Dear PAO,
I started working as a probationary employee in one of the companies
here in Cebu. My wife is about to give birth to our second child. Upon
inquiry with our HR, I was informed that I can avail of the 7-day
paternity leave but without pay because of my employment status. Is this
correct? Based on my research, my employment status is not material in
order for me to avail of the leave benefits. Please advice.
JPS
Dear JPS,
Private employees are granted numerous benefits under the Labor Code of
the Philippines as well as other pertinent labor laws. One of which is
paternity leave. It is the seven (7)-day leave with full pay consisting
of basic salary.
However, not all employees may avail of such benefit. As provided for
under Republic Act (R.A.) No. 8187, otherwise known as the “Paternity
Leave Act of 1996,” only married male employees, whether they be in the
private and public sectors, shall be entitled to paternity leave,
provided that it is the first four (4) deliveries or miscarriages of
their respective legitimate spouses with whom they are cohabiting. In
addition, the male employees applying for the same must notify their
respective employers of the pregnancy of their legitimate spouses and
the expected date of such delivery (Section 2, R.A. No. 8187).
In the situation that you have presented before us, it is submitted
that your employer should grant you the seven (7)-day leave with full
pay if you have met the above-stated qualifications. The fact that your
employment status is still probationary should not be a hindrance for
you to be granted such benefit because Republic Act No. 8187 does not
limit the grant of said benefit only to regular employees. And when the
law makes no distinctions, one should not distinguish.
Furthermore,
Section 1 (b) of the Revised Implementing Rules and Regulations of
Republic Act No. 8187 for the Private Sector defines the term “employee”
in a general sense. As provided therein, an “employee” is “any person
who performs services for another and receives compensation therefor,
provided an employer-employee relationship exists between them.”
If you were able to establish that you are entitled to paternity
leave benefit but your company still refuses to grant you the same, you
may consider filing a complaint against them. The responsible officers
of your company, if found to have violated the provisions of Republic
Act No. 8187, may be penalized by a fine not exceeding Twenty Five
Thousand Pesos (P25,000.00) or imprisonment of not less than thirty (30)
days nor more than six (6) months (Section 5, RA No. 8187).
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.
source: Manila Times Column of Atty. Persida Acosta
Sunday, September 29, 2013
Tuesday, September 24, 2013
Restrictive covenants in employment contracts
ONE OF the means to keep afloat in today’s
competitive market is to hire employees who are “fit” for a particular
job. However, before employers may tap the full potential of their
employees, the former are expected to invest much time, effort and money
in honing their skills and perfecting their work proficiency. In fact,
some employers even send their employees abroad and pay all necessary
expenses for their training and professional growth.
But then, reality bites, because after acquiring the needed experience and expertise, the employee may leave the company due to tempting offers and fat bonuses dangled by another competitor company. What is even worse is when this employee starts to solicit the services of his colleagues and brings the whole team with him to the competitor company.
So as to mitigate, if not end, the ill effects of the above practice, employers may explore the possibility of providing restrictive covenants in their employment contracts to regulate the post-employment action and activity of their employees. These restrictive covenants are express contractual terms, which bind an employee to comply with the restraint agreed and stipulated upon, and prevent him from taking certain action/s when he leaves the company.
Restrictive covenants may include: (a) non-competition/non-compete clause -- when the employee is prevented from directly competing or working for a competitor of his former employer, or when the employee is prevented from setting up a competing business; (b) non-solicitation clause -- when a duty is imposed on the employee not to approach his former employer’s customers or prospective customers, or when the employee is prevented from taking customers/clients of his former employer; and (c) non-poaching clause -- when the employee is prevented from enticing his former employer’s staff away from the business, the aim is to prevent the employee from taking key employees with him to his new employment or business.
The validity of restrictive covenants, such as those mentioned above, is anchored on law and applicable jurisprudence.
Thus, the employer and the employee may establish such stipulations, clauses, terms, and conditions as they may deem convenient (Art. 1306, Civil Code), and that the obligations arising from the agreement between the employer and the employee have the force of law between them and should be complied with in good faith (Art. 1159, Civil Code) (Oxales v. United Laboratories, Inc. [G.R. No. 152991, 21 July 2008]).
Likewise, restrictive covenants are enforceable in this jurisdiction, unless they are unreasonable. And in order to determine whether restrictive covenants are reasonable or not, the following factors should be considered: (a) whether the covenant protects a legitimate business interest of the employer; (b) whether the covenant creates an undue burden on the employee; (c) whether the covenant is injurious to the public welfare; (d) whether the time and territorial limitations contained in the covenant are reasonable; and (e) whether the restraint is reasonable from the standpoint of public policy (Rivera v. Solidbank Corp. [G.R. No. 163269, 19 April 2006]).
