Retrenchment Concept

Retrenchment is an economic ground to reduce the number of employees. It is the reduction of personnel for the purpose of cutting down on costs of operations in terms of salaries and wages resorted to by an employer because of losses in operation of a business occasioned by lack of work and considerable reduction in the volume of business (See Alabang Country Club vs. NLRC, G.R. No. 157611, August 9, 2005 ).

Retrenchment is sometimes also referred to as downsizing. It is aimed at saving a financially ailing business establishment from eventually collapsing.

Basic Requisites of Valid Retrenchment

To justify retrenchment, the following requisites must be complied with:

  1. The retrenchment must be necessary to prevent business losses; and
  2. The business losses sought to be prevented are serious, actual and real.

Meaning of “To Prevent Losses”

The phrase “to prevent losses” means that retrenchment is authorized to be undertaken by the employer sometime before the losses anticipated are actually sustained or realized. Actual losses need not set in prior to retrenchment. (Lopez Sugar Corporation vs. Federation of Free Workers, G.R. Nos. 75700-01, August 30, 1990.)

Meaning of “Serious, Actual and Real”

In order to be justified, the termination of employment by reason of retrenchment must be due to business losses or reverses which are serious, actual and real.

Not every loss incurred or expected to be incurred by the employer will justify retrenchment, since, in the nature of things, the possibility of incurring losses is constantly present, in greater or lesser degree, in carrying on the business operations. (See Edge Apparel Inc. vs. NLRC, G.R. No. 121314, February 12, 1998 .)

The following are the general standards to determine whether the business losses sought to be prevented are serious, actual and real, and sufficient to justify retrenchment of employees:

  1. The losses expected should be substantial and not merely de minimis in extent;
  2. The losses apprehended must be reasonably imminent;
  3. The alleged losses if already realized, and the expected imminent losses sought to be forestalled, must be proven by sufficient and convincing evidence. (See Lopez Sugar Corporation case.)

Separation Pay

In case of retrenchment to prevent losses, the separation pay shall be equivalent to one month pay or at least one-half month pay for every year of service, whichever is higher. A fraction of at least six months shall be considered one whole year. (Article 283, LC.)

Temporary Retrenchment or Lay-Off

Article 283 of the Labor Code of the Philippines speaks only of permanent retrenchment or lay-off. There is no specific provision in the Labor Code that governs temporary retrenchment, particularly the requisites for its implementation and maximum duration.

To remedy this situation, the Court has applied by analogy Art. 286 to set a specific period that employees may remain temporarily laid, or, sometimes referred to as in floating status. (See Sebuguero vs. NLRC, G.R. No. 115394 September 27, 1995.) Article 286 provides:

Article 286. When employment not deemed terminated. The bonafide suspension of the operation of a business or undertaking for a period not exceeding six months, or the fulfillment by the employee of a military or civic duty shall not terminate employment. In all such cases, the employer shall reinstate the employee to his former position without loss of seniority rights if he indicates his desire to resume his work not later than one month from the resumption of operations of his employer or from his relief from the military or civic duty.

Applying the above provision in the case of temporary retrenchment, an employee who has been temporarily laid-off should be recalled or otherwise permanently retrenched after the lapse of six months. Failing this would be tantamount to illegal dismissal.

Last Edited: Friday, August 19, 2011

Caveat: Subsequent court and administrative rulings, or changes to, or repeal of, laws, rules and regulations may have rendered the whole or part of this article inaccurate or obsolete.
authorized causes, grounds for dismissal, retrenchment, retrenchment to prevent losses, Termination of Employment
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59 comments

  1. Employees were transferred from company 1 to company 2 (sister companies) not given separation pay but seniority retained and were made to sign quitclaims. Now company 2 is retrenching employees again. Should employer have paid separation pay for transfer from company 1 to company 2?

    [Reply]

    Ted Ferrolino Reply:

    In case of buyout or merger of two companies (say company 1 and company 2), it is common for the surviving company (company 2) to absorb the employees of the other company (company 1). There should be no problem with this setup if company 2 undertakes to absorb the employees of company 1 under the same terms and condition of employment, without loss of seniority right and with full credit for years of service.
    Under this setup, if company 2 starts retrenching employees, all affected employees must be credited their full years of service, including service rendered for company 1.

    [Reply]

    Jimmy Bayrante Reply:

    Will this mean sir that an employee who is affected but this buyout cannot receive any pay or monetary claim when transferring from Company 1 to Company 2?

    Our current company (1) sold out department to another company (2. This will happen in October this year. Our current company (1) is saying that we (employees) will not receive any separation pay nor any changes on our benefits etc. going to company (2). What will be retained is our current compensation package and tenure.

    [Reply]

  2. company A, a GOCC(SEC registered is cutting down costs due to loses. 1 million subsidy from govt will be granted to company A on the condition that company will retain 10 employees only.is this legal? company A starts retrenching and will not grant any separation pay because according to employer, employee are APPOINTED only on probationary status only therefore considered as contractual. But no succeeding contracts made to effect regularization even if employees continously receives salary and has been in service for more than a year or longer. We want to know our rights and whether we are regular or contractual?

