Retrenchment of workers due to pandemic
The Covid-19 pandemic has affected the lives of people everywhere because of the community quarantine, which restricted the movement of people and has totally affected our way of life.
The pandemic has affected businesses and the labor force. Businesses are greatly affected by these quarantine measures leading to their closure and loss of jobs. For others, there is a glimmer of hope in the continuity of their businesses, but certain measures must be implemented to keep the company afloat.
The Department of Labor and Employment has issued labor advisories 9 and 11 encouraging employers to adopt flexible work arrangements as remedial measures to the Covid-19. Both urged employers to consider remedial measures instead of removing employees or closing businesses. However, these remedial measures are not enough. Business establishments have to make painful decisions to layoff or retrench employees to save the business.
The DOLE acknowledged the impact of the Covid-19 pandemic to businesses in the Cordillera, especially in Baguio City as some establishments resorted to the retrenchment of employees to cope with losses.
However, employers should follow due process in the retrenchment of their employees. To legally retrench employees, the following must be followed: 1. Retrenchment is undertaken to prevent losses, which are not merely de minimis, but substantial, serious, actual, and real, or if only expected, are reasonably imminent as perceived objectively and in good faith by the employer; 2. The employer serves written notices to the employees and the DOLE at least one month prior to the intended date of retrenchment; 3. The employer pays the retrenched employees separation pay equivalent to one month pay or at least ½ month pay for every year of service, whichever is higher;4. The employer must use fair and reasonable criteria in ascertaining who would be dismissed and retained among the employees; and 5. The retrenchment must be undertaken in good faith.
If the retrenchment is brought about by losses, financial reverses suffered by the companies, the separation pay for that is half month per year of service. For instance, if an employee is being paid P20,000 per month and the computation would be half a month per year of service, the amount will be divided by two and P10,000 will now be multiplied by the employee’s year of service.
The DOLE has issued several issuances already and advisories encouraging employers to implement or to have compassion or humanitarian actions and retaining their employees.
Instead of termination, employers could opt for other options to retain their employees while recovering from the losses. Employers may implement flexible work arrangements like a rotation of duty, reduced work hours, or reduce work week, work from home, or telecommunicating schemes.
To date, there are 132 businesses that closed in the Cordillera and most of these establishments are in Baguio City affecting 5,649 workers. A total of 4,231 establishments reported temporary closures affecting 59,281 workers.
Only 784 establishments adopted flexible work arrangement which have affected 16,383 workers.