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Authorized Causes

by Justice Ngeeng2x

5 common requisites applicable to the ALL the grounds under Article 298

1. There is good faith in effecting the termination;

2. The termination is a matter of last resort, there being no other option available to the
employer after resorting to cost-cutting measures;

3. Two (2) separate written notices are served on both the affected employees and the
DOLE at least one (1) month prior to the intended date of termination;

4. Separation pay is paid to the affected employees, to wit:

(a) If based on (1) installation of labor-saving device, or (2) redundancy. - One (1) month
pay or at least one (1) month pay for every year of service, whichever is higher, a fraction of
at least six (6) months shall be considered as one (1) whole year.
(b) If based on (1) retrenchment, or (2) closure NOT due serious business losses or
financial reverses. - One (1) month pay or at least one-half (½) month pay for every year of
service, whichever is higher, a fraction of at least six (6) months shall be considered as one
(1) whole year.
(c) If closure is due to serious business losses or financial reverses, NO separation pay
is required to be paid.

5. Fair and reasonable criteria in ascertaining what positions are to be affected by the
termination, such as, but not limited to: nature of work; status of employment (whether
casual, temporary or regular); experience; efficiency; seniority; dependability; adaptability;
flexibility; trainability; job performance; discipline; and attitude towards work. Failure to follow
fair and reasonable criteria in selecting who to terminate would render the termination
invalid.
A. Business Related Causes

1. Installation of labor-
saving device 1. There must be introduction of machinery, equipment or other
devices; and
2. The purpose for such introduction must be valid such as to
save on cost, enhance efficiency and other
justifiable economic reasons

2. Redundancy;
1. There must be superfluous positions or services of
employees;
2. The positions or services are in excess of what is
reasonably demanded by the actual requirements of the
enterprise to operate in an economical and efficient manner;
and
3. There must be an adequate proof of redundancy such as but
not limited to the new staffing pattern,
feasibility studies/proposal, on the viability of the newly created
positions, job description and the
approval by the management of the restructuring.

3. Retrenchment;
1. The retrenchment must be reasonably necessary and likely
to prevent business losses;
2. The losses, if already incurred, are not merely de minimis,
but substantial, serious, actual and real, or if only expected,
are reasonably imminent;
3. The expected or actual losses must be proved by sufficient
and convincing evidence;4 and
4. The retrenchment must be in good faith for the advancement
of its interest and not to defeat or
circumvent the employees' right to security of tenure.
4. Closure or cessation of Can an employer close its business even if it is not suffering
business operations NOT from business losses?
due to serious business Yes. In fact, closure involves two (2) situations:
losses or financial reverses
(a) When NOT due to serious business losses or financial
reverses; or
(b) When due to serious business losses or financial reverses
It is only in the first that payment of separation pay is required.
No such requirement is imposed in the second.

What are some relevant principles on closure?

▪ Principle of closure under Article 283 applies in cases of both


total and partial closure or cessation of business operations.
5. Closure or cessation of
Management may choose to close only a branch, a
business operations due to
department, a plant, or a shop.
serious business losses and
▪ Closure of department or section and hiring of workers
financial reverses
supplied by independent contractor as replacements is
valid.
▪ Relocation of business may amount to cessation of
operations.
▪ Closure of business to merge or consolidate with another or
to sell or dispose all of its assets, held valid.
▪ Audited financial statements necessary only in closure due to
losses.
B. Health-related causes
DEOFERIO RULE ON SUBSTANTIVE

(1) An employee has been found to be suffering from any


disease;
(2) His continued employment is prohibited by law or
prejudicial to his health, as well as to the health of
his co-employees; and
(3) A competent public health authority issues a medical
certificate that the disease is of such nature or at
such a stage that it cannot be cured within a period of six (6)
months even with proper medical treatment.

DEOFERIO RULE ON PROCEDURAL

(1) The notice to apprise the employee of the ground for which
his dismissal is sought; and
(2) The notice informing the employee of his dismissal, to be
issued after the employee has been given
reasonable opportunity to answer and to be heard on his
defense

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