ASG Law

Tag: employment dispute

  • Navigating Resignation and Commission Rights: Insights from a Landmark Philippine Labor Case

    Key Takeaway: Clear Evidence of Continued Employment is Crucial for Post-Resignation Claims

    Edwin Alacon Atienza v. TKC Heavy Industries Corporation and Leon Tio, G.R. No. 217782, June 23, 2021

    Imagine working tirelessly to secure a significant deal, only to find yourself in a legal battle over the rightful compensation you believe you deserve. This is the reality Edwin Alacon Atienza faced when he sought to claim his salary and commissions from TKC Heavy Industries Corporation. At the heart of the dispute was the question of whether Atienza had resigned or was terminated, and what he was entitled to after his employment ended. The Supreme Court’s decision in this case sheds light on the complexities of resignation, termination, and the rights to commissions in the Philippine labor context.

    Atienza, a sales agent for TKC, claimed he was owed salary and commissions for deals he had worked on, asserting he had not resigned but was still employed when he stopped receiving payments. TKC, on the other hand, argued that Atienza had resigned and was not entitled to further compensation. The case traversed through the Labor Arbiter, National Labor Relations Commission (NLRC), and the Court of Appeals before reaching the Supreme Court, highlighting the intricate legal journey of labor disputes in the Philippines.

    Understanding the Legal Landscape

    The Philippine Labor Code, along with the Civil Code, provides the framework for addressing employment disputes. Central to this case are the concepts of resignation and commissions. Resignation is defined as the voluntary act of an employee to relinquish their position, which must be proven by the employer to be voluntary. On the other hand, commissions are compensations typically based on sales performance, and the entitlement to them often hinges on the terms of employment or agency agreements.

    Article 285 of the Labor Code states that “the employer shall not terminate the services of an employee except for a just cause or when authorized by this Title.” This provision underscores the importance of clear evidence in determining the nature of an employee’s departure from a company. Additionally, Article 1868 of the Civil Code defines agency, which is relevant when considering an employee’s right to commissions, as sales agents often act as agents for their employers.

    For example, consider a real estate agent who works on a sale that closes after they’ve left the agency. Whether they receive a commission could depend on whether their efforts were instrumental in the sale and if their agency agreement stipulates post-termination compensation.

    The Journey of Atienza’s Case

    Atienza was hired by TKC in October 2011 as a sales agent, with a monthly salary and a 3% commission on sales. He excelled in his role, securing deals with local government units (LGUs) across the Philippines. However, in early 2013, Atienza claimed TKC stopped communicating with him, yet he continued working on pending deals.

    Atienza filed a complaint with the NLRC for nonpayment of wages and commissions. TKC countered that Atienza had resigned in January 2013 and had not been entitled to further compensation. The Labor Arbiter initially ruled in Atienza’s favor, awarding him salary, commissions, and damages. However, the NLRC reversed this decision, finding that Atienza had resigned and was not entitled to the claimed amounts.

    Atienza appealed to the Court of Appeals, which upheld the NLRC’s decision. The case then reached the Supreme Court, which took a closer look at the evidence. The Court found that Atienza had indeed intended to resign but continued working on pending deals until February 2013. Key evidence included text messages and emails showing Atienza’s ongoing involvement with TKC’s sales operations.

    The Supreme Court’s reasoning included the following quotes:

    “In order to prove that resignation is voluntary, the acts of the employee before and after the alleged resignation must be considered in determining whether he or she, in fact, intended to sever his or her employment.”

    “An agent is not entitled to commissions for unsuccessful or unconsummated transactions. As a general rule, an agent is entitled to a commission only upon the successful conclusion of a sale.”

    The Court ultimately ruled that Atienza was entitled to salary and benefits for January and February 2013, an equitable commission for the Caloocan deal, and a share of the commission for the Surigao del Sur deal, as he had worked on these deals with another agent.

