Termination for Authorized Causes

Besides termination of employment for just causes, there is another set of causes for termination by the employer. Authorized causes for termination of employment don't need a DOLE investigation. Notice to the DOLE and the workers is all that's needed. The causes are the following:

1.) Installation of labor-saving devices
2.) Redundancy
3.) Retrenchment to prevent losses
4.) Closure of the business establishment/cessation of operations

Retrenchment

Termination by the employer without the employees' fault which in no way makes them suffer injury. This is resorted to during periods of recession, industrial depression, seasonal fluctuations, lulls because of a lack of new orders, shortage of materials or conversion of the plant for a new production program, introduction of new methods/machinery or automation. 

Requirements:

1.) The retrenchment is reasonably necessary and likely to prevent business losses which, if incurred, aren't minimal but serious, or if only expected, reasonably imminent as perceived objectively and in good faith by the employer

2.) The employer serves written notice to the employees and the DOLE at least 1 month before the intended date of retrenchment

3.) Employees are paid at least 1 month's wages or 1/2 month per year of service, whichever is higher

4.) The employer exercises the prerogative to retrench employees in good faith to protect its interests but not to circumvent the employees' right to security of tenure

5.) Use of fair and reasonable criteria in ascertaining who to dismiss and who to retain (such as status, efficiency, seniority, physical fitness, age and financial hardship for certain workers)

Redundancy

Redundancy happens when there is an excess of the service capability of work (read: more workers than the employer actually needs.) Several factors influence redundancy: overhiring of workers, decrease of business volume, dropping of a particular line previously manufactured by the company, phasing out of a service facility previously undertaken by the business, etc. The employer isn't obliged to keep more employees than he actually needs during these conditions.

Requirements:

1.) Written notice to the employees and DOLE at least 1 month before the intended date

2.) Payment of separation pay equal to at least 1 month's wages or 1 month per year of service, whichever is higher

3.) Good faith in abolishing redundant positions

4.) Fair and reasonable criteria in ascertaining what positions are to be declared redundant and accordingly abolished

Losses

Requirements are the following:

1.) Actual or expected losses must be substantial and not minimal

2.) Expected losses must be reasonably imminent and this imminence can be perceived by the employer objectively and in good faith

3.)  The termination must be necessary and likely to prevent the losses expected (and the employer must have taken measures to cut costs other than labor costs)

4.) Losses, whether expected or actual must be proved by sufficient and convincing evidence

Cessation/Closure

There is nothing in the law that will prevent the employer from deciding to close his business, otherwise it would be oppressive to him and deny him his basic rights.

Requirements:

1.) Written notice to the employees and DOLE at least 1 month before the intended date of closure

2.) The closure must be bona fide in character

3.) Payment of at least 1 month's wages or 1 month per year of service, whichever is higher

Principle of Absorption

A bona fide buyer or transferee of all or substantially all of the previous owner's business isn't obliged to absorb his (the previous owner's) employees. Liabilities of the previous business owner are also not enforceable against the new owner unless he unequivocally assumes them or if the sale/transfer was made in bad faith (Barayoga vs. Asset Privatization Trust, 473 SCRA 690.)