LETTER TO A LAWYER
Dear Attorney,
I hope this message finds you well. I am currently employed in a sales-related position. My employer has repeatedly been hinting—or outright stating—that I could be terminated from my job simply because I have not been reaching certain sales targets. While I understand that performance expectations are part of the job, I am feeling very anxious because of the way these threats are delivered. It seems like they are constantly hovering this possibility of termination over my head, and it has created a very uncomfortable working environment.
I am concerned about whether these threats are lawful. Does our labor law in the Philippines prohibit an employer from threatening to terminate an employee merely due to low sales performance? In cases like this, is there a specific legal framework or policy that protects employees from undue pressure or harassment? Also, what steps should I take if I genuinely feel that I am being unfairly threatened and that my job is in jeopardy without a valid cause?
Thank you so much for taking the time to read my letter. Your expert advice will be greatly appreciated. I look forward to your guidance on how to address this concern appropriately.
Respectfully,
A Concerned Employee
LEGAL ARTICLE: A COMPREHENSIVE GUIDE ON PHILIPPINE LABOR LAWS REGARDING THREATS OF TERMINATION OVER LOW SALES
Disclaimer: The information provided herein is for educational purposes only and does not constitute formal legal advice. For specific questions regarding particular facts or circumstances, please consult a qualified attorney.
Introduction
In the Philippines, the right to security of tenure is safeguarded by both the Constitution and the Labor Code. Employees cannot simply be dismissed at the whim of an employer. This protection underscores the notion that a person's livelihood and economic security are of paramount importance. However, businesses also have the prerogative to maintain a workforce suited to their operational needs, which includes setting performance targets and taking legitimate disciplinary action against non-performing personnel. Balancing these two interests—employee security and management prerogative—often leads to complex questions about threats of termination for unsatisfactory performance.
One common scenario arises in a sales environment, where businesses rely on sales figures, quota achievements, and target-based work. While an employer is certainly allowed to expect employees to meet key metrics, the mere fact of failing to meet a certain target does not automatically justify dismissal. Indeed, the law sets out specific requirements and procedures for termination based on poor performance or similar grounds. It is crucial for both employers and employees to understand these rules to avoid disputes, labor cases, or even claims of illegal dismissal.
This article will explore the relevant laws, jurisprudence, and Department of Labor and Employment (DOLE) guidelines that address the permissibility and limits of termination for low sales. We will also delve into the concepts of management prerogative, authorized causes, just causes, due process requirements, and the proper methods of handling performance-related issues without resorting to harassment or unwarranted termination threats.
I. Legal Foundations
A. Security of Tenure Under the Philippine Constitution
Article XIII, Section 3 of the 1987 Philippine Constitution recognizes the right of all workers to “security of tenure.” This means that employees cannot be dismissed from their employment except for lawful or authorized causes, and only after due process. Security of tenure is a fundamental labor right that ensures an employee’s continued employment until the employer can prove a valid reason under law to terminate the relationship.
B. Labor Code of the Philippines
The Labor Code of the Philippines (Presidential Decree No. 442), as amended, enshrines the principle of security of tenure in its provisions. Under this Code, dismissals must be done for either “just causes” (Article 297, formerly Article 282) or “authorized causes” (Article 298 and Article 299, formerly Article 283 and Article 284). Moreover, the Code stipulates procedural requirements to ensure due process before an employee can be lawfully terminated.
Broadly, “just causes” for dismissal typically involve serious or habitual misconduct, willful disobedience, fraud or breach of trust, gross and habitual neglect of duties, or commission of a crime against the employer. On the other hand, “authorized causes” deal with business exigencies—such as retrenchment, redundancy, installation of labor-saving devices, or business closure.
Being threatened with termination solely due to low sales performance implicates the concept of “just cause” related to employee inefficiency or performance. However, to lawfully terminate an employee for poor performance, strict adherence to substantive and procedural due process is required.