Restrictive covenants are not necessarily void for being in restraint of trade. In deciding to include a restrictive covenant in the employment contract, employers must see to it that there are reasonable limitations as to time, trade and place (Tiu v. Platinum Plans Phils., Inc. [G.R. No. 163512, 28 February 2007]).
To concretize, a non-compete clause in the employment contract of an engineer working in an I.T. firm, cannot prohibit the said engineer from working in another I.T. firm during his entire lifetime. Neither can the said non-compete clause validly prohibit the engineer from working in another trade (e.g. mining, construction, etc.), which is not at all connected with the I.T. industry, nor can he be prohibited from working in all I.T. firms in the Philippines. Under any such circumstance, since there is no “reasonable limitation as to time, trade and place,” the restrictive covenant will be struck down for being violative of public policy.
Employers, however, must realize that even a carefully drafted restrictive covenant is not a cure-all remedy. Undeterred employees will simply leave as soon as they can find new employers who will gamble more on their experience and expertise, rather than honoring the restrictions. If it reaches this point, the resolve of the aggrieved employer will be tested in enforcing the restrictive covenants, more so that other employees are merely waiting for the employer’s move, until such time that they themselves are also ready to test the hot waters.
(The author is a Senior Associate of the Angara Abello Concepcion Regala & Cruz Law Offices (ACCRALAW), Cebu Branch. He can be contacted at (6332) 231-4223 or e-mail address: evsolengjr@accralaw.com. The views and opinions expressed in this article are those of the author. This article is for general informational and educational purposes only and not offered as and does not constitute legal advice or legal opinion.)
source : Businessworld
But then, reality bites, because after acquiring the needed experience and expertise, the employee may leave the company due to tempting offers and fat bonuses dangled by another competitor company. What is even worse is when this employee starts to solicit the services of his colleagues and brings the whole team with him to the competitor company.
So as to mitigate, if not end, the ill effects of the above practice, employers may explore the possibility of providing restrictive covenants in their employment contracts to regulate the post-employment action and activity of their employees. These restrictive covenants are express contractual terms, which bind an employee to comply with the restraint agreed and stipulated upon, and prevent him from taking certain action/s when he leaves the company.
Restrictive covenants may include: (a) non-competition/non-compete clause -- when the employee is prevented from directly competing or working for a competitor of his former employer, or when the employee is prevented from setting up a competing business; (b) non-solicitation clause -- when a duty is imposed on the employee not to approach his former employer’s customers or prospective customers, or when the employee is prevented from taking customers/clients of his former employer; and (c) non-poaching clause -- when the employee is prevented from enticing his former employer’s staff away from the business, the aim is to prevent the employee from taking key employees with him to his new employment or business.
The validity of restrictive covenants, such as those mentioned above, is anchored on law and applicable jurisprudence.
Thus, the employer and the employee may establish such stipulations, clauses, terms, and conditions as they may deem convenient (Art. 1306, Civil Code), and that the obligations arising from the agreement between the employer and the employee have the force of law between them and should be complied with in good faith (Art. 1159, Civil Code) (Oxales v. United Laboratories, Inc. [G.R. No. 152991, 21 July 2008]).
Likewise, restrictive covenants are enforceable in this jurisdiction, unless they are unreasonable. And in order to determine whether restrictive covenants are reasonable or not, the following factors should be considered: (a) whether the covenant protects a legitimate business interest of the employer; (b) whether the covenant creates an undue burden on the employee; (c) whether the covenant is injurious to the public welfare; (d) whether the time and territorial limitations contained in the covenant are reasonable; and (e) whether the restraint is reasonable from the standpoint of public policy (Rivera v. Solidbank Corp. [G.R. No. 163269, 19 April 2006]).
Restrictive covenants are not necessarily void for being in restraint of trade. In deciding to include a restrictive covenant in the employment contract, employers must see to it that there are reasonable limitations as to time, trade and place (Tiu v. Platinum Plans Phils., Inc. [G.R. No. 163512, 28 February 2007]).
To concretize, a non-compete clause in the employment contract of an engineer working in an I.T. firm, cannot prohibit the said engineer from working in another I.T. firm during his entire lifetime. Neither can the said non-compete clause validly prohibit the engineer from working in another trade (e.g. mining, construction, etc.), which is not at all connected with the I.T. industry, nor can he be prohibited from working in all I.T. firms in the Philippines. Under any such circumstance, since there is no “reasonable limitation as to time, trade and place,” the restrictive covenant will be struck down for being violative of public policy.
