AUTHORIZED CAUSES OF TERMINATION Russel R. Romero
May 21, 2015
AUTHORIZED CAUSES OF
TERMINATION
Russel R. Romero
TERMINATION OF EMPLOYMENT
Authorized Causes for dismissal of employee refer to those lawful grounds for termination which in general do not arise from fault or negligence of the employee.
Just Causes are always based on acts attributable to the employee’s own fault or negligence.
Authorized Causes of Termination
Article 297. Closure of Establishment and Reduction of Personnel.
1. Installation of labor-saving devices2. Redundancy3. Retrenchment4. Closing or cessation of operation
TERMINATION OF EMPLOYMENT
Authorized Causes of Termination
1. Installation of labor-saving devices – Contemplates the installation of machinery to effect economy and
efficiency in the method of production.
2. Redundancy – Exist where the services of an employee are in excess of what is reasonably demanded by the actual requirements of the enterprise.
TERMINATION OF EMPLOYMENT
Authorized Causes of Termination
3. Retrenchment to prevent losses – Is an economic ground to reduce the number of employees. Reduction of personnel for the purpose of cutting down on costs of operations in terms of salaries and wages.
4. Closure or cessation of operation – the closure of
business is a ground for the termination of the services of an employee unless the closing is for the purpose of circumventing pertinent provisions of labor code.
TERMINATION OF EMPLOYMENT
Authorized Causes of Termination
5. Disease – An employer may terminate the services of an employee who has been found to be suffering from any disease and whose continued employment is prohibited by law or is prejudicial to his health as well as health of his co-employees.
TERMINATION OF EMPLOYMENT
Authorized Causes of Termination
Serving a written notice on the workers and the Ministry of Labor and Employment at least one (1) month before the intended
date thereof.
TERMINATION OF EMPLOYMENT
The affected worker shall be entitled to a separation pay equivalent to at least his one (1) month pay or at least (1) month pay for
every year of service
SEPARATION PAY
Installation of labor-saving device and redundancy
TERMINATION OF EMPLOYMENT
The affected worker shall be entitled to a separation pay shall be equivalent to one (1)
month pay or at least (1/2) month pay for every year of service. A fraction of (6) months shall be
considered as (1) whole year.
SEPARATION PAY
Retrenchment to prevent losses and in cases of closures or cessation of operations.
TERMINATION OF EMPLOYMENT
General Milling Corporation vs. Viajar
January 30, 2013 - Redundancy
Redundancy still valid basis for terminating employee butcompany needs to show “adequate proof” to establish goodfaith.
CASES
• The supreme court held that Viajar’s termination was
illegal.
• Supreme court prove that redundancy was not enough
to show that termination was warranted.
• GMC did not exert efforts to present tangible proof
that it was experiencing business slow down.
General Milling Corporation vs. Viajar
January 30, 2013 - Redundancy
CASES
• GMC failed to present evidence which could readily
show that the company’s declaration of redundant
positions was justified.
• Viajar presented evidence that GMC had been hiring
new employees while it was firing the old ones.
Negating the claim of redundancy.
Composite Enterprises vs. Emilio M. Aparoso & Joeve Quindipan – Retrenchment
CASES
• Caparoso alleged that he was hired on November 8,
1998. • Quindipan hired on intermittent basis since 1997 and
continuously working on August 1998.• They were both dismissed from the service on October
8,1999.
PETITIONER
Composite Enterprises vs. Emilio M. Aparoso & Joeve Quindipan – Retrenchment
CASES
• They were both hired on May 11, 1999 for three months
and then on a month to month basis.
• They terminated the said employees as a result of the
expiration of their contracts of employment on October
8, 1999
RESPONDENT
Composite Enterprises vs. Emilio M. Aparoso & Joeve Quindipan – Retrenchment
CASES
• The Labor Arbiter ruled that petitioners are regular
employees in the decision dated June 15, 2000.
