"How to EFFECTIVELY Fire a Problem Employee"
A seminar prepared and delivered by:
Attorney Apollo X.C.S. Sangalang
May 15, 2015
Asian Institute of Management (AIM) - Conference Center
Makati City
4. WATERFRONT CEBU CITY CASINO
HOTEL, INC. and MARCO PROTACIO
-versus-
ILDEBRANDO LEDESMA
G.R. No. 197556
March 25, 2015
Supreme Court of the Philippines
5. LABOR ARBITER
-WINNER-
ILDEBRANDO LEDESMA
-AWARDS-
1. Suspension and Dismissal were Illegal
2. Reinstatement (without Loss of Seniority Rights)
3. Full Backwages
4. Money Claims (Service Incentive Leave)
5. 10% Attorney’s Fees
26. • No lawyer-client relationship.
• Consult your own legal counsel.
• Remember: legal opinions differ.
• Respect the sub judice rule.
• Avoid conflicts of interest.
27.
28. 3 Key Words
• EFFECTIVELY terminate
• PROBLEM employee
• COSTLY illegal dismissal case
29. 3 WAYS to Terminate
• Efficient.
• Legal.
•Effective.
30. 3 PROBLEM Employees
• Article 296 Labor Code.
• Causes Analogous.
• You CAN’T fire… (yet).
41. Substantive
Due
Process
• Just Cause
• Reasonableness
• Good Faith
Procedural
Due
Process
• Notice to Explain
• Notice of Hearing
• Notice of Termination
Substantial
Evidence
• Proof of Substantive
Due Process
• Proof of Procedural
Due Process
• Proof of Good Faith
LEGAL
WAY
46. COURT OF APPEALS
-WINNER-
NEW AGE GRAPHICS, et.al.
-DECISION-
1. Reversed NLRC’s Decision.
2. Dismissal was VALID.
3. But there’s VIOLATION of
PROCEDURAL DUE PROCESS.
47. SUPREME COURT
-WINNER-
NEW AGE GRAPHICS, et.al.
-DECISION-
1. Affirmed Court of Appeal’s Decision.
2. Dismissal was Valid.
3. But there’s VIOLATION of
PROCEDURAL DUE PROCESS.
48. Substantive
Due Process
• Just Cause
• Reasonableness
• Good Faith
Procedural
Due
Process
• Notice to Explain
• Notice of Hearing
• Notice of
Termination
Substantial
Evidence
• Proof of Substantive
Due Process
• Proof of Procedural
Due Process
• Proof of Good Faith
LEGAL
WAY
50. 3 PROBLEM Employees
• Article 296 Labor Code.
• Causes Analogous.
• You CAN’T fire… (yet).
51. Article 296*, Labor Code
1. Serious misconduct;
2. Willful disobedience (or insubordination);
3. Gross and habitual neglect of duties;
4. Fraud;
5. Willful breach of trust; and
6. Crime against person of the employer or
his immediate family or representatives.
52. Causes Analogous
1. Loss of trust and confidence;
1. Gross negligence resulting in grave
consequences;
1. Inefficiency or incompetence without
improvement;
53. Causes Analogous
4. Habitual commission of minor offenses;
5. Unfit for continued employment based on
the “Totality of Infraction” doctrine.
6. Company Policy;
54. Company Policy
• Causes Analogous is the LEGAL BASIS
for employers to create or customize
special and specific offenses penalized
by termination.
• Offenses must have the same gravity as
the offenses in Article 296.
• Must be written, well defined, justifiable
and properly circulated.
55. Problem Employees
You CAN’T Fire…(yet)
1. No JUST CAUSE;
1. Dismissal would be UNREASONABLE;
1. Employer in BAD FAITH;
56. Substantive
Due
Process
• Just Cause
• Reasonableness
• Good Faith
Procedural
Due
Process
• Notice to Explain
• Notice of Hearing
• Notice of Termination
Substantial
Evidence
• Proof of Substantive
Due Process
• Proof of Procedural
Due Process
• Proof of Good Faith
LEGAL
WAY
57. Substantive Due Process
• JUST CAUSE:
–based on Article 296*, Labor Code.
–based on “Causes Analogous”.
