REDUNDANCY: AUTHORIZED CAUSE IN EMPLOYMENT TERMINATION

 Dismissal of workers due to redundancy is a management prerogative governed by the Article 283 of the Labor
Code.

 Refers to the termination of employment due to the excess of workers than what an employer's operation
requires. It's a form of business-driven termination, not attributed to employees' performance or conduct.
Common reasons include the introduction of new technologies, business downturns, or company
reorganizations.

o Substantive Due Process: This pertains to the valid and lawful grounds for termination. In redundancy,
employers should ensure that the positions to be terminated are in excess of what is needed. The
selection of employees to be let go must be fair and reasonable, often based on criteria like seniority,
performance, or company needs.

o Procedural Due Process: This requires employers to observe the twin notice requirement.
 First, they must serve written notices to the employees and the Department of Labor and
Employment (DOLE) at least one month before the intended date of termination. The notice
should clearly state the specific grounds for termination.
 Second, a final notice should be given, indicating that upon consideration of all circumstances,
termination is the final course of action.

 Entitlement to separation pay:

o Equivalent to at least one month's pay or at least one month's pay for every year of service, whichever is
higher.

 Section 5.4 of DOLE Department Order No. 147, Series of 2015 provides that for redundancy to be valid as a
ground for termination, the following factors or elements must be present:
1. There must be superfluous positions or services of employees;
2. The positions or services are in excess of what is reasonably demanded by the actual requirements of the
enterprise to operate in an economical and efficient manner;
3. There must be good faith in abolishing redundant positions;
4. There must be fair and reasonable criteria in selecting the employees to be terminated; and,
5. There must be an adequate proof of such redundancy such as but not limited to the new staffing pattern,
feasibility studies/proposal, on the viability of the newly created positions, job description and the approval
by the management of the restructuring.

 In the case of 3M Philippines, Inc. v. Yuseco (G.R. No. 248941, 09 November 2020), the SC explained that:

o Redundancy exists when the service capability of the workforce is in excess of what is reasonably
needed to meet the demands of the business enterprise. A position is redundant where it had become
superfluous. Superfluity of a position or positions may be the outcome of a number of factors such as
over-hiring of workers, decrease in volume of business, or dropping a particular product line or service
activity previously manufactured or undertaken by the enterprise.

o A valid redundancy program must comply with the following requisites:

a. written notice served on both the employees and the DOLE at least one (1) month prior to the
intended date of termination of employment;
b. payment of separation pay equivalent to at least his one (1) month pay or to at least one (1) month
pay for every year of service, whichever is higher;
c. good faith in abolishing the redundant positions; and
d. fair and reasonable criteria in ascertaining what positions are to be declared redundant and
accordingly abolished, taking into consideration such factors as (i) preferred status; (ii) efficiency; and
(iii) seniority, among others.

o SC further cited that:

“As the NLRC aptly ruled: Based on the record of this case, We find that the separation of complainant
from employment was due to redundancy which was carried out after a serious study. It is difficult to
convince Us that the redundancy was thought out on the spur of the moment or only during the meeting
of November 25, 2015. It would be foolhardy for the respondent company to have come out with a
drastic change in its organization without regard to its viability and profitability, just to get rid of
complainant.”
 “Precisely, in 2015, the company made a decision to enhance its marketing and sales capabilities,
inspired by the business performance of some 3M subsidiaries in the South East Asian Region. The
company focused more on the demands of the market.”

 In the case of American Power Conversion Corporation et al., vs. Jason Yu Lim (G.R. No. 214291, January 11,
2018) the Supreme Court explained that, the declaration of redundant positions is a management prerogative,
an exercise of business judgment by the employer. It is however not enough for a company to merely declare
that positions have become redundant. It must produce adequate proof of such redundancy to justify the
dismissal of the affected employees.
o The following evidence may be proffered to substantiate redundancy:
 New staffing pattern, feasibility studies/proposal, on the viability of the newly created positions,
job description and the approval by the management of the restructuring.
 Affidavits executed by the officers of the Company, explaining the reasons and necessities for the
implementation of the redundancy program.

 In Santos v. Pepsi (G.R. No. 141947, July 5, 2001) the SC mentioned that,
“x x x
the two (2) positions being different, it follows that the redundancy program instituted by PEPSI was
undertaken in good faith. Petitioners have not established that the title Account Development Manager
was created in order to maliciously terminate their employment. Nor have they shown that PEPSI had
any ill motive against them. It is therefore apparent that the restructuring and streamlining of PEPSI's
distribution and sales systems were an honest effort to make the company more efficient.

 Burden of Proof
o The burden is on the employer to prove by substantial evidence the factual and legal basis for the
dismissal of its employees on the ground of redundancy. (Abbott Laboratories [Philippines], Inc. v.
Torralba, G.R. No. 229746, October 11, 2017)

SUMMARY
Legal Requirements Action Plan
1. Good faith in abolishing the redundant We should have an adequate proof of such
positions redundancy to justify the dismissal of the affected
employees, such as but not limited to:
 the new staffing pattern,
 feasibility studies/proposal on the
viability of the newly created positions,
 job description
 approval by the management of the
restructuring.
2. Fair and reasonable criteria in We must have a proof that we applied fair and
ascertaining what positions are to be reasonable criteria in determining what positions
declared redundant and accordingly have to be declared redundant.
abolished, taking into consideration such
factors as (i) preferred status; (ii)
efficiency; and (iii) seniority, among
others.
3. Written notice served on both the Shall be made at least one (1) month prior to the
employees and the DOLE intended date of termination of employment
4. Payment of separation pay Equivalent to at least his one (1) month pay or to
at least one (1) month pay for every year of
service, whichever is higher