• Declaring complainants to have been illegally
dismissed from employment.
• Respondents are hereby ordered to immediately
reinstate to their positions.
LABOR ARBITER
Composite Enterprises vs. Emilio M. Aparoso & Joeve Quindipan – Retrenchment
CASES
• The Court of Appeals held that respondent’s manpower
requirement varies from month to month depending on
the demand from their clients for their products.
• Respondents employed petitioners for the purpose of
addressing a temporary manpower shortage.
COURT OF APPEALS
Composite Enterprises vs. Emilio M. Aparoso & Joeve Quindipan – Retrenchment
CASES
1. Whether petitioners are regular employees of respondents; and
2. Whether respondents are guilty of illegal dismissal.
The petition raises these issuesThe petition raises these issues:
Composite Enterprises vs. Emilio M. Aparoso & Joeve Quindipan – Retrenchment
CASES
Even if an employee is engaged to perform activities that
are necessary and desirable in the usual trade or
business of the employer. It does not preclude the fixing
of employment for a definite period.
Petitioners are not regular employees
Composite Enterprises vs. Emilio M. Aparoso & Joeve Quindipan – Retrenchment
CASES
Petitioners are not regular employees
1. The fixed period of employment was knowingly and voluntarily agreed upon by the parties. That there was no indication of force, duress or improper pressure exerted on petitioners when they signed the contracts.
2. There was also no proof that respondents where regularly engaged in hiring workers for work for a minimum period of five months to prevent the regularization of their employers.
Composite Enterprises vs. Emilio M. Aparoso & Joeve Quindipan – Retrenchment
CASES
Petitioners are not regular employees
3. Hence, they are employed for a total of five months. Their employment did not even exceed six months to entitle them to become regular employees.
4. The pay slip submitted by petitioners to prove their prior employment are handwritten and indicates only the date and amount of pay. They do not indicate the name of the employer.
Composite Enterprises vs. Emilio M. Aparoso & Joeve Quindipan – Retrenchment
CASES
Petitioners were not illegally dismissed from employment
1. Petitioners terms of employment are governed by their fixed term contracts and had expired. They were not illegally dismissed from employment.
2. Petitioners employment did not exceed six months.
Zuellig Freight and Cargo Systems vs. NLRC and San Miguel – Closure of Establishment
CASES
Facts
• Ronaldo San Miguel had been a checker / custom representative of Zeta Brokerage Corp.
• On January 1994 he and other employees were informed that Zeta would cease operations, and that all affected employees including him would be separated.
• Zeta informed him through a letter, of his termination effective March 31, 1994.
Zuellig Freight and Cargo Systems vs. NLRC and San Miguel – Closure of Establishment
CASES
Facts
• He allegedly accepted his separation pay subject to the standing offer to be hired to his former position by petitioner. On April 15, 1994, he was summarily terminated.
• San Miguel filed a complaint for unfair labor practice, illegal dismissal, non payment of salaries and moral damages against Zeta.
• Zeta contended that the dismissal is for a just cause, cessation of business operations.
Zuellig Freight and Cargo Systems vs. NLRC and San Miguel – Closure of Establishment
CASES
Issue
Whether the dismissal due to alleged closure of business operations is valid.
Zuellig Freight and Cargo Systems vs. NLRC and San Miguel – Closure of Establishment
CASES
Ruling
No. The cessation of business operations by Zeta was not
a bona fide closure to be regarded as a valid ground for
termination of employment of San Miguel.
The amendments in the articles of incorporation of Zeta
to change the corporate name to Zuellig Freight and
Cargo Systems did not produce its dissolution as a
corporation.
Zuellig Freight and Cargo Systems vs. NLRC and San Miguel – Closure of Establishment
CASES
Ruling
Thus, Zuellig is bound to respect and honor Zeta’s
obligation especially with the employees’ security of
tenure.
