A look at the legal consequences of being left out to dry by your employer.
Back in March, the President declared a state of National Health Emergency because of the rampant cases of COVID-19 in the Philippines. On March 16, he announced a state of Enhanced Community Quarantine across the country, which was very quickly referred to as “the lockdown”.
Businesses closed their doors, not permitted to open as a means of trying to control the spread of the virus. And for the past six months, many of those businesses either remain closed or are still operating at a reduced staffing level.
Everyone that was not allowed to enter their workplace and could not continue as working from home was placed on a status of No Work No Pay, also known as forced leave, temporary retrenchment, temporary layoff (TLO), or floating. The terms may have varied, but they all meant the same thing. A form of temporary suspension.
Under the Labor Code, employers are permitted to suspend business operations due to financial losses, whether in whole or in part, for up to six months, and can suspend the operations of their employees as well. Hundreds of thousands of employees ended up with no work to go to, and were classed as being on “floating” status.
Article 301 of the Labor Code states:
“The bona fide suspension of the operation of a business or undertaking for a period not exceeding six (6) months, or the fulfillment by the employee of a military or civic duty shall not terminate employment. In all such cases, the employer shall reinstate the employee to his former position without loss of seniority rights if he indicates his desire to resume his work not later than one (1) month from the resumption of operations of his employer or from his relief from the military or civic duty.”
Today is the first day that follows the end of the 6-month period for those that were first placed on forced leave on March 17.
Contrary to what your employer may state, 6 months in law is not equal to six calendar months. The Supreme Court has given that the general rule of one month in terms of law should be equal to 30 days, unless the specific month is mentioned by name. So a period of six months, such as used for probation and temporary suspension, is equal to 30 days multiplied by 6, which is 180 days.
The law states that the suspension is permitted for a MAXIMUM period of six (6) months, or 180 days as per the Supreme Court. Since there is no exact legal provision that applies to temporary retrenchment or lay-off. Instead, Article 300 has been applied by analogy “to set a specific period that employees may remain temporarily laid-off or in floating status.” As 6 months is the limitation for suspension of business operations, the temporary retrenchment or lay-off should also not be longer than 6 months.
After the lapse of 6 months, the employer has two options:
(a) recall the employees back to work, or
(b) permanently retrench them.
If recalled back to work, the employer is required to reinstate the employees to their former positions without loss of seniority rights provided they exercise such right within one (1) month from resumption of operations.
If the employer does not exercise any of these options, this would be “tantamount to dismissing the employee” with the employer being liable for the dismissal. If the bona fide suspension of operations exceeds six (6) months, the employment is considered terminated and made permanent resulting in illegal or constructive dismissal.
In SKM Art Craft Corporation v. Bauca, the employer’s establishment was razed by a fire resulting in the bona fide suspension of operations. While valid, the employer failed to recall the employees after the expiration of the six (6) months period resulting in their permanent dismissal.
In International Hardware, Inc. v. Pedroso, the employee (delivery truck driver) was rotated by the employer for over six (6) months, resulting in the reduction of his working days and his income. By way of defense, the employer explained that the rotation was due to the financial losses suffered by the business. However, it was held that suspension of operations in excess of 6 months resulted in the termination of employment by way of constructive dismissal or retrenchment. Thus, the employee was entitled to separation pay.
In Agro Commercial Security Services Agency, Inc. v. Jimenez, the employees (security guards) were placed on “floating status” for over six (6) months after their assigned companies and government agencies were sequestered by the Government. While valid, the “floating status” of an employee should only last “for a reasonable time.” In this case, the employees were placed on such status for over six (6) months, resulting in them being considered illegally dismissed from service.
Such cited jurisprudence is the basis for all other cases of illegal or constructive dismissal following the end of the period of TLO. Any employee that has not been retrenched or reinstated after the 180th day of the suspension period is considered to have been illegally dismissed.
Today is that day! And for those employees that are still not reinstated or retrenched by their employers, you are now able and eligible to file your complaint with the local office of the NLRC for ILLEGAL or CONSTRCUTIVE DISMISSAL.
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