C. Department of Labor and Employment (DOLE) Regulations
DOLE has issued various regulations and guidelines that aim to clarify and operationalize labor laws. Notably, DOLE Department Order No. 147-15 (or related issuance) provides guidelines on the termination of employment for just causes, reiterating the need for due process and for the existence of valid grounds. While DOLE does not issue a singular regulation specifically addressing “low sales” as a reason for termination, their official guidelines on disciplinary procedures and the concept of performance-based termination are quite clear: any dismissal must be based on established just or authorized causes, coupled with the observance of due process.
II. Management Prerogative and Performance Standards
Employers have the inherent right to regulate all aspects of employment, often referred to as “management prerogative.” This includes setting productivity quotas, designing sales targets, and establishing performance-related goals to ensure that the business remains profitable and sustainable. However, this prerogative must be exercised in good faith, without violating employees’ constitutional rights, and must always conform to existing labor laws.
Threatening employees with termination for low sales could be within the employer’s prerogative if it genuinely reflects a performance issue and is paired with reasonable efforts to assist the employee in improving. Nonetheless, harassment or intimidation is not sanctioned by law. In the Philippines, even if the employer has broad powers, the exercise of these powers must not breach the basic rules of fairness and due process.
If employees are incessantly threatened with termination without concrete steps or opportunities to improve, or if these threats are made in a manner that abuses the employer’s prerogative, such conduct can be challenged as oppressive or as indicative of constructive dismissal.
III. Grounds for Dismissal Due to Low Performance
A. Just Cause for Poor Performance
Under Article 297 of the Labor Code (former Article 282), an employer may dismiss an employee for “gross and habitual neglect of duties” or other just causes. If low sales performance truly amounts to an employee’s inefficiency, negligence, or failure to carry out responsibilities, the employer must demonstrate the following:
Clear Performance Standards: The employer should have set identifiable and reasonable performance metrics. For sales-based roles, these metrics can be monthly or quarterly quota figures, key performance indicators (KPIs), or sales conversion ratios. The standards must be made known to the employee at the start or during the course of employment.
Actual Failure to Meet Standards: The employer must show that the employee consistently failed to meet these standards, despite sufficient opportunity and guidance.
No Improvement Despite Interventions: Proof that the employee was counseled, given performance improvement plans (PIPs), training sessions, or other measures to help improve performance. If the employee continues to underperform after receiving support and guidance, the employer may have grounds to consider termination.
Good Faith and Absence of Malice: The employer’s action must not be motivated by arbitrary or discriminatory reasons. The purpose must be genuine business necessity rather than a mere personal grudge or an attempt to circumvent employee protections.
Simply labeling an employee’s performance as “low” does not suffice. The dismissal must be justified with proper documentation and a genuine demonstration of the employee’s continued failure to meet reasonable standards.
B. Constructive Dismissal
When an employer subjects an employee to intolerable conditions, undue pressure, or repeated threats of termination without basis, this scenario can amount to constructive dismissal. Constructive dismissal is defined as “an involuntary resignation by the employee because the continued employment became impossible, unreasonable, or unlikely, or because of a demotion in rank or a diminution in pay, or when there is clear discrimination, insensibility, or disdain by an employer, which makes it impossible for the employee to continue working.”
While constructive dismissal typically involves more drastic measures than mere threats—such as forced resignation or demotion—repeated menacing statements about job termination could contribute to a hostile work environment, which might be found to be tantamount to constructive dismissal under certain circumstances. Employees who feel they have been constructively dismissed may file complaints for illegal dismissal before the National Labor Relations Commission (NLRC) or the appropriate labor arbiters.
IV. Procedural Due Process Requirements
Even where a valid cause (substantive due process) exists, the law also requires adherence to procedural due process. Under the “Two-Notice Rule,” mandated by Philippine labor jurisprudence:
First Notice (Notice to Explain or Show-Cause Notice): The employer must issue a written notice informing the employee of the specific acts or omissions constituting the grounds for dismissal. This not only outlines the allegations but also affords the employee a chance to respond in writing.
Opportunity to Be Heard: After the employee responds, a hearing or conference is generally required or at least made available. This ensures that the employee can present evidence, defend themselves, and clarify any misunderstandings.
Second Notice (Notice of Decision): If the employer finds that dismissal is warranted, a second written notice of termination should be issued, indicating the basis for the decision and explaining why the employee is being terminated.
