BoardRoom Discussions

Finally, my How To Lose Your Job series can be closed

On August 29, 2007, it was an honor to handle one of the break out sessions of the 1st HR Philippines National Convention and I handled the discussion on Employee Discipline. Using the same approached I employ with fellow HR practitioners, I would like to close this series by discussing Due Process of law from the point of view of management.

In the Philippines, Employee Discipline is one of the rights an investor or capitalist can use to ensure a profitable operations.

“Success of industries is the foundation upon Which just wages may be paid. There can be no success without efficiency. There can not be efficiency without discipline…”

Batangas Transportation Co., et al vs. Bagong Pagkakaisa ng mga employees and Laborers of BTCo., GR No. L-1706 March 10, 1949

However, this management right is not absolute and management is equally obliged to observe another right. And these are the rights of an employee to a security of tenure and due process.

“The state affords the constitutional blanket of rendering protection to labor but it also protect the right of employers to exercise what are clearly management prerogatives, so long as the exercise is without abuse of discretion.”

Pantranco North Express vs. NLRC GR No. 106516, Sept. 21, 1999.

Due process is the mechanism that ensures both rights of management, i.e. to employee discipline and the prerogative to dismiss employee, and the right of an employee to a security of tenure, is respected. It is the process affording the employee of the opportunity to be informed of his alleged violation(s) and to be heard or to explain his side.

Due process have two elements:

1. The substantive Due Process
2. The Procedural Due Process

Substantive Due Process provides the ground for disciplinary action, i.e. corrective or retributive.

While Procedural Due Process provides the procedure on how to go about hearing the side of the employee and evaluating all facts and evidences against the allegation. Procedural Due Process must follow the twin notice rule– (1) Notice to explain and (2) Notice of decision.

Non observance of due process have resulted embarassment to some companies. Not to mention the cost of litigation and settlement.

When due process is not observed, it will result to any or combination of the following:

1. Illegal dismissal or Suspension
2. Illegal dismissal will result to reinstatement and payment of back wages.
3. Illegal suspension, on the other hand will result to payment of lost wages.

Aside from this basic premise, it is prudent for Management and HR practitioners to keep in mind Supreme Court doctrines relevant to employee discipline. These are:

1. Pre Wenphil Doctrine (before 1989) — The none observance of substantive and procedural due process will result to illegal dismissal.
2. Wenphil Doctrine (Feb 1989)– This doctrine was brought about by the dismissal of employee. SC ruled that company had basis to dismiss employee but since the procedural due process was not observed, the company paid damages for not respecting the right of employee. The dismissal was upheld.
3. Serrano Doctrine (Jan 2000)– Because the Wenphil doctrine brought abuse from big corporations wherein they will dismiss employee, though with grounds, the procedural due process is not being observed. This practice became known as the “terminate now pay later” attitude of big corporations. The Supreme Court, then, modified Wenphil resulting to this new doctrine. Though dismissal of employee will still be upheld if there are sufficient grounds, the monetary damages brought by disrespect to the employees right to be heard, shall be computed from the time the Supreme Court ruled the case with finality and backwards.
4. Agabon Doctrine (Nov 2004)– The Supreme Court again went back to Wenphil because the Serrano Doctrine can be abused by terminated employees. Terminated employee can, therefore, enrich themselves, by questioning the legality of their dismissal.