With the current economy and health hazards, businesses are closing down, and people are losing jobs. But even with this, opportunities are showing up, especially in the online world. It’s perfect for finding an online job to make ends meet.
As you scour the internet, you find two main types of online opportunities. You can either become an independent contractor or a direct-hire employee. What’s the difference? Here are 5 main differences you should check out.
Disclaimer: This article is not a replacement for legal advice. For any concerns with your specific working relationship classification, better consult the experts.
Supervision and Manner of Work
The first distinction is your working-relationship. As an employee, you are under a company, and usually, they have control over how you will be working. They will supervise with clock-in and clock-out attendance.
While independent contractors are generally under their own company. They are self-employed individuals who have clients paying them either hourly or per project. Most can work depending on their schedule. You can also set how you’re going to work and deliver the results they want.
Mandatory Government Benefits
In the Philippines, every employee is entitled to mandatory benefits such as:
- SSS
- Philhealth
- PAGIBIG
Social security, healthcare, and housing benefits aid Filipino workers for a better life. Of which, your employer has a portion to pay for it. Employees also have 13th-month pay and higher pay during holidays and overtime.
On the other hand, independent contractors can still opt for the mandatory benefits above. But you have to pay for it on your own. It’s not “mandatory” for your clients to shoulder some part of it.
Taxes
For employees, taxes are straightforward. The company prepares and remits your taxes for you. On every payday, you receive your salary net of tax.
As for independent contractors, you get your salary in full before taxes. And because you have to prepare your taxes yourself, you can deduct allowable expenses like electricity, internet bill, and more. In essence, you have more control over your financial obligations ebefore taxes as an independent contractor.
DOLE Classification
With the above choices, it’s essential to know how the government classifies employment vs. independent contractors. DOLE has a four-fold test.
- Does the employer have the power to select and hire an employee?
- Does the employer pay wages?
- Does the employer have the power to dismiss the employee?
- Does the employer have the power to control the employee’s conduct? Specifically, does the employer have the power to control both the end or the goal and the manner and means to achieve the end or the goal?
Take note; the answer should be YES TO ALL the questions above. One “NO” can make you an independent contractor.
Security of Tenure
For termination, employees in the Philippines are under the rules of DOLE, especially if you are regularized after 6 months. You can’t fire someone instantly without just cause. And labour arbitrations are quite expensive.
It ensures the security of tenure for the employees.
As for independent contractors, termination is based on the contract stipulations. Or they can even cancel at any time. But there’s no specific governing body protecting independent contractors. That’s why most independent contractors need to have a pipeline of clients to be more stable.
Which Do You Choose?
There’s no right or wrong choice here. It all depends on what you want. Choose employment if you don’t want to look for many clients and you don’t want to be bothered with passing taxes and mandatory deductions.
If you want more control over how you work, the time you work, and managing your pay, you can opt to be an independent contractor.
Is There a Way to Enjoy the Benefits of Both?
If your employer allows it, you can be an employee for one company and become an independent contractor in your spare time. By having an extra remote working job, you can actually enjoy both.
And when the time comes that your income is greater than your remote job, you can opt to go freelance full time and pay for your own mandatory benefits.
How about the security of tenure? If you’re partnered up with a reputable company like Remote Staff, you can be assured of the security of tenure. Because if you lose one client, the agency will replace them for you, depending on your skills or past performance.
So, if you want to become an independent contractor with most of the benefits of an employee, you can check out Remote Staff. You can also check out these high-paying online jobs you can take advantage of. Cheers!
