LOCKOUT

TEMPORARY LAY-OFF

TERMINATION OF
EMPLOYMENT BY THE
EMPLOYEE

BY: DAISY CIELO

BSBA- IV
 LOCKOUT

The temporary refusal of the employer to furnish work as

a result of an industrial or labor dispute.
Requirements For A Valid Lockout

 A decision to declare a lockout must be approved by a majority of

the board of directors of the corporation or association or of the
partners in a partnership, obtained by secret ballot in a meeting
called for the purpose.
 The decision shall be valid for the duration of the dispute based on
substantially the same grounds considered when the strike or
lockout vote was taken.
 Temporary Lay-off

According to the Book Of Compendium Labor Law By

Antonio Abad And Anna Maria Abad
 There is no specific provision of law which treats of a
temporary retrenchment or lay-off and provides for the
requisites in effecting it or a period or duration therefor.
 Many think that layoff and retrenchment are one and the same thing but that is not true.

BASIC FOR
COMPARISON
LAYOFF RETRENCHMENT
MEANING – Lay-off refers to the provisional – Retrenchment means involuntary
termination of the employee, at separation of employee due to the
the instance of the employer. replacement of labor by machines
or the close of the department.
 DEFERENCE BETWEEN LAY-OFF
AND RETRENCEMENT
– The biggest difference between layoff and retrenchment is that layoff is volatile
in nature. i.e employees are recalled, once the period of layoff is over while
retrenchment is non-volatile i.e that involves full and final termination of
services.
– The employment contract is terminated with the employees by the employer,
due to three major reasons which are:
1. The organization is going through the lean period
2. Initial faculty hiring
3. Employee shows deviant behavior, which affects the whole environment.
– These employees cannot however be forever “temporarily “ laid off. To remedy
this situation, Art. 286 may be applied but only by analogy to set a specific
period that employees may remain temporarily laid-off or in a floating status
(while business operations are suspended) for only a period of six months.
– After six months, the employees should either be recalled to work or
permanently retrenched in accordance with the requirements of law.
– Failing to comply with this would be tantamount to dismissing the employees
without cause, and holding employer liable for such illegal dismissals.
 Termination Of
Employment By the
Employee
 WHY YOU NEED TO KNOW
LABOR LAW TO TERMINATE?

– Everyone’s got a problem employee.

– There are many ways to deal with one. However,
termination becomes a distinct possibility when things
become difficult.
– If you’re at this point, you’ll need to figure which process
to follow, both of which are guided by the law.
 TWO KINDS OF CAUSES WHEN THE
EMPLOYER TERMINATES EMPLOYMENT

1. JUST CAUSES

2. AUTHORIZED CAUSES
– Just causes are primarily causes were the employee is at fault.

– On the other hand, authorized causes are when there are business

contingencies that force termination.

– An employee’s health situation may be a reason for termination.

 JUST CAUSES OR WHEN THE
EMPLOYEE IS AT FAULT
 You can terminate due to just cause when the employee is at fault.
 Just causes are listed in Art. 282 of the labor code and reproduced below:
 Serious misconduct or willful disobedience by the employee of the lawful orders of his
employer or representative in connection with his work
 Gross and habitual neglect by the employee of his duties
 Fraud or willful breach by the employee of the trust reposed in him by his employer or duly
authorized representative
 Commission of a crime or offense by the employee against the person of his employer or any
immediate member of his family or his duly authorized representatives and
 Other causes analogous to the foregoing
 You and I may have our own notions about which specific situations correspond to the
above.
 However, these are technical terms around which the supreme court has built
jurisprudence which defines each and provides guidance as to what conditions must be
present for any one invoked.
 For instance, loss of confidence covers only two types of employees that have an
employer’s trust and confidents:

1. An employee with managerial function; or

2. An employee who manages and safeguards his employer’s money or property

 It also stresses that loss of confidence applies to acts which are deliberate, work related,
and backed up by substantial evidence.
 There’s an entire body of doctrine which examines what constitutes fraud in labor, this in
addition to the doctrine defining the process that must be followed to determine whether
such fraud exists or not in the case of a particular employee.
 What this means to you as an HR practitioner is that to effectively terminate, you
need to understand what each of the grounds mean legally and what process you
need to follow to comply with the legal process in order to best serve your company.