• Jurisprudence
• Company Policy
–must overcome: “Security of
Tenure.”
58. Article 296*, Labor Code
1. Serious misconduct;
2. Willful disobedience (or insubordination);
3. Gross and habitual neglect of duties;
4. Fraud;
5. Willful breach of trust; and
6. Crime against person of the employer or
his immediate family or representatives.
59. Causes Analogous
1. Loss of trust and confidence;
1. Gross negligence resulting in grave
consequences;
1. Inefficiency or incompetence without
improvement;
60. Causes Analogous
4. Habitual commission of minor offenses;
5. Unfit for continued employment based on
the “Totality of Infraction” doctrine.
6. Company Policy;
61. Company Policy
• Causes Analogous is the LEGAL BASIS
for employers to create or customize
special and specific offenses penalized
by termination.
• Offenses must have the same gravity as
the offenses in Article 296.
• Must be written, well defined, justifiable
and properly circulated.
62. Substantive Due Process
• REASONABLENESS:
–Penalty is proportionate to the offense.
–Company Policy is NOT against Law or
Public Policy.
–Offense is business-related or
employment-connected.
63. Substantive Due Process
• GOOD FAITH:
–Good faith is presumed.
–Bad faith must be proven.
–But in labor law, it’s the reverse!
•Because ALL DOUBTS
favor employees!
64. 3 COSTLY Risks
when violating:
Substantive Due Process
• Reinstatement.
• Backwages.
• Damages.
67. Substantive
Due
Process
• Just Cause
• Reasonableness
• Good Faith
Procedural
Due
Process
• Notice to Explain
• Notice of Hearing
• Notice of Termination
Substantial
Evidence
• Proof of Substantive
Due Process
• Proof of Procedural
Due Process
• Proof of Good Faith
LEGAL
WAY
69. Procedural Due Process
• NOTICE TO EXPLAIN:
– Describes the who, what, when, where,
why and the how much or what manner
the offense was committed.
– Gives employee at least 5 DAYS to
submit a written explanation.
– Specifies TERMINATION as possible
penalty, if found guilty.
70. Procedural Due Process
• NOTICE OF HEARING:
–Gives opportunity to the employee to
verbally explain his side and present his
evidence and witnesses.
–States that he has right to be assisted
by a representative or counsel of his
own choice.
–Ideally, should lay down the procedure.
71. Procedural Due Process
• NOTICE OF TERMINATION:
–Summarizes what happened since the
start of the disciplinary process.
–Enumerates the basis of the decision.
–States the verdict clearly, including
monetary liability (if any); and advises
employee of the next step.
73. Substantive
Due
Process
• Just Cause
• Reasonableness
• Good Faith
Procedural
Due
Process
• Notice to Explain
• Notice of Hearing
• Notice of Termination
Substantial
Evidence
• Proof of Substantive
Due Process
• Proof of Procedural
Due Process
• Proof of Good Faith
LEGAL
WAY
74. Substantial Evidence
• Proof of substantive due process.
• Proof of procedural due process.
• Proof of good faith.
75. Substantial Evidence
• PROOF of
SUBSTANTIVE DUE PROCESS:
– Employee committed a valid Offense.
• Affidavits and Testimonies.
• Admissions.
• Supporting Documents.
• Object Evidence.
76. Substantial Evidence
• PROOF of
PROCEDURAL DUE PROCESS:
–Notices were written and served.
• Personal service.
• Substituted service.
–Hearings were recorded.
• Attendance.
• Minutes.
77. Substantial Evidence
• PROOF of GOOD FAITH:
–Show the effect of the offense on the
organization or on the business.
–Show that you walked the Extra Mile.
• Because employers have the
BURDEN OF PROOF*.
• Because ALL DOUBTS favor the
employees.
78. Substantive
Due
Process
• Just Cause
• Reasonableness
• Good Faith
Procedural
Due
Process
• Notice to Explain
• Notice of Hearing
• Notice of Termination
Substantial
Evidence
• Proof of Substantive
Due Process
• Proof of Procedural
Due Process
• Proof of Good Faith
LEGAL
WAY
79. EFFECTIVE WAY
• Legal Way isn’t enough. Why?