Employers, however, must realize that even a carefully drafted restrictive covenant is not a cure-all remedy. Undeterred employees will simply leave as soon as they can find new employers who will gamble more on their experience and expertise, rather than honoring the restrictions. If it reaches this point, the resolve of the aggrieved employer will be tested in enforcing the restrictive covenants, more so that other employees are merely waiting for the employer’s move, until such time that they themselves are also ready to test the hot waters.
(The author is a Senior Associate of the Angara Abello Concepcion Regala & Cruz Law Offices (ACCRALAW), Cebu Branch. He can be contacted at (6332) 231-4223 or e-mail address: evsolengjr@accralaw.com. The views and opinions expressed in this article are those of the author. This article is for general informational and educational purposes only and not offered as and does not constitute legal advice or legal opinion.)
source : Businessworld
Wednesday, August 21, 2013
House helpers in Metro Manila get P2,500 monthly pay
Dear PAO,
What is the minimum wage for house helpers? What other benefits do employers need to give their house helpers? Are those helpers who are not “stay-in” included?
Sincerely,
George
Dear George,
As provided for under Section 24 of Republic Act (R.A.) No. 10361, otherwise known as the Domestic Workers Act or Batas Kasambahay, domestic workers are entitled to the following minimum wage: (a) Two Thousand Five Hundred Pesos (P2,500.00) a month for those employed in the National Capital Region (NCR); (b) Two Thousand Pesos (P2,000.00) a month for those employed in chartered cities and first class municipalities; and (c) One Thousand Five Hundred Pesos (P1,500.00) a month for those employed in other municipalities.
Aside from the grant of minimum wage, domestic workers are entitled to receive the following benefits from their employers: (1) Daily and weekly rest period; (2) Annual service incentive leave of five days with pay for those who have rendered at least one year of service; (3) Thirteenth month pay which is not less than one-twelfth of the basic salary for those who have rendered at least one month of service; (4) Coverage under the Social Security System (SSS), Employees Compensation Commission (ECC), Philippine Health Insurance Corporation (Philhealth) and Home Development Mutual Fund or Pag-Ibig; and (5) Board, lodging and medical attendance (Section 1, Rule IV, Implementing Rules and Regulations (IRR) of R. A. No. 10361).
In addition, domestic workers are guaranteed the following: (1) Right to privacy; (2) Right to form, join or assist labor organizations; (3) Right to be provided a copy of the employment contract; (4) Right to terminate the employment; (5) Right to exercise their own religious beliefs and cultural practices; (6) Right to access to outside communication; (7) Right to access to education and training; and (8) Standard of treatment (Section 1, Rule IV, IRR of R. A. No. 10361).
It is worth emphasizing that the grant of the aforementioned benefits applies not only to those domestic workers who are “stay-in” or living in the same house as their employers, but also to those who are in a “live-out” arrangement. This includes general househelp, yaya, cook, gardener, laundry person, or any person who regularly performs domestic work in one household on occupational basis. However, service providers, family drivers, children under foster family arrangement, as well as any other person who performs work occasionally or sporadically and not on an occupational basis are not entitled to the said benefits (Section 2, Rule I, IRR of R. A. No. 10361).
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.
Source: Manila Times Column of Atty Persida Acosta
What is the minimum wage for house helpers? What other benefits do employers need to give their house helpers? Are those helpers who are not “stay-in” included?
Sincerely,
George
Dear George,
As provided for under Section 24 of Republic Act (R.A.) No. 10361, otherwise known as the Domestic Workers Act or Batas Kasambahay, domestic workers are entitled to the following minimum wage: (a) Two Thousand Five Hundred Pesos (P2,500.00) a month for those employed in the National Capital Region (NCR); (b) Two Thousand Pesos (P2,000.00) a month for those employed in chartered cities and first class municipalities; and (c) One Thousand Five Hundred Pesos (P1,500.00) a month for those employed in other municipalities.
Aside from the grant of minimum wage, domestic workers are entitled to receive the following benefits from their employers: (1) Daily and weekly rest period; (2) Annual service incentive leave of five days with pay for those who have rendered at least one year of service; (3) Thirteenth month pay which is not less than one-twelfth of the basic salary for those who have rendered at least one month of service; (4) Coverage under the Social Security System (SSS), Employees Compensation Commission (ECC), Philippine Health Insurance Corporation (Philhealth) and Home Development Mutual Fund or Pag-Ibig; and (5) Board, lodging and medical attendance (Section 1, Rule IV, Implementing Rules and Regulations (IRR) of R. A. No. 10361).
