Rather than permanently close shop, employers can consider several alternative work schemes to keep their operations going and avoid mass layoffs, a Department of Labor and Employment official (DOLE) said.
DOLE OIC-Undersecretary for Labor Relations, Social Protection and Policy Support Atty. Benjo Santos Benavidez said the department has unveiled new guidelines on employment preservation upon the resumption of business operation.
“We are mindful that companies, especially during this time, in the exercise of management’s prerogative may terminate the services of workers, or worse, close the establishment. The closure of establishment may result in massive termination of employees,” he said.
“In our advisory, if only to preserve employment, we appeal to employers that instead of closing the establishment or terminating the employees, you may want to explore alternative work schemes.”
The guidelines, contained in Labor Advisory No. 17 series of 2020 dated May 16, 2020, state that employers may adopt any or a combination of alternative work schemes as an alternative to termination of employment or closure of business. These schemes entail the following:
Transfer employees to another branch or outlet of the same employer
Assign employees to other function or position in the same or other branch or outlet
Reduce normal workdays per day or week (e.g., reduce workdays from six times a week to less days in a week, or reduce normal work hours in a day). The workday reduction may result in salary reduction of the worker, said Benavidez.
Rotate workers within the workweek or within the month
Partially close the establishment. “This may result in the termination of some of the workers but at least our intention in issuing this labor advisory is to avoid the total, permanent closure of establishment, which may result in massive unemployment,” said Benavidez.
These alternative work schemes are temporary in nature and shall be adopted as long as the public health crisis exists, according to the labor advisory.
“This Advisory shall apply to all employers and employees regardless of employment status in the private sector operating or allowed to resume business operations under enhanced community quarantine, general community quarantine or other quarantine arrangements,” the advisory says.
To further help employers continue operations, the advisory indicates that employers and employees may agree to adjust wage and wage-related benefits.
“But that adjustment must be based on the voluntariness of the parties,” said Benavidez. “Unlike in previous issuances, and consistent with jurisprudence, we now require that it be in writing and on temporary duration.”
The requirement to have the agreement be in writing is to protect both employer and employee, he added. “This is concrete evidence that the parties are voluntarily entering into a contract especially on the diminution or reduction of wage and wage-related benefits.”
The advisory further declares that the adjustment in wage and wage-related benefits shall be temporary and not exceed six months.
“The duration of six months however may be extended or renewed based on the further agreement of the parties,” the labor official said.
Meanwhile, in case employers decide to terminate the services of their employees, the authorized grounds for doing so under the labor code include the following: installation of labor-saving devices, redundancy, retrenchment to prevent losses, and closure or cessation of operations.
In the first two instances, separation pay must be provided the employee equivalent to one month pay for every year of service.
For retrenchment and closure, on the other hand, the separation pay is one-half month pay for every year of service.
But Benavidez clarified that under the labor code, the requirement of separation pay in case of closure or cessation of operation is conditioned “on the absence of financial reverses.”
He added: “Hence if the company is closing its operations due to financial reverses-which financial reverses must be proven-the employees will not be entitled to separation pay. The requirement of separation pay only comes in when the closure or cessation of operation is not due to financial reverses.”
At the same time, Benavidez shared that aside from separation pay, Republic Act No. 11199, or the SSS Law, stipulates that employees involuntarily separated from work may also file for unemployment insurance.
“An employee who is a member of SSS is entitled to have an unemployment insurance benefit for two months, the maximum of which is in the amount of 50% of the average monthly salary but based on the SSS schedule that is amounting to P10,000 per month.”
“So aside from separation pay, employees who are involuntarily separated may also apply for unemployment insurance with the Social Security System,” continued, Benavidez, who made his virtual presentation during the May 26 general membership meeting of the Philippine Chamber of Commerce and Industry.