A quick look at retrenchment, redundancy and the rights of laid-off workers

A quick look at retrenchment, redundancy and the rights of laid-off workers
Employees of local broadcast giant ABS-CBN holding placards ask motorists to honk their cars during a protest in front of ABS-CBN building in Manila on February 14, 2020.
AFP / Ted Aljibe

MANILA, Philippines — Retrenchment, redundancy, layoffs and job cuts have been in the news in recent weeks with 140 workers losing their jobs at nutrition giant Wyeth's milk plant and dozens at risk at a unit of media company ABS-CBN.

What are retrenchment and redundancy, and what are workers who lose their jobs because of them entitled to?

Retrenchment to prevent further losses is among the authorized causes for termination under the Labor Code. According to a briefer by the Department of Labor and Employment, it is a termination that an employer can initiate "through no fault of and without prejudice to the employees." 

It adds that the law "recognizes retrenchment as a right of the management to meet clear and continuing economic threats or during periods of economic downturn to prevent losses."

This is done "because of losses in the operation of a business, lack of work, and considerable reduction on the volume of his business," the briefer also said.

For retrenchment to be legal, losses cannot be "merely de minimis, but substantial, serious, actual, and real." The employer also has to show proof of substantive and imminent financial losses to justify the retrenchment.

Another authorized cause for employment termination is redundancy — or when the employer no longer needs the worker's services, often due to labor-saving devices like machines and gagdets.

Due process for laid-off workers

Companies have to give their workers due process, which means "a written notice of dismissal to the employee specifying the grounds at least 30 days before the date of termination," in laying them off, the Bureau of Labor Relations said in a separate briefer.

Copies of the notices of termination must also be filed with DOLE. 

Laid-off workers may question the legality of their dismissal before the National Labor Relations Commission, with the BLR noting that "in establishments with a collective bargaining agreement, the dismissal may be questioned through the grievance machinery established under the CBA." If the issue is not resolved at that level, it can be brought to the NLRC.

The Wyeth Philippines Progressive Workers Union is currently in mediation with management at the regional National Conciliation and Mediation Board office in Laguna.

Separation pay

Employees who are let go because of retrenchment and redundancy are entitled to separation pay, although at different rates.

Workers who are let go for redundancy are entitled to separation pay equivalent to one month pay or one month for every year of service, whichever is higher. Retrenched workers are entitled to separation pay equivalent to one month pay or half a month for every year of service, whichever is higher.

In a statement last week, Wyeth Nutrition said it would be giving workers severance packages "superior to what the law requires." 

ABS-CBN this week said it "is left with no choice but to cease the operations of TeleRadyo effective [June 30] to prevent further business losses."

The company will also have a minority stake in a joint venture with Romualdez-led Prime Media Holdings Inc. that will see the revival of radio DZMM, which was taken off the air in 2020 after the broadcaster's franchise lapsed. A panel of the House of Representatives voted that same year against granting ABS-CBN, which had earned the ire of then President Rodrigo Duterte, a new franchise.

The loss of revenue and reach because of its franchise troubles has led to layoffs at ABS-CBN, including the latest round at TeleRadyo.

ABS-CBN said in its disclosure to the Philippine Stock Exchange that the JV will give former employees "a chance to find job opportunities" and "a way to continue providing accurate and balanced news and information to the country." — Jonathan de Santos

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