VA Guide Series: Supreme Court Ruling on Contractors vs Employees
10 min read
This guide is for Filipino VAs and freelancers, and the clients who work with them. It follows a group of delivery riders through a Supreme Court case, then translates their story into a VA's week: a laptop for the motorcycle, a task list for the delivery route. You also get ready-to-send messages.
Key Takeaways
- The riders owned their motorcycles and were paid per delivery, yet the Court found they were employees. A VA's own laptop and set monthly rate raise the same kind of question.
- What mattered was who controlled the work, not the title or who owned the tools.
- Many VA arrangements are genuine freelancing. This is about noticing when yours has started to look like a job, and how to ask about it kindly.
- The dispute took nearly eight years. A calm, early conversation is kinder to everyone, and an Employer of Record (EOR) is one option among several.
Imagine you are a delivery rider
You own your motorcycle and pay for your own fuel. You are paid for the deliveries you complete, under a rate matrix. The business that takes you on says you are an independent contractor, not an employee.
On paper, that sounds like a straightforward freelance arrangement, and plenty of people would call it one.
Now add what the Court later found. You report to an operations manager and to the hub at set times. Someone else decides which packages you carry and which areas you cover. There are standards for timeliness and complete deliveries, and the rate matrix lets the business hold you liable for losses and delays.
Do you still sound like an independent contractor?
That was the situation of a group of Filipino riders who delivered for Lazada's account through a small logistics business, T. Osada Logistics and Services. On February 24, 2026, the Supreme Court ruled on their case in Ador v. T. Osada Logistics and Services (G.R. No. 265600).12 The decision is about riders, not VAs. But the question underneath it is one remote workers recognize, and the riders' story answers it better than any definition could.
A few weeks, then a message
By the riders' account, they were taken on around April 18, 2018. A dispatcher named Jovy, who had worked for the owner's taxi business, helped recruit the others. Each rider used their own motorcycle to collect parcels from Lazada's warehouse and deliver them to customers.1
Then, in early May, the riders say an operations manager told them to stop reporting for work from May 7. There was no written notice and no reason given. Other riders took over their routes. Jovy says he was told to stop on May 28.1
The business told a different story. It said the riders were independent contractors, that no employment relationship existed, and that they stopped reporting because of a misunderstanding about their arrangement and pay. It denied dismissing anyone.1
Within weeks, the workers filed complaints for illegal dismissal. Lazada was named at first, but the claims against it were later dropped, so the dispute was between the workers and the business that engaged them.1
This was not an argument over vocabulary. It was a dispute over whether these workers could claim the protections of Philippine labor law, such as security of tenure.
Now swap the motorcycle for a laptop
The riders delivered parcels. You deliver inboxes, calendars, customer chats, bookings and spreadsheets. The tools are different, but the details of the working relationship translate surprisingly well. Here is the riders' world next to a VA's.
| The riders' world | A VA's world |
|---|---|
| Own motorcycle and fuel | Own laptop, internet and headset |
| Paid per delivery under a rate matrix set by the business | An hourly rate or monthly retainer set by the client |
| Reported to a manager and the hub at set times | Daily stand-ups, a fixed shift, a time tracker, "online by 9" |
| The business chose the packages and areas | The client assigns the task queue, inbox, accounts and priorities |
| Standards for timeliness and complete deliveries | Response-time targets, quality scores, KPIs |
| Could be held liable for losses and delays | Deductions or penalties for missed or late tasks |
| Told to stop reporting, with no written notice | "We won't need you from Monday," and access switched off |
Swipe sideways on small screens.
These are parallels, not findings. The Court decided a case about delivery riders, and a VA's situation has to be looked at on its own facts. But these are the kinds of details the Court weighed.
Does any of this sound familiar?
- "Please be online from 9 to 6 and use the time tracker."
- "Follow our SOP exactly, and check in with me every morning."
- "Please don't take other clients while we work together."
- "We won't need you from next week."
None of these is wrong on its own. Many are normal in a healthy working relationship, and plenty of genuine freelancers have some of them. Taken together, they tell the real story.
Nearly eight years, four rulings
What followed was slow. The Labor Arbiter ruled for the workers in February 2019. The National Labor Relations Commission (NLRC) reversed in July 2019, finding no proof of dismissal and telling the riders to return to work without backwages. The Court of Appeals upheld that in August 2022. In February 2026, the Supreme Court reversed it all.1
Notice something. For most of this journey, employment itself was not the sticking point. The Labor Arbiter, the NLRC and the Court of Appeals all treated the riders as employees, and the business had not timely challenged that. The Supreme Court examined the question anyway, because the business kept denying it.1 That part of the decision is the one most useful to freelancers.
