Redundancy is one of the authorized causes for termination of employment under Article 283 of the Labor Code of the Philippines.
Redundancy exists where the services of an employee are in excess of what is reasonably demanded by the actual requirements of the enterprise. A position is redundant where it superfluous, and superfluity of a position or positions may be the outcome of a number of factors, such as over hiring of workers, decreased of volume business, or dropping of a particular product line or service activity previously manufactured or undertaken by the enterprise.
In Wiltshire, the Court held that an employer has no legal obligation to keep on the payroll employees more than the number needed for the operation of the business. (See Wiltshire File Co., v. NLRC, 1991; Coats Manila Bay vs. Ortega, 2009)
Adequate Proof of Redundancy
It is the employer’s burden to show that redundancy exists. It is not enough for a company to merely declare that it has become overmanned. It must produce adequate proof of such redundancy to justify the dismissal of the affected employees (Asufrin vs. San Miguel Corporation, 2004).
Evidence must be presented to substantiate redundancy such as but not limited to the new staffing pattern, feasibility studies/proposal, on the viability of the newly created positions, job description and the approval by the management of the restructuring (Panlilio vs. NLRC, 1997).
Requirements of a Valid Redundancy Program
The employer must comply with the following requisites to ensure the validity of the implementation of a redundancy program:
- A written notice served on both the employees and the Department of Labor and Employment (DOLE) at least one month prior to the intended date of retrenchment as required by the Labor Code;
- Payment of separation pay equivalent to at least one month pay or at least one month pay for every year of service, whichever is higher;
- Good faith in abolishing the redundant positions; and
- Fair and reasonable criteria in ascertaining what positions are to be declared redundant and accordingly abolished. (See Caltex vs. NLRC, 2007, )
In case of termination due to redundancy, the worker affected thereby shall be entitled to a separation pay equivalent to at least one (1) month pay or to at least one (1) month pay for every year of service, whichever is higher.
Proof of Losses Not Required
Redundancy does not require the exhibition of proof of losses or imminent losses. In fact, of all the statutory grounds provided in Article 283 of the Labor Code, it is only retrenchment which requires proof of losses or possible losses as justification for termination of employment. (See Coats Manila Bay case.)
Duplication of Work Not Necessary.
Redundancy does not necessarily refer to duplication of work. That no other person was holding the same position prior to the termination of the employee’s services does not mean that his position had not become redundant. Indeed, in any well-organized business enterprise, it would be surprising to find duplication of work and two or more people doing the work of one person. (See Wiltshire case.)
In redundancy, what is looked into is the position itself, the nature of the services performed by the employee and the necessity of such position. (Tierra International Construction Corp. vs. NLRC, 1992)
Redundancy Arising from Contracting Out of Labor
In several cases, the court upheld the dismissal on ground of redundancy even when the employer contracts out the services of another company to perform the same task as the redundant positions. Contracting out of labor has been held as a valid management prerogative. (See De Ocampo vs. NLRC, 1992; Serrano vs. NLRC, 2000.)
- The employer was engaged in the production of wooden doors and furniture. The complainants who were hired as mechanics were terminated by the employer when their positions were abolished, and contracted out to Gemac Machineries. The dismissal is proper. In contracting the services of Gemac, which the company has the right to do, the services rendered by the mechanics became redundant and superfluous, and therefore properly terminable. (De Ocampo vs. NLRC, G.R. No. 101539 September 4, 1992.)
- As a result of the phasing-out of the company’s security section, and contracting out the same with an independent contractor, the services of the complainant as head of the security checker’s section, was terminated. The termination was for an authorized cause, i.e., redundancy. (Serrano vs. NLRC, G.R. No. 117040. January 27, 2000.)
Last Edited: Friday, August 19, 2011