Termination of employment through retrenchment

Dear PAO,

I am employed as an Administrative Staff for a company engaged in taxi business.

Two weeks ago, my boss approached me and informed me that they needed to terminate my services because the operation of the business was going downhill.

He told me that it would be better if I resign because that way, they would give me an amount equivalent to a two-month salary.

I am not sure if I will accept their offer, so I am writing to you to seek for your advice. I hope you can help me.

Mr. Lacsamana

Dear Mr. Lacsamana,

Every employee has a security of tenure in his employment. This means that his employment may not be terminated unless it is done by reason of any of the causes mentioned under our laws, or if he initiates the termination of his employment by means of filing his resignation.

As you mentioned in your letter, your employer has decided, although has yet to enforce said decision, to put an end to your employment because the business of the company is “going downhill.” It may be said that the company is intending to retrench you. Under the law, retrenchment is one of the grounds for termination. As provided for under Article 283 of the Labor Code of the Philippines, “The employer may also terminate the employment of any employee due to x x x retrenchment to prevent losses x x x” Hence, your employer may validly severe employment ties with you provided that they will serve you and the appropriate Regional Office of the Department of Labor and Employment with a written notice of termination at least thirty days before the effectivity of your termination (Section 2, Book VI, Rule I, Omnibus Rules Implementing the Labor Code). Accordingly, they are obliged to give you separation pay which is equivalent to one month pay or to at least one-half month pay for every year of service, whichever is higher. Please be reminded that a fraction of at least six months shall be considered one whole year (Article 283, id). However, the business losses must be real and actual, and not merely to get rid of you or end your employment without valid cause. Moreover, their losses must be supported with a financial statement duly audited.

However, you also mentioned that they are asking you to resign from the company. While termination of employment by the employee through resignation is recognized under our laws, this must be done by him voluntarily. Ordinarily, the employee must serve a written notice of termination to the employer at least one month in advance from the date of intended effectivity of his resignation. But, a written notice is no longer necessary if it is based on any of the grounds provided for under Article 285 (b), id. In both cases, the law does not provide for any remuneration to be paid to the employee. Thus, if you decide to file your resignation, you will have no basis under the law to ask for any compensation from the company, unless by written agreement, you and the company assented for such remuneration or if such benefit is provided for in the company policy.

In the end, you are the only person who can decide which route you will take and which you believe will be more beneficial for you. The foregoing advice may only serve to guide you in your decision-making. –PERSIDA ACOSTA, Manila Times

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