An employer who fails to comply with these procedural steps could be held liable for illegal dismissal or for nominal damages, depending on the circumstances. Threatening an employee with termination without initiating these formal procedures signals a disregard for due process.
V. Role of DOLE in Unlawful Threats and Harassment
The DOLE, as the primary government agency overseeing labor and employment matters, can receive complaints regarding unlawful termination threats or harassment in the workplace. If an employee believes that they are being threatened unlawfully or that they are in danger of losing their job without just cause or due process, they may file a complaint with the DOLE or proceed directly to the NLRC.
Moreover, DOLE can conduct inspections and audits of companies’ compliance with labor laws. If a pattern of harassment or other abusive workplace practices is discovered, the employer could face sanctions, and employees could be entitled to redress.
While there is no single “DOLE law” that specifically addresses “pananakot” (threatening) to dismiss an employee for low sales, the general framework protects employees from unlawful acts. Termination based on low performance must follow the established guidelines; otherwise, it could be considered illegal or an unfair labor practice.
VI. What to Do If You Face Threats of Termination
Document Everything: Keep a personal record of the times, dates, and nature of the threats. Save written messages or emails, note down conversations, and gather relevant evidence of your job performance (like monthly sales reports, memos, or performance evaluations).
Communicate Your Concerns: If feasible, raise the matter with your HR department or your immediate supervisor. Politely but firmly express that you are willing to improve your performance and that you want specific guidance on how to do so. This shows good faith on your part.
Ask for a Performance Improvement Plan: Many companies have formal performance improvement plans (PIPs) which outline goals, timelines, and resources for employees to meet performance standards. Requesting one might help mitigate constant threats and ensure a more structured approach to performance management.
Seek Assistance: If the threats continue, consider consulting with a labor lawyer or approaching a workers’ union (if available in your company). These professionals and organizations are trained to help navigate the intricacies of labor laws and mediate disputes.
Consider Filing a Complaint: Should the threats escalate and no amicable resolution is reached, you may file a complaint before the National Labor Relations Commission for illegal dismissal (if actual dismissal occurs) or constructive dismissal (if conditions have become unbearable). Another option is to approach DOLE, particularly if you suspect any labor standards violations.
VII. Potential Remedies in Case of Unlawful Termination
If an employer proceeds with an unjust or procedurally flawed termination due to alleged low performance, the employee may file a complaint for illegal dismissal. The remedies for illegal dismissal often include:
Reinstatement: The illegally dismissed employee may be reinstated to their former position without loss of seniority rights and other privileges. This means the law aims to restore the status quo prior to the dismissal.
Backwages: Employees are generally entitled to full backwages computed from the time of dismissal up to the date of actual reinstatement. This can prove financially substantial if the labor dispute takes a long time to resolve.
Separation Pay: In lieu of reinstatement, or if reinstatement is no longer feasible due to strained relations or the closure of the company, the employee may opt for separation pay. In cases of illegal dismissal, separation pay is often granted to help the employee transition to a new job.
Damages and Attorney’s Fees: Under certain circumstances, employees may also be entitled to moral damages, exemplary damages, or attorney’s fees. However, the award of damages usually depends on showing that the employer acted in bad faith or that the dismissal was oppressive and attended by malice or fraud.
VIII. Supreme Court Jurisprudence on Performance-Based Termination
Philippine Supreme Court decisions have long emphasized that low performance, by itself, is not necessarily a just cause for termination unless it is proven to be both gross and habitual. For instance, the Court has repeatedly held that an employee’s inefficiency must be proven by substantial evidence of repeated failure or refusal to follow instructions, or by a pattern of negligence that indicates disregard for duties. An isolated or occasional drop in sales may not be sufficient cause.
Additionally, even if the employer can prove poor performance, the absence of compliance with due process requirements can still render the dismissal illegal. This means an employer must ensure that both the substantive aspect (valid cause) and the procedural aspect (due process) are satisfied.
IX. Good Faith, Fair Play, and Industrial Peace
Terminating employment is an act imbued with public interest; hence, the law requires strict scrutiny whenever an employer separates a worker. Employers are encouraged to explore other ways to manage low-performing employees, such as:
Coaching and Mentoring: Managers should provide regular feedback, guidance, and support to help employees improve sales strategies or techniques.
