REVIEWER

LABOR RELATIONS

Remedies of Employees (Ee) in case of Illegal Dismissal

In case where the worker is illegally terminated, his remedies are:

a. Reinstatement without loss of seniority rights – Actual reinstatement or payroll reinstatement;
b. Full backwages – Full backwages means no deduction;
c. Separation pay in lieu of reinstatement;
d. Damages, including Attorney’s fees; and
e. 6% legal interest on monetary award.

Reinstatement- It is the restoration of the Ee to the state from which he has been unjustly removed
or separated without loss of seniority rights and other privileges. The person reinstated assumes the
position he had occupied prior to his dismissal, and is, ordinarily, entitled only to the last salary in
that position.
- presupposes that the previous position from which one had been removed still exists, or
that there is an unfilled position which is substantially equivalent or of similar nature as the
one previously occupied by the employee.

Forms of reinstatement
1. Actual or physical – The Ee should be reinstated to his position which he occupies prior to his
illegal dismissal under the same terms and conditions prevailing prior to his dismissal or separation
or, if no longer available, to a substantially equivalent position.
2. Payroll – The Ee is merely reinstated in the payroll. The Ee although not admitted back to work,
would nevertheless be included in the payroll and entitled to receive salary and other benefits as if
she were in fact working.

NOTE: Employer is given the option to reinstate either actually or in payroll.

Order of Reinstatement- An order for reinstatement entitles an Ee to receive his accrued backwages
from the moment the reinstatement order was issued up to the date when the same was reversed
by a higher court without fear of refunding what he had received.

Backwages refers to the relief given to an Ee to compensate him for the lost earnings during the
period of his dismissal. It presupposes illegal termination.

- The payment of backwages is generally granted on the ground of equity. It is a form of relief
that restores the income that was lost by reason of the unlawful dismissal; the grant thereof
is intended to restore the earnings that would have accrued to the dismissed Ee during the
period of dismissal until it is determined that the termination of employment is for a just
cause.
- The backwages shall, from the time that wages are unlawfully withheld until the time of
actual reinstatement or, if reinstatement is no longer feasible, until the finality of judgment
awarding backwages, cover the period from the date of dismissal of the Ee up to the date of:
1. Actual reinstatement, or if reinstatement is no longer feasible; 2. Finality of judgment
awarding backwages.

Separation Pay in lieu of Reinstatement GR: Separation pay is not a usual consequence of illegal
dismissal because if there is a finding of illegal dismissal, the employee shall be entitled to
reinstatement and backwages. XPNs: Separation pay takes the place of reinstatement in the
following instances: 1. When Ee’s previous position or its substantial equivalent position is not
anymore existing, i.e., occupied by another employee or the business is already closed; and 2. When
there is an application of the doctrine of strained relations.

Instances when Separation Pay must be Paid 1. Termination due to authorized causes; 2. Separation
pay in lieu of reinstatement; 3. By way of financial assistance; and 4. In case of termination, when it
is mandated to be paid under a CBA or explicit company policy.

Doctrine of Strained Relations - It is when the Er can no longer trust the Ee and vice versa or there
were imputations of bad faith to each other; reinstatement could not effectively serve as a remedy.
This rule applies only to positions which require trust and confidence.

The following must be proven before the Doctrine of Strained Relations can be applied:
1. The Ee concerned occupies a position where he enjoys the trust and confidence of his Er; and
2. That it is likely if the Ee is reinstated, an atmosphere of antipathy and antagonism may be
generated as to adversely affect the efficiency and productivity of the Ee concerned.

Requisites of the Doctrine of Strained Relations:

1. It must be alleged and proved by the employer;
2. The evidence that should sustain the application of strained relations should be more than
just the illegal dismissal case that has been filed by the employee; and
NOTE: There must be independent evidence showing that the relations have been strained.
3. The position must involve a position of trust and confidence.

DAMAGES

Moral damages may be awarded to compensate one for diverse injuries such as mental anguish,
besmirched reputation, wounded feelings, and social humiliation. It is however not enough that such
injuries have arisen; it is essential that they have sprung from a wrongful act or omission of the
defendant which was the proximate cause thereof e.g., breach of contract.

Exemplary damages may be awarded only if the dismissal was shown to have been effected in a
wanton, oppressive or malevolent manner.

In the determination of the amount of nominal damages which is addressed to the sound discretion
of the court, several factors are taken into account:
1. The authorized cause invoked; 2. The number of employees to be awarded; 3. The capacity of
the employers to satisfy the awards, taken into account their prevailing financial status as borne
by the records; 4. The employer’s grant of other termination benefits in favor of the employees;
and 5. Whether there was a bona fide attempt to comply with the notice requirements as
opposed to giving no notice at all. 6. The employer’s financial, medical, and/or moral assistance
to the sick employee; and 7. The flexibility and leeway that the employer allowed the sick
employee in performing his duties while attending to his medical needs.

NOTE: Actual damages cannot be awarded because that is already represented by the backwages
payable to the employee. That is the actual damages he suffered.

In employment termination cases, attorney’s fees are not recoverable where there is no sufficient
showing of bad faith on the part of private respondent (employer) there must always be a factual
basis for the award of attorney’s fee.
LIABILITIES OF CORPORATE OFFICERS It is basic that a corporation is invested by law with a
personality separate and distinct from those of the persons composing it as well as from that of any
other legal entity to which it may be related.