    Implications for Future Cases

    This ruling emphasizes the importance of clear evidence in determining the nature of an employee’s departure and their entitlement to post-employment compensation. For businesses, it highlights the need for clear policies on resignation and commission agreements. Employees should document their continued work and communications with their employer, especially if they intend to claim compensation after leaving.

    Key Lessons:

    • Employers must prove the voluntariness of a resignation with clear evidence.
    • Employees should maintain records of their work and communications to support claims for post-employment compensation.
    • Commission agreements should clearly define the terms of payment, including post-termination scenarios.

    Frequently Asked Questions

    What constitutes a valid resignation?

    A valid resignation must be voluntary and intentional, with clear evidence of the employee’s intent to relinquish their position.

    Can an employee claim commissions after resignation?

    Yes, if the employee’s efforts were instrumental in securing a deal that closed after their resignation, they may be entitled to commissions based on the terms of their employment or agency agreement.

    What should employees do if they believe they are owed compensation?

    Employees should gather evidence of their work and communications with the employer and file a complaint with the NLRC if necessary.

    How can employers protect themselves from similar claims?

    Employers should have clear policies on resignation and commission agreements, and maintain detailed records of employee performance and communications.

    What is the role of the Civil Code in labor disputes?

    The Civil Code provides additional legal principles, such as those governing agency, that can be applied in labor disputes, especially when determining rights to commissions.

    ASG Law specializes in labor and employment law. Contact us or email hello@asglawpartners.com to schedule a consultation and ensure your rights are protected.

  • Strained Relations Doctrine: Reinstatement vs. Separation Pay in Labor Disputes

    In Papertech, Inc. v. Katando, the Supreme Court addressed whether an illegally dismissed employee should be reinstated or receive separation pay due to strained relations with the employer. The Court ruled that despite the general right to reinstatement, separation pay is appropriate when prolonged conflict and litigation have created an irreparable breakdown in the employer-employee relationship. This decision highlights that while reinstatement is a primary remedy, it is not always feasible, especially when the history of antagonism undermines the possibility of a productive working relationship. The ruling emphasizes a practical approach, prioritizing a fair resolution that acknowledges the realities of the employment dynamic.

    When Legal Battles Erode Workplace Harmony: Examining Strained Relations in Dismissal Cases

    Josephine Katando, a machine operator at Papertech, Inc., faced a series of employment disputes following her involvement in a unionization effort. After participating in a picket in 2008, she was initially terminated, then ordered reinstated by the National Labor Relations Commission (NLRC). However, Papertech reassigned her to a distant location, leading to further legal challenges. Later, she was suspended and eventually dismissed for insubordination. The central legal question is whether the doctrine of strained relations applies, justifying separation pay in lieu of reinstatement, given the history of legal battles between Katando and Papertech.

    The concept of strained relations was first introduced in Balaquezon Employees & Workers Transportation Union v. Zamora. The Supreme Court expanded this in Globe-Mackay Cable and Radio Corp. v. National Labor Relations Commission, outlining critical factors. These include the employee’s position of trust, the potential for antipathy to affect productivity, the origin of the strain, and the impact of asserting one’s rights. These considerations aim to balance the employee’s right to reinstatement with the employer’s need for a harmonious work environment.

    While the Court acknowledges that litigation alone shouldn’t automatically preclude reinstatement, the extensive and prolonged conflict between Papertech and Katando presented a unique situation. The disputes spanned over a decade, beginning with the illegal strike in 2008 and continuing through multiple complaints and appeals. This protracted legal battle significantly impacted the working relationship. The Supreme Court referenced Digital Telecommunications Philippines, Inc. v. Digitel Employees Union, noting that the length and litigiousness of the conflict indicated a strained relationship.

    Papertech’s willingness to pay separation pay, as stated in their appeal, further indicated their reluctance to reinstate Katando. The company explicitly stated they wished to move on from the situation peacefully. This sentiment, combined with the existing animosity, suggested that reinstatement would be impractical and detrimental to both parties. Furthermore, the Court considered the earlier Court of Appeals decision in CA-G.R. SP No. 135557, which declared the abolition of Katando’s position in Pasig City.

