Dear Atty. Kathy,

I am a clinic assistant in the clinic of a candy factory. I have been an employee of the factory for more than five years now, so I was shocked when HR gave me a letter, saying that my employment will end in 30 days, because of redundancy. I asked what will happen to the factory clinic, and the HR officer said it will be handled by a separate company who has its own employees who will man the clinic, so that the factory can concentrate its resources on its main candy manufacturing operations. Is this legal?

Christian

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Dear Christian,

The Labor Code recognizes redundancy as an authorized cause for the termination of employment. Article 298 of the Labor Code provides that the employer may terminate the employment of any employee due to redundancy.

Redundancy exists where there is a duplication of work, such that services of an employee are in excess of what is reasonably demanded by the actual requirements of the enterprise. In such cases, the employer has no legal obligation to keep in its payroll more employees than are necessary for the operation of its business.

The determination that the employee’s services are no longer necessary or sustainable and, therefore, properly terminable is an exercise of business judgment of the employer. The wisdom or soundness of this judgment is not subject to discretionary review of the labor tribunals and the courts, provided there is no violation of law and no showing that it was prompted by an arbitrary or malicious act.

In declaring redundancy, the employer must produce adequate proof that such is the actual situation to justify the dismissal of the affected employees. Examples of such proof are 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, among others, as adequate to substantiate a claim for redundancy.

Based on your narration, it appears that the factory will outsource the clinic operations to a third party, service provider. As long as the factory substantially proves that the outsourcing is a fair exercise of its business judgment (by providing the proof as listed above, among others), then, as ruled by the Supreme Court, the decision to outsource clinic operations cannot be considered as impulsive or random. Moreover, the factory’s reason for outsourcing its clinic operations is reasonable, that is, it wanted to focus on the core business of candy manufacturing, of which clinic operations is not an integral part.

Thus, legality or validity of the redundancy is subject to the above-mentioned conditions and requirements.

(Gertrudes D. Mejila versus Wrigley Philippines Inc., et al., G.R. No. 199469, 11 September 2019)

Atty. Kathy Larios