GR: Officers of a corporation are not personally liable for their official acts unless it is shown that
they have exceeded their authority.

Exceptions: Where the incorporators and directors belong to a single family, the corporation and its
members can be considered as one in order to avoid its being used as an instrument to commit
injustice, or to further an end subversive of justice. The shield of corporate fiction shall be pierced
when it is deliberately and maliciously designed to evade financial obligations to employees.

TERMINATION BY EMPLOYEE
Two Types of Resignation
1. Voluntary Resignation; and
2. Involuntary Resignation or Constructive Dismissal

RESIGNATION vs. CONSTRUCTIVE DISMISSAL

Resignation - is the voluntary act of an employee who finds himself in a situation where he believes
that personal reasons cannot be sacrificed in favor of the exigency of the service, then he has no
other choice but to disassociate himself from his employment.
- Voluntary
- Not entitled to separation pay unless it is a company practice or provided in the CBA.

Constructive Dismissal - occurs when there is cessation of work because continued employment is
rendered impossible, unreasonable, or unlikely as when there is a demotion in rank or diminution in
pay or when a clear discrimination, insensibility, or disdain by an Er becomes unbearable to the Ee
leaving the latter with no other option but to quit.
- Involuntary or forced resignation
- Entitled to either reinstatement or separation pay and backwages.

Resignation:
1. With written notice - An employee may terminate without just cause the employeremployee
relationship by serving a written notice on the employer at least one (1) month in advance

NOTE: The employer upon whom no such notice was served may hold the employee liable for
damages. The employer has no control over resignations and so, the notification requirement was
devised in order to ensure that no disruption of work would be involved by reason of the
resignation.

2. Without written notice – An employee may put an end to the relationship without serving any
notice on the employer for any of the following just causes. (Art. 300(b), LC): a. Serious insult by the
employer or his representative on the honor and person of the employee; b. Inhuman and
unbearable treatment accorded the employee by the employer or his representative; c. Commission
of a crime or offense by the employer or his representative against the person of the employee or
any of the immediate members of his family; and d. Other causes analogous to any of the foregoing.

Resignation is withdrawable even if the employee has called it irrevocable. But after it is accepted or
approved by the employer, its withdrawal needs the employer’s consent.
Abandonment as a Just Cause for Termination
- It means deliberate and unjustified refusal of an employee to resume his employment.
- Abandonment is proven when the Er must show that the Ee deliberately and unjustifiably
refused to resume his employment without any intention of returning.

Requirements for a Valid Finding of Abandonment Two (2) factors must be present:
1. The failure to report for work, or absence without valid or justifiable reason; and
2. A clear intention to sever Er-Ee relationship, with the second element as the more determinative
factor, being manifested by some overt acts.

Preventive suspension - means that during the pendency of the investigation, the Er may place the
Ee under preventive suspension leading to termination when there is an imminent threat or a
reasonable possibility of a threat to the lives and properties of the Er, his family and representatives
as well as the offender’s co-workers by the continued service of the Ee.
- It should not last for more than 30 days. The Ee should be made to resume his work after 30
days. It can be extended provided the Ee’s wages are paid after the 30-day period.

FLOATING STATUS
- An employment is not deemed terminated when: 1. There is a bona fide suspension of the
operation of a business or undertaking for a period not exceeding six (6) months; or, 2. The
fulfilment by the employee of a military or civic duty.
- During this period, the employee is considered on “floating status,” which is also known as
temporary lay-off, temporary off-detail, or temporary retrenchment. Since the lay-off is only
temporary, the employment status of the employee is not deemed terminated, but merely
suspended.
- The floating status of an employee should last only for a legally prescribed period of time.
When that floating status of an employee lasts for more than six (6) months, he may be
considered to have been illegally dismissed from the service. Thus, he is entitled to the
corresponding benefits for his separation.

Retirement has been defined as withdrawal from office, public station, business, occupation, or
public duty.

Kinds of retirement schemes

1. Compulsory and contributory in nature;
2. One set up by the agreement between the Er and Ees in the CBA or other agreements
between them (other applicable employment contract); and
3. One that is voluntarily given by the Er, expressly as announced company policy or impliedly
as in the failure to contest the Ee’s claim for retirement benefits.

Retirement age It is the age of retirement that is specified in the: 1. CBA; 2. Employment contract; 3.
Retirement plan (Sec. 3, Rule II, Book VI, IRR); or 4. Optional retirement age for underground mining
Ees.

Retirement age in the absence of a retirement plan or other applicable agreement

1. Optional – Upon reaching 60 years old provided that Ee has rendered five (5) years of service. The
option to retire upon reaching the age of 60 years or more but not beyond 65 is the exclusive
prerogative of the Ee if there is no provision on retirement in a CBA or any other agreement or if the
Er has no retirement plan. (Capili v. NLRC, G.R. No. 117378, 26 March 1997)
2. Compulsory – 65 years old, regardless of years of service.
MANAGEMENT PREROGATIVE GR: Management prerogative is the right of the employer to regulate
all aspects of employment, such as: 1. Freedom to prescribe work assignments; 2. Working methods;
3. Processes to be followed; 4. Regulation regarding transfer of Ees; 5. Supervision of their work, lay-
off and discipline; and 6. Dismissal and recall of work.