Understanding the Difference Between Employer and Employee Roles

An employer is a person, company, or organization that hires people to perform work. An employee is the person hired to perform that work in exchange for compensation.

That is the simplest difference between an employer and an employee.

For example, if ABC Accounting Services, Inc. hires Maria Santos as a bookkeeper:

Employer: ABC Accounting Services, Inc.
Employee: Maria Santos
Position: Bookkeeper

The employer provides the job and pays the employee. The employee performs the work required by the job.

But the relationship involves more than salary and assigned tasks. In the Philippines, being classified as an employer or employee can affect payroll, taxes, SSS, PhilHealth, Pag-IBIG, workplace rights, benefits, and how an employment relationship can be ended.

Understanding who the employer is can become especially important when someone works remotely, through a staffing company, for a BPO, or for a foreign business using an Employer of Record.

What Is an Employer?

An employer is a person or organization that employs one or more workers.

In a typical company, the employer is the business that enters into an employment relationship with the employee.

The employer generally determines what work needs to be done and manages the employment relationship.

For example:

Company: Manila Digital Solutions, Inc.
Worker: Juan Dela Cruz
Position: Software Developer

Manila Digital Solutions, Inc. is the employer.

Juan Dela Cruz is the employee.

The company's owner, CEO, or Juan's direct supervisor is not necessarily his employer as an individual. The employer may instead be the legal company that hired him.

This distinction matters when completing employment contracts, government registrations, background checks, and other official documents.

What Is an Employee?

An employee is a person who performs work for an employer in exchange for compensation under an employment relationship.

Employees can work in many different positions.

Examples include:

• Accountant

• Software developer

• Virtual assistant

• Nurse

• Sales representative

• Customer service representative

• Marketing specialist

• Executive assistant

• Operations manager

A person's job title does not determine whether they are an employer or employee.

A marketing manager can still be an employee. A chief technology officer can also be an employee.

What matters is the underlying relationship between the worker and the organization.

Employer vs. Employee: The Basic Difference

The easiest way to understand the distinction is to look at what each party does.

The two sides have different responsibilities, but they are part of the same employment relationship.

What Are the Responsibilities of an Employer?

An employer's responsibilities go beyond simply paying a salary.

The exact obligations depend on the employee, company, and applicable Philippine laws, but they can include several important areas.

Paying employees correctly

Employers are responsible for paying employees according to the agreed compensation and applicable employment requirements.

Payroll may involve:

• Basic salary

• Applicable overtime

• Holiday pay

• Night-shift differential

• Bonuses or commissions

• Allowances

• Payroll deductions

• 13th-month pay

The Department of Labor and Employment publishes information and labor advisories concerning Philippine employment standards.

Handling SSS contributions

Covered private-sector employers have responsibilities under the Philippine Social Security System.

These can include employer registration, reporting employees, deducting the employee's contribution, paying the employer's contribution, and remitting the required amounts.

Official employer and contribution information is available from the Social Security System.

Handling PhilHealth

Employers may also have responsibilities involving employee registration, deductions, employer contributions, and remittances to PhilHealth.

Official information is available through PhilHealth.

Handling Pag-IBIG

Pag-IBIG Fund is another part of employment administration for covered workers.

Employers may have responsibilities involving registration, employee deductions, employer contributions, and remittances.

Employers and employees can check current information through the Pag-IBIG Fund.

Maintaining employment records

Employers should maintain accurate records covering matters such as:

• Employment contracts

• Salary

• Attendance

• Payroll

• Leave

• Government contributions

• Changes in employment

• Employee information

Good recordkeeping protects both sides when questions or disputes arise.

Providing a safe workplace

Employers also have responsibilities involving occupational safety and health.

Workplace safety requirements depend on the nature of the business and the work being performed.

Information about Philippine occupational safety and health programs can be found through the Occupational Safety and Health Center.

What Are the Responsibilities of an Employee?

Employees also have responsibilities within the employment relationship.

These normally begin with performing the job they were hired to do.

Performing assigned work

Employees are expected to perform the duties associated with their position.

A customer service representative, for example, might be expected to respond to customers, document cases, and follow company procedures.

A software developer might be expected to build software, fix defects, review code, and document technical work.

The exact responsibilities should be made clear through the employment agreement, job description, company policies, and instructions from management.

Following reasonable workplace policies

Employees are generally expected to follow applicable company policies and procedures.

These can cover:

• Attendance

• Working hours

• Security

• Confidentiality

• Data protection

• Workplace conduct

• Equipment use

• Communication

• Leave requests

Employees should receive clear information about the policies that apply to them.

Providing accurate information

Employees may also need to provide accurate personal and employment information for payroll and government records.

This can include information connected to SSS, PhilHealth, Pag-IBIG, tax records, and banking.

