Bona Fide Suspension Of Operations (Are Boracay Resort Owners Prohibited From Terminating Employees?); Sample Bona Fide Suspension Notice to Employee and DOLE
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. (Art. 301, Labor Code; The Labor Code of the Philippines, Villanueva, pp. 295-296)
In all such cases, the employer shall reinstate the employee to his former position without loss of seniority rights if he indicates his desire to resume his work not later than one (1) month from the resumption of operations of his employer or from his relief from the military or civic duty. (Art. 301, Labor Code; The Labor Code of the Philippines, Villanueva, pp. 295-296)
Get a copy of the Labor Code 2018 Edition by Atty. Elvin B. Villanueva. Also available in all branches of Fully Booked and National Bookstore
Under Art. 286 [now Article 301] of the Labor Code, a bona fide suspension of business operations for not more than six (6) months does not terminate employment. After six (6) months, the employee may be recalled to work or be permanently laid off. (Waterfront Cebu City Hotel vs. Jimenez, G.R. No. 174214, June 13, 2012 cited in The Labor Code of the Philippines, Villanueva, pp. 296)
Recently, Rappler reported that Labor Secretary Silvestre Bello III ordered business owners not to lay off any of their workers during the impending 6-month closure of Boracay starting April 26.
According to Bello, temporary suspension of business operations should not and must not result in the termination or separation of any employee. Bello said business owners can only observe the “no work, no pay” scheme, or suggest that their employees go on forced leave by using their leave credits.
Those who go on leave, according to the Department of Labor and Employment (DOLE), should be called back when the temporary closure order is lifted in October. The labor advisory is for “strict observance and compliance.”
Bello’s position recognizes only single reality in this situation. That is, all companies will survive the 6-month closure. There is apparent failure to recognize that small and medium businesses may not be able to bear the impact of closure.
Can these businesses close down? Based on Bello’s pronouncement it seems prohibited.
The Labor Code is clear under Article 298 that employers may close or cease its operations regardless of the reason. If the reason is not due to losses, it has to pay employees separation pay of at least one-month pay or ½ month per year of service whichever is higher. If the closure is due to losses it may not pay separation pay consistent with the doctrine laid down in the case of North Davao Mining vs. NLRC (G.R. No. 112546, March 13, 1996).
Hence, the DOLE cannot characterize the decision of the employer if its financial circumstances warrant the closure of business as a result of closure of Boracay.
However, companies which decide to suspend have to follow the rules on bona fide suspension of operations. It should not exceed six (6) months otherwise, it shall result in illegal dismissal.
It bears stressing that notice of bona fide suspension should also be sent to DOLE.
Below are sample of notices of Bona Fide Closure to employees and the DOLE:
Sample Notice of Bona Fide Suspension of Operations to Employee
To: JUAN DELA CRUZ
From: HR
Date: _____________________
Subject: BONA FIDE SUSPENSION OF OPERATIONS
The company has decided to suspend its operations for a period not exceeding six (6) months due to government decision to close Boracay Island for almost the same period.
Measures were taken to avert this from happening but to no avail. Thus, the company has no choice but to resort to suspension as this is a decision that is beyond the management’s control.
Hence, the company has decided to suspend the operations for a period not to exceed six (6) months in compliance with government mandate. You are being temporarily laid off effective April 26, 2018 as provided in the government directive.
You will receive a written notice prior to end of six months whether the company would be able to continue in operation or cease in coordination with the proper government authorities.
Please be guided accordingly.
_________________________
HR Manager
See other sample notices of termination in Human Resource Forms, Notices and Contracts Volume 2 by Atty. Villanueva
Sample Notice of Bona Fide Suspension of Operations to DOLE
April 2, 2018
DEPARTMENT OF LABOR AND EMPLOYMENT
REGIONAL OFFICE – REGION VI
Swan Rose Building, Commission Civil St.,
Jaro, Iloilo City 5000
Subject: BONA FIDE SUSPENSION OF OPERATIONS
Gentlemen:
The company, XYZ Club Resort, Inc. (company) has decided to suspend its operations for a period not exceeding six (6) months beginning April 26, 2018 pursuant to the order of closure of the Boracay Island by the government.
Measures were taken to avert this incident from happening but to no avail. Thus, the company has no choice but to comply with the government order.
Hence, the company has decided to suspend the operations for a period not to exceed six (6) months. Employees have been notified as well of the temporarily lay off effective April 26, 2018. The list of affected employees is attached here as Annex “A” and the Establishment Report as Annex “B”.
Employees will receive a written notice prior to end of six months whether the company would be able to continue in operation or cease in coordination with the appropriate government agencies concerned.
Very truly yours,
_________________________
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