
July 26, 2022
“What is Retrenchment? Retrenchment or downsizing is a mode of terminating employment initiated by the employer through no fault of the employee and without prejudice to the latter, resorted to by management during periods of business recession, industrial depression or seasonal fluctuations or during lulls over shortage of materials. It is a reduction in manpower, a measure utilized by an employer to minimize business losses incurred in the operation of its business.
x x x . . . .
“Accordingly, the employer may resort to retrenchment in order to avert serious business losses. To justify such retrenchment, the following conditions must be present, namely:
- The retrenchment must be reasonably necessary and likely to prevent business losses;
- The losses, if already incurred, are not merely de minimis, but substantial, serious, actual and real, or, if only expected, are reasonably imminent;
- The expected or actual losses must be proved by sufficient and convincing evidence;
- The retrenchment must be in good faith for the advancement of its interest and not to defeat or circumvent the employees’ right to security of tenure; and
- There must be fair and reasonable criteria m ascertaining who would be dismissed and who would be retained among the employees, such as status, efficiency, seniority, physical fitness, age, and financial hardship for certain workers.”
Please see the case of FASAP VS. PAL G.R. No. 178083, March 13, 2018.
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