It makes our job easier, efficient and legally defensible. 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. 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. (Benguet Electric … 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. In these circumstances, there has been no dismissal. However, the employer… Art. Certain things must appear in the notice for it to be sufficient. A demotion is a step down in rank or job title for an employee. Reduction of an employee's salary is often a consequence of the employer's decision to demote the employee for some reason. It is the employer’s prerogative to demote its employees to other positions when the interests of the company reasonably demand it (Rubberworld (Phils. Is it possible to impose demotion under the law? 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. They are "secure" there once they are regular. Since he has been demoted, he now has fewer responsibilities and workload, and yet, still enjoys the benefits of his previous position. A demotion is a reduction in position, rank or grade, or a movement to a lower type of position, which may or may not be accompanied by a reduction in salary, as a result of a transfer. - Any employee may be retired upon reaching the retirement age established in the collective bargaining agreement or other applicable employment contract. Demotions are treated as dismissals from employment. 442., governs all employee-employer relations, their rights and obligations.. “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. There are many personal and professional reasons someone might consider a voluntary demotion. ELVIN B. VILLANUEVA is an HR practitioner, consultant and litigation lawyer. HR practitioners that implement this decision are encouraged to acquire technical competence to carry out this sensitive task. The moral of the story is that your employees will work with you willingly to retain their jobs—and in hopes that the salary reduction is a short term solution for a non-exempt employee. Before you demote an employee, make sure the demotion does not violate any company policies or contract that you might have with the employee. EMPLOYEE DISCIPLINE AND TERMINATION OF EMPLOYMENT UNDER PHILIPPINE LAW, FREQUENTLY ASKED QUESTIONS Published on December 7, … An employee might not be doing well in their current position, and there is no other option left except reducing their responsibilities. 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. Demotion refers to the lowering down of the status, salary and responsibilites of an employee. Companies may use it to promote business growth by sending key and competent personnel to areas where the employer needs them. 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. The termination of an employment contract, initiated either by you or your employee, is a complicated part of managing employees in the Philippines.The Philippines’ Labor Code is more beneficial for the employees, and as it is not as a simple process as in many other countries, costly disputes are easy to arise. If you are the type of person who wants to get hold of your copy now, an ebook version in PDF format is also available for purchase and delivery online. If you don’t follow these basic rules, you could end up in a labor court defending a decision that may seem appropriate but which may lack certain legal requirements. I got this question in a workshop once, “Attorney, we demoted an employee. Therefore, they reason, they can’t be removed or demoted from their position. This was the case of Cavite Apparrel vs. Marquez: So yes, between demotions and terminations, the law actually prefers that you consider demotion first before dismissing employees. 442., governs all employee-employer relations, their rights and obligations.. Without just cause, an unjustified demotion may constitute constructive dismissal, for which an employer may be held liable for backwages and damages. This is one guide you’ll want to keep as one of your tools for managing employees and your business! Philippine laws only grant separation pay to those who were dismissed from service not due to their own fault or negligence but for reasons that are beyond their control, i.e. Common penalties can take the form of reprimands, memos, suspensions and terminations. 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. That's it for demotion. The Labor Code hardly deals with transfers and demotions and you won’t find official set of rules to rely on to guide employers and employees alike. “Very practical, direct to the point and comprehensive.” — Elenor Alnajes. Thus, management must take extra caution and observe utmost good faith in doing so. "But Attorney! Let’s discuss this in today’s article. The Philippine Constitution provides employees in rank-and-file and supervisory positions the right to organize, join, and assist labor unions for the main purpose of establishing a collective bargaining agreement (CBA) with their employer. 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. Consider the situation with me: In effect, what you did was to say to the employee, “Hey, you did a bad thing. Present the news in a professional manner. 283. It is widely accepted that the Philippines is one of the countries which implement stricter labor laws. In a voluntary demotion, the employee adjusts his job to match the current needs of his life. In short, if the employee does something bad, and the employer gave the employee chance to explain their side. The concepts are easy to understand making this book an important tool in every HR practitioner or business owner’s business kit. Find out more about involving your workers in health and safety. Florido for this wonderful book.”  — Bheng Materum, Personnel Officer, Geoestate Corporation. Part of due process in effecting a demotion is the presence of just cause. A demotion is a step down in rank or job title for an employee. How can something that isn’t in the labor code be legal?" At the approval of the Director, a demoted employee may have his/her name placed on the reinstatement eligible list for the classification from which demoted. Published Sep 1, 2020 5:51:59 PM. If they trust you and believe that they have been given the complete story, the salary reduction is an event that has an ending. 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. In particular, the employer must be able to show that the transfer is not unreasonable, inconvenient or prejudicial to the employee; nor does it involve a demotion in rank or a diminution of his salaries, privileges and other benefits. In addition to meeting with the employee, observe how he or she is reacting to the new role. 177705, September 18, 2009, 600 SCRA 648, 653. This guide will help you make informed decisions before it’s too late. Philippines, under RA No. These sources of law bind everyone in the Philippines, whether you know of them or not. This means going thru proper due process proceedings. 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. 1. Once a labor case clamps down on the company, there will certainly be costs involved. 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. Paperback copies of 44 Rules on Transfers and Demotions are now available at National Bookstore, Fully Booked and Powerbooks stores nationwide. To be clear, you can reduce the salaries and benefits of a demoted employee to reflect their new status within the company. Important rules on how to demote an employee in the Philippines. In a voluntary demotion, the employee adjusts his job to match the current needs of his life. These sources of law bind everyone in the Philippines, whether you know of them or not. 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. 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. IGNORANCE OF THE LAW EXCUSES NO ONE It constitutes willful disobedience of a lawful order of an employer. The right to a living wage of an employee is recognized under Article XIII, Section 3 of our 1987 Constitution. 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. An employee who refuses to be transferred, when such transfer is valid, is guilty of insubordination. Well, that’s because it isn’t in the labor code. Okay, with that out of the way, the actual middle of the article - which contains the core messaging and details of the move - is, again, straightforward. It may be a tool for positive changes or a weapon of destruction. However, the employee argues that he should still enjoy the salaries and benefits he enjoyed previously because of non-diminution. Tell the employee of his demotion with calm and professional language. 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. Nope, you’re not doing anything wrong. What is constructive dismissal? 287. Retirement. It‘s found in the principle called Management Prerogative and has been discussed in Supreme Court cases. This book will guide you by providing sample forms relating to demotions and transfers. Just fill them up or make some adjustments to suit the circumstances of your business or employee. If he is not informed of these reasonable criteria, he will be considered a regular employee. Let me cite an example. 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. Did we do the right thing?”. The Labor Code of the Philippines, otherwise known as Presidential Decree No. A demotion letter addresses the involuntary demotion of an employee, often memorializing a previous conversation in which the employee has been informed of their demotion and the reasons for it. Employment promotion. Labor and Social Legislation. Employees cannot be demoted because of race, gender, age, religious beliefs, or genetic information. Get quick access to this guide with sample forms and notices in less than the time it will take you to head for the bookstore. Under the principle of management prerogative, employers are given the power by the law to decide how to run their businesses, including how to discipline their employees. Regardless of how you phrase it, the office will probably … You should never demote an employee based on race, age, gender, religion, or disability. Others claim that you’re better off sticking to the suspensions and terminations. As an employer, you can determine the form in which these penalties take as an exercise of your management prerogative. Demotion of Employee Philippines. About the Authors. 70 Kimberly-Clark Philippines, Inc. v. Dimayuga, G.R. 44 rules on Employee Transfer and Demotion is now available at your favorite bookstores (National Bookstore, Fully Booked and Powerbooks) . “Art. Even if an employee voluntarily asks for a demotion, there … Answer is yes, it is allowed. “Is it legal to transfer and demote an employee in the Philippines?”. In other words, this isn't the first time the employee will be hearing about this. In an interview with DZBB on Monday, Employers Confederation of the Philippines chairman Sergio Ortiz-Luis Jr said that the government should shoulder the testing of private sector employees… Payroll Salary Compensation and Benefits in the Philippines as provided under the Labor Code of the Philippines and other relevant laws. If there is a drop in production or the company isn’t as profitable, the employer will opt to demote some of the higher paid employees to avoid termination. Important rules on how to demote an employee in the Philippines. In short, if the employee does something bad, and the employer gave the employee chance to explain their side. Usually a demotion means a loss in pay, benefits, and company privileges. 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. Understanding the … 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. Labor and Social Legislation. h. "Overseas employment" means employment of a worker outside the Philippines. employee discipline and termination of employment under philippine law, frequently asked questions Published on December 7, 2015 December 7, … It’s available for sale right now. 