Are Your Filipino Freelancers Actually Employees? 10-Question Self-Audit Checklist

Author: Martin English — CEO & Founding Partner
Published: November 21, 2025
Updated: November 21, 2025
Disclosure: This article is for informational purposes only and does not constitute legal advice.

Audience & Intent

Who this guide is for

• US, AU, UK, EU founders, CFOs, COOs, HR and Legal leads hiring in the Philippines.

• Teams with 5–100 remote staff currently labelled as freelancers, contractors, consultants or VAs.

• Companies that suspect: “We treat them like employees… but on paper they’re freelancers.”

What you’ll get

• A 10-question self-audit checklist you can run in 10–15 minutes.

• A simple scoring system to classify roles as low / medium / high misclassification risk.

• Clear guidance on what to do next if your score is high (including how an EOR fixes the problem without opening a PH entity).

 

TL;DR: Are your Filipino freelancers actually employees?

If you’re asking, “Are my Filipino freelancers actually employees?”, here’s the short answer:

• Philippine law looks at reality, not labels. Calling someone a “freelancer” doesn’t help if you control their hours, tools and KPIs.

• If they work full-time or close to full-time only for you, do core roles, and are integrated into your team and systems, they are very likely employees in substance.

• This 10-question checklist gives you a quick, practical risk score for each person or role.

• If the score is high, the cleanest fix (without opening a PH entity) is usually to convert them into Employer of Record (EOR) employees with proper contracts, payroll and benefits.

 

Key takeaways

• Labels don’t decide status — control, integration and economic dependence do.

• You can triage your roster into green (0–3), amber (4–6), red (7–10) in a single working session.

• Red scores (7–10) mean you’re treating someone like an employee while calling them a freelancer — that’s where misclassification risk lives.

• You don’t need to convert everyone overnight; start with a pilot group of high-risk, high-value roles.

• Moving high-risk freelancers into EOR employment usually improves compliance, retention, and investor confidence at the same time.

 

Quick primer: why this matters in the Philippines

In the Philippines, classification typically turns on:

• The four-fold test (who hires, who pays, who can dismiss, who controls how the work is done), with control as the most important element.

• DOLE’s view on whether there is a genuine independent business behind the “contractor”, or whether it’s just a way to avoid direct employment.

• If the reality looks like employment, DOLE or the courts can treat you (or a local partner) as the real employer, with liability for back wages, 13th month, leaves, SSS/PhilHealth/Pag-IBIG, and potential termination disputes.

This checklist doesn’t replace legal advice — it tells you where the fire is most likely burning.

How to use this 10-question self-audit

1. List your Filipino freelancers/contractors.
   Start with people in core, recurring roles (support, dev, finance, EA/VA, marketing, PMs).

2. Answer the 10 questions for each person or role.
   Use how things actually work today, not what the contract or invoice says.

3. Score each person with the scoring rules below.

4. Tag each as Low / Medium / High risk.

5. Use the next-step guidelines to decide whether to keep, adjust, or convert the arrangement (often via EOR).

You can do this in a simple sheet:
Name / Role / Score / Risk / Notes / Next Step.

The 10-Question Self-Audit Checklist

For Questions 1–9:

• Yes = 1 point (employee-leaning)

• No = 0 points (contractor-leaning)

For Question 10:

• Yes = 0 points (contractor-leaning)

• No = 1 point (employee-leaning)

 

1. Do we decide their regular working hours?

Example: “You’re on shift Monday to Friday, 9am–6pm PH time.”

• Yes: We control their daily/weekly schedule.

• No: They largely choose when to work, as long as they hit deliverables.

 

2. Do they attend internal team meetings like employees?

Stand-ups, weekly team calls, 1:1s, all-hands.

• Yes: They join recurring internal meetings as if they’re part of the team.

• No: We only meet when needed to discuss specific projects or deliverables.

 

3. Is their work managed through our internal tools and systems?

Company email, Slack/Teams, project tools (Jira, Asana, Notion), CRM, etc.

• Yes: They use our internal systems like any team member.

• No: We mostly interact via email or external channels; they use their own tools.

 

4. Do we pay them a fixed monthly amount, not per project?

• Yes: They receive a regular monthly amount (retainer or salary-like payment).

• No: We pay per project, milestone, or clearly scoped deliverable.

 

5. Has the engagement been continuous for 6–12+ months?

• Yes: They’ve been working with us on an ongoing basis for at least 6–12 months.

• No: The work has been short-term, intermittent, or clearly project-based.

6. Are they expected to work primarily or only for us?

• Yes: In practice, we expect them to be mostly or fully dedicated to us.

• No: They clearly work with multiple clients and we respect that.

7. Would they struggle financially if this engagement stopped?

• Yes: We’re their main or only income source; they’re economically dependent on us.

• No: We’re one of several clients; losing us would hurt, but not devastate.

 

8. Are they doing core roles in our business?

Think: support agents, core developers, finance staff, EAs/VAs, PMs, key marketers.

• Yes: They perform day-to-day work central to our product or service.

• No: They handle non-core, specialist or peripheral tasks (e.g., a one-off implementation).

 

9. Do we manage their performance like employees?

Setting KPIs, doing performance reviews, giving warnings, coaching plans.

• Yes: We set KPIs, track performance regularly and may issue warnings.

• No: We mostly evaluate them at the project level, not via internal HR processes.

 

10. Can they freely subcontract or send a substitute?

This one is reversed for scoring.