In addition, domestic workers are guaranteed the following: (1) Right to privacy; (2) Right to form, join or assist labor organizations; (3) Right to be provided a copy of the employment contract; (4) Right to terminate the employment; (5) Right to exercise their own religious beliefs and cultural practices; (6) Right to access to outside communication; (7) Right to access to education and training; and (8) Standard of treatment (Section 1, Rule IV, IRR of R. A. No. 10361).
It is worth emphasizing that the grant of the aforementioned benefits applies not only to those domestic workers who are “stay-in” or living in the same house as their employers, but also to those who are in a “live-out” arrangement. This includes general househelp, yaya, cook, gardener, laundry person, or any person who regularly performs domestic work in one household on occupational basis. However, service providers, family drivers, children under foster family arrangement, as well as any other person who performs work occasionally or sporadically and not on an occupational basis are not entitled to the said benefits (Section 2, Rule I, IRR of R. A. No. 10361).
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.
Source: Manila Times Column of Atty Persida Acosta
Saturday, July 27, 2013
Who are seasonal employees?
In a small town in Negros Oriental, employees formed a labor union.
Their employer (Hacienda) owned a sugarcane plantation and did not favor
employees associated to unions and refused to negotiate with the labor
union to discuss the collective bargaining agreement between the
hacienda and the laborers. The hacienda did not give work to 36
employees for more than a month, which led to the employees staging a
strike. Issues were temporarily settled when the hacienda and union
entered into a Memorandum of Agreement (MOA). Unfortunately, the MOA was
not followed and the hacienda even employed armed guards to ensure that
the employees could not enter the premises.
With the assistance of Department of Labor and Employment, another MOA was reached. The employees were supposed to be reinstated upon availability of work but the hacienda reneged on its commitment once again. Hence, a case for illegal dismissal was filed with the National Labor Relations Commission (NLRC). In the hacienda’s defense, it argued that the employees were merely seasonal employers and not regular employees who could file a case of illegal dismissal.
The NLRC ruled that the hacienda illegally dismissed its employees who were deemed regular employees since they performed the same task for several years. The Court of Appeals (CA) affirmed the NLRC’s decision -
[W]hile the work of (employees) was seasonal in nature, they were considered to be merely on leave during the off-season and were therefore still employed by (hacienda). Moreover, the workers enjoyed security of tenure. Any infringement upon this right was deemed by the CA to be tantamount to illegal dismissal.
The Supreme Court agreed with the CA, holding that the refusal of the hacienda to “make use of the services of their employees, even when they were ready, able, and willing to perform their usual duties whenever these were available, and hiring of other workers to perform the tasks originally assigned to (them) amounted to illegal dismissal of the latter.”
Article 280 of the Labor Code provides for the distinction between regular and seasonal employees -
[a]n employment shall be deemed to be regular where the employee has been engaged to perform activities which are usually necessary or desirable in the usual business or trade of the employer, except where the employment has been fixed for a specific project or undertaking the completion or termination of which has been determined at the time of the engagement of the employee or where the work or services to be performed is seasonal in nature and the employment is for the duration of the season.
The Court clarified that in order to be classified as a seasonal worker, and excluded from the classification of regular employees, one must perform work or services that are seasonal in nature and be employed only for the duration of one season.
On the other hand, regular employees include seasonal employees who continuously and repeatedly perform a particular nature of work as it is “sufficient evidence of the necessity if not indispensability of that activity to the business.” The employment is considered regular only with respect to the activity and while such activity exists.
Citing De Leon v. NLRC, “this Court has already settled that seasonal workers who are called to work from time to time and are temporarily laid off during off-season are not separated from service in said period, but merely considered on leave until re-employed” (Hacienda Fatima v. National Federation of Sugarcane Workers-Food and General Trade, G.R. No. 149440, 28 January 2003, J. Panganiban).
source: Manila Times' Column of Benchpress
With the assistance of Department of Labor and Employment, another MOA was reached. The employees were supposed to be reinstated upon availability of work but the hacienda reneged on its commitment once again. Hence, a case for illegal dismissal was filed with the National Labor Relations Commission (NLRC). In the hacienda’s defense, it argued that the employees were merely seasonal employers and not regular employees who could file a case of illegal dismissal.