    The prior CA decision played a crucial role in the Supreme Court’s analysis. It established that Papertech had validly transferred its manufacturing and production departments to provincial plants, rendering Katando’s original position obsolete. This meant that reinstatement to her previous role was impossible. Given the strained relations and the impracticality of reinstatement, the Court concluded that separation pay was the most appropriate resolution.

    The Supreme Court, in its decision, cited several precedents to justify its stance on the strained relations doctrine. In Globe-Mackay Cable and Radio Corp. v. National Labor Relations Commission, the court set parameters for when strained relations could be invoked. Here’s a closer look at the principles established in that case:

    …(1) the employee must occupy a position where he or she enjoys the trust and confidence of his or her employer; (2) it is likely that if reinstated, an atmosphere of antipathy and antagonism may be generated as to adversely affect the efficiency and productivity of the employee concerned; (3) it cannot be applied indiscriminately because some hostility is invariably engendered between the parties as a result of litigation; and (4) it cannot arise from a valid and legal act of asserting one’s right.

    The Supreme Court also addressed the matter of legal interest on monetary awards. While generally, legal interest is applied from the time of extrajudicial or judicial demand, the Court exercised its discretion in this case. It found that imposing interest was unwarranted, noting Papertech’s willingness to pay backwages and separation pay after the Labor Arbiter’s decision. The delay in payment was attributed to Katando’s decision to appeal the case.

    In essence, the Papertech v. Katando case reaffirms that the doctrine of strained relations is a nuanced exception to the general rule of reinstatement in illegal dismissal cases. The Court considers various factors, including the nature of the employee’s position, the history of conflict, and the practicality of reinstatement. This approach allows for a more equitable resolution, recognizing that in some instances, continued employment is simply not viable.

    FAQs

    What was the key issue in this case? The key issue was whether an illegally dismissed employee should be reinstated or receive separation pay due to strained relations with the employer. The Supreme Court had to determine if the existing animosity justified deviating from the standard remedy of reinstatement.
    What is the doctrine of strained relations? The doctrine of strained relations is an exception to the rule of reinstatement, where the employer-employee relationship has deteriorated to a point where continued employment is not viable. Separation pay is granted in lieu of reinstatement in such cases.
    What factors does the Court consider when applying the doctrine of strained relations? The Court considers the employee’s position of trust, the potential for workplace disruption, the cause of the strained relations, and the employee’s desire to return to work. The court assesses if reinstatement would be detrimental to the company’s operations.
    Why was Katando not reinstated in this case? Katando was not reinstated due to the prolonged and extensive legal battles with Papertech, which created a highly antagonistic environment. Additionally, her original position was abolished, making reinstatement impractical.
    What is the significance of the previous CA decision in this case? The previous CA decision established that Papertech had validly transferred its manufacturing operations, abolishing Katando’s position. This made reinstatement impossible, reinforcing the decision to award separation pay.
    Did Papertech’s willingness to pay separation pay affect the Court’s decision? Yes, Papertech’s willingness to pay separation pay indicated their desire to end the employment relationship, which the Court considered as evidence of strained relations. It showed they did not want Katando back as an employee.
    What is the general rule regarding legal interest on monetary awards? Generally, legal interest is applied to monetary awards from the time of extrajudicial or judicial demand until full payment. However, the Court has discretion to waive interest depending on the circumstances.
    Why was legal interest not imposed in this case? Legal interest was not imposed because Papertech was willing to pay the monetary awards after the Labor Arbiter’s decision. The delay in payment was due to Katando appealing the case, not Papertech’s refusal to pay.

    The Papertech v. Katando case underscores the importance of considering the practical realities of employment disputes. While reinstatement is a fundamental right, the doctrine of strained relations provides a necessary exception when the employment relationship has been irreparably damaged. This decision offers valuable guidance for employers and employees navigating complex labor disputes.

