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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:
Failure to observe prescribed standards of work, or to fulfill reasonable work assignments due to inefficiency may constitute just cause for dismissal. Such inefficiency is understood to mean failure to attain work goals or work quotas, either by failing to complete the same within the allotted reasonable period or by producing unsatisfactory results. (Iluminada Ver Buiser vs. Hon. Vicente Leogardo, G.R. No. L-63316, July 31, 1984)
Article 297 of the Labor Code of the Philippines provides the legal basis for productivity standards. It supports that an employer is authorized to end an employee’s tenure on the grounds of “gross inefficiency,” which includes situations where there is a persistent failure to meet the established performance standards.
Productivity standards encompass the criteria and anticipations set by employers to assess their employees’ performance. These work standards cover various aspects such as output volume, quality, efficiency, and adherence to specific workplace policies.
Types of Productivity Standards
The employer holds the authority to establish productivity standards, which can serve two main purposes:
- As an Incentive Scheme
Incentivizing the performance of employees who exceed the productivity standards often results in additional benefits for employees, acting as an incentive. These incentives can take various forms, such as bonuses, promotions, or other non-monetary rewards, ultimately fostering a culture of excellence within the workforce.
- As a Disciplinary Scheme
On the other hand, failure to meet productivity standards can lead to disciplinary actions. This may range from providing additional training and support to imposing sanctions or, in extreme cases, termination of employment. It is crucial, however, for employers to adhere to due process and ensure that any disciplinary measures are reasonable, fair, and in compliance with labor laws.
Dismissal as an Implication of Non-Compliance with Productivity Standards
Failing to adhere to productivity or work standards can serve as a valid reason for terminating an employee’s employment.
In Iluminada Ver Buiser vs. Hon. Vicente Leogardo, the Supreme Court held:
“The practice of a company in laying off workers, because they failed to make the work quota, has been recognized in this jurisdiction. In the case at bar, the petitioners’ failure to meet the sales quota assigned to each of them constitute a just cause of their dismissal, regardless of the permanent or probationary status of their employment. Failure to observe prescribed standards of work, or to fulfill reasonable work assignments due to inefficiency may constitute just cause for dismissal. Such inefficiency is understood to mean failure to attain work goals or work quotas, either by failing to complete the same within the alloted reasonable period, or by producing unsatisfactory results. This management prerogative of requiring standards availed of so long as they are exercised in good faith for the advancement of the employer’s interest.”
Further, taking the case of Armando Puncia vs. Toyota Shaw/Pasig, Inc.:
“In the instant case, records reveal that as a Marketing Professional for Toyota, Puncia had a monthly sales quota of seven (7) vehicles from March 2011 to June 2011. As he was having trouble complying with said quota, Toyota even extended him a modicum of leniency by lowering his monthly sales quota to just three (3) vehicles for the months of July and August 2011; but even then, he still failed to comply. In that six (6)-month span, Puncia miserably failed in satisfying his monthly sales quota, only selling a measly five (5) vehicles out of the 34 he was required to sell over the course of said period. Verily, Puncia’s repeated failure to perform his duties – i.e., reaching his monthly sales quota – for such a period of time falls under the concept of gross inefficiency. In this regard, case law instructs that “gross inefficiency” is analogous to “gross neglect of duty,” a just cause of dismissal under Article 297 of the Labor Code, for both involve specific acts of omission on the part of the employee resulting in damage to the employer or to his business.”
Here, the consistent failure to meet sales quota tantamount to repeated failure to meet his duties and as a result constitutes gross inefficiency, which is equivalent to gross neglect of duty and can be grounds for dismissal under Article 297 of the Labor Code. It is worthy to note that gross neglect of duty is one of the just causes for dismissal. In other words, when an employee consistently falls short of expected performance levels, it can provide valid grounds for their dismissal by the employer.
Read also: Is the imposition of productivity standards a management prerogative?
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