The NLRC ruled that the hacienda illegally dismissed its employees who were deemed regular employees since they performed the same task for several years. The Court of Appeals (CA) affirmed the NLRC’s decision -
[W]hile the work of (employees) was seasonal in nature, they were considered to be merely on leave during the off-season and were therefore still employed by (hacienda). Moreover, the workers enjoyed security of tenure. Any infringement upon this right was deemed by the CA to be tantamount to illegal dismissal.
The Supreme Court agreed with the CA, holding that the refusal of the hacienda to “make use of the services of their employees, even when they were ready, able, and willing to perform their usual duties whenever these were available, and hiring of other workers to perform the tasks originally assigned to (them) amounted to illegal dismissal of the latter.”
Article 280 of the Labor Code provides for the distinction between regular and seasonal employees -
[a]n employment shall be deemed to be regular where the employee has been engaged to perform activities which are usually necessary or desirable in the usual business or trade of the employer, except where the employment has been fixed for a specific project or undertaking the completion or termination of which has been determined at the time of the engagement of the employee or where the work or services to be performed is seasonal in nature and the employment is for the duration of the season.
The Court clarified that in order to be classified as a seasonal worker, and excluded from the classification of regular employees, one must perform work or services that are seasonal in nature and be employed only for the duration of one season.
On the other hand, regular employees include seasonal employees who continuously and repeatedly perform a particular nature of work as it is “sufficient evidence of the necessity if not indispensability of that activity to the business.” The employment is considered regular only with respect to the activity and while such activity exists.
Citing De Leon v. NLRC, “this Court has already settled that seasonal workers who are called to work from time to time and are temporarily laid off during off-season are not separated from service in said period, but merely considered on leave until re-employed” (Hacienda Fatima v. National Federation of Sugarcane Workers-Food and General Trade, G.R. No. 149440, 28 January 2003, J. Panganiban).
source: Manila Times' Column of Benchpress
Monday, July 15, 2013
Legality of work stoppage
In sympathy with the labor sector that staged a welga ng bayan to
protest the accelerating prices of oil, the officers of two labor unions
staged a work stoppage that lasted for several days. The companies of
these labor unions filed a petition with the Labor Arbiter to declare
the work stoppage illegal for failure to comply with the following
requirements: (1) filing of notice of strike; (2) securing a strike
vote, and (3) submission of a report of the strike vote to the
Department of Labor and Employment.
The officers of the labor unions, on the other hand, countered that they did comply with the necessary requirements. And, they were prevented from going to work due to the difficulties of finding transportation to work and were concerned for their safety if in case violence erupted as a result of the welga. Also, the workers were prevented from reporting for work by being locked out of the office premises.
The Labor Arbiter held that the strike was illegal. Thus, the officers of the labor unions lost their employment status and were eventually terminated by their employers.
On appeal, the National Labor Relations Commission (NLRC) reversed the Labor Arbiter and held that there was no strike due to the fact that there was no labor dispute between the employers and the employees. Thus, the employees were ordered to be reinstatement, without loss of seniority rights, and with full back wages from the date of their termination.
The Court of Appeals (CA) however reverted to the ruling of the Labor Arbiter that the employees failed to prove their compliance with the requirements of a legal strike. In fact, they never produced before the Labor Arbiter a copy
The Supreme Court (SC) sustained the ruling of the CA that an illegal strike did take place. Because the employees were not able to prove that they informed their employers of their intention to join the welga ng bayan, their work stoppage was not entitled to legal protection -
Stoppage of work due to welga ng bayan is in the nature of a general strike, an extended sympathy strike. It affects numerous employers including those who do not have a dispute with their employees regarding their terms and conditions of employment. Employees who have no labor dispute with their employer but who, on a day they are scheduled to work, refuse to work and instead join a welga ng bayan commit an illegal work stoppage.
Moreover, the SC ruled that union officers must bear the consequences of their actions when they knowingly participate in an illegal strike.
Article 264 (a) of the Labor Code clearly provides that “any union officer who knowingly participates in an illegal strike may be declared to have lost his employment status.” It reiterated that in Gold City Integrated Port Service, Inc. v. National Labor Relations Commission, the word “may” in Article 264 (a) was explained and implies that “[t]he law . . . grants the employer the option of declaring a union officer who participated in an illegal strike as having lost his employment.” Thus, the reinstatement or retention of the striker’s employment, despite his participation in an illegal strike, is a management prerogative the Court will not question (Biflex Phils. Labor Union v. Filflex Industrial and Manufacturing Corp, G.R. No. 155679, 19 December 2006, J. Carpio-Morales).
source: Manila Times' Column of Benchpress
The officers of the labor unions, on the other hand, countered that they did comply with the necessary requirements. And, they were prevented from going to work due to the difficulties of finding transportation to work and were concerned for their safety if in case violence erupted as a result of the welga. Also, the workers were prevented from reporting for work by being locked out of the office premises.
