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. Some employers allow deductions from the wage or payment of the entire amount to these creditors not knowing that this is illegal. This book will guide you by providing sample forms relating to demotions and transfers. It’s available for sale right now. (Benguet Electric … Understanding the … As an employer (or supervisor) a Demotion Letter will serve as a record of the official action being taken. EMPLOYEE DISCIPLINE AND TERMINATION OF EMPLOYMENT UNDER PHILIPPINE LAW, FREQUENTLY ASKED QUESTIONS Published on December 7, … “Is it legal to transfer and demote an employee in the Philippines?”. IGNORANCE OF THE LAW EXCUSES NO ONE Without just cause, an unjustified demotion may constitute constructive dismissal, for which an employer may be held liable for backwages and damages. If they trust you and believe that they have been given the complete story, the salary reduction is an event that has an ending. In a voluntary demotion, the employee adjusts his job to match the current needs of his life. About the Authors. Instead, lawyers rely on Supreme Court rulings which deal with certain aspects of demotion. In short, if the employee does something bad, and the employer gave the employee chance to explain their side. One camp says no because it is a violation of security of tenure. A group of nurses said the government must review and amend the recent circular from the Department of Budget and Management over its … Demotion is the movement of an employee from one job to another of lower rating, employment status, or rank. In short, if the employee does something bad, and the employer gave the employee chance to explain their side. 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. 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. 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. Kirk, a 48-year-old executive employee of a multinational company in the Philippines, was … 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. 44 rules on Employee Transfer and Demotion is now available at your favorite bookstores (National Bookstore, Fully Booked and Powerbooks) . 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. Hope you learn your lesson.”. 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. It  is also available in EBook (pdf format), perfect for your PC, Ipad, Kindle and tablet. 70 Kimberly-Clark Philippines, Inc. v. Dimayuga, G.R. You should never demote an employee based on race, age, gender, religion, or disability. Most demotions are in response to an employee's behavior or poor work performance. However, the employer… Even if an employee voluntarily asks for a demotion, there … 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. Labor and Social Legislation. Find out more about involving your workers in health and safety. A demotion is a step down in rank or job title for an employee. Demotion is the movement of an employee from one job to another of lower rating, employment status, or rank. B. Many employers use demotions in … Company restructuring is also a cause for demotion. Kudos to Atty. 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. I got this question in a workshop once, “Attorney, we demoted an employee. As a general rule, I agree with that. 44 Rules is a compilation of these rules which are embodied in numerous cases decided in the past few years. 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. First, let’s answer the basic question: is demotion allowed by the law in the first place? 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. This is wrong on so many levels, and it doesn't make sense. 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. 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. Telling an employee that you’re demoting them can be tricky. An employee who refuses to be transferred, when such transfer is valid, is guilty of insubordination. Demotion is used as a disciplinary measure in an organization. But the people who claim this seems to miss a crucial component. Therefore, we didn’t reduce the salary. How then should an employer go about transferring or demoting an employee in order to promote the goals of business? This demotion letter template will help you understand the different parts of a demotion letter and how they function. This falls as an exception to the non-diminution of benefits principle because it went through due process. Usually a demotion means a loss in pay, benefits, and company privileges. You’re not punishing an erring employee: you’re rewarding them. 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. Payroll Salary Compensation and Benefits in the Philippines as provided under the Labor Code of the Philippines and other relevant laws. Questions regarding timing of transfer, acts to avoid, lateral functions, location, and rank are concisely discussed in this work. In no case will the employee receive an amount lower than PHP 537.00. 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. Philippines, under RA No. Regardless of how you phrase it, the office will probably … 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 can something that isn’t in the labor code be legal?" Villanueva and Atty. The Labor Code of the Philippines, otherwise known as Presidential Decree No. Unfair dismissal. Companies may use it to promote business growth by sending key and competent personnel to areas where the employer needs them. Usually a demotion means a loss in pay, benefits, and company privileges. Coca Cola Bottlers Philippines, GR 176985, April 1, 2013). Reduction of an employee's salary is often a consequence of the employer's decision to demote the employee for some reason. It constitutes willful disobedience of a lawful order of an employer. 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. It is widely accepted that the Philippines is one of the countries which implement stricter labor laws. 283. An integral part of discipline is to decide what kinds of penalties to impose against erring employees. 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. There seems to be a lot of confusion when it comes to using demotion in the workplace. This work can guide HR specialists, managers and business owners in making the right decisions and implementing management choices the legal way. Tags: demotion philippines , demotion rules philippines , how to demote philippines , law on demotion philippines , philippine demotion guide If the explanation still shows that the employee is still guilty, then the employer is free to impose whatever penalty (including demotion) seems appropriate. They usually cite Section 18, Article II of the Constitution and the Article III of the Labor Code. 