TERMINATION OF EMPLOYMENT
N. B. there is always separation pay in retrenchment, even due to serious
losses
Closure not due to serious losses ½ month salary for each year of service, or 1 month salary (whichever is higher)
Closure due to serious losses No separation pay
What is a constructive dismissal?
o Unwarranted transfer or demotion, or unjustified action that results into involuntary resignation by the employee
o Includes imposing “floating status” on employee beyond 6 months
What if the employee is found to be suffering from disease and his continued employment will prejudice his health or that of his co-employees?
o He can be terminated.
o What is his separation pay?
1 month salary or ½ month salary for each year of service, whichever is higher
o What does the IRR provide?
There must be certification from competent public health authority that the disease is incurable within a period of 6 months even with proper treatment
What are the types of dismissal?
o 1. Valid dismissal
o 2. Illegal dismissal – no valid ground o 3. Valid ground, but improper dismissal
What is an ineffectual dismissal?
o No longer applicable now. There is no such thing.
If there is a valid dismissal, will the employee get anything?
o Separation pay, if terminated for authorized causes o What if it’s for a just cause?
You don’t get anything, in general.
o
Exception?
But you can get financial assistance if justice and equity require this. This is for those who are not morally depraved (“perverse mental attitude”). Ex.
terminated for repeated absences or laziness.
What are the consequences of illegal dismissal?
o 1. Reinstatement to former position without loss of seniority rights
When is there no reinstatement?
1. If the position is not anymore available,
2. Strained relations between the ER and EE. Strained relations usually apply when the EE is holding a position of confidence.
What is thus the alternative?
Instead you get separation pay equal to 1 month for every year of service.
o 2. Backwages
Represents wages he should have earned
How is it computed?
From actual termination until the case for illegal termination is finally resolved
Employee is hired on year 1 and is fired year 5. The case was resolved after 7 years, which is year 12. His salary was P10,000.
How do you count?
o (P10,000 x 13 x 7) = P910,000
o You calculate it against 13 months because you factor in the thirteenth month
What about separation pay?
o 1 month for every year of service: P120,000
o He rendered service for 12 years, not 5, because he does not lose seniority rights during the 7 years when the case was pending.
o If you are entitled to other benefits, you also calculate it against the 12 years, not 5.
o (But if wages increased to P12,000 in the middle of the period and there is proof, it becomes P12,000 x 12 = P144,000)
Will the P10,000 monthly salary remain constant regardless of increases in salary of other employees or other factors that would increase salary?
o In practice, if you are a minimum wage worker during termination and the MW is adjusted, your salary will also be adjusted to reflect the increase.
o If you are not a minimum wage worker, it’s difficult because there is no basis to assume you will get an increase. In that case, your compensation is fixed at P10,000. But if there is proof that your salary would have increased had you stayed, then apply this (ex. there is a CBA that should have included the employee, increasing the salary).
What is the difference in calculation for backwages and separation pay, if there is an intermediate increase?
o Separation pay use the latest amount to multiply against years of service, blanketly
o Backwages for the years with lower salary, use that; for the years with higher salary, use the higher amount (e.g. P10,000 x 2 years; P12,000 x 5 years, etc.)
What are the consequences of dismissal where there is valid ground, but defective procedure?
o No reinstatement.
o What else do you get?
Nominal damages.
P50,000 authorized cause
P30,000 just cause o Backwages?
No
o Separation pay?
No, if just cause.
Yes, if authorized cause – but it’s not because of the defective procedure, but it will arise from the authorized cause itself (which requires separation pay).
o Employees that are illegally dismissed (second category) can get damages. T/F?
Yes, you can get moral damages. This, however, is not a standard of the package, you have to prove it, and the courts have discretion.
When are moral damages awarded?
Where there is BF or fraud in the dismissal, or acts contrary to morals, good customs, public policy
When are exemplary damages awarded?
Dismissal was done in wanton, oppressive, or malevolent manner
o Are there actual damages in an illegal dismissal case?
Before, the SC said full backwages is more exemplary than compensatory. But this is now inconsistent with the formula for dismissal with defective procedure.
What is reinstatement pending appeal?
o The L.A. will provide that there is reinstatement pending appeal upon finding in favor of the employee.
Employer has two options:
o 1. Actual reinstatement (without loss of seniority rights) o 2. Payroll reinstatement
Reinstated in payroll but not required to report
The Labor Arbiter decides that it was an illegal dismissal. It was appealed to the NLRC, and the NLRC said the dismissal was valid.
What will happen to the reinstatement?
o The employer can have the employee stop reporting to work. It is not a new termination because the NLRC simply effected the original dismissal. There must be notice.
o What if the CA reversed the NLRC? Does the employee go back?
There is NO reinstatement pending appeal.
Reinstatement pending appeal only applies to Labor Arbiter.
Since you go up to the SC through rule 45, it’s an appeal (unlike 65 which is a SCA), so the CA decision is not executory.
o The SC finally reversed the CA, and said the dismissal was valid. What happens to the salaries/wages received pending appeal?
No need to return them, whether actual or payroll reinstatement.