Communicating changes

Employees should inform their employer when relevant information changes.

This might include:

• Address

• Bank details

• Contact information

• Government membership information

• Other information required for employment administration

Employer vs. Employee SSS Contributions

SSS provides a useful example of how employer and employee responsibilities differ.

Under the current regular Social Security contribution structure, contributions are shared between employer and employee.

The employer handles payroll administration, withholds the employee's applicable contribution, adds the employer's contribution, and remits the required amount.

The employee's share is therefore different from the employer's share.

Employees should also monitor their contribution history to make sure contributions are appearing correctly.

Current contribution schedules and other information are available from the Social Security System.

Employer vs. Employee in a Simple Payroll Example

Suppose Maria earns a monthly salary of ₱40,000.

Maria's responsibilities include performing the work she was hired to do and complying with applicable workplace policies.

Her employer's responsibilities can include:

Employer:

Pays Maria's salary

↓

Calculates payroll

↓

Withholds applicable employee deductions

↓

Adds applicable employer contributions

↓

Remits required contributions

↓

Provides payroll records

Maria receives her net salary after applicable deductions.

The employer's total cost of employing Maria can therefore be higher than her ₱40,000 monthly salary.

That cost may also include employer SSS, PhilHealth, Pag-IBIG, benefits, 13th-month pay, and other applicable employment costs.

Employer vs. Supervisor: They Are Not the Same

A common mistake is assuming that your manager is your employer.

Consider this example:

Employer: ABC Technologies Philippines, Inc.
Employee: Maria Santos
Supervisor: David Cruz

David manages Maria's work.

But ABC Technologies Philippines, Inc. employs Maria.

If an official form asks Maria for her employer name, she would normally enter the company's name, not David's.

Your supervisor represents the company in managing your work, but the legal employer may be the company itself.

Employer vs. Company Owner

The company owner is also not automatically the employer in an individual capacity.

Suppose Pedro Reyes owns:

Reyes Business Solutions, Inc.

The company hires 20 employees.

In formal employment documents, the employer may be Reyes Business Solutions, Inc., rather than Pedro Reyes personally.

The company and its owner can be legally distinct.

This is another reason employees should check their employment contracts when they need the exact name of their employer.

Employer vs. Client

The distinction between an employer and a client has become more important with remote work.

Suppose a Filipino graphic designer provides services to a US company as an independent contractor.

The US company may be the designer's client, not necessarily their employer.

Compare that with a Filipino graphic designer who is formally employed by a Philippine company and assigned to support a US client.

The structure might look like:

US client

↓

Philippine employer

↓

Employee

The employee works with the US client but is employed by the Philippine company.

The company receiving someone's work is therefore not automatically that person's legal employer.

Employee vs. Independent Contractor

An employee and an independent contractor are also not necessarily the same.

An employee works within an employment relationship.

An independent contractor generally provides services under a commercial or service arrangement.

The distinction matters because employment can come with statutory rights, protections, and employer obligations that may not apply in the same way to an independent contractor.

Companies should not assume that simply calling someone a "freelancer" or "contractor" settles the question.

The actual working relationship matters.

If classification is uncertain, businesses should seek appropriate Philippine legal or professional advice rather than relying only on the title used in a contract.

What If You Work for a Foreign Company?

Remote work can make the employer-employee distinction less obvious.

Suppose Maria lives in Manila but works every day with a US technology company.

There are several ways the relationship could be structured.

Direct employment through a Philippine entity

The US company may own a Philippine subsidiary.

The structure could be:

US Technology Company

↓

US Technology Philippines, Inc.

↓

Maria

Maria works for the international business, but the Philippine entity may be her legal employer.

Independent contractor

Maria could have a service agreement directly with the US company.

In that case, she may be an independent contractor rather than an employee.

Employer of Record

The US company could also hire Maria through an Employer of Record in the Philippines.

In that arrangement, another company becomes Maria's legal employer.

Employer and Employee Roles Under an Employer of Record

An Employer of Record, or EOR, creates an interesting distinction between legal employment and day-to-day management.

Consider this structure:

US Company

↓

Philippine EOR

↓

Employee

The EOR is the employee's legal employer.

The US company generally manages the employee's actual work.

For example, the US company may decide:

• What projects the employee works on

• Who the employee reports to

• What targets need to be achieved

• What tools the employee uses

• How the team works together

The EOR may handle:

• Employment contract

• Payroll

• SSS

• PhilHealth

• Pag-IBIG

• Applicable tax withholding

• Employment administration

This is why an employee working through an EOR may have two company names associated with their job.

The company they work with every day and the company that legally employs them may be different.

What About BPO Employees?

The same distinction can appear in the Philippine BPO industry.

Suppose Juan works in customer support for a US online retailer.