• Because…
– Filing labor complaint is easy and free;
– Employee who felt mistreated will try to
vindicate himself or get even;
– Guilty employee will try to save face;
– Lawyers, paralegals, and labor leaders
accept contingency fees.
88. Ethical Best Practice
• Law on Human Relations
–“Every person must, in the exercise
of his rights and in the performance
of his duties, act with justice, give
everyone his due, and observe
honesty and good faith.”
–Article 19, Civil Code
89. Ethical Best Practice
• Rotary Code of Conduct:
–“Be fair in all dealings with
others and treat them with
the respect due to them as
fellow human being.”
90. 1. Is it the TRUTH?
2. Is it FAIR to all
concerned?
3. Will it build
GOODWILL and
BETTER
FRIENDSHIPS?
4. Will it be
BENEFICIAL to all
concerned?
Ildebrando Ledesma was the House Detective at Waterfront Hotel in Cebu City.
Christe Mandal was a supplier of a concessionaire of the hotel.
Rosanna Lofranco was an applicant for a job at the hotel.
Christe and Rosanna filed complaints against Ildebrando, and on the basis of their AFFIDAVITS and TESTIMONIES during administrative hearings conducted by the hotel management, he was dismissed from employment.
The hotel management was able to establish that, among others, Ildebrando KISSED and MASHED the breasts of Christe in the hotel’s elevator.
And he was also found to have EXHIBITED his penis and asked Rosanna to masturbate him at the hotel’s conference room. This was after he was able to delude or trick Rosanna to perform a massage on him inside the said conference room.
Thus, on August 12, 2008, Ildebrando filed with the office of the LABOR ARBITER a complaint for illegal dismissal against the hotel.
On April 29, 2009, the LABOR ARBITER rendered an decision in favor of Ildebrando on the ground that the charges against him appears to be mere concoctions (or merely manufactured or invented).
About ten (10) months have elapsed from the suspension of Ildebrando up to the promulgation of the LA’s decision.
IF his salary is P30,000, then his backwages would be P300,000 (= P30,000 x 10 months).
The LA awarded service incentive leave pay to him in the amount of almost P4,000.
The 10% attorney’s fee would be P30,400 (=P304,000 x 10%).
On November 27, 2009, the NLRC rendered a Decision reversing the LA’s Decision.
From April 29, 2009 to November 27, 2009, the time that have elapsed is SEVEN (7) months.
The payroll reinstatement pay of Ildebrando would be (P30,000 x 7 =) P210,000.
On March 17, 2011, the CA rendered a Decision reversing the NLRC and reinstating the LA’s Decision.
On June 21, 2011, the CA denied the Motion for Reconsideration of Waterfront.
From the date of suspension up to the date of the CA’s Resolution denying the MR of Waterfront, about THIRTY-SEVEN (37) months have elapsed.
The backwages PLUS payroll reinstatement pay of Ildebrando would then be (37 months x P30,000 =) P1,110,000
On March 25, 2015, the SC rendered a Decision reversing the CA’s Decision and reinstating the NLRC’s Decision.
Despite his loss, Ildebrando would still be entitled to payroll reinstatement pay reckoned from the date of the LA’s Decision (April 29, 2009) up to March 25, 2015, which is about SIX (6) years or SEVENTY-TWO (72) months.
His payroll reinstatement pay would be (72 months x P30,000 =) P2,160,000.
However, if I were lawyer for Waterfront, I would argue that his payroll reinstatement pay should be reckoned up to November 27, 2009 only.
From April 29, 2009 to November 27, 2009, the time that have elapsed is SEVEN (7) months.
The payroll reinstatement pay of Ildebrando would be (P30,000 x 7 =) P210,000.
Signed the Roll of Attorneys in May 1995.
Became Chapter President of the IBP – Pasay, Paranaque, Las Pinas and Muntinlupa Cities Chapter: 2 years. From 2007 to 2009.
1997 -1998
Almost 2 years
2003 – 2006
At least 3 years
2006 – 2007
Almost 2 years
Became LAW PROFESSOR at the Philippine Law School in Pasay City: 4 Semesters
Became Chapter President of the IBP – Pasay, Paranaque, Las Pinas and Muntinlupa Cities Chapter: 2 years.