What the Court looked at
The Court did not start from the paperwork. It applied the four-fold test, treating control over the work as the most significant element.1 It followed a 2022 ruling about other Lazada riders, where the Court also looked past an independent contractor agreement.3 Here is how each question played out for the riders.
| The question | What the Court found |
|---|---|
| Who hired them? | The business took the riders on to fulfill its Lazada delivery contract. They were not offering courier services to the public. |
| Who paid them? | The business, under a rate matrix it set. The riders did not bill Lazada or the customers. |
| Who could dismiss them? | The business. A manager told them to stop reporting, and the rate matrix let the business hold them liable for losses, delays or lapses. |
| Who controlled the work? | The business set where and when they reported, which packages they delivered, which areas they covered and the performance standards, even though the motorcycles were theirs. |
Swipe sideways on small screens.
A VA can ask the same four questions. Who found and engaged me? Who pays me? Who can end the work? Who decides how I do it?
The Court also used an "economic reality" lens. Its factors include how integral the work is to the business, the worker's investment in equipment, the degree of control, the chance of profit or loss, and how dependent the worker is on the business.1 The riders were not running separate courier businesses. They were there to deliver on the business's promise to Lazada, and they relied on that engagement for their livelihood.1
Two more points. When status is disputed, the business bears the burden of proving the worker is a true independent contractor.1 And a document saying no employment relationship exists does not hold if the real arrangement points the other way. In the Court's words, "Protection to labor prevails over contractual labels."1
Your laptop is their motorcycle
This is the part many VAs recognize. You bring your own laptop, your own internet and often your own software. Designers and developers do the same. Owning your tools feels like the mark of a contractor.
The riders owned their motorcycles, and the Court still found them to be employees. Investment in equipment is one factor in the economic reality test, but it sits beside the others. Here the business decided where and when they reported, what they delivered, where they went and which standards they met.1 Equipment did not outweigh control.
This matters for remote workers who assume that working from home on a personal laptop settles the question. It does not settle it in either direction. A VA with several clients, their own methods and their own business can be a true contractor. A VA who follows a fixed schedule under daily supervision may raise questions, whatever equipment they own.
What it cost, and what it took
The Court ordered the business owner, who ran the business as a sole proprietor and was therefore personally responsible, to pay each worker separation pay instead of reinstatement, full backwages from the date of dismissal until the decision becomes final, and attorney's fees of 10 percent of the award, with 6 percent yearly interest from finality.1 Moral and exemplary damages were not awarded, and the owner's spouse was not found personally liable.1
Behind the figures are people. The riders lost their work in a conversation in the field, then waited years for an answer. The business owner faced a judgment that arrived long after the events. Nobody in a dispute like this comes out unscathed, which is one more reason to talk early.
If this sounds like you
Here are three illustrative VA situations. They are examples, not legal assessments of anyone's status.
The one-client VA
You support one overseas client from Monday to Friday on a fixed schedule. They assign your tasks daily, supervise how you do them and expect you available during set hours. Calling yourself a freelancer does not settle your status. The actual arrangement needs a look.
The multi-client VA
You support a few clients, choose your own hours and methods, quote per project or retainer, and could say no to a request. That may be more consistent with genuine independent contracting.
The VA on a shift
You work a set shift for one client, follow scripts and quality scores, report to a team lead, and a missed shift is handled as a disciplinary matter. That may raise questions about whether the relationship is employment.
Contracting suits many VAs, and nothing here says otherwise. If you are happy as a freelancer, a conversation may simply confirm it. If you are not sure, here is a calm way to start:
- Write down how your work actually runs: hours, who gives instructions, which tools, and whether you have other clients.
- Re-read your agreement for scope, payment and notice terms.
- Decide what you want: clarity, a change, or a record that you asked.
- Ask kindly and in writing, using the messages below.
- For a specific situation, ask DOLE or a Philippine labor lawyer.
If you are the client
The story does not say you cannot hire Filipino VAs. It asks you to check that your paperwork describes the arrangement you really have. Five questions help:
- Are you hiring a specific service, or filling an ongoing position?
- Does your VA genuinely decide how and when the work gets done?
- Do you direct their day the way an employer would?
- Do they run an independent business, or rely mainly on you for work?
- Does your written agreement match how you actually work together?
If the picture is unclear, ask DOLE or a Philippine labor lawyer, and talk with your VA. Our guide on comparing the real cost of contracting and employment can help with the numbers.
Where an EOR fits
If you need a dedicated, long-term team member, formal employment may fit better than a contractor arrangement. An Employer of Record (EOR) is one way to do that without opening a Philippine entity. The EOR is the legal employer and the client directs the day-to-day work.
Zero-Ten Park's published scope covers onboarding and legal employment, payroll and tax filing, statutory benefit compliance, and HR support.4 The EOR wiki has more detail. An EOR is not a way to disguise a relationship or make responsibility disappear, and how duties are shared depends on the agreement and the facts. Other routes exist too, including your own entity or staying a genuine contractor.
- HMO is not in the published scope. Any private benefit is agreed separately, case by case.
- The service page lists a standard rate of US$230 (Php 12,000) per employee per month, and a custom rate of US$350 (Php 20,000) with a different feature set. Confirm current rates with Zero-Ten Park.