The Labor Arbiter held that the strike was illegal. Thus, the officers of the labor unions lost their employment status and were eventually terminated by their employers.
On appeal, the National Labor Relations Commission (NLRC) reversed the Labor Arbiter and held that there was no strike due to the fact that there was no labor dispute between the employers and the employees. Thus, the employees were ordered to be reinstatement, without loss of seniority rights, and with full back wages from the date of their termination.
The Court of Appeals (CA) however reverted to the ruling of the Labor Arbiter that the employees failed to prove their compliance with the requirements of a legal strike. In fact, they never produced before the Labor Arbiter a copy
The Supreme Court (SC) sustained the ruling of the CA that an illegal strike did take place. Because the employees were not able to prove that they informed their employers of their intention to join the welga ng bayan, their work stoppage was not entitled to legal protection -
Stoppage of work due to welga ng bayan is in the nature of a general strike, an extended sympathy strike. It affects numerous employers including those who do not have a dispute with their employees regarding their terms and conditions of employment. Employees who have no labor dispute with their employer but who, on a day they are scheduled to work, refuse to work and instead join a welga ng bayan commit an illegal work stoppage.
Moreover, the SC ruled that union officers must bear the consequences of their actions when they knowingly participate in an illegal strike.
Article 264 (a) of the Labor Code clearly provides that “any union officer who knowingly participates in an illegal strike may be declared to have lost his employment status.” It reiterated that in Gold City Integrated Port Service, Inc. v. National Labor Relations Commission, the word “may” in Article 264 (a) was explained and implies that “[t]he law . . . grants the employer the option of declaring a union officer who participated in an illegal strike as having lost his employment.” Thus, the reinstatement or retention of the striker’s employment, despite his participation in an illegal strike, is a management prerogative the Court will not question (Biflex Phils. Labor Union v. Filflex Industrial and Manufacturing Corp, G.R. No. 155679, 19 December 2006, J. Carpio-Morales).
source: Manila Times' Column of Benchpress
Friday, June 28, 2013
Dismissal must be based on willful breach of trust
A bank manager was promoted to the position of vice president of
Allied Business Ventures Department of the bank after just five years.
When one of the bank’s branch managers resigned, the VP was asked to sign the branch manager’s standard employment clearance pertaining to the latter’s accountabilities with the bank. The VP, however, issued a clearance only for the branch manager’s paid cash advances and salary loan, after being shown receipts by the bank’s cashier.
Seven months later, the VP was informed that the resigned bank manager was involved in a questionable transaction involving P11 million for which the bank was being sued. Because the clearance issued by the VP effectively barred the bank from going after the bank manager, the bank terminated the services of the VP for loss of trust and confidence as was demanded by his position.
Aggrieved, the VP filed a complaint for illegal dismissal. He insisted that there was a plot to oust him from his position, which was why they blamed him for clearing all of the bank manager’s financial clearances even though he only cleared the latter for paid cash advances and salary loan. The reasoning that there was loss of trust and confidence was a mere afterthought given the gap between the issuance of the clearance and the bank firing him, he said.
The Labor Arbiter ruled in favor of the VP holding that the act of issuing the clearance was not a valid and justifiable ground for the bank to lose trust and confidence in him.
The Labor Arbiter was affirmed by the National Labor Relations Commission (NLRC).
The Court of Appeals however held that the VP was dismissed for just cause as “he failed to exercise prudence in clearing [the bank manager] of his accountabilities given that the same were yet to be audited.”
On appeal, the Supreme Court (SC) affirmed the Labor Arbiter and the NLRC, and found that the VP was illegally dismissed. First, it explained the rules on a dismissal based on willful breach of loss and confidence -
As provided in Article 282 of the Labor Code, an employer has the right to dismiss an employee by reason of willful breach of the trust and confidence reposed in him. To temper the exercise of such prerogative, the law imposes the burden of proof upon the employer to show that the dismissal of the employee is for just cause failing which would mean that the dismissal is not justified.
The law mandates that before validity can be accorded to a dismissal premised on loss of trust and confidence, two requisites must concur, viz: (1) the employee concerned must be holding a position of trust; and (2) the loss of trust must be based on willful breach of trust founded on clearly established facts.
