Can you run a business without hiring an employee?
As its dictionary meaning goes, to hire is to employ, to engage, to appoint, to enlist, to sign up or to secure the services of someone. Hiring refers to the process of engaging somebody for his service. Whatever relationship will result from that hiring will depend on the agreement and its execution. Any businessman can definitely run a business without hiring anyone. It is a given that he and his partners can do everything on their own if they choose to.
But can the businessman run his business with the help of another without having to be an employer? Still definitely yes.
Hiring somebody in running your business does not necessarily have to be hiring him as an employee. Indeed, the businessman has the prerogative of hiring the services of freelancers and consultants, without having to shoulder the obligations of an employer under the Labor Code. While the relationship between an employer and an employee is specifically governed by the Labor Code, engaging freelancers and consultants should be subject to the provisions of contract law in general.
The only concern is this. How can you tell if the person you are hiring will not be considered by law as an employee? How can you be so sure that he will not come to you later and invoke his rights to labor benefits and to security of tenure?
Employee or not, the person you are hiring, of course, has rights. The only difference is that, in simple terms, the rights of an employee are defined by the Labor Code while the rights of a non- employee are defined by the terms of his contract. In general, we can say that an employment relationship is more restrictive in nature while a consultancy or freelance agreement has more leeway.
Control is the single most important factor in determining whether the person you hired is an employee. This pertains to control over the means and methods of doing the work. Generally, the employee’s work performance is subject to your control while a consultant’s service is not, except only as to the desired result. While the employee does his work under your supervision, the consultant renders service using his own means, styles and methods, free from your control; your only concern is the delivery of the result. To otherwise ensure which kind of relationship you are getting into, it is important to define everything under a written contract, especially if your intention is to enter into a consultancy agreement. Not only that, you have to make sure that the actual execution is consistent with what is written.