    [Reply]

  3. hi,

    I have a concern regarding Article 286, does this article pertains to the whole entity as company or does it also pertain to certain employees only or campaign like in a call center when a specific account in call center closed.

    [Reply]

  4. this is my 5th mnth in our company dayshift acct, and that said acct will pull out the acct, now our company wants to transfer us to other acct which is night shift, if we don’t want to be on a graveyard shift is there any possibility we can decline the offer and ask for separation pay? since we applied for dayshift acct…

    [Reply]

  5. mid 2010 we serve 2 company but we have only 13yh month pay receive and we also no overtime,night differential we discussed but our employer refused and also in outport destination he only give 200 pesoos food allowance what necessary action for this kind of treatment gives by our employer thnks and merry xmas and happy new year

    [Reply]

  6. our company gave us open retrenchment program for those who are wiling voluntarily to take the retrenchment program. I submitted a letter last December 7, 2010 stating that I voluntarily take the chance of the retrenchment until the last office hours of January 31, 2011.Until this day I still didn’t have receive any notice from the company for my release. Do I have to continue my service with the company after the January 31, 2011. Can I just leave the company after January 31 even without the notice? Please help, thanks.

    [Reply]

    Ted Ferrolino Reply:

    You need to wait for confirmation that your application to avail of retrenchment program is accepted. Don’t just stop working without the confirmation. Otherwise, you are risking losing your separation pay.

    [Reply]

  7. i would like to ask, if there is an employee who was retained, is he/she be elligible for a severance pay if he declined to be retained and decided to resign though?

    [Reply]

  8. Hi Ted,

    I’ve been reading all the posts here but found none that actually fit my current status.
    I am a call-center employee with a management position, currently on \floating status\. In october, my company announced that our department will cease operations on December 30, 2010 (the client did not renew its contract). I am then placed on \reserve status\ for a maximum of 6 months, as provided by law (Labor Code Article 283). I was made to understand that HR will be looking for a replacement employment for me under the same company. If the replacement is unsuccessful, then that’s the only time I will be separated from the company. I will not be receiving any salary for the months that I’m on \floating status\. As such, HR advised me to look for a \temporary\ employment (to a non-competitor) while waiting.

    From where I’m sitting, this is clearly anti-employee. To be afforded a \floating status\ without salary.

    So my questions are:

    1. Are there annotations under the Labor Code for me to demand HR to separate me from the company instead? My chances of being transferred to another department are slim due to many reasons– salary demand, tenure, lack of available position or just plain incongruence with my skill set. So, it’s either I am to resign or wait for six months. I am very much willing to be separated early, as long as I get my separation pay.

    2. Is this considered retrenchment, under the rules defined by law?
    3. What is a possible case I can file against the company with this scenario?
    4. What are legal repercussions in case I do get employment from a competitor, in this case, another call center? Will it be enough grounds for a case of disloyalty/conflict of interest? (I can’t afford to be jobless for 6 months so I would have to look for one. This presents another problem as the chances of getting a job while inconveniently connected with my present company, is almost zero. Also, my skill set is exclusively set for the call-center industry. That is to say, I will not attempt to apply as a Starbucks – obviously a non-competitor- barista if my expertise is clearly on data analysis or network engineering).

    Thank you for your reply.

    Nuki

    [Reply]

    Ted Ferrolino Reply:

    1. There is no provision in the Labor Code that allows the employee to demand retrenchment. I can only think of two instances under the Labor Code by which an employee may terminate his/her employment, i.e., by way of resignation as mentioned in Art. 285, or by way of voluntary retirement under Art. 287.

    2. As I see it, it is not considered retrenchment, but a bona fide suspension of operation due to non-renewal of client. This is recognized in law. Article 286, LC, allows the employer to place the employee under floating status for not more than six months. The provision states: “The bonafide suspension of the operation of a business or undertaking for a period not exceeding six months xxx shall not terminate employment.”

    3. I can’t think of any (read #4). Questioning your floating status may be futile; An action for illegal/constructive dismissal on the other hand is premature (before the end of six months).

    4. Personally, I believe the restriction imposed by your company prohibiting you to apply to a competitor company is illegal, and constitute unreasonable restraint of trade/occupation. Unless your company offers you a sort of compensation/allowance during the period you are under “floating status”, they have no right to prevent you from engaging in other equally gainful occupation. If in case you do get employed by a competitor company and as a result you are terminated (thereby forfeiting your tenure/separation pay), you may question your termination as illegal.

    [Reply]

    Same boat Reply:

    Just a follow up question, If get accepted in another company,am I still entitled to tenure/separation pay?

    [Reply]

  9. Separation Pay
    In case of retrenchment to prevent losses, the separation pay shall be equivalent to one month pay or at least one-half month pay for every year of service, whichever is higher. A fraction of at least six months shall be considered one whole year. (Article 283, LC.)
    hi po tanung ko lang po..kc aq nag resign nung jan.23 2011,effectivity on feb.20 2011..now pinapirma po aq nung july 27 ng clearance form and mi ksama pong release,waiver and of claims..tama po b un n papirmahin aq? ng waiver?

