Proof of Good Faith in Redundancy

Proof of Good Faith in Redundancy

Redundancy is one of the authorized causes of employee termination under Article 298 of the Labor Code, as amended.

The employer who intends to terminate the employee for cause has to comply with two aspects of due process. These are the substantive aspect and the procedural aspect.

The substantive aspect pertains to the ground or basis of termination which should be in accordance with law and jurisprudence. The procedural aspect refers to the required notices, which in the case of redundancy, must be served on the DOLE and the employee.

The Supreme Court (SC) has, in several occasions, emphasized the importance of guidelines on good faith and observance of reasonable criteria in redundancy. These guidelines ensure good faith in abolishing redundant positions. (FEATI University vs. Pangan, G.R. No. 202851, September 09, 2019)

According to the SC, to establish good faith, the employer must provide substantial proof that the services of the employee are in excess of what is needed by the company and that fair and reasonable criteria, such as but not limited to (a) less preferred status, e.g., temporary employee; (b) efficiency; and (c) seniority, were used to determine which positions are to be considered redundant or who among the employees are to be redundated.

Indeed, an employer cannot simply declare that it has become overmanned and dismiss its employees without adequate proof to sustain its claim of redundancy. Neither can an employer merely claim that it

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has reviewed its organizational structure and decided that a certain position has become redundant. It bears stressing that adequate proof of redundancy and criteria in the selection of the employees to be affected must be presented to dispel any suspicion of bad faith on the part of the employer.

In the FEATI case, the company merely presented financial audits and enrolment lists to justify complainant’s dismissal due to redundancy. These pieces of evidence prove only the fact of financial losses and decline in enrolment. They do not, in any way, prove that fair and reasonable criteria were used in determining which position is to be declared redundant or who among the employees is to be redundated.

The school’s bare allegations that it conducted a review of its organizational structure and came up with the decision that complainant’s position became redundant cannot be considered substantial evidence to prove compliance with the above-cited jurisprudential guidelines. Neither can general averments about logic and reason – Program Coordinator does not need the aid of an Assistant Coordinator anymore considering that there were less students – be considered sufficient to justify the dismissal of an employee on the ground of redundancy.

Evidence that the alleged review was conducted, as well as the specific criteria used in the determination of which position or employee should be affected by the cost- cutting measures, must be presented. Otherwise, the termination of the redundated employee cannot be sustained.

Such evidence is important not only because it is mandated by the jurisprudential guidelines, but specifically because in this case, the circumstances surrounding employee’s transfer to the redundated position that caused his dismissal are questionable.

Before complainant’s position as Assistant Program Coordinator was declared redundant, he position as University Cashier was also considered redundant for allegedly being already absorbed by the Accounting Department. This led to his transfer to the Assistant Program Coordinator position, which, notably, was created only for his purpose.

Aside from the company’s bare allegation that the tasks of the University Cashier were absorbed by the Accounting Department, no evidence was presented to support such allegation and to prove that the position was justifiably redundant. Per SC, no explanation was offered as to why complainant was “re-hired” in the same position before the approval of his alleged application for early retirement, only to be considered a redundant position later on. The school failed to explain why every position held by complainant was purportedly subjected to its cost-cutting measures.

In sum, while the school may have been able to prove decline in enrolment and financial losses, it severely failed to prove that it utilized fair and reasonable criteria in ascertaining that complainant’s position as Assistant Program Coordinator, as well as his former position as University Cashier, were redundant and/or that it was necessarily complainant who should be affected by its cost-cutting measures.

Complainant’s dismissal on the ground of redundancy, therefore, cannot be sustained.

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