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. … Salary reduction for exempt employees is more complicated. HR officers and business owners ordinarily implement decisions and later turn to lawyers for advice or worse, legal assistance, only when faced with court action. How then should an employer go about transferring or demoting an employee in order to promote the goals of business? No. These penalties are not specified by the law. 71 Art. In my workshops, there is a rule that I emphasize over and over again for participants. Telling an employee that you’re demoting them can be tricky. An integral part of discipline is to decide what kinds of penalties to impose against erring employees. i. The right to security of tenure means that a regular employee … 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. In no case will the employee receive an amount lower than PHP 537.00. business closure, cessation of operation, retrenchment (reduction of costs) to prevent losses, etc. A Demotion Letter officially informs the employee of the reason(s) behind the downgrade within the company. The authors (who are HR practitioners and lawyers at the same time) know how HR specialists and managers (even small business owners) struggle with documenting HR decisions. An employer may look to demote an employee as an alternative to dismissal after 121621, May 3, 1999). Mistakes in effecting the transfer or demotion can cost the employer huge sums of money in the form of an award for backwages, damages and attorney’s fees in favor of the illegally transferred or demoted worker.

. This work can guide HR specialists, managers and business owners in making the right decisions and implementing management choices the legal way. “Employee Transfer and Demotion is a very useful tool for HR practitioners. The Labor Code of the Philippines, otherwise known as Presidential Decree No. Based on work performance. This is a must-have for employers who wish to make the right decision and avoid or minimize litigation. That way, the employer can have flexibility in running the ship. This is wrong on so many levels, and it doesn't make sense. 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. There seems to be a lot of confusion when it comes to using demotion in the workplace. Compulsory Demotion . 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. The decision to transfer an employee can be tricky for an employer. It is widely accepted that the Philippines is one of the countries which implement stricter labor laws. Also keep an eye on how other employees are reacting to the change. 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. Read what HR managers and other responsible company officers are saying about this guide: “Employee Transfer and Demotion is a very useful tool for HR practitioners. Demotion is used as a disciplinary measure in an organization. HR/Admin Manager, X-Habit, Inc. “This book is another milestone in Human Resource literature. Others say that you can, but you have to keep paying the same salary because it will violate the non-diminution of benefits principle. Resources Leaflets. Unlike those letters, a demotion letter comes AFTER a meeting. © 2021 Demotion of Employee Philippines. If you need more information about how to conduct disciplinary procedures, I recommend you stop by our book store and grab a copy of the Complete Employee Discipline System. Company restructuring is also a cause for demotion. Since demotion is just another form of penalty, it stands to reason that you should go thru due process before imposing demotion. 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. They usually cite Section 18, Article II of the Constitution and the Article III of the Labor Code. 2. Demoting an employee is not easy, but sometimes it has to be done. In the case of organizations, it can be is a disciplinary measure short of firing an employee. 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. Many employers use demotions in an attempt to keep an employee in the company. Kirk, a 48-year-old executive employee of a multinational company in the Philippines, was … Here are four steps to smoothly navigate a demotion. Schedule, however, shall not apply to officials and employees whose terms of office are coterminous witll the incumbent President of the Philippines, including the.coterminous employees of these officials, 4.1 Rules for Adjusting Salaries 4.1.1 The salaries of incumbent civilian personnel shall be adjusted to the “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. He finished law with honors from the Arellano University in 2009 and passed the bar exams held in the same year. There are a number of reasons why an organization might compel an employee to take on a lower role. B. As an employer (or supervisor) a Demotion Letter will serve as a record of the official action being taken. In all such cases, the situation will be discussed with the employee by the Supervisor/Department Head before any action is taken. Nurses appeal DBM provisions on 'demotion,' contractual positions By Carolyn Bonquin, CNN Philippines . 44 Rules is a compilation of these rules which are embodied in numerous cases decided in the past few years. 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. A Supervisor/Department Head may recommend involuntary demotion for a staff member for inefficient work performance, disciplinary reasons, or other just cause. Workplaces where employees are involved in taking decisions about health and safety are safer and healthier. The dos and don’ts in demotion are also clearly and completely explained. 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. However, it can be a mistake to enforce a demotion when it would be better for an employee to leave the company. Hope you learn your lesson.”. Other times, employees seek out voluntary demotions. 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. 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. If the explanation still shows that the employee is still guilty, then the employer is free to impose whatever penalty (including demotion) seems appropriate. 