Pinoy Tech

For those who haven’t read, last month we retrenched a lot of employees. Two weeks ago we started work with almost half of our employees.

The company I worked for has decided to retrench employees because of economical reasons. I can imagine that most of the employees were a bit shocked. Some even threatened to file a case against us. I thought, “Could she really do that? What grounds does she have to file a case?.” Hence, this article.

The Labor Code of the Philippines provides a list of just causes for termination.

Almost all companies (some break the rule) in the Philippines abide by the 6-month rule that all employees who have exceeded six months of employment will be regularized. Anyone who hasn’t reached this would still be in the probationary period. In this probationary period, the employer will decide if the employee will be regularized or not based on the employee’s work performance. As you can see, the law considers tenure as a guarantee of permanent employment.

All employees who have exceeded six months are presumed to have gained regular employee status. The employees will be entitled to all rights for regular employees. These employees can be fired only the following just causes provided by law.

1. Serious misconduct or willful disobedience by the employee of the lawful orders of his or her employer or the employer’s representative in connection with the employee’s work;
2. Gross and habitual neglect by the employee of his or her duties;
3. Fraud or willful breach by the employee of the trust reposed in him or her by the employer or th employer’s duly authorized representative;
4. Commission of a crime or offense by the employee against the person of his or her employer, any immediate member of his or her employer’s family, or his or her employer’s duly authorized representative; and
5. Other causes analogous to the foregoing.

Any termination that cannot be justified will result in the employee being reinstated without loss of tenure. The employee will be entitled to full back wages, allowance and benefits.

However, our company did not fire anyone for these reasons. We did it because of economic reasons.

The law also provides reasons besides the five given.

1. the installation of laborsaving devices;
2. redundancy;
3. retrenchment to prevent losses; or
4. closure or cessation of operation of an establishment.

In these cases, an employer is required to pay the employee one whole month of pay and one month of pay per year of service. Six months of service is considered as one whole year.

Below is a table that best illustrates this.

I believe that all employer should keep a Philippine Labor Code book with him or her or have an attorney who advices on these matters. The employer should be clear with all law and should always consider employee’s rights to avoid any problems.