No. “Is it legal to transfer and demote an employee in the Philippines?” Employers generally have management prerogatives which include the right to transfer and demote employees but these prerogatives are subject to certain limitations found in legal provisions and case law. It makes our job easier, efficient and legally defensible. ), Inc., vs. … Also keep an eye on how other employees are reacting to the change. There’s a massive disconnect here between your intention and the lesson you're teaching your team. It is widely accepted that the Philippines is one of the countries which implement stricter labor laws. As the name suggests, a demotion letter is a letter demoting an employee. In no case will the employee receive an amount lower than PHP 537.00. These penalties are not specified by the law. Since demotion is just another form of penalty, it stands to reason that you should go thru due process before imposing demotion. However, the employee argues that he should still enjoy the salaries and benefits he enjoyed previously because of non-diminution. In short, if the employee does something bad, and the employer gave the employee chance to explain their side. Find out more about involving your workers in health and safety. Other times, employees seek out voluntary demotions. Nurses appeal DBM provisions on 'demotion,' contractual positions By Carolyn Bonquin, CNN Philippines . I tell them, “Employee discipline is just like parenting. The organization is better served by having the employee step back into the former role. Part and parcel of these restrictions is the protection to the employee’s right to a living wage, a protection granted to the fruits of one’s labor. From Schalk and Rousseaur’s perspective on psychological contracts, we know that the effects of demotion on one’s health depends on how we perceive the change. Villanueva and Atty. An organization can provide a demotion at the choice of the organization or voluntarily, at the request of the employee, sometimes called deployment. All rights reserved. Read the book on 44 Rules on Employee Transfer and Demotion Thus, it cannot be used as a subterfuge by the employer to rid himself of an undesirable worker. It is the employer’s prerogative to demote its employees to other positions when the interests of the company reasonably demand it (Rubberworld (Phils. Provide a written statement detailing when the demotion will take effect and the specific reasons the demotion is warranted. Is it possible to impose demotion under the law? Conversely, a transfer to a different (usually, distant) location, may be used by some to destroy the life of an unwanted employee as it may cause an unwilling employee to resign or worse, disrupt family life. An integral part of discipline is to decide what kinds of penalties to impose against erring employees. These sources of law bind everyone in the Philippines, whether you know of them or not. In short, if the employee does something bad, and the employer gave the employee chance to explain their side. Litigation is a hassle that must be avoided because it ordinarily drains the company’s energy, resources and even affects employee morale. Once such giving of benefits attains the status of a company practice, the employees can demand these benefits as a matter of right. Reduction of an employee's salary is often a consequence of the employer's decision to demote the employee for some reason. No. Before you scold your kids, make sure that you understand what happened and give them a chance to explain what they did.” In labor relations, it's exactly the same. Present the news in a professional manner. h. "Overseas employment" means employment of a worker outside the Philippines. In accordance with rules, regulations and standards to be promulgated by the Commission, the President of the Philippines or the Head of each Department is authorized to pay cash awards and to incur whatever necessary expenses are involved in the honorary recognition of subordinate officers and employees of the Government who by their suggestions, inventions, superior accomplishments and … Demotion is the movement of an employee from one job to another of lower rating, employment status, or rank. (Benguet Electric … 44 rules on Employee Transfer and Demotio, The First Written Guide on Employee Transfers and Demotions and Why You Should Learn the Rules, The Philippine Guide on Employee Transfers and Demotions. No wage deductions It is a common practice in the Philippines that creditors demand that the debtor-employee’s wage be paid directly to them. Tell the employee of his demotion with calm and professional language. “Employee Transfer and Demotion is a very useful tool for HR practitioners. Part of due process in effecting a demotion is the presence of just cause. First, let’s answer the basic question: is demotion allowed by the law in the first place? This is wrong on so many levels, and it doesn't make sense. 1. The Labor Code of the Philippines, otherwise known as Presidential Decree No. As an employer (or supervisor) a Demotion Letter will serve as a record of the official action being taken. If they trust you and believe that they have been given the complete story, the salary reduction is an event that has an ending. That way, the employer can have flexibility in running the ship. Even if an employee voluntarily asks for a demotion, there … Philippine labor laws that employers must know October 18, 2009 by Vanessa Abrugar ... employee may be dismissed for a just cause or when he fails to qualify as a regular employee in accordance with reasonable standards made known to him at the time he is hired. So, they’re doing their readers a favor—they have included sample notices and forms to guide you in laying down the basis of  transfers and demotions the LEGAL WAY. Based on work performance. This is a must-have for employers