Companies may find it harder to terminate employees for cause

As most of us are aware, Philippine labor laws are tilted heavily in favor of labor. In fact, the Labor Code itself expressly provides that all doubts in the interpretation and implementation of labor laws shall be resolved in favor of labor. With the issuance of Department Order (DO) 147-15, the battle just became harder for management.

As every human resources practitioner knows, Philippine labor laws are some of the most protective of labor in the world.

One of the things that foreign investors have a hard time grasping is the fact that there is no “at will” termination of employment in Philippines. Instead, termination of employment may only be effected if based on the Just and Authorized Causes of termination provided for in the Labor Code.

In general, Just Causes are grounds for dismissal which are attributable to the fault, negligence, or behavior of the employee. Specifically, Just Causes include (a) serious misconduct (b) gross and habitual neglect of duty (c) breach of trust (d) commission of a crime against the company, and (d) other causes analogous to the above. On the other hand, Authorized Causes are grounds for dismissal which usually arise due to business decisions and necessities.

According to the Labor Code, the following are Authorized Causes for termination of employment: (a) redundancy (b) introduction of labor saving device (c) retrenchment to prevent losses, and (d) closure or cessation of business not on account of losses. Additionally, an employer is also permitted to dismiss an employee in the event that an employee is suffering from an illness that poses risk to himself and to his co-employees, provided that such illness is not curable within a period of six months.

Notably, one of the most commonly used cause for termination of employment is the Just Cause of “analogous causes.”

While the other causes for dismissal have well defined elements and standards prescribed by law or jurisprudence, the Just Cause of “analogous causes” was widely considered as something of a “catch-all” provision since the only requirement for its application is that the complained act or omission must be analogous to any of the other Just Causes mentioned in the article 282 of the Labor Code.

According to the Supreme Court, “one is analogous to another if it is susceptible of comparison with the latter either in general or in some specific detail; or has a close relationship with the latter.”

In this connection, the following, among others, were considered as falling under analogous causes for termination of employment: Gross inefficiency, incompetence, commission of a crime against a co-employee, theft of Company property, quarrelsome personality, attitude problems, and violation of safety rules. Theoretically speaking, the list of “analogous causes” has no end since all the law requires is that the employee’s act or omission be analogous to any of the other just causes. It is due to this flexibility afforded to the application of analogous causes that it became that catch-all provision for termination of employment based on Just Cause.

However, last Sept. 7, analogous causes suddenly found itself bounded by new limitations when the Department of Labor issued DO 147-15.

Significantly, section 5.2 (g) of DO 147-15 provides that “No act or omission shall be considered as analogous cause unless expressly specified in the company rules and regulations or policies.” Needless to say, and regardless of our reservations on the validity of the DO, this development is a major game changer for employers and employees alike.

With the issuance of DO 147-15, employers must first specify in their company rules and regulations the specific acts and omissions that management considers as an analogous cause for termination of employment before any employee may be dismissed for the commission of such act or omission. Stated differently, employers can no longer dismiss an employee for an act or omission that qualifies as an analogous cause if the complained act or omission was not explicitly listed in the company’s rules and regulations as an analogous cause for termination of employment.

Thus, with the issuance of DO 147-15, it would be prudent for employers to review and amend their company rules and regulations to ensure the inclusion of a list of acts and omissions that are considered as analogous causes for termination of employment. It is highly recommended that such list be thorough and exhaustive in order to afford the employer more options and greater flexibility in case an employee needs to be terminated from employment.

Kesterson T. Kua is an Associate of the Angara Abello Concepcion Regala & Cruz Law Offices (ACCRALAW).

830-8000

ktkua@accralaw.com

source:  Businessworld

Employees entitled to service charge share

Dear PAO,
I am presently employed as a waiter for a hotel but I am under an agency. I have read about the provision of service charge under our Labor Code. I just want to know whether I am entitled to receive such service charge. Please enlighten me.
RPJ

Dear RPJ,
Article 96 of the Labor Code of the Philippines deals with the distribution of all service charges collected by hotels, restaurants and similar establishments. As stated therein:“All service charges collected by hotels, restaurants and similar establishments shall be distributed at the rate of eighty-five percent (85%) for all covered employees and fifteen percent (15%) for management. The share of the employees shall be equally distributed among them. In case the service charge is abolished, the share of the covered employees shall be considered integrated in their wages.” (Emphasis supplied)

To be considered as covered employees, one must be directly employed by the establishment and/or undertaking, whether for profit or not, but not including government employees, managerial employees, field personnel, members of the family of the employer who are dependent on him for support, domestic helpers, persons in the personal service of another, and workers who are paid by results as determined by the Secretary of Labor in appropriate regulations. (Article 82, Ibid.) In addition, there must be a concrete showing of employer-employee relationship between the claimant-employee and the employer he/she is claiming from.In a long line of cases, our Supreme Court has pronounced the so-called “four-fold test” to determine the existence of an employer-employee relationship, to wit: (1) the selection and engagement of employee; (2) the payment of wages; (3) the power of dismissal; and (4) the power to control the employee’s conduct (Escario, et al. vs. NLRC, 333 SCRA 257, G. R. No. 124055, June 8, 2000). No benefits under the Labor Code may be claimed if any of the said elements is absent.

Accordingly, you must prove that there exists an employer-employee relationship between you and the hotel in order for you to be entitled to receive your share in the service charges collected by them. Corollary to this, you must prove that the hotel is in command or control of your selection and engagement, the payment of your wages, your dismissal, as well as the conduct of the performance of your tasks as a waiter. If the hotel has no control over any of the said elements, such that when the said control belongs to the agency which hired you, then you may not demand for the said benefit from the hotel. Nevertheless, you are entitled to receive the appropriate benefits from the agency which hired you in accordance with the tenets of our Labor Code, as well as the provisions of your contract and collective bargaining agreement, if there be any.

We hope that we were able to answer your queries. Please be reminded that this advice is based solely on the facts you have narrated and our appreciation of the same. Our opinion may vary when other facts are changed or elaborated.

Editor’s note: Dear PAO is a daily column of the Public Attorney’s Office. Questions for Chief Acosta may be sent to dearpao@manilatimes.net