    [Reply]

    Ted Ferrolino Reply:

    Normal sa mga company na irequire and employee na magsubmit ang clearances at pumirma ng release o waiver. This serves as a proof that you have no more obligations/claims against the company.
    In your case, I am not sure kung ano yung laman na pinirmahan mo, so I can’t tell kung tama ba yun. Pero normally, wala namang problema kung pumirma ka man.

    [Reply]

  10. hi sir, gud eve.. i have a question about sa retraction.. 2 weeks po ksi ako n nka-medical from work and i’m working as a call center agent.. in my case, pgbalik ko po ng work and i already have gone thru several tests regarding my health condition and was able to have a fit to work.. pero pgbalik ko po sa company, eh i was told n magtatanggalan po ng agent dahil sa low call volume and i am one of those n natanngal.. ngyon, they are offered an account transfer and unfortunately hndi po ko nkapasa sa screening ng account.. question ko po is wala po b akong matatanggap na separation pay from the company? coz i’ve heard from my supervisor that they will only give pay for those who are regular employees and above 1 year of service and by the way, i’ve worked there since march 2009 so i’m almost 1 year in service.. my kanya-kanyang policy po ba ang every call center company regarding sa separation pay or may fixed na law regarding this.. and i know na involuntary termination po kse to dahil nka medical leave po ako for 2 weeks and ganun ung mangyayari sakin pgbalik ko? and meron din po akong kasama na nkamedical leave for a month and naterminate din po sha.. i really need your advise sir on what to do because i am a bread winner po.. thanks in advance and god bless..

    [Reply]

  11. Jackie Torres Comment:
    February 23rd, 2011 at 10:46 pm

    Hello, I need a very helpful insight about my situation. I am a call center agent, regular and tenured. I was hired last January 2009 for a non voice account. After 1 year and 8 months, I was transferred to another department. Helpless and we cannot demand to be retained. After 3 months, they transferred me back to my first department and I was obliged to retake the Training. After 5 days of training, they served me a letter of temporary layoff status for 6 months for not being able to pass the training.

    I am hurt and I feel so demoralized. How can I not pass the training from the department that I have already worked for almost 2 years and I was top 5 agent before they transfer me to another department. I felt they treated me as if I am still on probationary.

    I filed a complaint and tomorrow will be our first hearing. Do I have any chance to win this case? I filed moral damages, exemplary damages and illegal layoff. The reason why it’s illegal for me is because I am already a tenured and a regular employee on my first department and they treated me as if I am still a trainee and there is no retrenchment in the account.

    I hope to hear from you as soon as possible.
    Thank you so much!

    [Reply]

  12. kitkat perez Comment:
    February 25th, 2011 at 10:10 pm

    hi po sir.. i have a concern here..

    we are hired by our company but then after 2 years the account was terminated due to auth cause( which is the decision of the clients). some of the agents were retained and transferred to another account. They (company) stated that the retained employee will not be receiving a separation pay because, according to them, the employment of the retained agents will continue as well as their tenurity.

    my question po ako, please identify kung redundancy or retrenchment ang twag sa scenario na ito..

    retrenchment, to prevent losses, but the clients paid the company…
    redundancy, because they cannot absorb all the employed that has been affected..

    [Reply]

  13. Hello,

    Our company is experiencing financial problems. We are still renegotiating with the banks that we have owed money from…Management has decided to reduce the employees but sees the company getting back on it’s feet after 1-2 months.

    I would like to know more on the steps of temporary lay off before executing it.

    [Reply]

  14. Hi,

    i am currently working in a call center for more than 8 months now. The account that we are dialing for pulled out and the company will be retrenching us.

    last Friday, June 17, we were advised that we only have one week left to the account. We asked why there is no 30 months notice as required by law. They said that they can give us a one month notice but that it would be unpaid. So if they do that, our last day would be on July 17, but that from June 25 onward we wouldn’t be paid.

    Can we demand that they pay us for that one month?
    Thanks.

    [Reply]

  15. Cherry Lyn Comment:
    July 16th, 2011 at 09:05 am

    Good day!!

    My account is a seasonal account where in were ramping down due to business reasons and the company decided to placed us on a floating status starting 07/18/2011. I am with the company for almost 7 yrs now and I am currently pregnant for 5 months,I have 3 kids and the only on working for my family, I don’t know what to do I cannot afford to be on floating status. please help

    [Reply]

  16. i am working for a company which has been restructed and i have been relegate or put into a unionised conditions following the new structure in place. i am still getting the same salary despite being relegated. My salary does not gain any annual increament. my employers contribution towards my pension was reduced from 26.5% to 5%.

    some of the workers from my group have been put on contract and the employers contribution has been raised from 26.5% to 35% and the have been paid separation package like retrenchment package.

    with the above sentiments is it ok that i was not paid the separation package following the labour laws/

    [Reply]

  17. I am working in a BPO industry and our account will be close. correct me if i am wrong temporary retrenchment is only deemed legal if the basis is revenue loss. Right? So what if the company is not really losing money but just want to transfer the account to another country. Is it legal to put an employee on a floating status if that is the case?