Although the VP held a position of trust, the SC ruled that the act of issuing the clearance could not be considered a willful breach of that trust -
The Court has repeatedly emphasized that the act that breached the trust must be willful such that it was done intentionally, knowingly, and purposely, without justifiable excuse, as distinguished from an act done carelessly, thoughtlessly, heedlessly or inadvertently.
The conditions under which the clearance was issued exclude any finding of deliberate or conscious effort on the part of the petitioner to prejudice his employer. Also, the petitioner did not commit an irregular or prohibited act. He did not falsify or misrepresent any company record as it was officially confirmed by [the cashier] (Torres v. Rural Bank of San Juan, G.R. No. 184520, 13 March 2013, J. Reyes).
source: Manila Times' Column Benchpress
When one of the bank’s branch managers resigned, the VP was asked to sign the branch manager’s standard employment clearance pertaining to the latter’s accountabilities with the bank. The VP, however, issued a clearance only for the branch manager’s paid cash advances and salary loan, after being shown receipts by the bank’s cashier.
Seven months later, the VP was informed that the resigned bank manager was involved in a questionable transaction involving P11 million for which the bank was being sued. Because the clearance issued by the VP effectively barred the bank from going after the bank manager, the bank terminated the services of the VP for loss of trust and confidence as was demanded by his position.
Aggrieved, the VP filed a complaint for illegal dismissal. He insisted that there was a plot to oust him from his position, which was why they blamed him for clearing all of the bank manager’s financial clearances even though he only cleared the latter for paid cash advances and salary loan. The reasoning that there was loss of trust and confidence was a mere afterthought given the gap between the issuance of the clearance and the bank firing him, he said.
The Labor Arbiter ruled in favor of the VP holding that the act of issuing the clearance was not a valid and justifiable ground for the bank to lose trust and confidence in him.
The Labor Arbiter was affirmed by the National Labor Relations Commission (NLRC).
The Court of Appeals however held that the VP was dismissed for just cause as “he failed to exercise prudence in clearing [the bank manager] of his accountabilities given that the same were yet to be audited.”
On appeal, the Supreme Court (SC) affirmed the Labor Arbiter and the NLRC, and found that the VP was illegally dismissed. First, it explained the rules on a dismissal based on willful breach of loss and confidence -
As provided in Article 282 of the Labor Code, an employer has the right to dismiss an employee by reason of willful breach of the trust and confidence reposed in him. To temper the exercise of such prerogative, the law imposes the burden of proof upon the employer to show that the dismissal of the employee is for just cause failing which would mean that the dismissal is not justified.
The law mandates that before validity can be accorded to a dismissal premised on loss of trust and confidence, two requisites must concur, viz: (1) the employee concerned must be holding a position of trust; and (2) the loss of trust must be based on willful breach of trust founded on clearly established facts.
Although the VP held a position of trust, the SC ruled that the act of issuing the clearance could not be considered a willful breach of that trust -
The Court has repeatedly emphasized that the act that breached the trust must be willful such that it was done intentionally, knowingly, and purposely, without justifiable excuse, as distinguished from an act done carelessly, thoughtlessly, heedlessly or inadvertently.
The conditions under which the clearance was issued exclude any finding of deliberate or conscious effort on the part of the petitioner to prejudice his employer. Also, the petitioner did not commit an irregular or prohibited act. He did not falsify or misrepresent any company record as it was officially confirmed by [the cashier] (Torres v. Rural Bank of San Juan, G.R. No. 184520, 13 March 2013, J. Reyes).
source: Manila Times' Column Benchpress
Tuesday, June 18, 2013
When loss of confidence is valid ground for dismissal
An alleged Certified Public Accountant (CPA) has been working as a
chief accountant in a credit corporation for three years. It was only
after this time that the credit corporation found out that she was not a
CPA and misrepresented herself as one in her application and personal
data sheet. She was also supposedly helping pirate employees of the
credit corporation for a rival corporation. After confronting her, the
credit corporation deemed it best to let her go that same day. When she
tried to collect her belongings the very next day, she was no longer
allowed to enter the premises.
The accountant filed a case for illegal dismissal with the National Labor Relations Commission (NLRC), where the Labor Arbiter ruled that she had been illegally dismissed and that her dismissal was done in violation of due process requirements. On appeal, the NLRC found that there was no illegal dismissal as the parties entered into a compromise agreement where the accountant would voluntarily resign in exchange for separation benefits. This decision was affirmed by the Court of Appeals.
The Supreme Court (SC) overturned the CA, holding that there was nothing in the records to prove that the accountant had voluntarily resigned from her position in the company. It further ruled that there was no illegal dismissal despite the company’s failure to follow the two-notice rule.