Eleazar S. Padillo vs. Rural Bank of Nabunturan, Inc. and Mark S. Oropeza – Disease and Retirement
CASES
Facts• Eleazar Padillo was employed by the bank as its SA
Bookkeeper.
• Bank took out retirement/insurance plans for all its employees in anticipation of its possible closure.
• Bank procured an insurance life plan in favor of Padillo for a benefit amount to P100,000 which was set to mature on July 11, 2009.
• On October 14, 2004, respondent Mark Oropeza the President of the Bank, bought majority of stocks and took over its management
Eleazar S. Padillo vs. Rural Bank of Nabunturan, Inc. and Mark S. Oropeza – Disease and Retirement
CASES
Facts• During the Latter part of 2007 Padillo suffered mild
stroke due to hypertension that impaired his ability to work.
• Padillo wrote a letter addressed to Oropeza expressing his intention to avail of an early retirement package, but his request remain unheeded.
• October 3, 2007, Padillo was separated from employment due to his poor and failing health. Not having received his claimed retirement benefits.
Eleazar S. Padillo vs. Rural Bank of Nabunturan, Inc. and Mark S. Oropeza – Disease and Retirement
CASES
Facts• Padillo filed a complaint with the LA a complaint for the
recovery of unpaid retirement benefits. He asserted that the bank had adopted a policy of granting its aging employees early retirement packages.
• LA dismissed Padillo’s complaint but directed the bank directed to pay him the amount P100,000 as financial assistance.
• Padillo was disqualified to receive any benefits because he was 55 years old when he resigned.
Eleazar S. Padillo vs. Rural Bank of Nabunturan, Inc. and Mark S. Oropeza – Disease and Retirement
CASES
Facts• Padillo filed a complaint with the LA a complaint for the
recovery of unpaid retirement benefits. He asserted that the bank had adopted a policy of granting its aging employees early retirement packages.
• LA dismissed Padillo’s complaint but directed the bank directed to pay him the amount P100,000 as financial assistance.
• Padillo was disqualified to receive any benefits because he was 55 years old when he resigned.
Eleazar S. Padillo vs. Rural Bank of Nabunturan, Inc. and Mark S. Oropeza – Disease and Retirement
CASES
Facts• Padillo elevated the matter to NLRC which reversed
and set aside the LA’s ruling.
• The NLRC applied the Labor Code provision on termination on the ground of disease, particularly Article 297 – holding that while Padillo did resign he did so only because of his poor health condition.
• It pronounced that separation pay on the ground of disease should not be given to Padillo because he was the one who initiated the severance of his employment.
Eleazar S. Padillo vs. Rural Bank of Nabunturan, Inc. and Mark S. Oropeza – Disease and Retirement
CASES
Issue
Petitioner is entitled to
1. Separation pay
2. Retirement Benefits
Ruling
The labor code provision on termination on the ground of disease does not apply in this case. Considering that it was the petitioner and not the bank who severed the employment the employment relations.
Eleazar S. Padillo vs. Rural Bank of Nabunturan, Inc. and Mark S. Oropeza – Disease and Retirement
CASES
Ruling
The clear import of Padillo’s letter and the fact that he stopped working before the foregoing date and never reported for work even thereafter show that it was Padillo who voluntarily retired and that he was not terminated by the Bank.
It is the employee who severs his employment ties, it necessarily follows that petitioner’s claim for separation pay must be denied.
Eleazar S. Padillo vs. Rural Bank of Nabunturan, Inc. and Mark S. Oropeza – Disease and Retirement
CASES
Ruling
What remains applicable, however, is the Labor Code provision on retirement [Article 300]. Simply stated, in the absence of any applicable agreement, an employee must (1) retire when he is at least sixty (60) years of age and (2) serve at least (5) years in the company to entitle him/her to a retirement benefit of at least one-half (1/2) month salary for every year of service, with a fraction of at least six (6) months being considered as one whole year. Notably, these age and tenure requirements are cumulative and non-compliance with one negates the employee's entitlement to the retirement benefits.
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