Tag - Retrenchment

Retrenchment of Employees and Criteria Employed

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. It is a reduction in manpower, a measure utilized by an employer to minimize business losses incurred in the operation of its business. (Philippine Carpet Employees Association [PHILCEA] vs. Hon. Sto. Tomas, G.R. No. 168719, February 22, [...]

Retrenchment Due to Existence or Imminence of Substantial Losses

Retrenchment is one of the grounds for dismissal under the Labor Code. In the case of Team Pacific Corporation vs. Parente, G.R. No. 206789, July 15, 2020. The employer claiming “existence or imminence of substantial losses” that would warrant the retrenchment, must prove the same. In Lopez Sugar Corporation v. Federation of Free Workers: Firstly, the losses expected should be substantial and not merely de minimis in extent. If the loss purportedly sought to be forestalled by retrenchment is clearly shown to be insubstantial [...]

Notes on Bona Fide Suspension of Operations and Extension

Below is a quick guide on doctrines, rules, and principles governing the bonafide suspension of operations and its extension per D.O. 215, Series of 2020. This is useful in refreshing the concepts and rules involved: For full discussion on this matter, read here. Terminologies used: Temporary off-detail; Temporary layoff; bonafide suspension of operations Period not exceeding six months So before 6 months, Employer (ER) has to decide whether to Resume or to Close If ER Resumes Reinstate without loss of seniority rights if Employee (EE) [...]

Retrenchment Criteria Used in Employee Termination

Retrenchment is one of the authorized causes to dismiss an employee under Article 298 of the Labor Code. It involves a reduction in the workforce, resorted to when the employer encounters business reverses, losses, or economic difficulties, such as “recessions, industrial depressions, or seasonal fluctuations.” (La Consolacion College of Manila v. Pascua, 828 Phil. 182, 191-192 (2018)) This is usually done as a last recourse when other methods are found inadequate. A valid retrenchment may only be exercised after the employer [...]

Retrenchment Based on Lack of Order

Retrenchment is one of the grounds for dismissal under Art. 298 of the Labor Code, as amended. Retrenchment usually pertains to financial difficulty encountered by the employer. It can include business hardship due to lack of order. The rule in this case states that if the ground cited by the employer for retrenchment is lack of order the same must be of such nature as would severely affect the business operations. In a 2013 case the employer pointed out as reason [...]

Retrenchment Should be the Last Resort and Other Issues

The prerogative of an employer to retrench its employees must be exercised only as a last resort, considering that it will lead to the loss of the employees’ livelihood. It is justified only when all other less drastic means have been tried and found insufficient or inadequate. (Philippine Carpet Employees Association [PHILCEA] vs. Hon. Sto. Tomas, G.R. No. 168719, February 22, 2006 citing Guerrero vs. National Labor Relations Commission, 329 Phil. 1069, 1076 (1996)) Retrenchment under Article 298 does [...]

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 [...]

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 [...]

Retrenchment to Prevent Losses Due to Impact of COVID-19 Pandemic with Sample Criteria and Notice of Retrenchment

Acquire Mastery of HR/Labor Doctrines, Rules and Principles with Atty. Elvin’s HR Bundle Books at Discounted Rate 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 (page 237, Guide to Valid Dismissal of Employees, 2nd Edition, citing Santos vs. CA, G.R. No. 141947, July 5, 2001 [...]

Redundancy vs. Retrenchment

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 by the enterprise. (page 221, Guide [...]

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