Training Programs: Employees may benefit from training initiatives or professional development opportunities aimed at upgrading their skills or product knowledge.
Motivational Incentives: Commission structures, bonuses, or recognition programs can spur employees to push harder in achieving targets.
These measures not only avoid potential labor disputes but also foster a healthier, more engaged workforce. By approaching performance concerns constructively, an employer helps maintain industrial peace and promotes the overall success of the enterprise.
X. Practical Insights for Employers and Employees
For Employers:
- Clear Policies: Ensure that company policies outline the performance metrics and the consequences for not meeting them.
- Documentation: Maintain thorough records of performance reviews, performance improvement plans, and all communications with employees.
- Progressive Discipline: Use a fair system that warns and counsels employees before any final decision on termination is made.
- Respectful Communication: Avoid any threat-laden or discriminatory language. Maintain professionalism, focusing on objective feedback.
For Employees:
- Know Your Rights: Familiarize yourself with relevant provisions of the Labor Code and DOLE regulations.
- Maintain Good Records: Track your work performance, achievements, and attempts to comply with management directives.
- Communicate Proactively: If you are struggling, ask for help or clarification rather than waiting for the employer to bring up your performance shortfalls.
- Seek Counsel if Necessary: If you feel threatened or harassed, do not hesitate to consult a labor lawyer or your company’s HR department to clarify any misunderstandings.
XI. Frequently Asked Questions
Can I be legally dismissed if I fail to meet my sales target just once?
- An isolated failure is usually insufficient to justify dismissal unless it constitutes gross negligence. Employers generally need to show repeated poor performance, and they must follow due process.
What if my employer keeps threatening me with termination but hasn’t actually fired me?
- Chronic threats can create a hostile work environment and may amount to harassment or even constructive dismissal if the conditions become intolerable. Document these incidents and seek legal counsel.
If my employer decides to terminate me for low sales, what is the best first step I should take?
- Ask for an explanation of the grounds for termination in writing, and carefully review any performance improvement plan or documentation. If you believe the process or the grounds are unfair, consult an attorney or lodge a complaint with the NLRC or DOLE.
Does the DOLE have a specific rule on “low sales” as a ground for dismissal?
- No. DOLE defers to the Labor Code and jurisprudence on just and authorized causes. Low sales can fall under poor performance or negligence, but only if proven with substantial evidence and subjected to due process.
Is it possible for an employer to use “company losses” to justify dismissing employees with low sales?
- If genuine and significant losses exist, the employer may consider authorized causes like retrenchment. However, the employer must comply with specific procedural requirements (e.g., prior notice to DOLE and payment of separation pay).
What is the effect if the dismissal is found to be legal in terms of separation pay?
- If the dismissal is for just cause (e.g., gross inefficiency), the employee is typically not entitled to separation pay, unless such benefit is provided by a company policy, CBA, or employment contract. However, if the dismissal is for authorized cause, separation pay rules under the Labor Code apply.
XII. Conclusion
Under Philippine law, employers are vested with the right to set performance standards, including sales quotas, to ensure operational efficiency and profitability. However, this managerial prerogative is circumscribed by the overarching principle of security of tenure and the legal requirement that all dismissals be grounded on lawful or authorized causes, with strict observance of due process.
Threatening employees with dismissal for low sales, without a clear and valid performance-improvement framework, potentially runs afoul of labor laws and can expose the employer to a claim of illegal dismissal. Employees facing such situations should remain proactive: document the threats, engage in constructive dialogue where possible, and seek legal counsel if the threats persist or materialize. On the other hand, employers can effectively address low performance without violating employees’ rights by adopting fair, transparent, and consistent performance management systems.
In sum, the key takeaway is that lawful termination for low sales is not a matter of mere whim or sudden threats. It requires well-founded reasons, adherence to due process, and consistency with prevailing labor laws. Understanding these legal principles fosters a fair and balanced working environment, thereby avoiding costly labor disputes and ensuring that both employer and employee rights are respected.
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