    [Reply]

  18. gud day, working po ako ng more than five(5)years, ngayon nag ka roon po ng “retrenchment” unfortunately napasama po ako dun.. ang sabi po sa amin na mahina daw po ang company pero nag karoon po ng increase sa salary, may promotion n nangyari tapos may mga new hire employee pa.. tanong ko po pwede po ba kami mag file ng kaso? ano at papaano po? ten(10) po pala kami natanggal five(5) probitionary at five(5)regular/permanent employee…

    [Reply]

  19. Hi Ted,
    Ask ko Lang po, legal a Kung I-withold ng employer ang clearance and COE ng isang emplotee na nagbigay Lang ng 7 day notice of resignation?
    Salamat and more power
    Sandra r.

    [Reply]

  20. Hi-I am currently employed in a call center company for 4 years and 4 months now. But my supervisor, director and HR manager spoke to me that I will be in RESERVED STATUS 30 days from today because the client’s need for employees is downsizing. After which i am not required to go to work(no work, no pay) until further notice or until they find another post for me. But I am a single mom and I cannot just stop working.

    I didn’t choose this to happen. Is there anything I can get from them? Should I just resign and forget the separation pay I might get after 6 months? I’m somehow desperate because I cannot afford to stop earning.

    Please help. :)

    [Reply]

  21. Hi!
    I just want to know, kapag may retrenchment ba, nasa rules ba nun na LAST IN FIRST OUT, or applicable din sa mga matatagal na?
    Our company is giving a voluntary retrenchment and I am 10 years in the service, I want to apply pero hindi daw ako pede.
    Thanks

    [Reply]

  22. Hi.

    Our employment was temporary on hold for 6months due to
    economic crisis as per management and now were on 5th month of it. Now the company said, that our employment “will now be retrenchment” what are the compensation should we get from them? Thanks!

    [Reply]

  23. hi sir!
    ask ko lang po, kapag sa separation po ba iether half month salary or full 1 month?

    Kase as I heard, kapag loss daw ang business, half salary lang dw ang makukuhang separation pay. Is it right po ba?

    pano po ba malalaman na loss ang company? ito po ba ay busisiin ng labor sa FS ng company?

    Thanks po.

    [Reply]

    koffeeGELO Reply:

    Hi!

    Just to give insights re: Retrenchment Pay.

    As per Labor Code: “In case of retrenchment to prevent losses and in cases of closures or cessation of operations of establishment or undertaking not due to serious business losses or financial reverses, the separation pay shall be equivalent to one (1) month pay or at least one-half (1/2) month pay for every year of service, whichever is higher.”

    Meaning it’s EITHER 1 month basic salary mo OR 1/2 ng basic salary mo X number of years in the company. Kung ano ang mas malaki ang value yun ang makukuha mo.

    Ex.
    Basic Sal=P20,000.
    1/2 Basic Sal x Number of Years
    P10,000 X 4 years = P40,000

    Retrenchment / Separation Pay = P40,000

    Hope this helps,

    [Reply]

    confused Reply:

    Hi Sir,

    Ask ko lang po, what if 1yr and 3months palang ako sa company so yung makukuha ko ay 1month na salary diba po?

    ex:

    20,000 x 1 = 20,000

    Sir kasama din po ba nilang babayaran ang Sickleave at Vacation Leave na di pa namin na gamit po? Untill August 15, 2013 lang po kasi kami.. Hintay ko po reply nyo.. Salamat.

    [Reply]

  24. Hi, I am a call center agent. The account I was originally involved with has terminated their business relationship with our company. Prior to the official announcement, our company had disclosed a information of giving the agents an option for redundancy in case they won’t have any similar account they can transfer their agents to. A memo was cascaded however the option for redundancy was not stated. They verbally informed us during the meeting that the computation of our final pay will sealed and distributed After a week however, a day before the account will close they officially informed us that there will be no option for redundancy anymore because we will be absorbed on the new account with the same less skill premium. I felt like they’re not giving us a good option at all especially redundancy which most agents would opt to. I felt like they have officially made the announcement of transferring us a day before the closing so we are left with no option but to take the offer. Few days after they have offered redundancy to leek 2 agents which I find very unfair. My question is that, should a redundancy option supposedly be offered in this scenario to all employees who opt to leave the company?

