Unsatisfactory performance

Dear Atty. Joji,

One of our employees was placed twice under a Performance Improvement Plan due to repeated issues in work quality, process adherence and communication. During the PIP period, he received multiple Notices to Explain, weekly coaching, monthly performance reviews and training, and was afforded an administrative hearing. Despite these interventions, his performance remained lacking and no improvement was observed. The employee was terminated for unsatisfactory performance tantamount to gross and habitual neglect of duty under company policy and Article 297 of the Labor Code. He then filed for illegal dismissal. Is his dismissal valid?

Bruce

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Dear Bruce,

For dismissal to be legal, well-settled is the rule that the employer must show compliance with both substantive and procedural due process. The legality of the act of dismissal constitutes substantive due process while the legality of the manner of dismissal constitutes procedural due process. Substantive due process requires that the dismissal by the employer be made under a just or authorized cause under the Labor Code. Procedural due process, on the other hand, consists of the twin requirements of notice and hearing.

Time and again, the Court has upheld the prerogative of management to regulate, according to its discretion and judgment, all aspects of employment. This flows from the established rule that labor law does not authorize the substitution of the judgment of the employer in the conduct of its business. Such management prerogative may be availed of without fear of any liability so long as it is exercised in good faith for the advancement of the employer’s interest and not for the purpose of defeating or circumventing the rights of the employees under special laws or agreements, and is not exercised in a malicious, harsh, oppressive, vindictive, or wanton manner, or out of malice or spite.

It is the same management prerogative which gives employers the authority to set standards, including assessing the performance of employees, so long as it is exercised in good faith for the advancement of the employer’s interest. And since performance assessments are within the employer’s ambit, respondent company in this case has the right to conduct the same. It has the right to dictate and prescribe the key performance metrics in order to reasonably assess the overall work performance of its employees. From the facts you presented, so long as the employer complied with the twin-notice requirement and conducted an administrative hearing prior to termination and having satisfied both substantive and procedural due process, there should be no problem as to the legality of dismissal.

Atty. Joji Alonso