1. If it’s actual reinstatement, no need to return the wages because he actually rendered service
2. If it’s payroll reinstatement, there’s still no reimbursement because it was the employer’s choice that led to payroll reimbursement
DIFFERENT SITUATION: What if the LA upheld the dismissal at first and the NLRC reversed? Is it reinstatement pending appeal?
o No. It is a reversal of the Labor Arbiter’s case, but not a reinstatement pending appeal. There is reinstatement unless there is a TRO.
o The employee can ask for a writ of execution from the NLRC that he be ordered back to work. There can be no payroll reinstatement because it’s not a reinstatement pending appeal.
o What if the CA reversed, upholding the dismissal, and the SC upheld the dismissal too?
The employee is not obliged to reimburse the salaries received in between LA’s reversal by the NLRC and the NLRC’s reversal by the CA.
o What if the employer did not reinstate the employee between the NLRC and CA stages, even if there is a valid order? Can the employee recover backwages?
Yes. Because even if he is ultimately dismissed, he still should have been reinstated in this period.
This is a case where an employee who was validly dismissed can still recover backwages.
o Can the NLRC issue a writ of execution after reversing the LA?
Yes, because the nature of the decision of the NLRC attains finality after the MR fails.
[Note that LA NLRC is appeal. Then it becomes final. The Rule 65 to the CA is an SCA, an is thus an original action. The appeal to SC is Rule 45 and is thus an appeal.]
o But SHOULD the NLRC issue a writ of execution?
The SC advises against it, because it might violate judicial courtesy.
Relate this with the calculation of backwages and separation pay above (“in the year 5, year 12” example):
o If there was reinstatement pending appeal somewhere there, the backwages period will take out whatever period was covered by the reinstatement pending appeal (because the employee was paid during that period).
Bago v. NLRC: EE won an illegal dismissal case with a favorable decision with the LA. The LA ordered immediate reinstatement. The ER opted payroll reinstatement pending appeal. The NLRC reversed the decision of the LA and ruled that the dismissal was valid. The ER stopped payroll reinstatement. The EE elevated the case to the CA, and eventually the SC. The SC upheld the dismissal. Is the EE entitled to continued payroll reinstatement after the NLRC decision?
o No. The EE is not entitled to continued payroll reinstatement.
The decision of the NLRC on appeals from decisions of the LA is final and executory after 10 calendar days from the receipt thereof by the parties. (Note: the CA is operating under Rule 65 – it’s an SCA, not an appeal)
Salas v. Aboitiz: Can the award of backwages in illegal dismissal be limited even if there is a finding there is no just cause for dismissal?
o Yes. AN exception to the general rule is where the EE is not entirely faultless, but the fault is not sufficient to justify termination. In such case, the EE’s fault cannot be condoned,
much less tolerated. The award of backwages in favor of the EE can be limited and the period for such award shall start from the date of the NLRC’s promulgation of its decision, instead of the termination.
Moreno v. San Sebastian College: A case where all the backwages were removed, and the EE was just reinstated because the EE was also at fault. (Same principle)
Lansangan v. Amkor: In an illegal dismissal case, the LA dismissed the complaint for illegal dismissal as he found the dismissed employee guilty of dishonesty as a form of serious misconduct and fraud. The Arbiter, however, ordered the reinstatement of the EE without
backwages “as a measure of equitable and compassionate relief.” The ER appealed the decision to the NLRC. The EE claims that he is entitled to reinstatement pending appeal. Is he?
o No. The provision in Article 223 says that the provisional remedy is given to an EE who secures an illegal dismissal declaration. The reinstatement aspect in 223 is for a decision that states the dismissal is illegal. In this case, the Arbiter did not find the dismissal illegal but merely ordered reinstatement for compassionate relief.
Resignation, temporary lay-off, retirement
What is the general rule for voluntary resignation?
o EE can terminate ER-EE relationship without just cause by service 1 month notice
o What if there is no notice given?
EE can be liable for damages o When is notice not required?
1. Serious insult by ER/representative on honor or person of employee
2. Inhuman and unbearable treatment
3. Commission of crime or offense by ER/representative to EE or family members
4. Analogous causes
o The EE submitted an irrevocable resignation. Can it still be withdrawn?
Yes, notwithstanding the appellation.
o What if the ER already accepted the resignation?
The withdrawal needs the ER’s consent.
What is the rule on “floating status”?
o If the employer temporarily suspends business or the employee is in military service, or analogous causes
o How long can it last?
Up to 6 months o After which?
ER must either reinstate the EE or retrench. If floating status lasts beyond 6 months, it can be deemed constructive dismissal.
o How does an EE return to work?
Give notice to ER within 1 month from resumption of business or cessation of military service
What is the rule on mandatory retirement?
o Follow any provision in the CBA or retirement plan. The benefits must not be below those in the LC.
What if there is no CBA provision or retirement plan?
o An employee who has reached at least 60 years of age and has served at least 5 years may retire.
o What is the mandatory retirement age?
65 years old.
o What does the employee receive?
½ month salary for every year of service (6 months fraction is one year)
o What is “1/2 month salary”?
15 days salary +
1/12 of 13th month pay +
Cash equivalent of not more than 5 days of SIL
What is the change in age for mining workers?
o Retirement is at least 50 years o Mandatory retirement age is 60 years
Who are exempted from complying with retirement pay provisions?
o Establishments employing not more than 10 employees or workers