Short answer. It depends on the arrangement. Under Labor Code Article 106, if the agency is engaged in labor-only contracting — it lacks substantial capital or investment and you perform work directly related to the client's main business — the agency is treated merely as the client's agent, and the client answers for you as if it employed you directly.
What the law says
There is "labor-only" contracting where the person supplying workers to an employer does not have substantial capital or investment in the form of tools, equipment, machineries, work premises, among others, and the workers recruited and placed by such person are performing activities which are directly related to the principal business of such employer. In such cases, the person or intermediary shall be considered merely as an agent of the employer who shall be responsible to the workers in the same manner and extent as if the latter were directly employed by him.
Labor Code, Article 106 — Contractor Or Subcontractor. Read the full provision →
The test is labor-only contracting, not who signs your payslip
Article 106 does not ask who cuts your paycheck. It defines labor-only contracting as a situation where the person or entity supplying workers to an employer does not have substantial capital or investment in the form of tools, equipment, machineries, or work premises, and the workers it recruits and places are performing activities directly related to the principal business of that employer. If both conditions describe your arrangement, the article treats the agency as merely an intermediary rather than as your true employer, regardless of whose account your salary is drawn from.
What labor-only contracting means for who is responsible for you
Where labor-only contracting exists, the statute says the agency or intermediary is considered merely as an agent of the employer — meaning the client company — which is then responsible to the workers in the same manner and to the same extent as if you were directly employed by it. That responsibility covers the same obligations the client would owe any of its own direct hires, not a lesser or indirect version of them.
Even outside labor-only contracting, wages are still protected
Article 106 also applies more broadly than the labor-only scenario. Whenever an employer contracts with another person for work to be performed, the employees of that contractor or subcontractor must still be paid according to the Labor Code, and if the contractor or subcontractor fails to pay their wages, the employer that engaged them becomes jointly and severally liable, to the extent of the work performed under the contract, in the same manner it would be liable to its own direct employees. So even legitimate, properly capitalized contracting does not let a client company walk away from wage obligations if the contractor defaults.
Who decides which category your arrangement falls into
The article also authorizes the Secretary of Labor and Employment to issue regulations restricting or prohibiting contracting-out, drawing the line between labor-only contracting and legitimate job contracting, and determining who among the parties is considered the employer for purposes of the Code. That means the fine details separating a legitimate independent contractor from a labor-only intermediary are filled in by those regulations, not stated in full within Article 106 itself.