    For inquiries regarding the application of this ruling to specific circumstances, please contact ASG Law through contact or via email at frontdesk@asglawpartners.com.

    Disclaimer: This analysis is provided for informational purposes only and does not constitute legal advice. For specific legal guidance tailored to your situation, please consult with a qualified attorney.
    Source: PAPERTECH, INC. VS. JOSEPHINE P. KATANDO, G.R. No. 236020, January 08, 2020

  • Reinstatement Without Backwages: Navigating Termination and Abandonment in Employment Disputes

    In Mallo v. Southeast Asian College, Inc., the Supreme Court ruled that when an employee is neither illegally dismissed nor has abandoned their job, the appropriate remedy is reinstatement to their former position without backwages. This decision underscores the importance of proving either illegal dismissal by the employer or abandonment by the employee to justify monetary awards. The Court emphasized that abandonment requires a clear intention to sever the employment relationship, which was not proven in this case, leading to the order of reinstatement without back pay.

    The Case of the Missing Teaching Load: Illegal Dismissal or Misunderstanding?

    Melvin P. Mallo, a professor at Southeast Asian College, Inc. (SACI), filed a complaint against SACI and its Executive President, Edita F. Enatsu, alleging unfair labor practice and illegal dismissal. Mallo claimed that after serving as a faculty member for several years, SACI failed to provide him with a teaching load for a new semester, effectively terminating his employment. SACI countered that Mallo was not dismissed, but rather, he failed qualifying tests for one assignment and declined another due to a conflict with a new job. The central legal question was whether SACI illegally dismissed Mallo or whether Mallo abandoned his position.

    The Labor Arbiter (LA) initially ruled in favor of Mallo, finding that he was illegally dismissed and awarding him backwages and separation pay. However, the National Labor Relations Commission (NLRC) affirmed the LA’s ruling but modified the amount of 13th-month pay. The Court of Appeals (CA) then reversed the NLRC’s decision, declaring that Mallo had abandoned his job and was not entitled to backwages or separation pay. This divergence in findings necessitated the Supreme Court’s intervention to determine the true nature of Mallo’s separation from SACI.

    The Supreme Court began its analysis by reiterating that the employer bears the burden of proving that an employee was not dismissed or that the dismissal was justified. Citing Samar-Med Distribution v. NLRC, the Court emphasized that failure to discharge this burden results in a finding that the dismissal was illegal. However, the Court found that SACI had indeed assigned Mallo a teaching load as a Clinical Instructor, which he initially accepted. Despite failing qualifying tests for the initial assignment, SACI offered him another position, indicating that they did not intend to terminate his employment.

    Building on this, the Court then addressed the issue of abandonment. Abandonment, as defined in Tan Brothers Corporation of Basilan City v. Escudero, requires a deliberate and unjustified refusal to resume employment, coupled with a clear intention to sever the employer-employee relationship.

    As defined under established jurisprudence, abandonment is the deliberate and unjustified refusal of an employee to resume his employment. It constitutes neglect of duty and is a just cause for termination of employment under paragraph (b) of Article 282 [now Article 296] of the Labor Code. To constitute abandonment, however, there must be a clear and deliberate intent to discontinue one’s employment without any intention of returning. In this regard, two elements must concur: (1) failure to report for work or absence without valid or justifiable reason; and (2) a clear intention to sever the employer-employee relationship, with the second element as the more determinative factor and being manifested by some overt acts.

    The Court found no evidence to suggest that Mallo deliberately intended to abandon his job. His act of filing a complaint for illegal dismissal and actively inquiring about his teaching load contradicted any intention to sever his employment. The Court noted that it would be illogical for Mallo to work towards attaining regular employee status only to abandon his position without justification. Thus, the Supreme Court concluded that Mallo neither was illegally dismissed nor had abandoned his job, leading to the order of reinstatement without backwages, consistent with established jurisprudence.

