CONSTRUCTIVE DISMISSAL: A HR MANAGEMENT (NON-LAWYER) PRACTITIONER'S PERSPECTIVE

In a decision dated April 3, 2024 (G.R. No. 254465), the Supreme Court ruled in favor of the petitioner employee in a case of constructive dismissal against his employer, effectively reversing the decision previously rendered by the Court of Appeals. The decision was posted on the Supreme Court’s website on September 27, 2024.

Moreover, the Supreme Court found the officers impleaded in the case to be solidarily liable for the illegal dismissal and were ordered to pay the employee:

1.Full back wages;

2.Separation pay;

3.Unpaid commissions;

4.Moral and exemplary damages;

5.Attorney’s fees.

As explained by the decision,

Constructive dismissal arises "when continued employment is rendered impossible, unreasonable or unlikely; when there is a demotion in rank and/or a diminution in pay; or when a clear discrimination, insensibility or disdain by an employer becomes unbearable to the employee." In such cases, the impossibility, unreasonableness, or unlikelihood of continued employment leaves an employee with no other viable recourse but to terminate his or her employment. By definition, constructive dismissal can happen in any number of ways. At its core, however, is the gratuitous, unjustified, or unwarranted nature of the employer's action. As it is a question of whether an employer acted fairly, it is inexorable that any allegation of constructive dismissal be contrasted with the validity of exercising management prerogative.

The Supreme Court added,

… it is settled that acts of disdain and hostile behavior such as demotion, uttering insulting words, asking for resignation, and apathetic conduct toward an employee constitute constructive illegal dismissal whenever by reason thereof, one's employment becomes so unbearable he or she is left with no choice except to resign. The Court has held that the standard for constructive dismissal is "whether a reasonable person in the employee's position would have felt compelled to give up [their] employment under the circumstances."

As a background:

1. The employee:

a.Was suspended for 7 days for habitual absences in October 2015;

b.Was served a Notice to Explain for alleged habitual absences in November 2015, the disposition of which is not stated; c.Submitted his reply to all the notices served on him.

2. In serving a customer order on January 25, 2015, a mistake took place not attributable to the employee for which the employee requested an investigation and submitted an explanation.

3. On January 22, 2016 the employee, with the assistance of his lawyer-sibling, attended a meeting with Management.

4. In a subsequent meeting, the Company President uttered unsavory remarks against the employee (i.e., humiliated and called him out) for bringing his lawyer-sibling to the previous meeting.

   
   

5. Thereafter, the employee was subjected to a series of “unpleasant” treatment (see samples below) by Management, leading to his decision to submit his “involuntary” resignation:

   a. Sarcastic remark of his Group Retail Manager when he pressed for an investigation of the mistaken order, viz. “Alangan naming pati si Xxx pagbayarin mo pa. Ano ba ang pinaglalaban mo?”;

   b. Following his transfer to another group, many of his accounts were pulled out from him, sans any explanation. When he protested, the TQAI General Sales Manager Xxx quickly responded - “[a ]yaw ka na pahawakan ng accounts ni Boss Lincoln. Accounts nya yan. Siya ang may say.” c. When he tried to process one particular sale under one of his few remaining accounts, the General Sales Manager refused to sign the vehicle sales proposal and warned him, “[h]indi ka pwede magrelease sa kliyenteng ito. Pwede mo iprocess pero ipangalan mo sa iba.”

   d. His new boss asked him point blank, “[a]no plano mo, magreresign lea?”

   
   

   Nothing in the case indicates that the employee was being investigated for a serious violation with an imposable penalty of termination of employment (*).

   
   

   (*) Note:

   As explained by a nationally renowned lawyer with expertise in Labor Law, the correct term for the penalty is “termination of employment” and not simply “termination” as the latter is tantamount to murder.

   
   

   Other occasions that give rise to the filing of a complaint of constructive illegal dismissal is “advising” an employee to resign. This is usually resorted to when an employee has fallen out of Management’s grace or no longer enjoys the trust and confidence of Management or if the employee has committed (or is suspected to have committed) a serious violation with an imposable penalty of termination of employment and Management in it’s desire to expeditiously resolve the matter dispenses with a formal investigation thereby circumventing due process. Management is “ill-advised” if it takes this option and HR should strongly guide Management against it.

   
   

   Take note that “asking for resignation” is among the grounds mentioned in the Supreme Court decision that may constitute constructive illegal dismissal.

   
   

   To be fair, the employee should be informed of his inappropriate acts or omissions that go against Company policy or constitute a violation of the Code of Conduct. Where corrective counseling to prevent the repetition of such acts or omissions suffices, the same should be conducted immediately. Otherwise, due process should take its course.

   
   

   The proper course to take is to charge the employee of the violation (i.e., serve a Show Cause Memo), provide ample time to submit a written explanation, evaluate the same to arrive at a decision and serve it on the employee accordingly. If the violation is serious enough to warrant termination of employment if guilty, conduct an Administrative Investigation allowing the employee to be accompanied by a representative if he so desires.

   
   

   If termination of employment is warranted, serve the Notice of Decision. After serving, the employee may be informed that he has the option to resign. In this case, the employee was not “asked to resign” nor “advised to resign” but given the option, which he is free to avail or not. Otherwise, the penalty of termination of employment will be applied. There is no ground for constructive illegal dismissal and if the employee insists on filing a complaint, Management is well protected.