1. A. It  is also available in EBook (pdf format), perfect for your PC, Ipad, Kindle and tablet. 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. Regardless of the motives of management, there are repercussions to consider in the transfer of an employee. 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. Unfair dismissal. Some people seem to think that once a person acquires security of tenure in a position, they are entitled to it forever. Many employers use demotions in … No. Demotions, the compulsory lowering of an employee’s job rank, job title, or status, are used in a variety of ways by both organizations and employees. Villanueva and Atty. The employee has proven to be a high performer, but the new role is unsuitable for the employee’s talents. Therefore, we didn’t reduce the salary. Once such giving of benefits attains the status of a company practice, the employees can demand these benefits as a matter of right. It makes our job easier, efficient and legally defensible. Even when a demotion is justified such as a reorganization to streamline operations, the employer must observe the proper procedure required of valid terminations. Kirk, a 48-year-old executive employee of a multinational company in the Philippines, was … 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 … 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 … However, the employer… An organization can provide a demotion at the choice of the organization or voluntarily, at the request of the employee, sometimes called deployment. The decision to transfer an employee may be a double-edged sword with both favorable and unfavorable consequences. 4 steps of demoting an employee. Risks associated with demotion. I can’t find it anywhere in the labor code! 44 Rules on Employee Transfer and Demotion is one such guide which provides answers to the usual questions on employee transfer and demotion. Then, follow up with a demotion letter that will serve as the official notice to the employee and will go on file. Do not let it appear that you pity the employee, and publicly praise that person for his or her contributions in the new role. Tagged demotion philippines guide, demotion philippines rules, demotion rules philippines, philippines demotion guide. The habitual patterns of behaviour such as violation of the rules and conduct, poor attendance record, insubordination where the individuals are demoted. In short, if the employee does something bad, and the employer gave the employee chance to explain their side. An involuntary demotion may be considered in a case where an employee is not able to perform work satisfactorily in his/her present position. 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. Department of Labor and Employment (DOLE) Building, Muralla Wing cor. As a rule, changes in rank or position within the company are considered valid only when they are based on just and valid grounds such as genuine business necessity. KNOWLEDGE OF THE RULES WILL KEEP YOU FROM MAKING COSTLY MISTAKES! Instead, lawyers rely on Supreme Court rulings which deal with certain aspects of demotion. Usually a demotion means a loss in pay, benefits, and company privileges. Provide a written statement detailing when the demotion will take effect and the specific reasons the demotion is warranted. 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). To punish you, we’ll reduce your responsibilities and work load but on paper, you’ll have a lower rank. Therefore, they argue, "Even if I was demoted, the law says my salaries and benefits should stay the same." Follow up with the individual after the demotion. One camp says no because it is a violation of security of tenure. An employee covered by said wage order shall receive a daily wage of PHP 537.00 for a work done on the normal working hours unless the employer pays said worker a higher amount. Let me cite an example. Before imposing any penalty whatsoever, you have to give the employee a chance to explain themselves. While it is not commonly used, demotions are one of the ways in which these penalties can be imposed. First, let’s answer the basic question: is demotion allowed by the law in the first place? ), Inc., vs. … You need to work with the employee before you send an official letter so it doesn't catch them off guard. Your employees are often the best people to understand the risks in their workplace. Since demotion is just another form of penalty, it stands to reason that you should go thru due process before imposing demotion. There’s a massive disconnect here between your intention and the lesson you're teaching your team. Some employers allow deductions from the wage or payment of the entire amount to these creditors not knowing that this is illegal. Business owners and practitioners alike will find this helpful.” —  Bobbit Jimenez, Controller, Citadel. Coca Cola Bottlers Philippines, GR 176985, April 1, 2013). This falls as an exception to the non-diminution of benefits principle because it went through due process. (Westin Philippine Plaza Hotel vs. NLRC, G. R. No. Nothing wrong with including this as an option, provided that it still disciplines your team appropriately. Got this question in a case where an employee 's behavior or poor work performance caution... The transfer of an employee imposing any penalty whatsoever, you ’ reduce. In the labor Code be legal? or minimize litigation first, ’... Employees to sign employment h. `` Overseas employment '' means employment of a practice... The people who claim this seems to be a mistake to enforce a demotion letter comes after meeting... Violate the non-diminution of benefits also keep an eye on how to demote an to. After a meeting a workshop once, “ Attorney, we ’ ll have a rank! Catch them off guard, they are `` secure '' there once they are entitled to it.. Case where an employee is not informed of these reasonable criteria, he will hearing! 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