    [Reply]

  25. Hi, I’ve been in my previous company for 9 months. I recently resigned because I’m not satisfied with the company benefits comparing to other call centers. But that’s just one of the reason. The company placed me on floating status for a week until I will comply my letter to explain of the three viations I made of which I was issued with a final written warning. I failed to submit my letter to explain on the date I was requested due to considerable reasons. A day after the due date I summated the letter but my supervisor failed to forward it to the admin until a day before the scheduled hearing. I went to the office on the hearing date but they told me they were unable to review my case since they don’t have a copy of it yet. The admin told me that they will notify me thru email of the new schedule. I felt like their not giving me importance at all and does not consider the beds of their employees. I communicated my supervisor to ask about my employment status which she confirmed that I am still an active employee.. But when I asked her about my floating status if I am paid she affirmed no. I have been on floating status for weeks due to the delay of the hearing schedule but their not paying me when in fact it’s not my fault. I did not sign any written memo that I am no longer connected with the company and I did remember signing any contract which states automatic termination of my services due to violations which havent been judged yet. Now that I have already resigned, should I still get my last pay which includes the dates I was on floating status? In addition to that I have found out that looks like the company has failed to submit their SSS contribution for the month of sept to dec 2011 as shown on the SSS website. The amount of monthly contribution is as well questionable.

    [Reply]

  26. In a BPO industry especially call centers, when an accnt closes employees either will be on a lay-off status or floating status without pay, is this covered buy this law? also i’ve been on a floating/ temp lay-off as what they termed it and its almost a month now that they haven’t reinstated. My question is, they have an accnt that doesn’t have a team leader but they pit in an OIC, would this be a violation of this law since their are available team leaders who are qualified for the position (are welling to work) than the OIC they put in? HR encourages the employees to get a job but if we resign, separation pay will not be given, would that be anit-employee especially when we can’t be with other centers/industries if we’ll not resign. We want to get the separation pay but can’t wait for 6 months. by the way they let us sign a waiver about the temp status sighting article 286.

    [Reply]

  27. Jermaine Arco Comment:
    February 15th, 2012 at 11:17 am

    HI Sir,

    Good day, I just have one quick question about the the said Topic. Article 286, LC, allows the employer to place the employee under floating status for not more than six months. The provision states: “The bonafide suspension of the operation of a business or undertaking for a period not exceeding six months xxx shall not terminate employment.” Some of my colleague’s was unfortunately part of the people that was put on floating status and my question is are they entitled to avail their SIL’s until it runs out just to get a sort of compensation while they’re waiting to get back to work?

    Hoping for your response.

    Thank you Sir

    [Reply]

  28. koffeeGELO Comment:
    March 1st, 2012 at 07:22 am

    Hi! Sir / Madam,

    Good day!

    I am an employee who was retrenched from my previous employer seeking your assistance and clarification regarding the retrenchment process particularly the retrenchment pay. We we’re retrenched(mass retrenchment) from our previous company(BPO-Business Process Outsourcing Company) and served our last day on October 31, 2011. As regular employees of the company, we are entitled for retrenchment pay. But according to our company due to its financial status (company also had a mass retrenchment last May 2011 prior to our batch) and with permission from DOLE/NLRC(according to our HR directress, which i doubt), they(company) will release our retrenchment pay on an installment basis for 6 pay-outs within 6 months.

    [Below are the agreed schedule for payments:]
    1st pay-out Nov 30, 2011
    1st half of our 2011 13th month pay

    2nd pay-out Dec 20, 2011
    2nd half of our 2011 13th month pay

    3rd payout Jan 30, 2011
    Last pay from the remaining days we rendered that was not included
    on our last salary due to cut-off(Oct21-31).

    4th pay-out Feb 28,2011
    1st part of retrenchment pay

    5th pay-out Mar 2011
    2nd part of retrenchment pay

    6th pay-out April 2011
    3rd part of retrenchment pay

    Last day, February 28, 2011 our 4th pay-out which is the 1st part of our retrenchment pay, it didn’t reflect on our ATM(company provided).We received a call from our company informing them that there would be a delay on our retrenchment pay due to insufficient funds because one of their client failed to pay the company. And release of our retrenchment pay will be extended until JUNE 2012 and as again allowed/permitted by DOLE/NLRC according to our company.

    My clarifications would be:

    Is it really legal for a company to have its previous employees’ retrenchment pay to be in an installment basis? And on a 6 months long installment basis?

    My previous company and I had a written agreement signed by both parties regarding the dates / amount of our pay-outs as stated above, but last day(Feb 28,2011-4th pay-out 1st part of retrenchment pay) our company informed us that the releasing of the remaining pays will be extended up until June 2012. They notified us day after the day should they should release the 1st part of retrenchment pay which is Feb 28, 2011.
    How about for another delay / extension of release of remaining payouts of our retrenchment pay without any prior notice? Is it also legal?

    Do you think that again this is allowed/permitted by DOLE/NLRC(according to our company)?

    I hope your good office can help me with my inquiries above.

    Hoping for your favorable and immediate response.

    Thank you very much and God Bless you!

    [Reply]

  29. Hi Sir,

    Ask ko lang about sa procedure kapag yung company ay binili ng isang company outside Philippines (international. ang nangyayari is nagkakaroon ng bayaran sa mga empleyado. yung ibang binayaran is 50% lang yung nakuha kasi nag volunteer sila na magpabayad. Ask ko lang about dun sa ayaw magpabayad pero nakasama sila sa listahan ng babayaran, 50% pa din ba yung makukuha nilang payment or pwedeng magdemand ng 100% separation pay?? wala din po akong makita sa labor code about sa acquisition ng isang company sa isa pang company. then yung name ng company na binili ay mababago na, dapat po bang bayaran lahat ng employee ng kumpanyang binili 100%?