My advocacy is LABOR LAW MADE EASY. My goal is to be YOUR DAILY LABOR LAW IN SACHETS.
Labor law applies to all employers, whether you’re big or small.
Labor law applies to all employees, whether you’re a highly paid executive (P1,333,333 per day) or an unskilled minimum wage earner doing menial jobs.
The law has identified the so-called vulnerable workers.
Unfortunately, the law has not identified the vulnerable businesses.
WHO HAS FACEBOOK ACCOUNTS?
Formerly Article 282, Labor Code.
McBurnie vs. Ganzon, et. al., GR Nos. 178039, etc., October 17, 2013 (Resolution):
1. Andrew James McBurnie is an Austraiian with NO Alien Employment Permit and NO Working Visa. He was awarded P60 million in salary compensation.
2. Eulalio Ganzon, of E. Ganzon Inc. and EGI Managers, Inc. These are Ganzon’s construction company and real estate development company.
3. Baguio Hotel project. It never took off for lack of funding.
4. Letter dated May 11, 1999.
5. Employment Contract dated May 11, 1999. 5-year term. Position: Executive Vice President of EGI
6. Contract states that McBurnie is entitled to housing benefits and a service vehicle. He was allowed to stay at Unit #812 Makati Cinema Square Condominium. He was allowed to use a Hyundai car.
7. November 17, 2009, McBurnie left for Australia and never came back since. He never personally appeared before the LA, NLRC, and CA.
8. McBurnie worked from September 1, 1999 until he met an accident on the last week of October 1999. This was for about 2 months (actually 45 days).
9. McBurnie filed an illegal dismissal case against Ganzon in 2002 (almost 3 years after he left the Philippines).
10. On September 18, 2009, the Supreme Court ruled in favor of McBurnie. It overturned the decisions of the NLRC and the CA favoring Ganzon. The ruling was based on a technicality regarding the appeal bond and the perfection of appeal. In January 25, 2012, it upheld its decision and denied the MR filed by Ganzon.
11. The 2009 NLRC’s and 2008 CA’s ruling was that McBurnie is not an employee but merely a business partner of EGI in the Baguio Hotel project (which didn’t materialize).
12. The LA Salimathar Nambi ruled in favor of McBurnie, adjudged him as illegally dismissed and awarded him backwages and damages etc. amounting to P60 million in 2004.
13. Ganzon timely filed an appeal with a motion to reduce the appeal bond. He posted a bond of P10 million which was deemed sufficient by the NLRC.
14.Ganzon cannot be held personally liable except when there is reason to hold him liable.
Appeal Bond
Professional Fee
Out-of-pocket expenses
Formerly Article 277, paragraph 2, Labor Code.
Formerly Article 277, paragraph 2, Labor Code.
E.A.P.G. = Employers Are Presumed Guilty!
Article XIII, Section 3, Constitution:
The State shall afford FULL PROTECTION to labor, local and overseas, organized and unorganized…
The LA found New Age Graphics to be in BAD FAITH.
BILLY filed a complaint against NEW AGE GRAPHICS which led to the findings of labor standards and tax violations on the part of the employer.
New Age only gave Billy 24 hours to submit his written explanation as per NTE.
The administrative hearing was scheduled on the same day that the NTE was served on Billy.
No written Notice of Termination was prepared by New Age Graphics and sent to Billy’s last known address.
Even if New Age Graphics was in BAD FAITH there is substantial evidence that Billy deserves to be terminated.
Billy was found to have committed WILLFUL DISOBEDIENCE in relation to rendering overtime work and complying with work standards.
Billy was also found to be habitually tardy and absent from work.
In addition, Billy was held to be guilty of INEFFICIENCY.
According to the SC:
“Failure to observe prescribed standards of work, or to fulfill reasonable work assignments due to inefficiency may constitute just cause for dismissal. Such inefficiency is understood to mean failure to attain work goals or work quotas, either by failing to complete the same within the alloted reasonable period, or by producing unsatisfactory results.”
SC increased the NOMINAL DAMAGES from P5,000 to P30,000.