Employer may Resort to Redundancy since it has no legal obligation to keep more employees than are necessary

Employer may Resort to Redundancy since it has no legal obligation to keep more employees than are necessary

Redundancy exists when the service capability of the workforce is in excess of what is reasonably needed to meet the demands of the business enterprise.

A position is redundant where it had become superfluous. Superfluity of a position or positions may be the outcome of a number of factors such as over-hiring of workers, decrease in volume of business, or dropping a particular product line or service activity previously manufactured or undertaken by the enterprise.

A valid redundancy program must comply with the following requisites:

(a) written notice served on both the employees and the DOLE at least one (1) month prior to the intended date of termination of employment;

(b) payment of separation pay equivalent to at least one (1) month pay for every year of service;

(c) good faith in abolishing the redundant positions; and

(d) fair and reasonable criteria in ascertaining what positions are to be declared redundant and accordingly abolished, taking into consideration such factors as (i) preferred status; (ii) efficiency; and (iii) seniority, among others.

In the case of 3M Philippines, Inc. vs. Yuseco, G.R. No. 248941, November 09, 2020, the Supreme Court held that HR Manager’s Affidavits bore 3M’s innovative thrust to enhance its marketing and sales capability by aligning its business model with some of the 3M subsidiaries in South East Asian Region.

Toward this end, 3M ought to merge its Industrial Business Group and the Safety & Graphics Business Group to maximize the capabilities and efficiency of the workforce and remove their overlapping of functions. The redundancy program had thus become an essential tool for this purpose.

Too, 3M submitted other documentary evidence showing that Yuseco’s employment was terminated due to redundancy, viz.:

1) Letter dated November 25, 2015, informing Yuseco the termination of his service due to redundancy:

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Payments are subject to normal taxes and standard wage withholdings, except for your vested retirement benefit, which will be tax-free since this will legally fall under the category of redundancy.

2) The draft Release Waiver and Quitclaim and Separation Benefit Computation presented to Yuseco during the November 25, 2015 meeting.

3) Letter dated December 1, 2015 serving as the formal one (1) month notice to Yuseco of the impending termination of his service due to redundancy in accordance with Article 298 of the Labor Code, viz.:

As discussed last 25 November 2015, in line with the Company’s effort to align its organization with corporate business strategy, economically and operationally, and in the exercise of its management prerogative, the Company conducted a review of its organizational structure, which resulted, among others, in the abolition of your position, Country Business Leader for the Industrial Business Group, because of said local corporate restructuring and change of business direction, which included merging of the Industrial Business Group and the Safety & Graphics Business Group.

As such, your position is considered redundant effective 1 January 2016.

4) Letter dated December 1, 2015 notifying the Director of the DOLE-NCR of Yuseco’s impending termination from work, along with another employee, on ground of redundancy. The letter contained the reasons therefor. This letter was received by the DOLE-NCR as evidenced by the stamp mark receipt of said Office.

5) Print out of text messages between Chiongbian and Yuseco showing that the latter even sought advice from the former on the steps he should take regarding the impending termination of his service on ground of redundancy. Notably, Yuseco never refuted these messages.

In sum, 3M sufficiently proved by substantial evidence that redundancy truly existed and its adoption and implementation conformed with the requirements of the law. Citing the NLRC ruling, the SC ruled further:

Based on the record of this case, We find that the separation of complainant from employment was due to redundancy which was carried out after a serious study. It is difficult to convince Us that the redundancy was thought out on the spur of the moment or only during the meeting of November 25, 2015.

It would be foolhardy for the respondent company to have come out with a drastic change in its organization without regard to its viability and profitability, just to get rid of complainant. Precisely, in 2015, the company made a decision to enhance its marketing and sales capabilities, inspired by the business performance of some 3M subsidiaries in the South East Asian Region.

The company focused more on the demands of the market. Thus, from being a “Business Group” organization, the company shifted to being a “Market Focused Organization.” This led to a series of changes in its marketing and sales. One of the changes effected by the company was the integration/merging of the Industrial Business Group with the Safety and Graphics Business Group.

All told, the SC held that Yuseco’s employment was validly terminated on ground of redundancy. Time and again, it has been ruled that an employer has no legal obligation to keep more employees than are necessary for the operation of its business.

In fact, even if a business is doing well, an employer can still validly dismiss an employee from the service due to redundancy if that employee’s position has already become in excess of what the employer’s enterprise requires.

Learn how to Validly Terminate Employee in the Philippines with this Tutorial Video of Atty. Elvin

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