Query: What are the rights of regular employees if their workplace is sold and subsequently closed due to financial losses?

In the Philippines, the rights of employees in the event of a business closure due to sale or financial losses are protected under the Labor Code. Employees who find themselves in such situations often question their entitlements, particularly regarding severance and the legality of their layoff.

Legal Provisions for Employee Rights

Notification: Employers are required to notify both the employees and the Department of Labor and Employment (DOLE) at least one month before the effective date of termination due to closure or cessation of business operations.
Separation Pay: If the closure is not due to serious business losses or financial reverses, the employees are entitled to separation pay equivalent to one month pay or at least half a month pay for every year of service, whichever is higher. However, if the closure is due to serious business losses, the law does not obligate the employer to pay separation benefits.

Determining the Cause of Closure

It's crucial for employees to determine whether the closure was genuinely due to financial losses. Employers need to prove these losses with substantial evidence to be exempted from paying separation pay. If the closure is due to reasons other than serious financial losses, such as a strategic business decision to sell the enterprise, employees may still be entitled to separation pay.

Process Following Closure

Claims Filing: Affected employees can file claims with DOLE if they believe that the closure was handled improperly or if they have not received their rightful benefits.
Legal Recourse: Employees can seek legal recourse if they suspect that the closure process violated labor laws. Legal advice can be sought to understand better the rights and the steps that can be taken.

Conclusion

Employees affected by the closure of a business in the Philippines due to sale or alleged financial losses have specific rights under the law. It is advisable for these employees to consult with legal experts or DOLE to ensure that their rights are protected and to understand the appropriate actions they can undertake in light of their situation.