    The decision in Mallo v. Southeast Asian College, Inc. highlights the importance of clear communication and documentation in employment relationships. Employers must ensure that assignments and expectations are clearly communicated to employees, while employees must promptly address any concerns or issues with their employment. This case serves as a reminder that the burden of proof lies with the employer to demonstrate that a dismissal was justified, and with the employee to prove abandonment. Ultimately, it reinforces the principle that in the absence of both illegal dismissal and abandonment, reinstatement is the appropriate remedy, albeit without backwages.

    FAQs

    What was the key issue in this case? The key issue was whether the employee, Melvin P. Mallo, was illegally dismissed by Southeast Asian College, Inc. or whether he abandoned his job, which would affect his entitlement to backwages and separation pay.
    What did the Court ultimately decide? The Supreme Court decided that Mallo was neither illegally dismissed nor had he abandoned his job. Consequently, the Court ordered his reinstatement to his former position without the award of backwages.
    What constitutes abandonment in labor law? Abandonment requires a deliberate and unjustified refusal to resume employment, coupled with a clear intention to sever the employer-employee relationship. Both elements must be present to legally constitute abandonment.
    Who has the burden of proof in illegal dismissal cases? In illegal dismissal cases, the employer has the burden of proving that the employee was not dismissed or that the dismissal was for a just cause. Failure to meet this burden results in a finding of illegal dismissal.
    What is the significance of filing a complaint for illegal dismissal? Filing a complaint for illegal dismissal generally negates any intention on the part of the employee to abandon their job. It demonstrates that the employee wishes to maintain the employment relationship.
    What is the remedy when there is neither illegal dismissal nor abandonment? When there is neither illegal dismissal by the employer nor abandonment by the employee, the proper remedy is reinstatement to the former position, but without the award of backwages.
    Why was Mallo not awarded backwages in this case? Mallo was not awarded backwages because the Court found that he was not illegally dismissed, and his failure to work was not due to the employer’s actions. Since he also did not abandon his post, reinstatement was deemed appropriate.
    What evidence did the employer present to show Mallo was not dismissed? The employer presented evidence that Mallo was initially assigned a teaching load, and when he failed the qualifying tests for that assignment, he was offered another position. This suggested the employer did not intend to terminate his employment.

    In conclusion, the Supreme Court’s decision in Mallo v. Southeast Asian College, Inc. provides valuable guidance on the remedies available when employment disputes arise that do not result in clear-cut illegal dismissal or abandonment. The ruling emphasizes the importance of proving intent and the burden of proof in labor cases.

    For inquiries regarding the application of this ruling to specific circumstances, please contact ASG Law through contact or via email at frontdesk@asglawpartners.com.

    Disclaimer: This analysis is provided for informational purposes only and does not constitute legal advice. For specific legal guidance tailored to your situation, please consult with a qualified attorney.
    Source: MELVIN P. MALLO, VS. SOUTHEAST ASIAN COLLEGE, INC., G.R. No. 212861, October 14, 2015

  • Company Practice as Law: When Resigning Employees in the Philippines are Entitled to Separation Pay

    n

    Unwritten Rules, Real Benefits: How Company Practice Can Mandate Separation Pay in the Philippines

    n

    TLDR: Philippine labor law generally doesn’t require separation pay for voluntary resignation. However, this landmark case clarifies that if a company consistently grants separation pay to resigning employees, it can become an established company practice, legally obligating them to continue this benefit. Learn how consistent actions speak louder than written words in Philippine employment law.

    nn

    [G.R. No. 131523, August 20, 1998] TRAVELAIRE & TOURS CORP. VS. NATIONAL LABOR RELATIONS COMMISSION

    nn

    INTRODUCTION

    n

    Imagine resigning from a company after years of dedicated service, expecting nothing beyond your final paycheck. In the Philippines, the law typically supports this expectation, as separation pay is not automatically granted to employees who voluntarily resign. However, what if your colleagues who resigned before you received separation pay? Does this create an unspoken right? This was the central question in the case of Travelaire & Tours Corp. vs. National Labor Relations Commission, a landmark decision that underscores the power of company practice in shaping employee rights beyond formal contracts and collective bargaining agreements.

