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.. Department of Labor and Employment (DOLE) Building, Muralla Wing cor. 70 Kimberly-Clark Philippines, Inc. v. Dimayuga, G.R. 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. 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 … In all such cases, the situation will be discussed with the employee by the Supervisor/Department Head before any action is taken. 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. 14. “Employee Transfer and Demotion is a very useful tool for HR practitioners. Risks associated with demotion. 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. 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. This work can guide HR specialists, managers and business owners in making the right decisions and implementing management choices the legal way. 121621, May 3, 1999). First, let’s answer the basic question: is demotion allowed by the law in the first place? I tell them, “Employee discipline is just like parenting. 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. This is why the latest Supreme Court cases require employers to observe due process including the giving out of notices. Whether or not the transfer is intended for purely business purposes or to express animosity, the legality of a company’s action will always be determined by the pieces of evidence brought before the labor court. Kudos to Atty. 2. An integral part of discipline is to decide what kinds of penalties to impose against erring employees. Others claim that you’re better off sticking to the suspensions and terminations. Hope this was helpful for you. The principle of non-diminution of benefits state that "any benefit and supplement being enjoyed by the employees cannot be reduced, diminished, discontinued or eliminated by the employer." Unfair dismissal. 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. Resources Leaflets. These sources of law bind everyone in the Philippines, whether you know of them or not. The Labor Code of the Philippines, otherwise known as Presidential Decree No. This book will guide you by providing sample forms relating to demotions and transfers. 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. Provide a written statement detailing when the demotion will take effect and the specific reasons the demotion is warranted. The employee has proven to be a high performer, but the new role is unsuitable for the employee’s talents. Demotion of Employee Philippines. One camp says no because it is a violation of security of tenure. 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. "Emigrant" means any person, worker or otherwise, who emigrates to a foreign country by virtue of an immigrant visa or resident permit or its equivalent in the country of destination. He graduated cum laude from the Pamantasan ng Lungsod ng Maynila. Retirement. A demotion is a step down in rank or job title for an employee. 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. Villanueva and Atty. However, the employer… Payroll Salary Compensation and Benefits in the Philippines as provided under the Labor Code of the Philippines and other relevant laws. A Supervisor/Department Head may recommend involuntary demotion for a staff member for inefficient work performance, disciplinary reasons, or other just cause. General Luna St., Intramuros, Manila, 1002, Philippines Monday - Friday: 8:00 am - 5:00 pm (except holidays) Consider the situation with me: In effect, what you did was to say to the employee, “Hey, you did a bad thing. The Labor Code of the Philippines, otherwise known as Presidential Decree No. 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. However, it can be a mistake to enforce a demotion when it would be better for an employee to leave the company. “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. 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). As an employer, you can determine the form in which these penalties take as an exercise of your management prerogative. There seems to be a lot of confusion when it comes to using demotion in the workplace. 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. It constitutes willful disobedience of a lawful order of an employer. However, it can be a mistake to enforce a demotion when it would be better for an employee to leave the company. Paperback copies of 44 Rules on Transfers and Demotions are now available at National Bookstore, Fully Booked and Powerbooks stores nationwide. Labor and Social Legislation. Here are four steps to smoothly navigate a demotion. The right to a living wage of an employee is recognized under Article XIII, Section 3 of our 1987 Constitution. In short, if the employee does something bad, and the employer gave the employee chance to explain their side. It  is also available in EBook (pdf format), perfect for your PC, Ipad, Kindle and tablet. What is constructive dismissal? This is a must-have for employers who wish to make the right decision and avoid or minimize litigation. 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. The habitual patterns of behaviour such as violation of the rules and conduct, poor attendance record, insubordination where the individuals are demoted. Therefore, we didn’t reduce the salary. 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. Tell the employee of his demotion with calm and professional language. 44 Rules is a compilation of these rules which are embodied in numerous cases decided in the past few years. Usually a demotion means a loss in pay, benefits, and company privileges. 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. Without just cause, an unjustified demotion may constitute constructive dismissal, for which an employer may be held liable for backwages and damages. A demotion is a step down in rank or job title for an employee. 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. 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. To punish you, we’ll reduce your responsibilities and work load but on paper, you’ll have a lower rank. This guide will help you make informed decisions before it’s too late. Coca Cola Bottlers Philippines, GR 176985, April 1, 2013). 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. 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