Tag - Redundancy

Good Faith of the Employer is Required in Redundancy Program

Under Article 298 (formerly 283) of the Labor Code, redundancy is recognized as an authorized cause for dismissal, viz.: Article 298 [283]. Closure of Establishment and Reduction of Personnel. – The employer may also terminate the employment of any employee due to the installation of labor-saving devices, redundancy, retrenchment to prevent losses or the closing or cessation of operation of the establishment or undertaking unless the closing is for the purpose of circumventing the provisions of this Title, by [...]

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 [...]

Redundancy Scheme is Ineffective if there is no Power to Terminate Services

Redundancy is one of the grounds to terminate services under authorized cause in Article 298 of the Labor Code, as amended. Termination letter is usually signed by the individual holding the authority to execute the act. However, in the case of Alfredo American Power Conversion Corporation, et al. vs. Lim, G.R. No. 214291, January 11, 2018, the Supreme Court held, in part, that the termination is ineffective where there is no authority to effect redundancy. In this case, the employee, [...]

Retrenchment and Redundancy

Retrenchment is the termination of employment effected by management during periods of business recession, industrial depression, seasonal fluctuations, lack of work or considerable reduction in the volume of the employer’s business. Resorted to by an employer to avoid or minimize business losses. (Somerville Stainless Steel Corporation vs. National Labor Relations Commission, 350 Phil. 859, 869 (1998)) To prevent losses” means that retrenchment or termination of the services of some employees is authorized to be undertaken by the employer sometime [...]

Notice Requirement in Redundancy and Issue on Bad Faith

Notice is required to be given to affected employee and the Department of Labor and Employment (DOLE) as part of the procedural due process for termination due to authorized cause. It is clear from the wordings of Article 298 of the Labor Code, as amended, that notice to the employee should be made at least one month before the redundancy takes effect. If the employee consents to the redundancy, will the lack of notice comply with the procedural requirement? In the [...]

Use of Criteria in Termination due to Redundancy and the LIFO Method

In several instances, the Court has held that it is important for a company to have fair and reasonable criteria in implementing its redundancy program, such as but not limited to, (a) preferred status, (b) efficiency and (c) seniority. CBA may dictate the rules to be followed in case of redundancy. Parties may stipulate that LIFO rule shall apply in case of termination in the line of work. However, where two positions are involved, last in first out rule may [...]

Redundancy Program Requisites for Validity

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. (3M Philippines, Inc. vs. [...]

Circumstances that Would Substantiate Termination due to Redundancy

Redundancy as a ground for dismissal for authorized cause requires existence of business exigency allowed by law as basis to declare position surplusage. For most employers, the question is what circumstances would justify the redundancy? While there is no hard and fast rule since every business situation may be unique in its own way, the Supreme Court provided examples in its decision. In Panlilio vs. National Labor Relations Commission, it was held that the following evidence may be proffered to [...]

Valid Termination due to Redundancy

For purposes of the Labor Code, redundancy exists where the services of an employee are in excess of what is reasonably demanded by the actual requirements of the enterprise. Succinctly put, a position is redundant where it is superfluous, and superfluity of a position or positions may be the outcome of a number of factors, such as over hiring of workers, decreased volume of business, or dropping of a particular product line or service activity previously manufactured or undertaken [...]

Procedural Due Process for Authorized Cause

Procedural due process is also required for termination due to authorized cause. For termination based on authorized causes, that is, retrenchment, redundancy, etc., under Article 298 of the Labor Code, as amended, the due process is deemed complied with upon the service of a written notice as follows: Notice to the employee (at least 30 days before the effectivity thereof); and Notice to the appropriate Regional Office of the Department of Labor and Employment (DOLE) at least thirty (30) days before [...]

error: Content is protected !!