Ways How to Keep Employees under the Labor Rules Amid Covid-19 In Philippines

By: Deeryl Jade L. Bantilan

As the Philippines continues to fight against the COVID-19 pandemic, many organizations and companies may not manage to survive and be forced to cease business operations due severe economic implications of COVID-19. While the government is launching programs and subsidies for these companies and businesses, the magnitude of the impact may have really hard times for them to recover. Accordingly, in this article, let me share insights on some ways to keep employees and business operations amid COVID-19 in Philippines through some labor cost saving devices under existing labor laws, rules, and regulations being implemented by the Department of Labor and Employment (DOLE) and other related agencies.

Manpower Reduction

The Labor Code of the Philippines recognizes employment dismissal, upon compliance with the substantive and procedural requirements, for authorized causes such as temporary retrenchment or lay-off, redundancy, or closure and cessation of business in order for private employers to prevent losses during periods of economic recession.

To legally dismiss employees, the following requirements must be observed:

1. Written notice must be issued to the employees at least thirty (30) days prior to the effective date of termination or retrenchment;
2. A copy of the notice shall also be submitted to the DOLE Regional Office where the employer is located;
3. Payment of separation pay equivalent to one (1) month pay or at least ½ month pay for every year of service, whichever is higher; and,
4. Retrenchment is undertaken to prevent losses and in good faith by the employer.

However, instead of employee termination for any other causes, this current situation demands keeping employees to the extent possible for humanitarian reasons for the employees to survive as most, if not all, would largely depend on their salaries for their day-to-day needs and that of their respective families. Below are some ways to keep your employees amid Covid-19 situation:

1. DOLE alternative work arrangements (DOLE Advisory No, 09 series of 2020) 

The Department of Labor and Employment (DOLE) addressed this problem through a labor advisory that encouraged private employers to implement mechanisms and remedial measures to mitigate any possible business loss as well as consider precautionary measures to avoid total closure.

Here are the alternative work arrangements under Labor Advisory No. 09 Series of 2020 instead of an outright termination of the services of the employees or the total closure of the establishments:

1. Reduction of Work Hours and/or Work Days – normal work hours or work days per week are reduced.
2. Work rotation – employees are rotated or alternately provided work within the week.
3. Forced Leave – employees are required to go on leave for several days or weeks utilizing their leave credits, if any.
4. Compressed Workweek – normal workweek is reduced to less than six days but the total number of work-hours of 48 hours per week shall remain.
5. Work from Home arrangement.

Employers are also advised to explore other flexible work arrangements that may benefit both the business and the employees.

To implement any of the above, the employer should inform and discuss with the employees the intended work arrangement, and notify, afterwards, the DOLE Regional Office which has jurisdiction over the workplace.

Implication on Labor Costs

Adopting the flexible work arrangement is considered and recognized as beneficial to the employees and employers in terms of reduction of labor costs and saving jobs while maintaining the business during the pandemic period.

The employer can pay the employees for actual days worked. The principle of “No-Work, No-Pay” shall apply.

• lf unworked – No pay. When the employee has accrued leave credits, he/she may be allowed to utilize such leave so that he/she will have compensation on unworked days.
• lf worked – No additional pay shall be given to the employees, only his/her salary on worked days.

The effectivity of any of the above alternative work arrangements shall be temporary in nature and implementation subject to the prevailing conditions of the company.

2. Temporary Suspension of Business Operations

Under Article 300 of the Labor Code of Philippines, an employer is allowed to temporarily suspend business operation or a specific component due to legitimate and valid reasons, including but not limited to, serious financial losses, force majeure (fire, flood, typhoon, etc.), failure to obtain a permit or license to operate, or due to a lawful order by a competent authority, for a period not exceeding six (6) months.

During the suspension period, the employee’s employment status is merely suspended and not terminated and as such, the employer is not mandated to pay salaries. After the six months suspension, the employer should either recall the employees back to work, or permanently retrench and pay their separation pay. If these options are not exercised properly, the employer may be held liable for illegal dismissal.

Should the employer decide to suspend temporarily the business operation, a notification should be disseminated to employees and a report must be filed at the DOLE Regional Office at least thirty (30) days prior to the effective date of closure.

Conclusion

COVID-19 has made a huge impact on almost everything around us, but it should not be a hindrance for everyone and for companies to operate but rather an opportunity to explore new ways of doing business. In doing so, you are helping not only the lives of many but the survival as well of the country.

The above ways discussed are options that the management may take depending on the circumstances available to them. I so doing, please give much emphasis on DOLE compliance aspects such as notifications to employees and DOLE to avoid further issues on failure of implementation such as potential cases for illegal termination and etc.

About the author:

Deeryl Jade Bantilan is a graduate of Bachelor of Science in Business Administration major in Human Resource Management with flying colors, being Magna Cum Laude of her class. She is currently the Team Lead for HR Services Team of G. Pagaspas Partners & Co. CPAS dealing with local foreign clients on professional services related to employee hiring, HR manual preparations, employee disciplinary actions and related HR services. She is likewise part of the Ph Visa Team dealing with expatriate’s requirements on Ph Visa, work permits, ACR I-card, and related matters.

Disclaimer: This is for purposes of academic discussions only as personally summarized by the author, not of Tax and Accounting Center, Inc. and is not a substitute for an expert opinion. Please consult your preferred tax and/or legal consultant for the specific details applicable to your circumstances.