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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.
AT A GLANCE:
Under the Labor Code, an employer may also terminate the employment of any employee due to the installation of labor-saving devices. (Article 298, Labor Code)
The installation of labor-saving devices contemplates the installation of machinery to effect economy and efficiency in its method of production. (Edge Apparel, Inc. v. NLRC, G.R. No. 121314, February 12, 1998)
The Labor Code provides that:
“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 operation of the establishment or undertaking unless the closing is for the purpose of circumventing the provisions of the Labor Code xxx” (Article 298, Labor Code)
The law authorizes an employer to terminate the employment of any employee due to the installation of labor-saving devices. The installation of these devices is a management prerogative, and the courts will not interfere with its exercise in the absence of abuse of discretion, arbitrariness, or maliciousness on the part of management. (Magnolia Dairy Products Corporation v. NLRC, G.R. No. 114952, January 29, 1996)
If an employee is terminated from employment as a consequence of installation of labor-saving devices, the employer shall pay such employee termination pay.
The Omnibus Rules Implementing the Labor Code provides that:
An employee shall be entitled to termination pay equivalent to at least one month’s salary for every year of service a fraction of at least six (6) months being considered as one whole year, in case of termination of his employment due to the installation of labor-saving devices or redundancy.” (Section 9, Title I, Book VI, Omnibus Rules Implementing the Labor Code)
The case of Edge Apparel, Inc. v. NLRC (G.R. No. 121314, February 12, 1998) further provides that:
A dismissal due to the installation of labor-saving devices, redundancy (Article 283) or disease (Article 284), entitles the worker to a separation pay equivalent to “one (1) month pay or at least one (1) month pay for every year of service, whichever is higher.”
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Alburo Alburo and Associates Law Offices specializes in business law and labor law consulting. For inquiries regarding taxation and taxpayer’s remedies, you may reach us at info@alburolaw.com, or dial us at (02)7745-4391/0917-5772207.
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