How to Terminate Employment When Saving Job is No Longer Feasible

When you can no longer prevent job loss, what is the ideal approach to terminate employment in times of COVID-19

 
Read: 13 Steps to Handle “Employee Refused Work” Because of COVID-19 Situation
 
In my previous article, we discussed the options available in LA 09-2020, LA 17-2020, DO 174, RA 11165, Labor Code of PH to manage talent oversupply, these are:
 

By exhausting all the options above, it can be used as basis for good faith. When your company decides to downsize due to the economic slowdown, you can present your compliance to the reportorial requirements of DOLE.
 
 

How to terminate employment in the midst of pandemic

1. Your options
    
   Art. 298. Closure of establishment and reduction of personnel.

   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 this Title, by serving a written notice on the workers and the Ministry of Labor and Employment at least one (1) month before the intended date thereof. In case of termination due to the installation of labor-saving devices or redundancy, the worker affected thereby shall be entitled to a separation pay equivalent to at least his one (1) month pay or to at least one (1) month pay for every year of service, whichever is higher. In case of retrenchment to prevent losses and in cases of closures or cessation of operations of establishment or undertaking not due to serious business losses or financial reverses, the separation pay shall be equivalent to one (1) month pay or at least one-half (1/2) month pay for every year of service, whichever is higher. A fraction of at least six (6) months shall be considered one (1) whole year.

 

 

2. SBWS Requirement: You cannot terminate employment during the community quarantine period

 

3. Substantive Requirements for Redundancy
    
   – The positions that will be made redundant is more than the actual requirements to efficiently deliver result.
   – Fair and reasonable criteria consistently implemented
   – Approved new planitilla based on time motion and feasibility studies, new workflow and job description

 

4. Substantive Requirements for Retrenchment
    
   – Expected or actual losses must be convincing (audited financial statement)
   – Fair and reasonable criteria consistently implemented

 

5. Procedural Requirements
    
   – 1 month notice to both DOLE and Employee

 

6. Separation Pay for Redundancy
    
   – 1 month to 1 year: equivalent to 1 month pay
   – 2 years and more (fraction of 6 months is equivalent to 1 year): 1 month pay for every year of service

 

7. Separation Pay for Retrenchment and Business Closure
    
   – 1 month to 2 years: equivalent to 1 month pay (because of the whichever is higher clause)
   – 3 years and more (fraction of 6 months is equivalent to 1 year): 1/2 month pay for every year of service

 

8. Other Monetary Obligations Per LA 06-2020 (If applicable)
    
   – Unpaid salary
   – Cash conversion of accrued and earned SIL/VL/SL
   – Pro rated 13th month pay
   – Tax refund
   – Cash bonds and alike
   – Or whatever is stipulated in CBA

 

9. When to Release Monetary Obligations per LA 06-2020
    
   Company have 1 month to release all monetary obligations to employee. However, for humanitarian reason, this is my suggested pay-out schedule, based on best practices of some companies:
    
   – Separation pay due to authorized causes: Given on the day when employee receives his/her notice of termination
   – Additional 30 days worth of payment to cover the 30 days notice, so employee need not report physically for work, and begin looking for another job (employee is still employed until after 30 days).
   – Final pay: Given a month after separation. The one month period is for clearance processing

Can We Terminate Employment of Probationary, Project Based, Contractual Employees for Authorized Causes?

 
Why not? The same substantive, procedural, documentary and monetary obligations apply.
 
 

Compassionate Off-Boarding

 
This is an intermediate program, putting another layer of humane touch, wherein employers are collaborating with other organizations to prepare and transition employees who are candidates for discplacement.
 
Affected employees will be trained for in-demand skills, and deploy them to industries where they may have new means of income.
 
One of the groups that facilitate compassionate off-boarding is IGNITE.