 Considering the repercussions if Labor Arbiter determines that the employee’s

dismissal was against the law, the stakes can be just high for the company as for the
employee. This necessitates close study of the grounds and processes on the part of
HR, as well as coordination with legal counsel.
 JUST CAUSES: PROCESS TO
FOLLOW

– In addition to knowing what ground to use, you’ll need to follow the specific
process for just causes.

• Notice to explain
• Hearing where the employee may air his side
• Notice of termination
 Notice to explain

The notice to explain ( NTE or Show Cause Memo or Show Cause

Order) is the start of the process.
It is a written notice to the employee that should have the following:

 Details the cause for termination based on Art. 282

 Lists the facts and instances that might lead to dismissal
 Cites the particular company item in the company’s code
discipline
 Ask for written explanation with in 5 days
 Should be served at the employees last known address.
 Every effort should be made to deliver to the employee
in person. If it cannot be then you should send it by
registered mail to his last known address.

A signed receipt is also good practice, should you later

on need to present evidence.
Administrative Hearing

An administrative hearing is really for the employee to air his side.

He can present facts in his defense and counter the employer’s charge. He can explain his side, and even
bring along counsel.

You may correctly think that some employees might skip this step in an effort to avoid the administrative
hearing and therefore later claim that the company did not follow process.

You’d be correct- this does happen.

However, the law recognizes that this isn’t the employer’s fault.
By providing an opportunity to be heard, you’ve complied with the law.
It’s up to the employee to now appear.

A good practice would be send a written notice of the time and place of the hearing to the employee and to
keep an attendance sheet.
Notice of Termination

If, after the administrative hearing, you find that the employee should be
terminated, you’ll have to issue a notice of termination.
The notice of termination is written letter that is ideally given to the employee in
person. If that isn’t possible, then sending it through registered mail to his last
known address can suffice.

You’ll need to state:

 All circumstances involving the charge against the employees have been
considered; and
 Grounds have been established to justify the severance of their
employment.

The ground in the notice of termination should of course be the same as that
which was in the Notice to Explain.

By complying with the process and correctly identifying the grounds needed for
termination, you will be following the law and properly supporting your
employer.
 Art. 285 TERMINATION BY
EMPLOYEE
A. An employee may terminate without just cause the employee-employer relationship by serving a
written notice on the employer at least (1) month in advance. The employer upon whom no such
notice was served may hold the employee liable for damages.
B. an employee may put an end to the relationship without serving any notice on the employer for any
of the following just causes.
1. Serious insult by the employer or his representative on the honor and person of the employee;
2. In human and unbearable treatment accorded the employee by the employer or his
representative;
3. Commission of a crime or offense by the employer or his representative against the person of
the employer or his representative against the person of the employee or any of the immediate
members of his family; and
4. Other causes analogous to any of the foregoing.
 AUTHORIZED CAUSES OR
BUSINESS EXIGENCIES

 Sometimes, business pressures force down-sizing or letting go of employees.

 Philippine law does recognize this in Art. 283

 The installation of labor- saving devices

 Redundancy
 Retrenchment to prevent losses or
 The closing or cessation of operation
Cases have given us a common understanding of these items and the
correct criteria to apply before invoking them.

For instance, for retrenchment to be used, Court has specified that the
following must exist:

 That the losses expected are substantial and not merely de minimis in
extent; that the expected losses are reasonably imminent such as can
be perceived objectively and in good faith by the employer; that the
retrenchment is reasonably necessary and likely to effectively prevent
the expected losses; and that imminent losses sought to be forestalled
are substantiated.
 Authorized Cause Process To Follow

You need to follow a few guidelines if you are using authorized cause:
 Written notice to the employees 1 month before
 Notice to the DOLE 1 month before using their forms
It is a simpler process than termination for just cause.
Still, make sure to follow that process and file the forms correctly to ensure compliance with Philippine labor laws.
By doing this, you are serving the company’s interests and ensuring that the business is protected in court.
You will need to pay your employee separation pay, with the amount depending on what ground was used:
 At least 1 month of pay or 1 month per year of service, whichever is higher for the installation of labor saving devices
or redundancy
 At least 1 month pay or at least ½ month pay for every year of service for retrenchment or the closing of operations
not due to serious business losses or financial reverses
Note that a fraction of a year of at least 6 months is considered one year.
 TERMINATION DUE TO ILLNESS
You can terminate due to illness under Art. 284
However, you cant terminate simply because someone has a fever.
In fact the Court have laid down substantive requirements for this:
 Certification by a competent public health authority
 Serious or contagious disease that cannot be cured within 6 months

