TERMINATING IN CRISIS: A WAY TO SPREAD OUT THREATS OR SIMPLY A GRAB TO DO AWAY WITH PEOPLE? By: ATTY. MANUEL A. QUIAMBAO

 By:    ATTY. MANUEL A. QUIAMBAO

          Assistant Dean

          College of Law

          Jose Rizal University (JRU)

          and

          Bar Reviewer in Labor Law

          C.P.R.S. Bar Review Center

         

In industrial settings, disputes thrive in times when job security is put at risk. Employers are making a big mistake by taking advantage of a purported global crisis to eliminate part of their workforce, whether as a legitimate effort to spread out actual threats to the business, or simply a grab at the opportunity to take out those who they have always wanted to terminate but couldn’t because of a lack of good cover.

The big fuss about recession is not of course a figment of a rich imagination. There is a domino-like breakdown among the big economies, much of it richly deserved. Unregulated growth, and greed masquerading as progress, probably account for much of the problem of the world. But to use this as a take off point for indiscriminate firing of people, or to demand from them to undergo extreme sacrifices at work, is unconscionable.

The situation is not helped any by a government agency (DOLE) that thinks it is doing a noble duty by announcing a daily tabulation of how many people are losing their job (as if this does not happen in normal times), or worse, by trivializing the trauma by suggesting ways by which labor can suffer more: compressed work arrangements, work rotation, forced leave, cutting of workdays, suspension of overtime pay. It rubs salt on the pain of people by claiming these measures, however demeaning, is better than losing employment.

But the more important question really is, can employers go ahead and cut people and still meet the stringent requirements of the law that proclaims that security of tenure is a paramount constitutional guarantee? Or of the proclamations of the court that have formed part of our jurisprudence to the effect that employment is a property right and thus, can not be taken away without due process of law?

Let us first examine the question about terminations.

Companies cannot go on a rampage and terminate people just because there is supposed to be a crisis, (or because the head offices of multinational companies have started firing people). The law on termination differs from jurisdiction to jurisdiction. For instance, the dominant law in the US covers employment at will, which allows parties to end employment relationship whenever any party feels like ending it for whatever reason.

Not so in this country. Employment in the Philippines can only be terminated if there is a valid cause. Unfortunately for many employers, unfounded fears of loses, or because everyone is planning to do it anyway and might as well join the bandwagon, is not a lawful ground.

In fairness, some companies are really affected by the downturn in the business, mostly those who get their volumes out of direct arrangements with foreign principals. One doesn’t need to be a rocket scientist to establish a cause and effect in this setting. If the principal in the US is hanging by a thread, you can’t expect its local affiliates, or suppliers, or resource facilitators in the Philippines to fare any better. In their cases, one would understand if the cut off in jobs is undertaken.

But not all companies are similarly situated. Our economy is not heavily industrialized.

And precious foreign exchange will continue to flow into national coffers no matter what, because there are simply too many Filipinos abroad and they will continue to remit money that will prop up the local economy. Our experience and capacity to endure was all too evident in the financial meltdown of 1997. Didn’t we survive that one? 

Employers, to be able to terminate based on a well-founded belief that it is necessary to survive, must be able to prove the following:

One, that losses are inevitable or imminent unless the action (RETRENCHMENT) is taken.

Two, that such losses are not the ordinary losses that come in the usual course of business, but major setbacks that if not avoided are likely to cause the company to close. In short, the losses anticipated must be substantial.

Three, that the company must have done already other alternatives intended to achieve the same objective of avoiding losses, like cost cutting in actual operations, but that the possibility of these losses remains necessitating the extreme measure of terminating people.

And four, the company must have in its custody and possession facts and figures, or documents and records that will clearly substantiate its projections about incurring huge losses.

THESE ARE NOT DRUM BEATINGS SO THAT EMPLOYERS WILL THINK TWICE BEFORE TERMINATING EMPLOYEES. THESE ARE THE WISE WORDS OF THE SUPREME COURT WHO HAD ESTABLISHED THESE PARAMETERS AND RAISED THEM AS PART OF AN ESTABLISHED DOCTRINE PRECISELY TO PREVENT SIMULATED OR CONTRIVED TERMINATIONS.

And even when companies can rightfully claim that all the aforementioned factors apply to them, their right to terminate is still subject to certain restrictions.

The first of course is the requirement to pay the employees affected with a severance pay.

The second restriction is that the basis for selecting who should go must include as part of the criteria the fact of the seniority of the employees in the company. This means that when all other factors are constant, then the newest employees should be the first to go.

The third restriction is that the employees to be terminated must be given adequate notice (one month) of the intended termination. This should provide the employees time to adjust to the realities of losing their job, but it is also time given to them to challenge the legality of the action. Just because the law allows retrenchment doesn’t mean it is a carte blanch to fire people.

And finally, employers cannot retrench only to hire other people immediately after the termination is accomplished. It is evident simulation of a cause, and employers who do this can very well be made to reinstate those who were terminated without getting back what they paid as severance pay.

While hard times call for mechanisms that will mitigate the burden to business, we must insist that this be done without missing on our inherent duty to take care of our employees. Termination, if at all, should be the last option and only when all other doors have closed in on us. When the loss of job is inevitable after the employer has done everything humanly possible to preserve it, the employee would understand…

It is the court that poignantly stated the case for the workers when it said in one case: “the lowly worker deserves our abiding respect. How we treat him determines whether the knife in his hands shall be a caring tool for beauty and progress or an angry weapon of defiance and revenge. If we cherish him as we should, we must resolve to lighten the weight of centuries of exploitation and disdain that bends his back but does not bow his head.”

 

We couldn’t agree more with the court.

(The writer is the Corporate Secretary and Asst. Dean of the Law School of Jose Rizal University and Group General Counsel of Fil-Pacific Apparel, Inc. He is also the legal counsel of a number of multinational and domestic corporations).

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