Dismissal in disguise

Dear Atty. Kathy,

During a spot compliance audit in the warehouse of X corporation where my father is the head, the audit committee said it found discrepancies in the inventory of X corporation’s new product. During the admin investigation, the HR head advised my father that he should resign or else X corporation will file criminal cases against him for the inventory losses and he will forfeit his separation benefits. My father does not want to resign but the HR head kept asking him what his final decision is, advising him to resign and always repeating that X corporation is preparing the criminal cases against him and that his separation benefits would be forfeited if he did not resign. My father always replied that he did not want to resign and will defend himself in the admin investigation. It seems X corporation is leaving my father without any other option except to resign. Is this already constructive dismissal?

Sage

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Dear Sage,

Based solely on your narration, it appears that X corporation has not issued any termination notice to your father. Even if that is the case, this does not mean that there was no illegal dismissal. Under Philippine jurisprudence, dismissal need not take the form of an express severance of the employment relationship. This is known as constructive dismissal. As held by the Supreme Court, constructive dismissal is commonly described as a "dismissal in disguise." It happens when an employer's acts make continued employment impossible, unreasonable or unlikely, that the employee is left with no real choice but to resign. In this connection, the Supreme Court has consistently ruled that the test is whether a reasonable person in the employee's position would have felt compelled to relinquish his employment under the totality of the circumstances.

In view of the above, according to jurisprudence, there is a strong basis to argue that your father was subjected to constructive dismissal. The totality of the circumstances suggests that your father was effectively deprived of any meaningful choice, as he was advised to resign; repeatedly asked by the HR head of his decision on the resignation; and was continually told that, the company would file criminal cases against him and that he would forfeit his separation benefits if he did not resign. Despite these repeated demands, your father always replied that he did not wish to resign and that he intended to defend himself in the ongoing investigation.

The repeated insistence that your father resign, coupled with the recurring threats of criminal prosecution and loss of benefits, could be seen as creating an environment in which continued employment was no longer a realistic or viable option. The supposed "choice" presented to your father was not between two freely available alternatives, but rather between resignation and the prospect of criminal charges and forfeiture of benefits. Such circumstances may be characterized as coercive rather than voluntary.

Do note, however, that an employer is not prohibited from discussing the possibility of resignation during an administrative investigation as part of an amicable separation. But any resignation must be the product of the employee's free and voluntary decision. When the offer to resign is accompanied by repeated threats or pressure tactics, what appears to be an option may, in reality, become an ultimatum. In such a case, the voluntariness required for a valid resignation may be absent.

Accordingly, if it can be shown that the repeated demands to resign and the threats of criminal prosecution and forfeiture of benefits effectively left your father with no genuine freedom to remain employed and defend himself, there is a substantial basis to argue that the Company's actions constituted constructive dismissal rather than a voluntary resignation.

Atty. Kathy Larios