    n

    Nenita Medelyn, the chief accountant of Travelaire & Tours Corp., resigned from her position. While she received her 13th-month pay, her claim for separation pay was initially denied by the Labor Arbiter. Medelyn argued that it was company practice to grant separation pay to resigning employees, citing instances of previous employees receiving this benefit. The National Labor Relations Commission (NLRC) sided with Medelyn, a decision ultimately affirmed by the Supreme Court. This case serves as a crucial reminder for both employers and employees in the Philippines about the legal weight of established company practices.

    nn

    LEGAL CONTEXT: SEPARATION PAY AND COMPANY PRACTICE IN PHILIPPINE LABOR LAW

    n

    Under Philippine law, specifically the Labor Code, separation pay is generally awarded to employees terminated due to authorized causes, such as redundancy or retrenchment, or in cases of illegal dismissal. Voluntary resignation, on the other hand, typically does not entitle an employee to separation pay. This principle is rooted in the idea that the employee is initiating the termination of employment, thus not necessitating financial assistance from the employer.

    n

    However, Philippine jurisprudence recognizes exceptions to this general rule. One significant exception arises from established company practice or policy. Even in the absence of a written contract, Collective Bargaining Agreement (CBA), or explicit company policy, consistent and repeated actions by an employer can create an implied obligation. This concept is based on the principle of “practice has the force of law between the parties.” If an employer has consistently and voluntarily provided certain benefits, such as separation pay to resigning employees, over a considerable period, this practice can ripen into a company policy that employees can legally rely upon.

    n

    The Supreme Court has consistently upheld the principle of company practice as a source of employee rights. In numerous cases, the Court has ruled that benefits voluntarily granted by employers, if consistently given, cannot be unilaterally withdrawn. This is because these benefits become part of the employees’ terms and conditions of employment, forming a contractual obligation by implication. The legal basis for this is rooted in Article 4 of the Labor Code, which mandates that all doubts in the implementation and interpretation of the provisions of the Labor Code shall be resolved in favor of labor.

    n

    The crucial element in establishing company practice is consistency and regularity. Isolated or sporadic instances of granting benefits may not be sufficient. The practice must be shown to be a deliberate and consistent course of action taken by the employer over a significant period. This was the central point of contention and ultimately the deciding factor in the Travelaire & Tours Corp. case.

    nn

    CASE BREAKDOWN: MEDELYN VS. TRAVELAIRE & TOURS CORP.

    n

    Nenita Medelyn’s journey to claim her separation pay began with her resignation from Travelaire & Tours Corp. in April 1994, where she served as chief accountant. Upon resigning, she believed she was entitled to separation pay, based on what she knew about the company’s treatment of previous resigning employees. When her request was denied, she filed a complaint with the National Labor Relations Commission (NLRC) in January 1995, seeking separation pay, service incentive leave pay, and 13th-month pay.

    n

    The case proceeded through the following stages:

    n

      n

    • Labor Arbiter Level: Labor Arbiter Potenciano S. Canizares, Jr. ruled in favor of Medelyn only for her proportionate 13th-month pay for 1994. Her claims for separation pay and service incentive leave pay were dismissed due to lack of evidence.

      • n

    • NLRC Appeal: Dissatisfied with the Labor Arbiter’s decision, Medelyn appealed to the NLRC. She argued that the company had a practice of granting separation pay to resigning employees, citing the examples of Rogelio Abendan, Anastacio Cabate, and Raul C. Loya, who had resigned previously and received separation pay. The NLRC reversed the Labor Arbiter’s decision in part, granting Medelyn separation pay amounting to P55,400.00. The NLRC reasoned: “Although in the case of Cabate and Loya the amount given was called ex gratia payment, it was nevertheless given upon separation of the employees from the company… If the respondent could be generous to some of its employees, why did it deny the complainant the same consideration. There is no reason why the company should discriminate against the complainant who had also served the company for a long time.”

