Employment status of riders for e-commerce platform

In the recent case of Ditiangkin v. Lazada E-Services Philippines, Inc. (G.R. 246892, 21 September 2022), the Supreme Court declared that there exists an employer-employee relationship between Lazada, one of the leading e-commerce platforms in the Philippines, and its five riders who filed an illegal dismissal case against the e-commerce giant.

In ruling in favor of the riders, the Supreme Court highlighted the constitutional policy of full protection of labor and the right of the workers to security of tenure, which are deemed incorporated into the contract entered into by the parties.

Using the four-fold test (a) power of selection and engagement; (b) payment of wages; (c) power to dismiss; and (d) power of control, the Supreme Court sided with the riders and declared them as employees of Lazada.

Power of selection and engagement. Lazada directly hired the riders. Each of them signed an Independent Contractor Agreement with Lazada. Even though named as such, the protection afforded by the law to labor precedes the nomenclature and stipulations of the Contract.;
Payment of wages. As indicated in their contract, the riders were paid by Lazada the amount of P1,200 for each day of service;
Power to dismiss. Lazada had the power to dismiss the riders. In their contract, Lazada can immediately terminate the agreement if there is a breach of material provision and
Power of control. Lazada maintained the power to control the means and methods of how the riders performed their work. Specifically, Lazada required the riders to accomplish a route sheet that keeps track of the arrival, departure, and unloading time of the goods to be delivered. The riders also had to shoulder a penalty of P500 if an item was lost on top of its actual value. The riders were also required to submit trip tickets and incident reports to Lazada. Lastly, Lazada admitted to having different route managers to supervise the delivery of the products from the sellers to the buyers.

Additionally, the Supreme Court used the economic dependence test to acknowledge the presence of employer-employee relationship. Citing Francisco v NLRC (G.R. 170087, 31 August 2006), the proper standard of economic dependence is whether the worker is dependent on the alleged employer for his continued employment in that line of business.

Finding that there exists an employer-employee relationship, the riders are deemed to be regular employees of Lazada. They are thus entitled to reinstatement to their positions with full back wages, including their salary for holiday pay and the cash bonds they advanced to Lazada.