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. ELVIN B. VILLANUEVA is an HR practitioner, consultant and litigation lawyer. Nothing wrong with including this as an option, provided that it still disciplines your team appropriately. These sources of law bind everyone in the Philippines, whether you know of them or not. Others claim that you’re better off sticking to the suspensions and terminations. The same goes for SL. 14. business closure, cessation of operation, retrenchment (reduction of costs) to prevent losses, etc. They are "secure" there once they are regular. Present the news in a professional manner. An employer may look to demote an employee as an alternative to dismissal after Demotions are treated as dismissals from employment. Also keep an eye on how other employees are reacting to the change. 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. You need to work with the employee before you send an official letter so it doesn't catch them off guard. 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. 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. However, the 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. 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. There’s a massive disconnect here between your intention and the lesson you're teaching your team. i. Once a labor case clamps down on the company, there will certainly be costs involved. Otherwise, the employee is entitled to recover the deficiency from the employer. 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. 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. 44 Rules on Employee Transfer and Demotion is one such guide which provides answers to the usual questions on employee transfer and demotion. The right to security of tenure means that a regular employee … Even when a demotion is justified such as a reorganization to streamline operations, the employer must observe the proper procedure required of valid terminations. These penalties are not specified by the law. 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. I can’t find it anywhere in the labor code! - Any employee may be retired upon reaching the retirement age established in the collective bargaining agreement or other applicable employment contract. 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. © 2021 Demotion of Employee Philippines. Labor and Social Legislation. Kirk, a 48-year-old executive employee of a multinational company in the Philippines, was … It makes our job easier, efficient and legally defensible. Important rules on how to demote an employee in the Philippines. Employees cannot be demoted because of race, gender, age, religious beliefs, or genetic information. 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. It is the employer’s prerogative to demote its employees to other positions when the interests of the company reasonably demand it (Rubberworld (Phils. Atty. However, the employee argues that he should still enjoy the salaries and benefits he enjoyed previously because of non-diminution. Business owners and practitioners alike will find this helpful.” —  Bobbit Jimenez, Controller, Citadel. 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. 287. 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. Common penalties can take the form of reprimands, memos, suspensions and terminations. Since demotion is just another form of penalty, it stands to reason that you should go thru due process before imposing demotion. Certain things must appear in the notice for it to be sufficient. 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. A. 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. If a new probationary period is a condition for demotion, the employee must sign a statement indicating an understanding of this fact prior to the effective date of the demotion. 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 … 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. “Art. A Supervisor/Department Head may recommend involuntary demotion for a staff member for inefficient work performance, disciplinary reasons, or other just cause. The dos and don’ts in demotion are also clearly and completely explained. The employee has proven to be a high performer, but the new role is unsuitable for the employee’s talents. What is the right to security of tenure? Important rules on how to demote an employee in the Philippines. 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. h. "Overseas employment" means employment of a worker outside the Philippines. If he is not informed of these reasonable criteria, he will be considered a regular employee. 177705, September 18, 2009, 600 SCRA 648, 653. 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. Just fill them up or make some adjustments to suit the circumstances of your business or employee. 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. The right to a living wage of an employee is recognized under Article XIII, Section 3 of our 1987 Constitution. In all such cases, the situation will be discussed with the employee by the Supervisor/Department Head before any action is taken. Department of Labor and Employment (DOLE) Building, Muralla Wing cor. "But Attorney! Demoting an employee is not easy, but sometimes it has to be done. Demotion refers to the lowering down of the status, salary and responsibilites of an employee. Employment promotion. 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. Regardless of the motives of management, there are repercussions to consider in the transfer of an employee. What is constructive dismissal? 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. Compulsory Demotion . Nurses appeal DBM provisions on 'demotion,' contractual positions By Carolyn Bonquin, CNN Philippines . This is a must-have for employers who wish to make the right decision and avoid or minimize litigation. 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. Let me cite an example. 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. Many employers use demotions in an attempt to keep an employee in the company. Closure of establishment and reduction of personnel. A Demotion Letter officially informs the employee of the reason(s) behind the downgrade within the company. 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. Thus, management must take extra caution and observe utmost good faith in doing so. No. Nope, you’re not doing anything wrong. While it is not commonly used, demotions are one of the ways in which these penalties can be imposed. No. 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." 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. The habitual patterns of behaviour such as violation of the rules and conduct, poor attendance record, insubordination where the individuals are demoted. 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. I tell them, “Employee discipline is just like parenting. Tagged demotion philippines guide, demotion philippines rules, demotion rules philippines, philippines demotion guide. A demotion is a step down in rank or job title for an employee. This means going thru proper due process proceedings. All rights reserved. The organization is better served by having the employee step back into the former role. Other times, employees seek out voluntary demotions. He finished law with honors from the Arellano University in 2009 and passed the bar exams held in the same year. Reduction of an employee's salary is often a consequence of the employer's decision to demote the employee for some reason. An organization can provide a demotion at the choice of the organization or voluntarily, at the request of the employee, sometimes called deployment. Since demotion is just another form of penalty, it stands to reason that you should go thru due process before imposing demotion. 