Recently the supreme court has decided that termination due to health reasons needs to follow the
two notice process.
This is the same process described in the above section for just causes. Briefly, this means that there
must be a Notice To Explain, Administrative Hearing and Notice of Termination.
 OTHER INSTANCES OF
TERMINATION
You can cut the employee-employer relationship in other instances.
Some of them are when:

 When the project ends and the employees are project based
 When the employee was hired for seasonal labor
 When the employee was as a casual laborer

You can terminate when the employment is of this type as these are all understood
and legally recognized.
Still, don’t forget to keep your papers in order and ensure you are following correct
processes for termination.
LAMBERT PAWNBROKERS
AND JEWELRY CORP. VS
HELEN BINAMARA

CASE
Retrenchment o redundancy: Kailan maaaring mangyari?
by Atty. Remigio D. Saladero Jr.
July 19, 2010

Sa ngayon ay maaaring pamilyar na kayo sa salitang “ retrenchment.” Maaaring pamilyar na rin kayo sa
salitang “ redundancy.” Sa dami ng mga manggagawang natanggal sa kanilang trabaho gamit ang ganitong
dahilan, hindi maaaring hindi kayo maging pamilyar sa kanila. Kaya napapanahon ang paglabas ng Korte
Suprema ng desisyon sa kasong “ Lambert Pawnbrokers and Jewelry Corporation vs. Helen Binamira ” (G.R. No.
170464). Sa kasong ito ay muling nilinaw kung kailan maaaring gamitin ng isang kompanya ang retrenchment o
redundancy upang tanggalin ang isang manggagawa sa kanyang trabaho.

Nagtatrabaho bilang isang vault custodian itong si Helen sa isang malaking pawnshop . Tatlong taon na siya
sa kompanya nang bigla siyang tinanggal ng manedsment sa kanyang trabaho. Nalulugi daw kasi ang
manedsment kung kaya’t kailangan nitong magbawas ng empleyado. Sa madaling sabi, “ retrenchment” ang
dahilan kung bakit tinanggal ng manedsment itong si Helen sa kanyang trabaho.
Hindi ito matanggap ni Helen kung kaya’t nagsampa siya ng demanda sa tanggapan ng Labor Arbiter. Sa
kanyang reklamo, sinabi niya na walang batayan ang pagtanggal sa kanya. Sinabi din niya na wala siyang tamang
abiso na tinanggap mula sa manedsment.
 Bilang sagot, pinakita ng manedsment ang financial statement nito na nabawasan ang kanyang kita
kung kaya’t napilitan itong tanggalin si Helen. Ayon sa dokumento, dati ay kumita ang kompanya ng P1
Milyon. Subalit noong nakaraang taon, P665,000 na lamang ang kanyang kinita.
Nakumbinsi ng kompanya ang Labor Arbiter at talo si Helen sa nilabas nitiong desisyon. May katuwiran daw
ang kompanya sa pagtanggal nito kay Helen.

Nag-apela sa National Labor Relations Commission (NLRC) si Helen at binaliktad ng NLRC ang hatol.
Wala daw sapat na batayan ang kompanya sa ginawa nitong retrenchment kaya hindi legal ang
pagkatanggal kay Helen.

