Dear Attorney,
I would like to seek legal advice regarding our company's sudden closure. We were not given any notice, and it happened abruptly. Does our team have any legal grounds to contest this closure, especially since we were not informed in advance? Your guidance would be greatly appreciated.
Concerned Employee
Insights
In the Philippines, the law requires that employers provide employees with due notice and follow proper procedures when terminating employment, especially in cases of closure or cessation of business operations. The pertinent legal concept here is covered under the Philippine Labor Code, specifically Article 298 (formerly Article 283), which governs the rights of employees in case of business closure.
Employer’s Obligation to Notify Employees
Under Article 298 of the Labor Code of the Philippines, when a company intends to shut down or cease its operations, the employer must provide written notice to both the employees and the Department of Labor and Employment (DOLE) at least 30 days in advance. This notice period ensures that employees are adequately informed and prepared for the termination of their employment.
Failure to comply with this requirement may constitute an illegal dismissal, and affected employees may have legal recourse to seek compensation or other remedies.
Separation Pay
In addition to the notice requirement, employees who are affected by company closures are entitled to separation pay, provided the closure is not due to financial losses. The separation pay is calculated at either one month's pay or half a month’s pay for every year of service, whichever is higher.
However, if the closure is due to the company’s financial losses, the employer may not be obligated to provide separation pay. In this case, it is crucial to establish whether the company was indeed experiencing financial hardship or if the closure was part of a different business decision.
Recourse for Affected Employees
If your employer failed to give the proper notice or did not pay the required separation pay, you may file a complaint with the Department of Labor and Employment or with the National Labor Relations Commission (NLRC). Affected employees can seek monetary compensation for illegal dismissal, back wages, and benefits that were unlawfully withheld.
Conclusion
Employees who are affected by a sudden and unannounced company closure should carefully review their employer’s compliance with the notice and separation pay requirements under the law. It is advisable to seek legal counsel to assess the situation and determine the best course of action for recovery of any entitlements.