Retainers Are Not Regular Employees

Let’s talk about “retainers”

For those who are confused, retainers are not regular employees of a company.

Retainers can be classified as independent contractors who are highly skilled professionals and freelancers and are paid in an agreed rate whether it is in hourly, daily, weekly or monthly basis.

Nowadays, doctors and some nurses in the companies are called retainers.

They are employed by a third party company or contractor to perform a work or service under a service agreement with the third party’s corporate account. With this, these health care professionals are not regular employees of the corporate account, but in retainer agreement with them.

In the past, there were two nurses who rendered services in a five-star hotel as company nurses for 3 years. The clinic is provided and maintained by the hotel for their guests and employees and in retainer agreement with a doctor.

The twist here was that the nurses were hired by the retainer doctor to help her with the clinic works. The doctor was the one paying for their salaries and government-mandated benefits and they followed the guidelines given to them by the doctor.

Eventually, the nurses complained and claimed their rights as regular employees of the hotel (regularization, payment of holiday pay, night differential and bonuses). However, their case was dismissed because of the absence of the employer-employee relationship between the nurses and the hotel.

One of characteristics of a retainer is having no employer-employee relationship with the company where they are rendering their service.

Their retainer agreement is a special kind of contract in order to just provide a service with pre-agreed timeline under a service agreement.

In an employer-employee relationship, four conditions must exist.

1. The power to hire the employee.

This is when the employee underwent selection of applicant, interview, and submission of 201 documents.

2. The power to pay their wages

This is when the employer or a third party pays the wages and government benefits of the employee. It also includes paying the employee holiday pays, overtime pays, night differentials and bonuses.

3. The power to terminate the employee

This is when the employee violated the company rules and, followed by due process, the employer dismissed the employee.

4. The power to implement and apply company’s policies and methodology to the employee.

This is when the employer has the power to implement the fixed working hours of the employee and gives specific instructions on how the employee will perform on his/her services.

The nurses did not win the case that they filed because it was proven that the hotel has no business with them. The hotel did not hire them, was not the one paying their wages and the hotel’s policies were not applied to the nurses. Hence, the employer-employee relationship between the nurses and the hotel did not exist.

Based on the story above, it was emphasized that retainers have fewer legal rights than a regular employee.

· Holiday pays, night differentials, overtime pays and bonuses may or may not be applicable to them depending on the retainer agreement and because they are not regular employees of the company.

· They must register with the country’s Bureau of Internal Revenue (BIR) as self-employed and are also subject to a variety of tax obligations and must comply with monthly, quarterly, and annual reporting obligations.

They also have fewer obligations and restrictions in the workplace.

· Retainers can work any time they want and can be on-call.

· They can also hire staff to complete the work. The retainer doctor mentioned above hired the nurses to help her in the clinic duties. During the peak season of the hotel, the retainer doctor would hire additional nurses to help them. A service charge was added to the doctor’s payment that was billed to the Hotel by the doctor.

What can happen to the retainer doctors and nurses under a third party provider?

In this case, the third party are called contractors.

Under D.O 18-a, contractors are persons, or entities, including a cooperative, engaged in a legitimate contracting or subcontracting arrangement providing either services, skilled workers, temporary workers, or a combination of services to a principal under a Service Agreement.

“Contractor’s employee”, on the other hand, includes one employed by a contractor to perform or complete a job, work, or service pursuant to a service agreement with a principal or their corporate account.

It shall also refer to regular employees of the contractor whose functions are not dependent on the performance or completion of a specific job, work or service within a definite period of time, i.e., administrative staff.

In corporate clinic management, it is third party’s main business to provide skilled professionals such as retainer nurses and doctors to their corporate account. These retainer nurses and doctors are considered contractor’s employees who shall refer to regular employees of the contractor.

These healthcare providers shall have an employer-employee relationship to their contractor, but they will be working as retainers to the corporate account, meaning they shall not have an employer-employee relationship with them.


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