      • n

    • Supreme Court Petition: Travelaire & Tours Corp. then elevated the case to the Supreme Court via a Petition for Certiorari, arguing that the NLRC had erred in finding a company practice and awarding separation pay. The Supreme Court, however, affirmed the NLRC’s decision.

      • n

    n

    The Supreme Court emphasized the principle of according respect and finality to the factual findings of quasi-judicial bodies like the NLRC, especially when supported by substantial evidence. The Court noted that Medelyn presented evidence showing that three other employees who resigned before her were granted separation pay. While the company termed payments to two of these employees as “ex gratia,” the Court highlighted that “Regardless of terminology and amount, the fact exists that upon resignation from petitioner corporation, the concerned employees were given certain sums of money occasioned by their separation from the company.”

    n

    Crucially, the Supreme Court pointed out that Travelaire & Tours Corp. failed to present any countervailing evidence, such as records of resigned employees who were *not* given separation pay. In the absence of such evidence, the Court upheld the NLRC’s finding of established company practice. Furthermore, the Supreme Court reiterated the pro-labor stance in Philippine law, stating, “if doubts exist between the evidence presented by the employer and the employee, the scales of justice must be tilted in favor of the employee.”

    nn

    PRACTICAL IMPLICATIONS: WHAT THIS CASE MEANS FOR EMPLOYERS AND EMPLOYEES

    n

    The Travelaire & Tours Corp. case has significant implications for both employers and employees in the Philippines. It underscores the importance of consistent practices in the workplace and how these practices can create legally enforceable obligations, even without formal documentation.

    n

    For Employers:

    n

      n

    • Be mindful of precedents: Employers should be aware that their actions, particularly in granting benefits, can set precedents. Consistently granting separation pay to resigning employees, even if intended as a gesture of goodwill, can be interpreted as establishing a company practice.

      • n

    • Document company policies clearly: To avoid ambiguity, companies should clearly document their policies on separation pay and other benefits. If separation pay is not intended for resigning employees, this should be explicitly stated in employment contracts, employee handbooks, or internal policies.

      • n

    • Ensure consistency in application of policies: If a company intends to grant separation pay only in specific circumstances for resigning employees, these circumstances should be clearly defined and consistently applied. Inconsistent application can lead to the perception of established practice.

      • n

    • Seek legal counsel: Employers should consult with legal counsel to review their employment practices and policies to ensure compliance with Philippine labor laws and avoid unintended legal obligations arising from company practice.

      • n

    n

    For Employees:

    n

      n

    • Observe company practices: Employees should pay attention to how the company treats resigning employees. If there is a consistent pattern of granting separation pay, this could be evidence of company practice.

      • n

    • Gather evidence: If resigning and seeking separation pay based on company practice, gather evidence of previous employees receiving this benefit. This could include pay slips, company memos, or testimonies from former employees.

      • n

    • Know your rights: Understand your rights under Philippine labor law, including the concept of company practice. Consult with labor lawyers or unions to assess your potential claims.

      • n

    nn

    Key Lessons from Travelaire & Tours Corp. vs. NLRC

    n

      n

    • Company practice can create legally binding obligations: Consistent and repeated actions by employers can establish company practice, obligating them to continue those practices as if they were written policies.

      • n

    • Consistency is key: To establish company practice, the benefit must be granted consistently and regularly, not just sporadically.

      • n

    • Burden of proof on employer to disprove practice: Once an employee presents evidence of company practice, the burden shifts to the employer to disprove it.

      • n

    • Pro-labor interpretation: Philippine labor law favors employees, and doubts in interpretation will be resolved in their favor.

      • n

    nn

    FREQUENTLY ASKED QUESTIONS (FAQs)

    nn

    Q1: Is separation pay mandatory for resigned employees in the Philippines?

    n

    A: Generally, no. Philippine law does not mandate separation pay for employees who voluntarily resign, unless stipulated in an employment contract, CBA, or established company practice.

    nn

    Q2: What constitutes