    Thanks for your response.
    God Bless!!!

    [Reply]

  30. Bananas & Pajamas Comment:
    April 4th, 2012 at 11:27 am

    Hi Sir/Maám,

    I am employed in a local bank for 5 years. My employer (XXX Bank) has been acquired by another bank (YYY Bank). Their term used is “ACQUISITION of BANKING BUSINESS”. Target of the closure of the Banking business of XXX Bank is on May 30, 2012. XXX Bank already amended its Primary & Secondary Purposes in the Articles of Incorporation (from “Banking Business” to “Holding Company”).

    since im already 5 years with the bank, i am already qualified for its Early Retirement Program (min. of 5 years). Assuming that the XXX Bank has not acquired by YYY Bank, the regular computation of my retirement would be 50% monthly salary for every year of service. Now, since there is an acquisition, how will be the treatment on the retirement plan/ Separation Pay? Is it equivalent to 1 month salary or 1/2 month salary for every year of service, whichever is higher? This is not a regular resignation from XXX Bank.

    Hope you can enlighten me as well as my fellow XXX Bankers.

    Thank you & Godbless!

    Bananas & Pajamas

    [Reply]

  31. Maria Imbong Comment:
    April 9th, 2012 at 11:58 pm

    Hi, I Am 55 years old and I am working for a private university as college instructor for 10 years already. I intend to resign. Are there laws in the Philippines that provides for early retirement or separation pay for someone like me? Thanks. It is said that the university will only pay if a faculty have rendered 15 years of service to the university…Pls advice.

    [Reply]

  32. Hi,just wanna ask how many times can a company do a work force reduction? two? three? four?….etc,etc and why?..pls advise

    [Reply]

  33. Sir good day.Our company is downsizing (currently downsizing) but it seems the employees are threatened they would be coached out or terminated due to performance issues. Is this valid ground for termination? or should they instead offer separation packages? it seems they are planning to make it look like the employees are not performing well and will terminate them instead of offering separation packages. is this legal? thanks.

    [Reply]

  34. Dear Sir,

    I worked for 10 years in a car rental services from april of 2003 – April 2012. Since 2008 up to present I rendered 15 days work only that is 16-31 of each month, considering that the company having financial instability, hoping that if more project will come we can go back to our regular working statues. this company was been good to me thats why I considered this terms. But last June when my time of duty for June 16-30, my co- office adjust me thru text that the management will cut- off our allowances such as meal and transportation allowances, only the basic salary of P446.00 will be given. I was very disappointed then, I report to office and ask my employer that it is very hard for me cope with the situation since I live in makati city while our office is in tandang sora which I spent P104.00 per day only for transpo. I can only take home 300.00 per day in 10days that is P3,000.00 only for a month. I am a single mom, I rent a house, meralco and water bill. I ask them if they will let us work 22days in a month, but the employer said they cannot afford to pay the 2 of us a whole month. What I did was, I tell them, very will then you only need 1 employee, so be it i will give – up. I finished that whole day but I did not return the day after that until now.

    My concern now is, DO I HAVE THE RIGHT TO ASK FOR A SEPARATION PAY?, or any compensation from them?

    Thanks

    [Reply]

  35. Ken Berdon Comment:
    July 20th, 2012 at 09:57 pm

    I am working in an export company. My job is to run the production and compute the cost of all our products. A mandate from my boss on the computation is not to put any profit on each product that we have. Now the time has come and we are experiencing financial losses. My boss has sent me a retrenchment letter and the reason for this is because we are experiencing financial losses. Can I file a case to my boss? What case would it be? Thanks for the help.

    [Reply]

  36. hi sir,
    ask ko lng po if legal po na ang isang company mg retrenchment ng 2 beses sa isang taon?

    [Reply]

  37. hi sir,tanong ko lang po ako po ay 15yrs.na sa company namin.miniting po kami nang aming manager nitong buwanna ito na hanggang 23 nalang kami dahil ililipat na ang company namin don sa laguna branch..kase lugi nga daw ang co. namin dito sa taguig kaya i merge nalang don sa laguna branch at kami po ay babayaran na lahat ng employee dito sa taguig dahil sobra na ang tao pag illipat pa kami doon..halos kami dito ay 13yrs to 24 yrs na sa companya..15yrs po ako noong oct.31 2012 at ang salary ko per day ay 437pesos dati ay 416 nitong august lang naging 437pesos.. tanong ko po mag kano po ba ang separation pay ko for 15 yrs…sana po ma replayan nyo po ito..thank you..

    [Reply]

  38. hi till this end of december 2012 na lang ang operations namin. Kasi hindi na renenew ang contract of lease namin. Hindi naman po lugi ang kumpanya namin. Wala pa rin kami malilipatan. Ano-anu po kaya ang mga matatanggap namin sa company?

