the Social Security System (SSS), explained that his office is in the process of issuing coverage for gig workers, as may be allowed by its charter (Republic Act No. 11199). That the SSS is planning to cover gig workers with benefits is laudable.

BUT, IN GENERAL, HOW DOES THE LAW PROTECT these lowly gig workers? To begin with, our Constitution (Article XIII, Section 3) has a bias for labor. This bias is reflected in Article 4 of our lengthy Labor Code: “All doubts in the implementation and interpretation of the provisions of this Code, including its implementing rules and regulations, shall be resolved in favor of labor.”

Gig workers are not directly covered by the Labor Code. Indirectly, however, I think Article 106 of the Code dealing with contractualization may be applied, “where the person supplying workers to an employer [1] does not have substantial capital or investment in the form of tools, equipment, machineries, work premises, among others, and [2] the workers recruited and placed by such person are performing activities which are directly related to the major business operation of the principal.” In such cases, the person or intermediary shall be considered merely as an agent of the employer who shall be responsible to the workers in the same manner and extent as if the latter were directly employed by him.

For example, if a “freelance” driver is provided a vehicle by the company, works regular hours, and is controlled by the said company, then he/she would be considered a regular employee. But where, as in the case of Grab, the driver owns or leases the vehicle from a third party and merely uses the Grab app to secure passengers, then he/she would be considered an independent contractor.

TO DETERMINE WHETHER AN OCCASIONAL WORKER, like a gig participant, is entitled to the benefits due to regular employees, the Supreme Court has laid down five criteria:

First, a worker is presumed a regular employee unless the employer establishes that (1) the employee was hired under a contract specifying that the employment will last only for a specific undertaking, the termination of which is determined at the time of engagement; (2) there was indeed a project undertaken; and (3) the parties bargained on equal terms, with no vices of consent.

Second, if considered a regular employee at the outset, security of tenure already attaches, and the subsequent execution of project employment contracts cannot undermine such status.

Third, even if initially engaged as a project employee, such employment may ripen into regular status if (1) there is a continuous rehiring even after the cessation of a project; and (2) the tasks performed by the alleged “project employee” are vital, necessary, and indispensable to the usual business or trade of the employer.

Fourth, regular workers are subject to the “no work, no pay” principle, such that the employer is not obligated to pay them when “on leave.” In case of an oversupply of regularized workers, then the employer can exercise management prerogatives to decide whom to engage for the limited projects and whom to consider as still “on leave.”

Fifth, submission of termination reports to the Department of Labor Field Offices “may be considered” only as an indicator of project employment; conversely, nonsubmission does not automatically grant regular status.

At bottom, I believe Congress should legislate on the status, benefits, and risks of the gig economy and its workers since the Labor Code was enacted prior to the digital age and therefore did not cover them directly.

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