- Do not switch to an EOR just to get one benefit, or to get around an existing agreement.
Message builder, checklist and share box
Use the builder to draft a first message, the checklist to prepare, and the share box to send this guide to the other side.
Share this with your client (or your VA)
A gentle way to open the topic without pointing a finger. The guide link fills in from this page's address.
Copy-ready messages
Eight messages, from easy to tricky. Replace anything in [square brackets] and make them sound like you. Each one is short on purpose.
1Ask your client to review how you work together Easy: VA to client
Why it works: It opens with appreciation and a small, time-boxed ask, so it reads as a check-in rather than a demand.
2Ask for scope, hours and notice terms in writing Easy: VA to client
Why it works: It offers to do the drafting, which takes work off the client and keeps the tone collaborative.
3Reply when your client says "you're a contractor, it's fine" Difficult: VA to client
Why it works: It acknowledges the client's view first, then brings the talk back to facts instead of arguing about labels.
4Ask for clarity if you are suddenly told to stop Difficult: VA to client
Why it works: It states what you understood, asks for the facts in writing and stays calm, which helps if questions come up later.
5Invite a long-time contractor to review your setup Easy: client to VA
Why it works: It puts the worker's preferences first and makes clear that no change will be imposed.
6Respond when a VA asks about employment and the budget is tight Difficult: client to VA
Why it works: It is honest about constraints, sets a date, and avoids a rushed yes or no.
7Reply when you would rather stay a contractor Difficult: VA to client
Why it works: It respects your own choice without closing the door, and still asks for clarity.
8Ask a provider for a written scope and quote Easy: either side
Why it works: It asks about scope, fees and responsibility before any commitment, and gets the answers on paper.
FAQ
I'm a VA with one overseas client. Does that make me an employee?
Not automatically, and not automatically a contractor either. It depends on how the work actually runs, especially who controls how and when it is done. A VA with several clients and their own methods looks different from one on a fixed schedule under daily supervision. For a specific situation, ask DOLE or a Philippine labor lawyer.
Does using my own laptop and internet make me a contractor?
Not by itself. The riders owned their motorcycles and were still found to be employees, because the business controlled where and when they reported, what they delivered, where they went and which standards they met. Your own equipment is one factor among several.
My agreement says I'm an independent contractor. Does that settle it?
Not by itself. The Court said the parties' own description does not decide the relationship, and that a stipulation of no employment relationship cannot stand when the real arrangement shows otherwise. A clear agreement still helps, especially when it matches how the work actually runs.
Is it okay to ask my client about this?
Yes. Many VAs raise it kindly and in writing, and the messages in this guide are written for that. Asking is not a complaint, and it does not guarantee any particular outcome. Any change should be agreed by both sides and written down.
Can a VA become an employee, and does it have to be through an Employer of Record?
It can be possible if both sides agree. Common routes include employment through the client's own Philippine entity or through an Employer of Record, and some people choose to stay genuine contractors. Pay, benefits, notice and responsibilities should be agreed and written down.
Back to your laptop
The riders' story started with a motorcycle and a rate card and ended, years later, with a ruling about what actually happened at work. The name on an agreement did not decide it. The daily reality did.
As a VA, you do not have to give up freelancing, and clients do not have to stop hiring freelancers. You only need to notice when the day-to-day looks like a job, and talk about it kindly, before a misunderstanding makes the decision for you.
Not sure how your own arrangement should look?
Tell us what you are weighing and we will help you understand your options, with no pressure to change anything. If formal Philippine employment is on your mind, you can learn more about Zero-Ten Park's EOR service or book a free consultation.
Sources
Reviewed November 3, 2026. Rules, rates and fees change, so verify with the official sources.
- Supreme Court of the Philippines, Ador v. T. Osada Logistics and Services, G.R. No. 265600 (Third Division, February 24, 2026). Full decision read November 3, 2026. Every case fact, finding and order in this guide comes from it.
- Supreme Court of the Philippines, official case listing for G.R. No. 265600. Checked November 3, 2026.
- Supreme Court of the Philippines, Ditiangkin v. Lazada E-Services Philippines, Inc., G.R. No. 246892 (September 21, 2022), the earlier Lazada riders case that Ador follows. Checked November 3, 2026.
- Zero-Ten Park, Employer of Record service page (last modified September 2, 2026; checked November 3, 2026): published scope, standard rate of US$230 (Php 12,000) and custom rate of US$350 (Php 20,000) per month.
- Zero-Ten Park, EOR wiki. Confirm current terms with Zero-Ten Park.
- DOLE, official website, for current rules on employment relationships and contracting. Confirm current rules.
General educational information only. Not legal, tax, insurance or financial advice. The case summary is simplified and does not cover every part of the decision. Some facts, such as the hiring date and what the riders were told, are the workers' account as recorded by the Court. Confirm anything specific to your situation with DOLE or a Philippine labor lawyer.