    Tanong ko na rin po ano po ba ang tamang computation ng separation pay? 15 days po o 13 days kasi mayroong day-off?

    yung 5 days leave po ba dapat bang isama kahit nagamit mo na ito?

    sana po matulungan nyo po kami at maliwanagan sa tamang computations.
    SALAMAT

    [Reply]

  39. paano po ba talaga ang tamang formula ng separation pay? para sa amin knowing na di naman lugi ang aming company.

    7 years and 4 months na po ako dito sa company. 500/ day po ang sahod ko.

    please help me.

    thanks..

    [Reply]

  40. zenaida marquez Comment:
    May 9th, 2013 at 09:04 am

    My friend
    has a corporation selling technology services. she has 3 employees. Now she has sustained loses after loses and wanted to close the company.

    the employees who work for 2 years is asking for a separation pay equivalent to 2 months pay.

    Is this right? the labor law says that it is only 1/2 mo. pay for every year of service or one month pay which ever is higher.

    Since she is loosing in her operation for the last 2 years, is she still required to pay? Can she just pay 1/2 month?

    [Reply]

  41. mary claire g. reyes Comment:
    June 11th, 2013 at 07:24 pm

    hello sir ted;

    This is in reference to my husband and his colleagues who were informed just a week ago that their present workplace will be stopping operations in Mindanano, and all of them will be relocated to the new business location in Bulacan. They were given a minimum of 6mos for the “clearing operations” until relocation takes effect. Further, they were given a month to decide whether to take the relocation package or be permanently separated from the company.

    The term that they were told was SEVERANCE and not retrenchment. My questions are the following:
    1) Is not severance the same with retrenchment (except for the spelling of course)?
    2) Is the severance pay taxable or not?
    3) If yes, up to how many percent of the total amount of the severance pay?

    Hope to receive a detailed answer from your end soon.
    Thanks in advance. God Bless. More power.

    [Reply]

  42. Regolo s, sayago Comment:
    August 16th, 2013 at 02:58 am

    Hi sir, ask ko lang po kung illegal dismisal po ba ang ginawa sa akin ng aming employer? Ako po ay regular na empleyado ng INTERFACE TECHNO PHIL INC, isat kalahating taon na ako sa companya pero ngayun po pinag reresign ako ng HR department, pakatapus ng tatlong linggo ng hindi ako pinapasok pinabalik ako para mag file na daw ako ng resignation, ano po ang gagawin ko?
    ang kompanya po na INTERFACE TECHNO PHIL INC, ay ang dating ASCED ASIA. at sa ngayun naman po ay pinalitan na naman nila ng pangalan na YUPIK GROUP INC, na kung nabasa nyo po sa mga pahayagan ito ay niraid ng mga awtoredad dahil sa nagsasagawa ng malawakang SCAM sa buong mundo sa ngayun po ay patuloy parin ang kanilang operation, sa ngayun po ako ay under ng YUPIK GROUP INC at kasalukuyan sa pilitang pinagreresign.

    SALAMAT PO.

    [Reply]

  43. shiela concon Comment:
    August 18th, 2013 at 04:45 pm

    Good day sir,

    I am a newly hired employee of a BPO company. During the job offer I was fwnrced to start working the next day, which is Thursday, I asked if I coukd mon Monday instead, but HR said they badly needed people to work with them immediately, he also said “so its either you take it or leave it?,”thereore, I started and joined the training on Thursday but I signed the contract on Friday. The training lasted until Saturday and then suddenly, Hr told us that the training on Monday Aug. 19 will be moved on September 2,at the new site which is a bit farther from the original site. Their explanation was, the are ramping up and they need the training room to be part of the production temporarily. They are stil on continous hiring fos the same account. Is there a case that can be filed against the company? Or can we at lfast ask for a compensation? Me and my co-trainees didnt sgn the paper which state that we agree that the training will be move to a different site on Sept. 2.

    Thank you, your reply and advice will be a great help.

    [Reply]

  44. Hi our company ceases its operation due to sudden losses. Our CEO made an immediate resignation and the said position were toked over by our major stockholder. Actually we our company is a marketing arm of our so called major stockholder the (developer it self). My question, are we entitled for a separation pay?

    [Reply]

  45. Good Day!

    I have just Laid off by my Employer and will be paid off accordingly. I was really devastated and still recuperating from it. I am employed in this company since May 2012 as a Outbound Logistics coordinator (The original Contract I signed). This February 2014 I have been transferred to inbound as part of our departmental job rotation which was imposed by my new boss for the purpose of determining which position will better fit for our skills. I have encountered several lapses on the said position during my take over of Inbound Operation. Though there was no Written memo or disciplinary action was given to me.

    During this period our company has been Sold to a multi national company and just this week May 14, 2014 I together with 20 of my office mates was called for a meeting to discuss a retrenchment process and that we are loosing money and they have to let us Go.