Every day, Juan:

• Answers the retailer's customers

• Uses the retailer's systems

• Learns the retailer's products

• Follows the client's customer-service procedures

But Juan was hired by:

Manila Customer Solutions, Inc.

His structure might therefore be:

US retailer, client

↓

Manila Customer Solutions, Inc., employer

↓

Juan, employee

Juan may casually tell someone he supports the US retailer.

But his legal employer may still be the Philippine BPO company.

Why the Employer-Employee Difference Matters

The distinction is not just about terminology.

It can determine who is responsible for important parts of employment.

These can include:

• Salary

• Payroll

• SSS contributions

• PhilHealth contributions

• Pag-IBIG contributions

• Employment contracts

• Leave

• Workplace policies

• Employment records

• Applicable benefits

• Termination procedures

It can also matter when an employee applies for:

• A loan

• A visa

• A new job

• A rental property

• A background check

• Employment verification

Knowing exactly who employs you can prevent confusion when different company names appear across your records.

How to Identify Your Employer

If you are not sure who your employer is, start with your official records.

Check your employment contract

Look for the company or individual identified as the employer.

Check your payslip

See which organization appears on your payroll documentation.

Check your certificate of employment

The organization issuing the certificate may identify your legal employer.

Check government records

Relevant records with SSS, PhilHealth, and Pag-IBIG may also help identify the employer associated with your employment.

Ask HR

If several company names appear in your records, ask HR:

"What is the full legal name of my employer?"

This is particularly useful for workers employed through BPO companies, staffing agencies, subsidiaries, or Employers of Record.

Common Misunderstandings

"My manager is my employer."

Not necessarily.

Your manager supervises your work. Your employer may be the company that hired you.

"The company I support is my employer."

Not always.

If you work for a BPO, staffing company, or EOR, the client you support may be different from your legal employer.

"Anyone who gets paid for work is an employee."

Not necessarily.

Independent contractors and freelancers also receive payment for work but may have a different legal relationship with their clients.

"The employer pays all statutory contributions."

Not necessarily.

Some Philippine statutory contributions involve both employer and employee shares.

"A foreign company cannot have Philippine employees."

A foreign business may use different structures to build a Philippine workforce, including a local entity or an Employer of Record, depending on its circumstances.

Employer vs. Employee at a Glance

The exact rights and responsibilities depend on the employment arrangement and applicable law.

Frequently Asked Questions

What is the main difference between an employer and an employee?

An employer hires workers and provides compensation for their work.

An employee performs work for the employer in exchange for compensation.

Who is considered an employer?

An employer can be a company, organization, or individual that employs workers.

For employees of incorporated businesses, the employer may be the legal company rather than its owner, CEO, or manager personally.

Who is considered an employee?

An employee is a person working under an employment relationship in exchange for compensation.

Is my manager my employer?

Usually not.

Your manager or supervisor directs your work, while your employer is generally the company or organization that employs you.

Is a freelancer an employee?

Not automatically.

A freelancer may be an independent contractor rather than an employee. The actual nature of the working relationship matters.

Who pays SSS, the employer or employee?

For covered employment, regular SSS contributions include an employer share and an employee share.

The employer handles the payroll deduction and remittance process.

Current contribution information is available from the Social Security System.

Who pays PhilHealth?

PhilHealth contributions generally involve employer and employee responsibilities for covered private-sector employment.

Employers and employees should check the latest requirements through PhilHealth.

Who pays Pag-IBIG?

Covered employment can involve contributions from both the employer and employee.

Current membership and contribution information is available from the Pag-IBIG Fund.

Who is my employer if I work through an EOR?

The Employer of Record is generally the legal employer.

The client company typically manages your daily work.

Check your employment contract for the exact legal employer.

Who is my employer if I work for a BPO?

The BPO company that hired you may be your employer even if you spend your working day supporting another company's account.

Check your employment contract and certificate of employment.

Employer and Employee: The Simple Definition

The difference between an employer and an employee comes down to their roles in the employment relationship.

The employer hires, compensates, and manages the employment relationship.

The employee performs work in exchange for compensation.

In a simple employment arrangement, identifying each side is easy.

The distinction becomes more important when several organizations are involved.

A worker might support a foreign company but be employed by a Philippine BPO. Another worker might work for an overseas startup but be legally employed through an Employer of Record. A freelancer might perform similar work but remain an independent contractor.

When there is uncertainty, look beyond the company logo or the name of the manager assigning the work.

Check the employment contract, payroll records, certificate of employment, and applicable government records.

For Philippine employment standards and worker rights, employers and employees can consult the Department of Labor and Employment. Information about statutory programs is also available directly from the Social Security System, PhilHealth, and Pag-IBIG Fund.

The basic distinction remains simple: the employer provides the employment, while the employee performs the work.