Humingi ng rekonsiderasyon ang kompanya at himalang binaliktad ng NLRC ang sarili nitong desisyon.
Ang sabi ng NLRC, masyadong maraming empleyado sa kompanya kaya puwedeng tanggalin ng
manedsment si Helen. Maaring hindi sapat ang pagkalugi ng kompanya para magtanggal ng empleyado sa
dahilan ng “ retrenchment” subalit may tamang dahilan para magtanggal ito ng empleyado sa dahilan ng “
redundancy .” Kaya, legal pa rin ang ginawa nitong pagtanggal kay Helen, hatol ng NLRC.
Si Helen naman ngayon ang umakyat sa Court of Appeals. Dito, siya naman ang kinatigan ng Court of
Appeals. Binaliktad ng Court of Appeals ang hatol ng NLRC at sinabing walang “ redundancy ” o “
retrenchment” sa kaso ni Helen. Iniutos nito sa kompanya ang pagbalik kay Helen sa kanyang trabaho at
pagbayad sa kanya ng
backwages.
 Hindi tumigil ang kompanya at dinala ang kaso sa Korte Suprema. Ganun pa man, sinang-ayunan ng
Korte Suprema ang Court of Appeals sa hatol nitong labag sa batas ang pagkatanggal kay Helen.
Maaring magtanggal ng empleyado ang isang kompanya sa dahilan ng “ retrenchment,” paliwanag ng Korte
Suprema, kung ito ay nalulugi o makakadanas ng pagkalugi at kailangan niyang magbawas ng empleyado
upang maiwasan o masolusyunan ang pagkaluging ito. Kailangan lamang may sapat na ebidensiya para
patunayan ang pagkaluging ito. Kailangan ding nagawa na ng kompanya ang ibang paraan para maiwasan
ang pagkalugi at wala nang nalalabing paraan kungdi ang magtanggal ng tao. Kailangan ding gumamit ng
resonableng batayan sa pagpili kung sinong empleyado ang tatanggalin. Dapat may sulat ding ibibigay sa
empleyadong matatanggal at sa Department of Labor and Employment (DOLE) isang buwan bago siya
tanggalin. At dapat ding bayaran ng kompanya ang empleyadong matatanggal ng
separation pay sa halagang kalahating buwan na sahod bawat taon ng pagtatrabaho.

Sa kaso ni Helen, bagamat pinakita ng kompanya ang financial statement nito na nagpapakitang
nabawasan ang kanyang kinita ng mga P335,000, hindi ito sapat na patunay upang ipakita na ito ay nalulugi.
Ang kabawasan ng kita ay hindi pagkalugi. Isa pa, walang patunay na ang kondisyong ito ay tuluy-tuloy.
Maaaring sa mga susunod na taon, gumanda uli ang kita ng kompanya.
 Hindi rin nagpatupad ang kompanya ng ibang hakbang para maiwasan nito ang pagkalugi bago ito nagdesisyon na
tanggalin si Helen. Wala ring katunayan na gumamit ito ng resonableng batayan para malaman kung sino sa mga
empleyado nito ang tatanggalin. Bukod pa rito, inabisohan nito si Helen na siya ay matatanggal sa mismong araw din na
siya ay tatanggalin. Maliwanag na nilabag ng kompanya ang mga pamantayan kaugnay ng “ retrenchment.”

Hindi rin maaring pumasok sa ilalim ng “ redundancy ” ang pagkatanggal kay Helen, sabi ng Korte Suprema.
Nangyayari ang “ redundancy ” kung ang isang posisyon ay hindi na kailangan ng kompanya dahil sa pagbabago ng
kanyang istruktura dahilan sa pagliit o pagpalit ng kanyang negosyo o iba pang lehitimong dahilan. Sa kaso ni Helen,
walang patunay na nagbago ng istruktura ang kompanya at tinanggal na ang posisyon ni Helen bliang vault custodian .
Binasura ng Korte Suprema ang ginawang paghahabol ng kompanya at inutos ang pagbalik kay Helen sa kanyang
posisyon at pagbayad sa kanya ng backwages. Kung sakaling hindi na praktikal sa kanya ang bumalik sa dati niyang
puwesto, sinabi ng Korte Suprema na dapat siyang bayaran ng kanyang separation pay .
JUST TO SUM IT UP
 You’ll notice that this deals with both the process and the grounds for
valid termination.

That’s because both are equally important if you want to protect your
employer and fully do your job as an HR.

I’ve dealt with many research about termination of employment and

opinions of lawyers and HRs but one of the best that I knew had
absolutely impeccable documentation, ably transacted with government
agencies and knew the law like a man knew his wife.

If you are trying to terminate, you’ve got to know the law.

It’s the best defense for your employer and will absolutely set you apart
from other HRs.