who wish to make the right decision and avoid or minimize litigation. From Schalk and Rousseaur’s perspective on psychological contracts, we know that the effects of demotion on one’s health depends on how we perceive the change. Guide to Philippine Employment Law: An Overview of Employment Laws for the Private Sector Quisumbing Torres 3 Furthermore, employers may not require employees to perform overtime work except in certain cases and provided appropriate compensation is paid. However, the employer… But the people who claim this seems to miss a crucial component. How then should an employer go about transferring or demoting an employee in order to promote the goals of business? Philippines, under RA No. Give the document to the employee as an additional means of communication on the matter, and so that they can have it for their records. Therefore, we didn’t reduce the salary. Payroll Salary Compensation and Benefits in the Philippines as provided under the Labor Code of the Philippines and other relevant laws. 1. Atty. C. In the event involuntary demotion is being recommended, a written statement of reasons for such action must be forwarded to the employee and the Human Resources Department. If I were explaining this to a person, here's how I would phrase it: So to cap it off, demotion which has gone thru proper due process is an exception to security of tenure. 121621, May 3, 1999). The net effect is they get off Scott free for something they did, and get paid for more than they are contributing to the company. You need to work with the employee before you send an official letter so it doesn't catch them off guard. However, it can be a mistake to enforce a demotion when it would be better for an employee to leave the company. 177705, September 18, 2009, 600 SCRA 648, 653. employee discipline and termination of employment under philippine law, frequently asked questions Published on December 7, 2015 December 7, … Your employees are often the best people to understand the risks in their workplace. This book will guide you by providing sample forms relating to demotions and transfers. Salary reduction for exempt employees is more complicated. Kudos to Atty. Common penalties can take the form of reprimands, memos, suspensions and terminations. Employees can't be demoted as retaliation for filing a sexual harassment claim or because they informed authorities about an illegal action by their organization. “Art. Nothing wrong with including this as an option, provided that it still disciplines your team appropriately. Let me cite an example. It may be a tool for positive changes or a weapon of destruction. Risks associated with demotion. Kirk, a 48-year-old executive employee of a multinational company in the Philippines, was … In other words, this isn't the first time the employee will be hearing about this. With the wrong evidence, it is possible for a transfer based on good faith to be declared as illegal for violating an employee’s right to security of tenure. Coca Cola Bottlers Philippines, GR 176985, April 1, 2013). Regardless of the motives of management, there are repercussions to consider in the transfer of an employee. Understanding the … Thus, terminating an employee in the country is taken VERY seriously and can be a complex process, especially since, when in doubt, the Labor Code of the Philippines … Many employers use demotions in an attempt to keep an employee in the company. The Supreme Court in the case of Ricardo E. Vergara Jr. vs Coca-Cola Bottlers Philippines Inc. (GR 176985, April 1, 2013), through Chief Justice Diosdado Peralta expounded on the principle of non-diminution of benefits, to wit: “Generally, employees have a vested right over existing benefits voluntarily granted to them by their employer. Therefore, they argue, "Even if I was demoted, the law says my salaries and benefits should stay the same." Unlike the United States of America, which has an “at-will employment” doctrine, employers in the Philippines can only terminate their relationship with an employee if a “just” or “authorized” cause, as defined under the law, has been established, after undergoing due process. Labor and Social Legislation. In a voluntary demotion, the employee adjusts his job to match the current needs of his life. Certain things must appear in the notice for it to be sufficient. Instead, lawyers rely on Supreme Court rulings which deal with certain aspects of demotion. A demotion is a step down in rank or job title for an employee. Labor and Social Legislation. Closure of establishment and reduction of personnel. A Supervisor/Department Head may recommend involuntary demotion for a staff member for inefficient work performance, disciplinary reasons, or other just cause. Follow up with the individual after the demotion. As a general rule, I agree with that. In fact, the Supreme Court itself has stated that if you can find another penalty that can suit the violation aside from termination, it prefers the lighter penalty in order to protect employees. The decision to transfer an employee can be tricky for an employer. He graduated cum laude from the Pamantasan ng Lungsod ng Maynila. A group of nurses said the government must review and amend the recent circular from the Department of Budget and Management over its … This is one guide you’ll want to keep as one of your tools for managing employees and your business! If the explanation still shows that the employee is still guilty, then the employer is free to impose whatever penalty (including demotion) seems appropriate. If a new probationary period is a condition for demotion, the employee must sign a statement indicating an understanding of this fact prior to the effective date of the demotion. Most demotions are in response to an employee's behavior or poor work performance. While it is not commonly used, demotions are one of the