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. It may be a tool for positive changes or a weapon of destruction. But an increasing number are now turning to law guides and lawyers for PRIOR advice to avoid serious consequences. In my workshops, there is a rule that I emphasize over and over again for participants. It makes our job easier, efficient and legally defensible. Consider the situation with me: In effect, what you did was to say to the employee, “Hey, you did a bad thing. The decision to transfer an employee may be a double-edged sword with both favorable and unfavorable consequences. 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. ), Inc., vs. … Part of due process in effecting a demotion is the presence of just cause. In these circumstances, there has been no dismissal. Is it possible to impose demotion under the law? Tell the employee of his demotion with calm and professional language. In short, if the employee does something bad, and the employer gave the employee chance to explain their side. In the case of organizations, it can be is a disciplinary measure short of firing an employee. It‘s found in the principle called Management Prerogative and has been discussed in Supreme Court cases. There are a number of reasons why an organization might compel an employee to take on a lower role. This guide will help you make informed decisions before it’s too late. Well, that’s because it isn’t in the labor code. “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. 442., governs all employee-employer relations, their rights and obligations.. Did we do the right thing?”. Workplaces where employees are involved in taking decisions about health and safety are safer and healthier. 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. 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. 2. Since he has been demoted, he now has fewer responsibilities and workload, and yet, still enjoys the benefits of his previous position. Then, follow up with a demotion letter that will serve as the official notice to the employee and will go on file. Demotion of Employee Philippines. 1. The Labor Code of the Philippines, otherwise known as Presidential Decree No. Since demotion is just another form of penalty, it stands to reason that you should go thru due process before imposing demotion. 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. Metro Manila (CNN Philippines, September 1) - … Provide a written statement detailing when the demotion will take effect and the specific reasons the demotion is warranted. This is consistent with management prerogative. Most often, the decision to transfer an employee attracts unwanted labor suit. (Westin Philippine Plaza Hotel vs. NLRC, G. R. No. Before you demote an employee, make sure the demotion does not violate any company policies or contract that you might have with the employee. The decision to transfer an employee can be tricky for an employer. 4 steps of demoting an employee. 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. Florido for this wonderful book.”  — Bheng Materum, Personnel Officer, Geoestate Corporation. In practice, they ask employees to sign employment Let me cite an example. Therefore, they argue, "Even if I was demoted, the law says my salaries and benefits should stay the same." 442., governs all employee-employer relations, their rights and obligations.. HR practitioners that implement this decision are encouraged to acquire technical competence to carry out this sensitive task. If an employee files 5 days SL in March, 3 of these SL will be paid in full the rest (2 days) will be paid half. 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. That way, the employer can have flexibility in running the ship. Once such giving of benefits attains the status of a company practice, the employees can demand these benefits as a matter of right. Therefore, they reason, they can’t be removed or demoted from their position. HR/Admin Manager, X-Habit, Inc. “This book is another milestone in Human Resource literature. An involuntary demotion may be considered in a case where an employee is not able to perform work satisfactorily in his/her present position. This is a must-have for employers who wish to make the right decision and avoid or minimize litigation. employee discipline and termination of employment under philippine law, frequently asked questions Published on December 7, 2015 December 7, … It is widely accepted that the Philippines is one of the countries which implement stricter labor laws. Do not let it appear that you pity the employee, and publicly praise that person for his or her contributions in the new role. Resources Leaflets. Payroll Salary Compensation and Benefits in the Philippines as provided under the Labor Code of the Philippines and other relevant laws. “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. 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 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. 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). Thus, terminating an employee in the country is taken VERY seriously and can be a complex process, especially since, when in doubt, the Labor Code of the Philippines … 44 Rules on Employee Transfer and Demotion is one such guide which provides answers to the usual questions on employee transfer and demotion. He graduated cum laude from the Pamantasan ng Lungsod ng Maynila. 71 Art. 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. 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. Hope this was helpful for you. To be clear, you can reduce the salaries and benefits of a demoted employee to reflect their new status within the company. In addition to meeting with the employee, observe how he or she is reacting to the new role. Retirement. This is one guide you’ll want to keep as one of your tools for managing employees and your business! Others say that you can, but you have to keep paying the same salary because it will violate the non-diminution of benefits principle. To punish you, we’ll reduce your responsibilities and work load but on paper, you’ll have a lower rank. However, it can be a mistake to enforce a demotion when it would be better for an employee to leave the company. Here are four steps to smoothly navigate a demotion. As an employer, you can determine the form in which these penalties take as an exercise of your management prerogative. 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. 1. Your employees are often the best people to understand the risks in their workplace. "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.