• Yes: They can send a substitute or sub-team (contractor-leaning) → 0 points

• No: We expect that specific person to do the work (employee-leaning) → 1 point

 

Scoring your answers

Add up the points from all 10 questions for each person or role.

• Questions 1–9: Yes = 1, No = 0

• Question 10: No = 1, Yes = 0

Maximum score: 10

0–3 points: Low employee-likeness (more contractor-shaped)

You’re likely dealing with genuine contractors, especially if:

• Work is project-based and time-limited.

• There is limited control over daily schedule and methods.

• They have other visible clients and a clear external business presence.

What to do:

• Keep an eye on scope, tenure, and control — don’t let a project morph into a full-time role without revisiting status.

• Make sure your contracts emphasise deliverables, independence, and the right to substitute.

 

4–6 points: Medium risk / grey zone

This is the “it depends” area. Something about the setup is drifting toward employee-like:

• They’re involved in ongoing, recurring work,

• You’re starting to control the how, when, and where, and

• They’re integrated into your team rhythms and tools.

What to do:

• Review the specifics with PH-savvy legal counsel or an EOR partner.

• Decide role by role whether to:

  • tighten the contractor model (shorter term, more outcome-based, less control), or

  • start planning conversion into EOR or entity-based employment.

• For medium-risk roles in core areas, assume they will eventually need a proper employment structure if they stay long-term

7–10 points: High risk (they already look like employees)

If someone scores 7 or above, they almost certainly:

• Work full-time or close to full-time for you,

• Are deeply embedded into your team and systems, and

• Do core, recurring work under your managers.

In reality, they are already employees — just not documented as such.

What to do:

• Treat this as a priority risk to address in the next 30–90 days, not “someday”.

• Map out a conversion plan (comp bands, titles, EOR vs entity) for these people.

• Use EOR if you don’t have a PH entity and want to move quickly.

 

What to do if your score is high: three practical paths

Once you know who is high-risk, you essentially have three options:

1. Convert to employees via a Philippine Employer of Record (EOR)

Best if you:

• Don’t have a Philippine legal entity.

• Want to keep the talent and ** reduce risk** quickly.

• Need payslips, statutory proof, and compliant contracts for investors or internal audit.

With an EOR:

• Your high-risk freelancers become employees of the EOR in the Philippines.

• The EOR runs payroll, SSS/PhilHealth/Pag-IBIG, 13th month, leaves, and HR basics.

• You keep day-to-day management and KPIs, but now in a compliant wrapper.

 

2. Convert to employees under your own PH entity

Best if you:

• Already have, or are committed to setting up, a Philippine entity.

• Want full, long-term control of all legal, payroll, and HR levers.

This gives maximum control, but requires:

• Incorporation and registration,

• Setting up internal payroll and HR processes, and

• Ongoing compliance overhead.

 

3. Rescope or exit misaligned contractor setups

Sometimes the right move is to:

• End the engagement (with fair notice, handover and support), or

• Redesign it into a truly contractor-style project: fixed scope, fixed timeline, limited control, and clear deliverables.

This is usually for non-core, lower-dependence roles where you don’t want long-term commitment.

How Smart Outsourcing Solution (SOS) uses this in real audits

In practice, we often start with something very close to this checklist:

1. Inventory: list all PH freelancers/contractors with role, start date, hours, pay, and exclusivity.

2. Score: run the 10 questions for each person and calculate their score.

3. Map: mark each as green (0–3), amber (4–6), red (7–10).

4. Plan: design a conversion roadmap — who to move to EOR, when, and under what packages.

5. Execute: convert high-risk contractors into EOR employees in weeks, often starting with a pilot.

That lets leadership say to investors or auditors:

“We identified contractor risk, quantified it, and moved key people into a compliant employment structure in the Philippines.”

Related guides in this series

From this checklist, you should internally link to:

• Contractor vs Employee in the Philippines (2025): Tests, Red Flags & Fixes via EOR
  Deeper dive into the legal tests and red flags.

• Move Freelancers & Contractors to an Employer of Record (EOR) in the Philippines
  Step-by-step guide and hub for moving different roles into EOR.

• 30/60/90-Day Post-Switch Health Check: How to Prove Your New Philippines EOR Is Actually Compliant
  How to show your board and investors that the new structure works.

 

FAQs: Self-auditing your Filipino freelancers

1. What score should start to worry me?

Anything 7 or above should be treated as high-risk for misclassification. Start planning a proper employment structure (EOR or entity) for those roles within the next 30–90 days.

2. We only call them “freelancers” by habit. Does that matter?

Not much. Philippine regulators and courts look at how the relationship works in real life — hours, control, integration, dependence — not what you call the invoice.

3. Do I have to convert everyone at once?

No. Most companies start with a pilot group of high-risk, high-value roles, then expand conversion as budgets and internal bandwidth allow.

4. Will freelancers accept conversion to employment?

In our experience, most Filipino freelancers in full-time, long-term roles welcome conversion when:

• Their net pay stays competitive, and

• They gain stability, benefits and proper employment records (payslips, COEs).

 

Next steps

If this checklist surfaced several amber and red scores, you can:

• Use it to start an internal discussion with founders, finance, HR and legal.

• Read the deeper Contractor vs Employee and Move Freelancers to EOR guides.

• Talk to an EOR partner about what a 30/60/90-day conversion plan would look like for your roster.

And if you want a quick reality check:

Book a short Contractor Self-Audit Session
Bring your scores and a simple list of Filipino freelancers; we’ll walk through where your risk sits and how EOR can clean it up without you rushing into a full PH entity.