Redundancy exists where the services of an employee are in excess of what is reasonably demanded by the actual requirements of the enterprise. It is one of the authorized causes for dismissal of an employee under Article 283 of the Labor Code. But certain requisites must be established and followed as illustrated in this case of Tom.
Tom was a regular employee of one of the major petroleum corporation operating in the Philippines (CPI) since February 2, 1984. He was a Senior Accounting Analyst receiving a monthly salary of P29,860.
In a letter dated June 30, 1997, CPI notified Tom of his termination effective July 31, 1997 due to the redundancy of his position with a separation pay and other benefits totaling P559,458.90.
The termination of Tom’s services was pursuant to a plan of CPI to implement redundancy program in its Marketing Division and some departments in its Batangas Refinery starting October 1996 to December 1998, as communicated to the Department of Labor and Employment (DOLE) on October 21, 1996. In said letter to DOLE, CPI stated that the redundancy program is a response to the market situation which constrained them to rationalize and simplify its business process after undertaking a review, restructuring and streamlining of its organization resulting in the consolidation, abolition and outsourcing of certain functions and identification of certain redundant positions. The letter likewise stated that CPI will provide DOLE with a list of the affected employees as it implements each phase of the program.
Tom had no other recourse but to comply with the notice and accept his termination pay since CPI said that his position had been determined to be redundant. But after learning that CPI subsequently offered positions of accountants for hiring, Tom filed with the Labor Arbiter, on June 18, 1998, a complaint for illegal dismissal against CPI and its president. Tom claimed that there was no independent proof or evidence to substantiate CPI’s claim of redundancy of his position. In fact it even opened for hiring positions for accountants to which he could have qualified rather than dismissed. He also said that he was not afforded due process as CPI even failed to give written notice to him and to DOLE at least one month before the intended date of termination as required by the Labor Code. So Tom contended that his dismissal was illegal. Was Tom correct?
Yes. 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 employee. Evidence must be submitted to demonstrate the superfluity of Tom’s position by concrete and real factors such as over hiring of workers, decreased volume of business, or dropping of a particular product line or activity, new staffing pattern, feasibility studies/proposal on the viability of the newly created positions, job description and approval by management of the restructuring.
In this case, there was no substantial evidence presented by CPI to justify Tom’s dismissal due to redundancy. CPI’s evidence to show redundancy merely consisted of a copy of its letter to DOLE informing the latter of its intention to implement a redundancy program and nothing more.
To ensure the validity of the implementation of the redundancy program there must be: (1) a written notice served on both the employees and the DOLE at least one month prior to the intended termination date; (2) payment of separation pay; (3) good faith in abolishing the redundant positions and (4) fair and reasonable criteria in ascertaining what positions are to be declared redundant and accordingly abolished.
In this case, no notice was sent to DOLE one month before the intended date of Tom’s termination to give it the opportunity to ascertain the verity of the cause of termination. Its letter of October 1996 is not a substantial compliance with this requirement since it merely notified DOLE of its plan to implement a redundancy program.
CPI also failed to show the fair and reasonable criteria in ascertaining what positions are redundant and in selecting the employee to be dismissed such as (a) less preferred status, e.g. temporary employee; (b) efficiency; and (c) seniority. No such appraisal was done in the case of Tom making his dismissal arbitrary. In fact CPI opened positions of accountants for hiring the minimum requirement of which is four to five years experience in handling accounting and supervisory functions. Tom could have been transferred to these positions instead of being dismissed considering his 13 years experience as Senior Accounting Analyst.
So Tom was illegally dismissed and should be reinstated without loss of seniority rights with full back wages. But he has to return the ex-gratia benefits he has received from CPI (Caltex etc. vs. NLRC and Sto. Tomas, G.R. L-159641, October 15, 2007).
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