Article 282 of the Labor Code provides that an employer may terminate an employment for fraud or willful breach by the employee of the trust reposed in him by his employer or duly authorized representative.
The Court made a distinction between managerial and rank and file employees when it comes to the termination of employees based on breach of trust. For managerial employees, the mere existence that there is basis to believe that such employee has breached the trust of the employer would suffice his dismissal. For rank and file employees, proof of involvement in the alleged events in question is necessary. The accountant, being a managerial employee, was validly terminated for loss of confidence -
In securing this position, she fraudaulently misrepresented her personal qualifications by stating in her Personal Information Sheet that she was a CPA… [t]his deceitful action alone was sufficient basis for respondent’s loss of confidence in her as a managerial employee.
The SC, however, explained that in labor cases, the existence of just cause is not enough to comply with procedural due process.
In the case of termination by the employer, it is not enough that there exists a just cause therefor, as procedural due process dictates compliance with the two-notice rule in effecting a dismissal: (a) the employer must inform the employee of the specific acts or omissions for which his dismissal is sought, and (b) the employer must inform him of the decision to terminate employment after affording the latter the opportunity to be heard.
Despite the existence of a just cause for termination, the accountant was dismissed from service in violation of procedural due process, because she did not receive any notice of her termination and was fired on the spot. Nevertheless, the failure to comply with procedural due process does not render a dismissal for valid cause illegal. Instead, the employees remedy is to be granted damages.
It is evident that although there was a just cause in terminating the services of Mendoza, respondents were amiss in complying with the two-notice requirement. Following prevailing jurisprudence on the matter, if the dismissal is based on just cause, then the non-compliance with non-procedural due process should not render the termination from employement illegal or ineffectual. Instead, the employer must indemnify the employee in the form of nominal damages (Mendoza v. HMS Credit Corporation, G.R. No. 187232, 17 April 2013, C.J. Sereno).
source: Manila Times' Column by Benchpress
The accountant filed a case for illegal dismissal with the National Labor Relations Commission (NLRC), where the Labor Arbiter ruled that she had been illegally dismissed and that her dismissal was done in violation of due process requirements. On appeal, the NLRC found that there was no illegal dismissal as the parties entered into a compromise agreement where the accountant would voluntarily resign in exchange for separation benefits. This decision was affirmed by the Court of Appeals.
The Supreme Court (SC) overturned the CA, holding that there was nothing in the records to prove that the accountant had voluntarily resigned from her position in the company. It further ruled that there was no illegal dismissal despite the company’s failure to follow the two-notice rule.
Article 282 of the Labor Code provides that an employer may terminate an employment for fraud or willful breach by the employee of the trust reposed in him by his employer or duly authorized representative.
The Court made a distinction between managerial and rank and file employees when it comes to the termination of employees based on breach of trust. For managerial employees, the mere existence that there is basis to believe that such employee has breached the trust of the employer would suffice his dismissal. For rank and file employees, proof of involvement in the alleged events in question is necessary. The accountant, being a managerial employee, was validly terminated for loss of confidence -
In securing this position, she fraudaulently misrepresented her personal qualifications by stating in her Personal Information Sheet that she was a CPA… [t]his deceitful action alone was sufficient basis for respondent’s loss of confidence in her as a managerial employee.
The SC, however, explained that in labor cases, the existence of just cause is not enough to comply with procedural due process.
In the case of termination by the employer, it is not enough that there exists a just cause therefor, as procedural due process dictates compliance with the two-notice rule in effecting a dismissal: (a) the employer must inform the employee of the specific acts or omissions for which his dismissal is sought, and (b) the employer must inform him of the decision to terminate employment after affording the latter the opportunity to be heard.
Despite the existence of a just cause for termination, the accountant was dismissed from service in violation of procedural due process, because she did not receive any notice of her termination and was fired on the spot. Nevertheless, the failure to comply with procedural due process does not render a dismissal for valid cause illegal. Instead, the employees remedy is to be granted damages.
It is evident that although there was a just cause in terminating the services of Mendoza, respondents were amiss in complying with the two-notice requirement. Following prevailing jurisprudence on the matter, if the dismissal is based on just cause, then the non-compliance with non-procedural due process should not render the termination from employement illegal or ineffectual. Instead, the employer must indemnify the employee in the form of nominal damages (Mendoza v. HMS Credit Corporation, G.R. No. 187232, 17 April 2013, C.J. Sereno).
source: Manila Times' Column by Benchpress
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