    Is it unjust that I have been included in the the retrenchment when my original position was left with my other colleague and that we are just on the process of “verbally agreed” departmental job Rotation.?

    I hope you can help me.
    Thank You !
    kELVIN

    [Reply]

  46. Kahit po ba contractual applicable samin yung iba? Some of us kasi were working for more tha three years, yung iba nga 15 years contractual pa rin. OK lang po ba yung ganito? Yung iba nga na hindi gusto ng current administration constructive dismissal ang ginagawa… Imbes na 8 hours ang trabaho ginagawang 4 hours lang.
    Pano namin malalaman if applicable samin tong mga labor laws?

    [Reply]

  47. anna fe real Comment:
    June 11th, 2014 at 06:26 pm

    good day po,, ask ko lang kung halimbawa sa year 2007 e nagwork ako as ofis assistant for 5months then transfer ako sa isang company 2 pero sister company sya..for 5months ulit 2008 then end of contract ako,,na dapat pla is accumulated and considered as regular na dapat ako kasi same owner lang ung 2 company….ngaun by year 2010 na call back ako ulit same position gang umabot sa july 2014,,na retrench po ako dahil sa kasong to prevent losses daw pero hndi totoo…pwede ko po ba isama ung year 2007-2008 ko na tenure pagdating sa computation ng separation pay ko? kumbaga may gap na 2years ng nakalipas? pero di po ako nagresignes\d kundi end of contract lamang po… sana masagot po nyo ang aking tanong para mailaban ko din ang karapatan ko bilang isang manggagawa..pa send nalang po sa email ko ung sagot po nyo…salamat po.

    [Reply]

  48. Concerned citizen Comment:
    August 1st, 2014 at 11:44 pm

    I spoke with sir Efmichael of DOLE Makati and he told me that it is illegal to put a supervisor or a manager on a floating status whenever a copamny filed something like downsizing to prevent losses. The company should have offerred a redundancy instead. He also mentioned that floating status is only applicable to rank and file positions. Now I really got confused when I came accross this forum and red all the posts here which is contradi ting to what DOLE said. I will try to talk to sir Efmicbael again to clarify everything. Now I feel he does not know the real deal. We dont know yet

    [Reply]

  49. Good day.

    Apr. 4 last day of work – notice of temporary retrenchment was served. we were also given the option for redundancy.

    June 10- I was offered a work that is opposite of what I am doing. I declined to accept. I was informed that the project I am working for will be back around August.

    August 4 – I told my manager that I will be accepting the redundancy since no progress for other suitable projects. She gave me a sample computation of my separation pay. I accepted and even scheduled my exit interview.

    August 7- I received a message from my manager that my only option is to resign if I don’t want to work for the company anymore. That means no separation pay. No official reinstatement letter was given and no notice that the redundancy is no longer being offered.

    1) Is this right that I am no longer eligibile for separation pay?
    2) what are the options that I have?
    3) I know it is premature to file an illegal dismissal case. According to the documents we got from DOLE, I was laid off May 22. Can I apply for redundancy still since no notice of lifting of such option has been made before I accepted the offer?

    Thank you.

    [Reply]

  50. Good Day,

    I would like to ask if are we (employees) going to be absorb if our company (partnership) will be bought by one of the owners. We also suspect that the reason why this will happen is to get rid of the Labor union starters/members in our plant.

    We are currently on our CBA process and they disagreed on our proposal that employees should be retained if ever transfer of ownership will occur.

    I would also like to ask what move shall we make to make them agree on such proposal?

    Thank you.

    [Reply]

  51. Hi,

    Nasa BPO company po ako at nagclosed ung account namin kc trinasfer po nung client ung account sa ibang BPO company. Tinatransfer po ako sa ibang account kaso ibang lugar po ung work so dinecline ko po ung job offer. Ask ko lang po kung entitled po ako sa retrenchment pay since valid naman po ung reason ko for declining the job offer?

    Thanks po

    [Reply]

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5 pings

  1. […] It is aimed at saving a financially ailing business establishment from eventually collapsing. (Read Retrenchment to Prevent Losses.) Closure or cessation of operation. The closure of a business establishment is a ground for the […]

  2. […] of an employment may be predicated on one without need of resorting to the other. (Read more about Retrenchment.) Closure of business, on one hand, is the reversal of fortune of the employer whereby there is a […]

  3. […] one of retrenchment. (Edge Apparel vs. NLRC, G.R. No. 121314, February 12, 1998; See also Retrenchment.) Separation Pay In case of termination due to the installation of labor saving devices, the worker […]

  4. […] termination based on authorized causes such as installation of labor-saving devices, redundancy, retrenchment to prevent losses, and closure or cessation of operation, the employer must serve written notice to the individual […]

  5. […] The legal advice is not correct. The Labor Code (Article 283) does not require actual losses to occur before retrenchment may be resorted. Precisely, retrenchment is resorted to in order “to prevent” actual losses. It is sufficient if losses sought to be forestalled are imminent and serious. (Read Retrenchment to Prevent Losses.) […]