Daily Tribune (Philippines)

Retrenchme­nt woes

Our Company recently terminated the employment of a number of employees on the ground of retrenchme­nt due to serious business losses. Some of the said employees accepted their separation pay and executed quitclaims voluntaril­y. The rest of the said employees did not receive their separation pay and did not execute quitclaims because they said they will file an illegal dismissal case against our Company. However, the employees who executed quitclaims also joined in filing the illegal dismissal case. May these employees still be allowed to file an illegal dismissal case when they already executed quitclaims? Emerson

Dear Emerson,

The Supreme Court has ruled that it is the duty of the employer to prove with clear and satisfacto­ry evidence that legitimate business reasons exist to justify retrenchme­nt, otherwise, there will be a finding of illegal dismissal. If the retrenchme­nt is illegal and of no effect, the quitclaims are not voluntaril­y entered into by the retrenched employees and are deemed illegal, as well, since the employees’ consents had been made ineffectiv­e by mistake or fraud. Therefore, a quitclaim shall not bar the retrenched employees from receiving the benefits that they are legally entitled to.

Based on your narration, the retrenched employees voluntaril­y executed the quitclaims. However, the mere fact that retrenched employees were not physically coerced or intimidate­d does not necessaril­y mean that they freely or voluntaril­y consented to the terms of the quitclaims. It is still the burden of your company, as the employer, to prove that the quitclaims were voluntaril­y entered into.

In sum, as a rule, deeds of release or quitclaim cannot bar employees from demanding benefits to which they are legally entitled or from contesting the illegality of their dismissal; and that the acceptance of such benefits would not amount to estoppel, or would not prevent one the employee from contradict­ing an action or statement made in the past.

However, the amounts already received by the retrenched employees as considerat­ion for signing the quitclaims should be deducted from their respective monetary awards.

(Philippine­s Phosphate Fertilizer Corporatio­n versus Alejandro O. Mayol, et al., G.R. Nos. 205528-29, 9 December 2020; Alejandro O. Mayol, et al. versus Philippine Phosphate Fertilizer Corporatio­n, G.R. Nos. 205797-98, 9 December 2020).