ways in which these penalties can be imposed. It’s available for sale right now. Employment promotion. B. In practice, they ask employees to sign employment An employee might not be doing well in their current position, and there is no other option left except reducing their responsibilities. In short, if the employee does something bad, and the employer gave the employee chance to explain their side. Art. Even when a demotion is justified such as a reorganization to streamline operations, the employer must observe the proper procedure required of valid terminations. In the pursuit of its legitimate business interest, management has the prerogative to transfer or assign employees from one office or area of operation to another provided there is no demotion in rank or diminution of salary, benefits, and other privileges; and the action is not motivated by discrimination, made in bad faith, or effected as a form of punishment or demotion without sufficient cause [G.R. This falls as an exception to the non-diminution of benefits principle because it went through due process. A demotion can be significantly less expensive than firing or laying off an employee because an employee you keep on is not eligible for severance pay or unemployment. 442., governs all employee-employer relations, their rights and obligations.. Here are four steps to smoothly navigate a demotion. In sum, as long as there are reasonable grounds for demoting an employee and said demotion is coupled with the twin-notice requirement, demotion is allowed and does not constitute constructive dismissal. An employee who refuses to be transferred, when such transfer is valid, is guilty of insubordination. Usually a demotion means a loss in pay, benefits, and company privileges. Demotion is used as a disciplinary measure in an organization. Did we do the right thing?”. Constructive dismissal refers to an involuntary resignation resorted to when continued employment becomes impossible, unreasonable or unlikely; when there is a demotion in rank or a diminution in pay; or when a clear discrimination, insensibility or disdain by an employer becomes unbearable to an employee or an unwarranted transfer or demotion of a employee, or other unjustified … Public hospital nurses ironically suffered a demotion after the government raised their entry salary to Salary Grade (SG) 15 or about P32,000 per month last July, a nurses’ organization said. 14. 44 rules on Employee Transfer and Demotion is now available at your favorite bookstores (National Bookstore, Fully Booked and Powerbooks) . The Labor Code of the Philippines, otherwise known as Presidential Decree No. 10149 or the "GOCC Governance Act of 20111 and 4.3 Nurses hired without employee-employer relationship and funded from non-Personnel Services appropriations/budgets. The Supreme Court in the case of Ricardo E. Vergara Jr. vs Coca-Cola Bottlers Philippines Inc. (GR 176985, April 1, 2013), through Chief Justice Diosdado Peralta expounded on the principle of non-diminution of benefits, to wit: “Generally, employees have a vested right over existing benefits voluntarily granted to them by their employer. Retirement. Florido for this wonderful book.”  — Bheng Materum, Personnel Officer, Geoestate Corporation. How can something that isn’t in the labor code be legal?" "But Attorney! 44 Rules on Employee Transfer and Demotion is one such guide which provides answers to the usual questions on employee transfer and demotion. To be clear, you can reduce the salaries and benefits of a demoted employee to reflect their new status within the company. 44 Rules is a compilation of these rules which are embodied in numerous cases decided in the past few years. It is different from a reassignment or transfer which is a movement from one position to another which is of equivalent rank, level or salary, without interruption in service. One camp says no because it is a violation of security of tenure. What is constructive dismissal? If this is the way you run your business, employees will all plot to commit a violation which will get them demoted (but not terminated). A. As an employer, you can determine the form in which these penalties take as an exercise of your management prerogative. - Any employee may be retired upon reaching the retirement age established in the collective bargaining agreement or other applicable employment contract. matters or cases involving employer-employee relations including money claims, arising out of or by virtue of any law or contracts involving Filipino workers for overseas employment except seamen: Provided, That the Bureau of Employment Services may, in the case of the National Capital Region, exercise such power, whenever the Minister of Labor deems it appropriate. IF an employee has filed a VL for 4 days in January but the said employee is only entitled to 1 VL for that month, the company will only pay in full 1 day of the leave but the rest (3 days) will be paid in half. If an employee files 5 days SL in March, 3 of these SL will be paid in full the rest (2 days) will be paid half. They usually cite Section 18, Article II of the Constitution and the Article III of the Labor Code. Demoting an employee is not easy, but sometimes it has to be done. 70 Kimberly-Clark Philippines, Inc. v. Dimayuga, G.R. Where the employee consents to a demotion and there is no significant loss of remuneration or duties, it is more likely that the Commission or courts will conclude that there has been a variation to the current contract of employment by consent. Do not let it appear that you pity the employee, and publicly praise that person for his or her contributions in the new role. Worse, you may be found liable for failing to meet these requirements and compelled to pay an employee not only backwages but also huge amounts as damages. 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