“Mayumi” was hired by a staffing agency engaged in recruitment and deployment of teachers as administrative staff officer. Prior to her employment, the staffing agency hired two administrative staff officers who have similar functions. After a month with the company, Mayumi received a notice that her services will be terminated on the ground of redundancy. She was given one week to finish all her work and after she received her separation pay.

“Did the staffing agency validly dismiss Mayumi on the ground of redundancy? We refer to the Labor Code, which contains a provision that applies to her case. Article 283 of the law provides: 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 operations of the establishment or undertaking unless the closing is for the purpose of circumventing the provisions of this law, by serving a written notice on the workers and the Department of Labor and Employment at least one month before the intended date thereof.

In case of termination due to the installation of labor-saving devices or redundancy, the affected worker shall be entitled to a separation pay equivalent to at least one month pay or to at least one month pay for every year of service, whichever is higher. In case of retrenchment to prevent losses and in cases of closure or cessation of operations of establishment or undertaking due to serious business losses or financial reverses, the separation pay shall be equivalent to at least one month pay or at least one-half month pay for every year of service, whichever is higher. A fraction of at least six months shall be considered as one year.

It is clear from this provision that there must be a written notice sent to the employee and to the DOLE at least one month prior to the intended date of the dismissal of the employee. In the case of Ocean East vs. Lopez (G.R. No. 194410, October 14, 2015), the Supreme Court through Associate Justice Diosdado Peralta stated: “For the implementation of a redundancy program to be valid, the employer must comply with these requisites: written notice served on both the employee and the DOLE at least one month prior to the intended date of retrenchment; payment of separation pay equivalent to at least one month pay or at least one month pay for every year of service, whichever is higher; good faith in abolishing the redundant positions; and fair and reasonable criteria in ascertaining the positions to be declared redundant and accordingly abolished.”

In Mayumi’s case, the staffing agency that recruited and employed her violated Article 283 of the Labor Code. Clearly, it failed to comply with the first, third, and fourth requisites for a valid implementation of a redundancy program, thereby making it liable for illegal dismissal.

The application of just and authorized causes of termination of employment under Articles 297-299 of the Labor Code, as amended, through Department Order 147-15, s. 2015, entitled “Amending the implementing rules and regulations of Book VI of the Labor Code of the Philippines, as amended.” D.O. 147-15 expressly provides for the standards in applying the just and authorized causes and outlines the due process of termination of employment.

Just causes of termination refer to serious misconduct, willful disobedience or insubordination, gross and habitual neglect of duties, fraud or willful breach of trust, loss of confidence, commission of a crime or offense, and analogous causes. The rules expressly provide that for acts or omissions to be considered as analogous causes, the same must be expressly specified in company rules and regulations or policies.

Authorized causes of termination refer to installation of labor-saving devices, redundancy, retrenchment or downsizing, closure or cessation of operation, and disease. The rules clarify that an employee may also be terminated from employment based on reasonable and lawful grounds specified in company policies and/or based on grounds provided for under collective bargaining agreements.

Further, all issues of termination based on just and authorized causes will be subject to mandatory conciliation-mediation and request for assistance before the single entry approach desk officers at the regional, provincial, or field offices of DOLE and its attached agencies. The rules are applicable to workers and employers of all work arrangements, including legitimate contracting/subcontracting, with existing employer-employee relationship.

The rules were issued to address the problem on varying interpretations and applications of the law on termination of employment which sometimes lead to labor complaints. It is issued consistent with the objective of the Philippine Labor and Employment Plan towards strengthening compliance with constitutionally protected rights of workers including the right to security of tenure.

END/Patrick T Rillorta