(The following post does not create a lawyer-client relationship between Alburo Alburo and Associates Law Offices (or any of its lawyers) and the reader. It is still best for you to engage the services of your own lawyer to address your legal concerns, if any.
Also, the matters contained in the following were written in accordance with the law, rules, and jurisprudence prevailing at the time of writing and posting, and do not include any future developments on the subject matter under discussion.)
Q: My employees are misbehaving. As an employer, how will I enforce discipline in the workplace?
In case of misbehaving employees, employers may initiate disciplinary proceedings against the concerned employee. It must be noted that actions on employee discipline, as well as imposition of penalties such as suspension, or even dismissal from employment, is among the management’s prerogatives.
Q: What is “management prerogative,” and how does it relate to employee discipline?
Under the doctrine of management prerogative, every employer has the inherent right to regulate, according to his own discretion and judgment, all aspects of employment, including hiring, work assignments, working methods, the time, place and manner of work, work supervision, transfer and recall of employees, and even those involving enforcement of disciplinary sanctions upon erring employees such as suspension of workers and/or dismissal from employment.
Q: What are the penalties that an employer may impose upon an erring employee?
There are a variety of penalties that an employer may impose upon an erring employee as a consequence of his misbehavior or misdeed, from mere warnings, admonition, censure, to suspension, demotion, and even termination from employment. The employer may impose any of such penalties as he may deem fit, provided that the gravity of the penalty to be imposed should be commensurate to the offense committed by the concerned employee, and that it should be imposed only upon compliance with the requirements of due process.
Q: What is suspension, and what are its consequences?
Suspension, also called lay off, is among the step taken in employee discipline, as punishment for some major offenses. Suspension may be for a certain period ranging from one to several days. During the suspension period, the principle of “no work, no pay” applies, and thus the employee concerned does not receive his wage for each and every day he is suspended.
However, suspension affects not only the employee, but also the employer, as the employer will not be able to avail the services of the suspended employee for the lay off period. This may somehow hurt the operations of the employer, especially if the suspended employee is skilled in his job, or holds sensitive functions that others cannot effectively handle.
Q: What are the different kinds of suspension?
Suspension may be imposed either as a penalty for an offense committed, or as a measure to prevent any investigation from being prejudiced. The latter is more commonly known as “preventive suspension.”
In case of preventive suspension, it may be imposed on the following conditions:
a. If the continued employment of the employee concerned poses a serious and imminent threat to the life or property of the employer or to his co-workers;
b. The preventive suspension shall not exceed 30 days.
If the preventive suspension is extended, the employee must be paid his wages and other benefits during the period of extension. It must be made clear that preventive suspension is not a penalty. It is merely undertaken as a preventive measure to avoid ongoing investigations from being prejudiced.
Q: What is dismissal from employment, as a penalty imposed to discipline erring employees?
Dismissal from employment is the supreme penalty that may be imposed by an employer against an employee, and is justified only on the most serious of offenses. Thus, for being the most severe penalty, it must be imposed in accordance with law.
Q: What is the right to security of tenure?
The right to security of tenure, which is guaranteed by the Constitution, means that an employee can be dismissed from his employment only if there is a valid cause as provided by law, and upon observance of due process. From this premise, the right to security of tenure has two aspects:
(1) the cause for dismissal, and
(2) the manner by which the dismissal was carried out.
Q: What are the causes provided by law to terminate the employment of an employee?
The causes for termination of employment are classified into two: (1) just causes and (2) authorized causes. The main distinction between the two is that just causes are attributable to the fault of the employee sought to be dismissed, while authorized causes are not attributable to the fault of the employee whose services are sought to be terminated, but the law nevertheless allows such termination for the protection of the interests of the employer.
The just causes for termination of employment are the following:
(a) Serious misconduct or willful disobedience by the employee of the lawful orders of his employer or representative in connection with his work;
(b) Gross and habitual neglect by the employee of his duties;
(c) Fraud or willful breach by the employee of the trust reposed in him by his employer or duly authorized representative;
(d) 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
(e) Other causes analogous to the foregoing.
The authorized causes for termination of employment are the following:
(a) Installation of labor-saving devices – when reduction of the number of workers in a company’s factory is made necessary by the introduction of machinery in the manufacture of its products is justified.
(b) Redundancy – there is redundancy where the services of an employee are in excess of what is reasonably demanded by the actual requirements of the enterprise.
(c) Retrenchment to prevent losses – when there is a need to reduce the workforce in order for the employer to address actual or imminent financial reverses taking place.
(d) Closing or cessation of operation of the establishment or undertaking – the employer, for reasons of his own, may in good faith choose to close his business.
(e) Employee suffers from an illness – when the illness is of such nature that his continued employment is prejudicial to his health as well as the health of other employees.
Q: Are dismissed employees entitled to receive anything?
If the termination is due to a just cause, the employer is not obliged to give separation pay to the dismissed employee. It is because termination of employment due to just cause is attributable to the fault of the dismissed employee, and the employer, for being the aggrieved party, should not be permitted to further suffer by obliging him to reward his former employee’s misbehavior by granting the latter separation pay.
However, if the termination is due to an authorized cause, separation pay is due to the employee concerned, as the termination of his employment is not due to his fault. However, by way of exception, if the cause of termination is due to closure of business because of financial reverses, there is no need for the employer to give the terminated employee separation pay.
Q: How much is the separation pay?
The amount of separation pay to be paid to the terminated employees varies, depending on the cause of termination.
