In the first part of this series, I discussed the just causes by which an employee may be validly terminated by the employer.
In this second part, I will discuss the authorized causes for a valid termination.
While just causes refer to the wrongdoings of the employee, authorized causes for a valid termination refer to the economic circumstances of the employer that are not the employees’ fault.
The authorized causes for termination may be classified into two: (a) health causes and (b) economic or business-related causes.
Under Article 284 of the Labor Code of the Philippines, an employer may validly terminate an employee who is found to be suffering from any disease and whose continued employment is prohibited by law or is prejudicial to his health and to the health of his co-employees.
On the other hand, Article 283 of the Code provides that an employer may validly terminate an employee on the following grounds: (a) installation of labor-saving devices (b) redundancy (c) retrenchment to prevent losses (d) closure or cessation of business operations.
Installation of labor-saving devices contemplates the installation machinery that affects the economy and efficiency of operations, and renders the position held by an employee as unnecessary. It is a management prerogative supported and protected by no less than our Constitution, provided that it is done in good faith and not to intentionally defraud employees.
Redundancy is where the number of employees is in excess of what the employer actually needs. This excess usually results from a number of factors such as overhiring, decrease in the volume of business or the dropping of a particular line or service previously held or offered by the establishment. The employer cannot be legally forced to keep employees more than the number needed for the operation of its business.
Retrenchment is also a reduction in the number of employees but it is based on economic grounds. For a dismissal to be valid on this ground, the retrenchment must be by reason of serious business losses or in order to prevent losses. In this case, the employer must provide documentary proof of its losses or show sufficient proof of impending and imminent losses if retrenchment is not implemented.
An employer may validly close or cease to operate his business for any reason. In the same manner that no employee may be forced to continue working for any establishment, no employer may likewise be forced to remain in business, provided, that the closure is not for the sole purpose of circumventing the law.
In all cases of termination under the authorized causes, the affected employee shall be entitled to separation pay equivalent to at least one month salary or one-half month salary for every year of service, whichever is higher. — NWI
