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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:
“An employee who is unjustly dismissed from work shall be entitled to reinstatement without loss of seniority rights and other privileges and to his full backwages, 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.” (Article 294, Labor Code)
“The employee shall either be admitted back to work under the same terms and conditions prevailing prior to his dismissal or separation or, at the option of the employer, merely reinstated in the payroll.” (Article 229, Labor Code)
In labor law, reinstatement is the admission of an employee back to work prevailing prior to his dismissal. In reinstatement, the employer has two options:
(1) Actual Reinstatement – the reinstatement of an employee to the position held prior to illegal dismissal.
(2) Payroll Reinstatement – the employee is reinstated in the employer’s payroll without necessitating his or her return to the workplace.
Article 294 of the Labor Code provides that:
“An employee who is unjustly dismissed from work shall be entitled to reinstatement without loss of seniority rights and other privileges and to his full backwages, 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.”
In the case of Alexander Bañares v. Tabaco Women’s Transport Service Cooperative (G.R. No. 197353, April 01, 2013), the Supreme Court explained the concept of reinstatement in the following manner:
“Reinstatement, as a labor law concept, means the admission of an employee back to work prevailing prior to his dismissal; restoration to a state or position from which one had been removed or separated, which presupposes that there shall be no demotion in rank and/or diminution of salary, benefits and other privileges; if the position previously occupied no longer exists, the restoration shall be to a substantially equivalent position in terms of salary, benefits and other privileges.” (Alexander Bañares v. Tabaco Women’s Transport Service Cooperative, G.R. No. 197353, April 01, 2013)
Article 229 of the Labor Code states that:
“The employee shall either be admitted back to work under the same terms and conditions prevailing prior to his dismissal or separation or, at the option of the employer, merely reinstated in the payroll.”
In the recent case of Jose Leni Solidum v. Smart Communications, Inc. (G.R. No. 206985, February 28, 2024), the Supreme Court expounded on the concept of actual reinstatement and payroll reinstatement, viz:
“In carrying out the reinstatement provision outlined in the labor-arbiter’s decision, the employer has two available options: Firstly, it may opt for actual reinstatement, requiring the employee to be restored to the position held prior to illegal dismissal. This includes reinstating the employee under the same terms and conditions that existed before the dismissal. If the original position is no longer available, the employer must provide a substantially equivalent position.
Alternatively, the employer may choose payroll reinstatement, where the employee is reinstated in the employer’s payroll without necessitating his or her return to the workplace. This option allows the employee to resume his or her employment status without physically reporting back to work.
It is well-settled that in the case of payroll reinstatement, even if the employer’s appeal turns the tide in its favor, the reinstated employee has no duty to return or reimburse the salary he received during the period where the lower court’s governing decision was for the employee’s illegal dismissal.”
Reinstatement is no longer viable where, among other things, the relations between the employer and employee have been so severely strained, that it is not in the best interest of the parties, nor is it advisable or practical to order reinstatement. (Alexander Bañares v. Tabaco Women’s Transport Service Cooperative (G.R. No. 197353, April 01, 2013)
Under the doctrine of strained relations, payment of separation pay is considered an acceptable alternative to reinstatement when the latter option is no longer desirable or viable.
Separation pay is made an alternative relief in lieu of reinstatement in certain circumstances, such as:
(1) when reinstatement can no longer be effected in view of the passage of a long period of time or because of the realities of the situation;
(2) reinstatement is inimical to the employer’s interest;
(3) reinstatement is no longer feasible;
(4) reinstatement does not serve the best interests of the parties involved;
(5) the employer is prejudiced by the workers’ continued employment;
(6) facts that make execution unjust or inequitable have supervened; or
(7) strained relations between the employer and the employee. (Alexander Bañares v. Tabaco Women’s Transport Service Cooperative, G.R. No. 197353, April 01, 2013)
In case the employer fails to comply with the labor arbiter’s order of reinstatement, the employer becomes obligated to pay the accrued salaries of the reinstated employee as stipulated in the decision. (Jose Leni Solidum v. Smart Communications, Inc., G.R. No. 206985, February 28, 2024)
Related Article/s:
What is the effect if reinstatement is no longer practicable?
Is an employee who was illegally dismissed from employment automatically entitled to reinstatement?
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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