When is an exogamy rule invalid?

There is no factual basis to conclude that all of their employees who marry each other would be unable to perform their duties, entailing one’s dismissal

6 days ago

In every company, policies exist. The host of do’s and don’ts employees have to comply with, fundamentally, is there for the company’s protection and better governance. They are what we call management prerogatives.

Usually, we encounter the exogamy rule — the prohibition of spouses to work in the same company. This supposedly thwarts the possibility of spouses conniving with each other to commit transgressions against the company. While a recognized policy under our labor laws, is it absolute?

In Catherine de la Cruz-Cagampan vs One Network Bank Inc. et al. (GR 217414, promulgated on 22 June 2022), One Network Bank Inc. implemented its exogamy policy. It stated that “Effective 1 May 2006, when two employees working for One Network Bank are subsequently married through Church or Civil Court rites, one must terminate employment immediately after marriage.”

Catherine de la Cruz was hired by said bank on 11 June 2004 as an accounting specialist. On 31 October 2009, she married her co-employee Audie Cagampan, the bank’s loan specialist. Cognizant of the exogamy rule, they asked for an exception, citing that other couples similarly situated were allowed to continue their employment. The bank, however, terminated Catherine. There was no justification why Catherine, between the two, was terminated but solely because of the exogamy policy. Catherine found this unfair and asked the National Labor Relations Commission to decide her fate.

Was she illegally terminated or not? The NLRC did find for her.

It opined that the bank’s “policy was unreasonable considering that the ‘mere fear of the possibility that the spouses may divulge to each other information with respect to client’s accounts is speculative, unfounded, and imaginary.’ It ruled that the (bank) failed to prove the legitimate business concern in implementing the discriminatory policy against its employees.”

The Court of Appeals, however, viewed the circumstances in a different light. On appeal by the bank, the appellate court “explained that the bank presented a reasonable business necessity in implementing the assailed company policy. Also known as the bona fide occupational qualification exception, this necessity originates from One Network Bank’s business that is imbued with public interest. Since One Network Bank must observe the highest degree of diligence in handling its affairs, the policy is necessary to protect the confidential information of its client and minimize risks from married co-employees whose communication is privileged.”

So, we now have two bodies — the NLRC and the CA — with opposing views. One finds the policy discriminatory, while the other holds it is a valid exercise of management regulation.

When Catherine brought the issue to the Supreme Court, the final arbiter had this to say.

“The Court of Appeals reversed the National Relations Commission’s affirmation of the Labor Arbiter’s pronouncement that petitioner was illegally dismissed and respondent’s ‘exogamy policy’ was unreasonable. The Court of Appeals is mistaken… Indeed, employers may freely conduct their affairs and employ discretion and judgment in managing all aspects of employment. However, their exercise of this right to management prerogative must be in accord with justice and fair play… Management prerogative must not be unbridled and limitless. Nor is it beyond this court’s scrutiny…”

“Courts… find the no-spouse employment policy invalid for failure of the employer to present any evidence of business necessity other than the general perception that spouses in the same workplace might adversely affect the business. They hold that the absence of such a bona fide occupational justification invalidates a rule denying employment to one spouse due to the current employment of the other spouse in the same office… Thus, a bona fide occupational qualification requires concurrence of two elements: ‘(1) That the employment qualification is reasonably related to the essential operation of the job involved; and (2) that there is a factual basis for believing that all or substantially all persons meeting the qualification would be unable to properly perform the duties of the job…”

“Weighed against the constitutionally mandated full protection to labor and the various statutory protections accorded to the sector, this Court finds that respondents failed to demonstrate the reasonable business necessity for its no-spouse employment policy….”

“First, the no-spouse qualification is not reasonably related to the bank’s essential operation of its business. It unduly discourages all employees from marrying a fellow worker at the pain of termination…

There is no iota of proof that supports respondents’ assertion that petitioner’s marriage to her fellow employee places the bank’s funds at risk for embezzlement….”

“Second, there is no factual basis to conclude that all of their employees who marry each other would be unable to perform their duties, entailing one’s dismissal. The policy was couched in a general manner, that whenever any two of their employees marry, one must terminate employment immediately after marriage….”

“The general articulation allows respondents to whimsically enforce its policy, as petitioner alleged here that others had been spared. Further, it leaves them the option on which employee’s services to terminate. Here they arbitrarily dismissed petitioner. The basic tenets of due process cannot allow this.”

The facts and quoted ruling are from the case cited above.


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