1. Installation of labor-saving devices – One (1) month pay, or at least one (1) month pay for every year of service, whichever is higher;
2. Redundancy – One (1) month pay, or at least one (1) month pay for every year of service, whichever is higher;
3. Retrenchment – One (1) month pay, or at least one-half (1/2) month pay for every year of service, whichever is higher;
4. Closure of business:
• If by reason of serious business reverses – No separation pay is required
• If not by reason of serious business reverses – One (1) month pay, or at least one-half (1/2) month pay for every year of service, whichever is higher;
5. Ailment or disease – One (1) month pay, or at least one-half (1/2) month pay for every year of service, whichever is higher;
A fraction of six (6) months shall be considered one (1) whole year.
Q: What is due process, or the process to be followed in terminating the employment of an employee?
If the termination is due to just cause, the employer is required to observe the two-notice rule:
1. Notice of the intention to dismiss, stating therein the ground for termination, and gives the employee a reasonable opportunity to explain his side. Reasonable opportunity has been held to be 5 days if the employee is facing charges for which the penalty of dismissal may be imposed.
2. Notice of dismissal, indicating that after taking into consideration the evidence and the explanation of the employee, the ground for termination was still established.
If the termination is due to an authorized cause, the employer is required to give a written notice of dismissal to the employee specifying the grounds at least 30 days before the effective date of termination. A copy of the notice shall also be furnished the Regional Office of the Department of Labor and Employment (DOLE) where the employer is located.
Q: What is the consequence if the termination of an employee is not due to the just or authorized causes provided by law?
If the dismissal was carried out for causes other than those provided by law, the employee may be entitled to payment of backwages. Reinstatement may also be awarded to the illegally dismissed employee, unless there is already strained relations between the employer and the employee, where in such case, the employer may be ordered to pay separation pay to the employee. If the dismissal was carried out without affording the employee a fair opportunity to be heard or to defend himself, then he may be entitled to payment of an indemnity [See Philippine-Singapore Transport Services, Inc. vs. NLRC, G.R. No. 95449, August 18, 1997].
Q: What is the concept of backwages?
Backwages presupposes illegal termination. It is restitution of earnings unduly withheld from the employee because of illegal termination, computed from the time his compensation was withheld until his actual reinstatement. Hence, where there is no illegal termination, there is no basis for claiming or awarding of backwages.
Q: What is the concept of reinstatement?
Aside from being paid his full backwages, an employee who is unjustly dismissed from work shall also be entitled to reinstatement, meaning that he must be allowed to resume his employment without loss of seniority rights and other privileges, inclusive of allowances, and to his other benefits or their monetary equivalent computed from the time his compensation was withheld from him up to the time of his actual reinstatement.
However, when the decision ordering reinstatement is pending appeal to a higher tribunal, and the employer does not want to accept the dismissed employee back to being physically employed in his business, the employer has the option to reinstate the employee in the payroll. This is called “payroll reinstatement” where it shall be obligatory on the part of the employer to pay the wages of the dismissed employee during the period of appeal. If the employee has been reinstated during the appeal period and such reinstatement order is reversed with finality, the employee is not required to reimburse whatever salary he received for he is entitled to such, more so if he actually rendered services during the period [Genuino vs. NLRC, G.R. No. 142732-33, December 4, 2007].
The employer, however, shall not be obliged to reinstate the dismissed employee even if there is a finding of illegal dismissal if there is already strained relations between the employer and employee so as to preclude harmonious working relationship, or if reinstatement has already become impossible, such as when the business has already closed, or when reinstatement cannot be done due to causes beyond the control of the employer. In which case, the illegally dismissed employee shall be entitled to separation pay instead of reinstatement.
Q: What is the doctrine of strained relations?
Under the doctrine of strained relations, the payment of separation pay has been considered an acceptable alternative to reinstatement when the latter option is no longer desirable or viable. On the one hand, such payment liberates the employee from what could be a highly oppressive work environment. On the other, the payment releases the employer from the grossly unpalatable obligation of maintaining in its employ a worker it could no longer trust.
Nevertheless, the principle of strained relations should not be used so indiscriminately as to bar the reinstatement of illegally dismissed workers, especially when they themselves have not indicated any aversion to returning to work. It is only normal to expect a certain degree of antipathy and hostility to arise from a litigation between parties, but not in every instance does such an atmosphere of antagonism exist as to adversely affect the efficiency and productivity of the employee concerned [Coca-Cola Bottlers Phils., Inc. vs. Daniel, G.R. No. 156893, June 21, 2005].
Q: If the employer is required to pay both separation pay and backwages, is he allowed to deduct the amount of separation pay from the backwages?
No. Separation pay is not deductible from backwages because the two are separate and distinct from each other. Separation pay is given as alternative to reinstatement if the same is not anymore possible, while backwages is paid to indemnify the illegally dismissed employee of the amounts he would have received had his employment not been terminated.
Q: If due process was not observed in termination of employment, what is the consequence?
In cases of termination due to just causes, the employer must indemnify the employee by way of nominal damages in the amount of P30,000.00 [Agabon vs. NLRC, G.R. No. 158693, November 17, 2004]. In case of termination due to authorized causes, the employer must indemnify the employee in the amount of P50,000.00 [Jaka Food Processing vs. Pacot, G.R. No. 151378, March 28, 2005].
Alburo Alburo and Associates Law Offices specializes in business law and labor law consulting. For inquiries regarding employment disciplinary procedures, you may reach us at info@alburolaw.com, or dial us at (02)7745-4391/0917-5772207.
All rights reserved.