Redundancy

Dear Atty. Kathy,

I work in Company M, a manufacturing Company, as a warehouseman, under Warehousing and Delivery, Southern Manila Department. Company M informed us that our entire department will have to be closed and the employees under it placed in a redundancy program. Management said, the reason was the spread of online shopping and delivery platforms that greatly affected the operations and income of Company M, leading Management to decide it could only keep one warehousing and delivery hub in Metro Manila, instead of the original 4 hubs/departments. I have been an employee in the same department for almost 15 years now. I asked the HR Department what is their basis for including me in the redundancy program even with my long years of service, however, the HR representative there is none. Is this a valid redundancy even without the criteria?

Liam

Dear Liam,

According to Article 298 [formerly Article 283] of the Labor Code and prevailing jurisprudence, a redundancy program is considered valid only when the employer fully complies with legal requirements prior to the termination of employment, as follows:

1. Written notice served on both the employees and the Department of Labor and Employment at least one month prior to the intended date of retrenchment;

2. Payment of separation pay equivalent to at least one month pay or at least one-half month pay for every year of service, whichever is higher;

3. Good faith in abolishing the redundant positions; and

4. Fair and reasonable criteria in ascertaining what positions are to be declared redundant and accordingly abolished.

Based solely on your narration, however, it appears that the entire Warehousing and Delivery, Southern Manila Department, is being abolished, rather than only selected positions within the said department.

In such a case, Company M would ordinarily have no need to apply fair and reasonable selection criteria for purposes of determining which employees should be included in the redundancy program, considering that all of the positions are equally affected by the closure of the entire department. Since the services of all employees under the Warehousing and Delivery, Southern Manila Department have to be terminated on the ground of redundancy, the requirement of fair and reasonable criteria to determine which employees should be dismissed from the service no longer finds application.

This does not mean, however, that the redundancy program automatically becomes valid. Company M must still show that the closure of the entire Warehousing and Delivery, Southern Manila Department complies with the other legal requirements stated above. If it is shown that the abolition of the department is not genuine or is merely intended to remove employees under the guise of redundancy, the termination may still be challenged as an illegal dismissal.

(Coca-Cola Europacific Aboitiz Philippines Inc., formerly known as Coca-Cola FEMSA Phils. Inc. [CCFPA] versus Menardo A. Osongco Jr. et al., G.R. Nos. 238975-76; 239050-51)

Atty. Kathy Larios