Bona Fide Suspension of Operations in Line with the Government Imposition of Enhanced Community Quarantine Due to COVID-19

Bona fide suspension of operations, whether full or partial, may be one of the options to resort to for most of the companies in response to the government order placing the entire Luzon under Enhanced Community Quarantine.

Earlier, the government issued a directive to implement the “Stringent Social Distancing Measures and Further Guidelines for the Management of the Coronavirus Disease 2019 (COVID-19) Situation.” The government issued Joint Resolution Nos. 11 and 12 (s. 2020) of the Inter-Agency Task Force for the Management of Emerging Infectious Diseases (Task Force) established under Executive Order No. 168 (s. 2014), relative to the recommendations for the management of the COVID-19 situation.

This is in light of the decision of the health officials to raise the Code Alert System for the COVID-19 in the country to Code Red Sublevel 2, following the sharp increase in the number of confirmed COVID-19 cases throughout the country. Relative to the above, the Executive Secretary of the Office of the President of the Philippines, Malacañang issued a Memorandum dated March 13, 2020 The latest of which is Memorandum from the Executive Secretary of the Office of the President of the Philippines, Malacañang dated March 16, 2020 on the Enhanced Community Quarantine all over Luzon.

Pursuant to the above Joint Resolutions, Proclamation No. 922 (s. 2020) and Republic Act No. 11332, the government imposed Enhanced Community Quarantine and Stringent social Distancing Measures over the entire Luzon, including national Capital Region (NCR), effective 00:00 (12:00) o’ clock in the morning of March 17, 2020 until 00:00 (12:00) o’ clock in the morning of April 13, 2020.

During this period, only those private establishments providing basic necessities and such activities related to food and medicine production, i.e., public markets, supermarkets, groceries, convenience stores, hospitals, medical clinics, pharmacies and drug store, food preparation and delivery services, water-refilling stations, manufacturing and processing plants of basic food products and medicines, banks, money transfer services, power, energy, water and telecommunications supplies and facilities shall be open.

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Hence, companies who are not within such business shall not operate. This is where the suspension of operations come in as among the options of employers.

Bona fide suspension of operations is allowed under Art. 301 of the Labor Code. It states that the bona-fide suspension of the operation of a business or undertaking for a period not exceeding six (6) months, or the fulfillment by the employee of a military or civic duty shall not terminate employment.

There are many issues surrounding this matter such as exhaustion of leave benefits, sick leave, vacation leave, emergency leave, advanced 13^th month pay, loans, etc. The company may actually become more generous if it can afford to do so.

At any rate, below is the sample memo suspending the company operations during the period for reference only.

To:             ALL EMPLOYEES

From:         HR

Date:          March 17, 2020 

Subject:     TEMPORARY SUSPENSION OF OPERATIONS

In compliance with the government directive to implement the “Stringent Social Distancing Measures and Further Guidelines for the Management of the Coronavirus Disease 2019 (COVID-19) Situation”, we would like to inform you that the company is implementing the policies for your health and safety. 

The government issued Joint Resolution Nos. 11 and 12 (s. 2020) of the Inter-Agency Task Force for the Management of Emerging Infectious Diseases (Task Force) established under Executive Order No. 168 (s. 2014), relative to the recommendations for the management of the COVID-19 situation. This is in light of the decision of the health officials to raise the Code Alert System for the COVID-19 in the country to Code Red Sublevel 2, following the sharp increase in the number of confirmed COVID-19 cases throughout the country. Relative to the above, the Executive Secretary of the Office of the President of the Philippines, Malacañang issued a Memorandum dated March 13, 2020 The latest of which is Memorandum from the Executive Secretary of the Office of the President of the Philippines, Malacañang dated March 16, 2020 on the Enhanced Community Quarantine all over Luzon.

Pursuant to the above Joint Resolutions, Proclamation No. 922 (s. 2020) and Republic Act No. 11332, the management hereby conforms to and implements the guidelines on the Enhanced Community Quarantine and Stringent social Distancing Measures over the entire Luzon, including national Capital Region (NCR), effective 00:00 (12:00) o’ clock in the morning of March 17, 2020 until 00:00 (12:00) o’ clock in the morning of April 13, 2020.

         Hence, please be guided by the following:

1. The company hereby declares suspension of operations effective 00:00 (12:00) o’ clock in the morning of March 17, 2020 until 00:00 (12:00) o’ clock in the morning of April 13, 2020 considering that the company is not involve in production of basic necessities related food and medicine. Thus:

“5. Only those private establishments providing basic necessities and such activities related to food and medicine production, i.e., public markets, supermarkets, groceries, convenience stores, hospitals, medical clinics, pharmacies and drug store, food preparation and delivery services, water-refilling stations, manufacturing and processing plants of basic food products and medicines, banks, money transfer services, power, energy, water and telecommunications supplies and facilities shall be open.” [Emphasis and underscoring supplied]

2. During the suspension of operations, the employment relationship shall likewise be suspended including its effects. To alleviate the loss of income, the employees shall be allowed to exhaust all the remaining sick leave or emergency leave credits. The rest shall be without pay.

3. The company may characterize certain functions as qualified for work-from-home and employees who are holding said positions shall submit daily reports of accomplishments as basis of attendance and performance. Employees who are qualified shall be accordingly notified and should follow the guidelines and policies on the matter.

4. The management has decided to advance a portion of the 13^th month pay for the year 2020 which shall cover only employees who have rendered service at least one month as of April 13, 2020. This shall be computed as follows:

Pro-rata 13^th month pay = Total Basic Salary Earned for the year 2020 / 12

5. The amount of pro-rata 13^th month pay shall be credited to payroll on or before March 31, 2020. The company likewise suspends the due date for any payment of employee advances and waives the period, penalties and interests during the period of enhanced community quarantine. The period shall run again on April 13, 2020 and any delay in payment prior to the March 17, 2020 shall be counted for purposes of delay.

6. Employees shall report to work on April 13, 2020 beginning on their respective shift and following the existing company policies, unless the government provides another date.

7. All communication shall be made through remote channels such as email, SMS, social media messaging, etc. Any changes on contact number, social media, email, among others, shall be communicated to the following:

Email:

SMS:

Facebook:

Messenger:

8. Be reminded as well to strictly observe social distancing. Strict social distancing is defined as follows:

“Strict Social Distancing is the strict maintenance of a distance of at least one (1) meter radius between and among those attending, during the entirety of the event.”[1] [Emphasis supplied]

9. We are furnishing the government offices a copy of these guidelines and compliance to ensure that the company is fully cooperating with the government measures to curb the spread of the virus and contain its effects.

10. Likewise, the government mandates a strict home quarantine in all households. Movement shall be limited to accessing basic necessities, provision for food and essential health services. Thus, please refrain from unnecessarily going out of residence except for the basic necessities considering that the government, under page 3 of the Memorandum dated March 16, 2020, warns to take action, both criminal and administrative, for failure to abide by the guidelines issued by Malacañang.

11. We apologize for the inconvenience that this may cause but we believe that our full cooperation is for the greater benefit of the families, friends, relatives, and the public in general.

We look forward to your utmost cooperation

                                             JUAN DELA CRUZ

                                             HR Manager

[1] Memorandum from the Executive Secretary of the Office of the President of the Philippines, Malacañang dated March 16, 2020.