Three basic requisites for a valid retrenchment

Under Article 283 of the Labor Code, there are three (3) basic requisites for a valid retrenchment, namely: (a) proof that the retrenchment is necessary to prevent losses or impending losses; (b) service of written notices to the employees and to the DOLE at least one (1) month prior to the intended date of retrenchment; and (c) payment of separation pay equivalent to one (1) month pay, or at least one-half (1/2) month pay for every year of service, whichever is higher.

We see no reason to reverse the NLRC and CA findings that no documentary evidence exists in the records to substantiate the claimed business losses; in fact, the petitioners also failed to show its financial conditions prior to and at the time GICI enforced its retrenchment program. In the absence of any attendant grave abuse of discretion, these findings are entitled not only to respect but to our final recognition in this appellate review.

The CA was also correct in affirming the NLRC’s award of full backwages and separation pay in lieu of reinstatement. In FF Marine Corporation v. NLRC,[10] we ruled that an illegally dismissed employee is entitled to reinstatement without loss of seniority rights and to other established employment privileges, and to his full backwages. In the event, reinstatement is no longer feasible, the employer must pay him his separation pay.

In the present case, the respondents were illegally dismissed as the employer failed to prove that their dismissal was for a duly authorized cause. The CA was thus correct in awarding them full backwages and separation pay in lieu of reinstatement since the positions the respondents formerly held no longer exist.

          We must however modify the CA decision to reflect the correct monetary award due to the respondents. The dispositive portion of the CA decision is incomplete as it failed to specify the separation pay to be awarded to the respondents as well as the reckoning point for the computation of the backwages. FF Marine Corporation[11] tells us that the separation pay shall be computed at one (1) month pay (for those with one year or less of service), or one-half (1/2) month pay for every year of service (for those with more than a year of service), whichever is higher, a fraction of at least six (6) months being considered one whole year.[12] The backwages shall be computed from the date of termination of service (September 30, 2005) until the finality of this Court’s decision.

About Erineus

Born on December 28, 1965, Surallah, South Cotabato, Southern Mindanao, Philippines.
This entry was posted in Labor Law, Termination and tagged . Bookmark the permalink.

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