Company Policy: Elements of Administrative Investigation and Progressive Discipline. July 24, 2014. Philippines. Prepared and delivered by Atty. Apollo X.C.S. Sangalang.
3. Philippine Spring Water Resources Inc.,
and Danilo Y. Lua
-versus-
Court of Appeals and
Juvenstein B. Mahilum
G.R. No. 205278
June 11, 2014
Supreme Court of the Philippines
6. LABOR LAW MADE EASY
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10. Employerâs Rights?
â˘â Law on Ownership (Civil Code):
âThe owner has the right to enjoy and dispose of a
thing, without other limitations other than those
established by law.â (Art. 428, Civil Code).
â˘â A âthingâ can be:
ââPhysical Capital (e.g. land, building, equipment)
ââFinancial Capital (e.g. financing)
ââIntellectual Capital (e.g. business model)
ââHuman Capital (e.g. organization)
11. Employerâs Rights?
â˘â Law on Contracts (Civil Code):
âThe contracting parties may establish such
stipulations, clauses, terms and conditions as may
be deemed convenient, provided they are not
contrary to law, morals, good customs, public order,
or public policy.â (Art. 1306, Civil Code)
â˘â Employment is a contract.
13. Employer Power!
â˘â Law on Management Prerogative:
âThe State recognizes the indispensable role
of the private sector, encourages private
enterprises, and provides incentives to needed
investments.â (Sec. 20, Art. II, Constitution)
âThe StateâŚx x x⌠recognizing the right of
enterprises (1) to reasonable returns on
investments, and (2) to expansion and
growth.â (Sec. 3, Art. XIII, Constitution)
14. Management Prerogative
1.â Right to hire employees of their
(employersâ) own choice;
2.â Right to fire (and discipline) them;
3.â Right to determine their compensation
and benefits; and
4.â Right to control their employees.
23. 3 Ways to Investigate, Discipline
and Terminate Employees
â˘âEfficient but NOT necessarily legal.
â˘âLegal but NOT necessarily effective.
â˘âEffective (which is more than legal).
24. 3 Reasons to Avoid
ILLEGAL Dismissal Cases
â˘âMonetary and Business Costs.
â˘âEmotional, Mental, Physical and
Spiritual Costs.
â˘âSocial and Macro-Economic Costs.
25. 3 Most Fearsome Monetary
and Business COSTS
â˘âReinstatement.
â˘âBackwages.
â˘âDamages.
26. 3 Hidden Monetary and
Business COSTS
â˘âDirect Costs of Litigation.
â˘âIndirect Costs of Litigation.
â˘âBusiness Losses and Closure.
27. 3 Kinds of Workers to I.D.T.
â˘âEmployees guilty of JUST CAUSE.
â˘âEmployees NOT guilty of just cause.
â˘âWorkers who are NOT employees.
28. 3 Kinds of Employees who
are Guilty of Just Cause
â˘âGuilty under Article 296 Labor Code.
â˘âGuilty under Causes Analogous.
â˘âGuilty under Company Policy.
29. Article 296*, Labor Code
1.â Serious misconduct;
2.â Willful disobedience (or insubordination);
3.â Gross and habitual neglect of duties;
4.â Fraud;
5.â Willful breach of trust; and
6.â Crime against person of the employer or
his immediate family or representatives.
30. Causes Analogous
1.â Loss of trust;
2.â Gross negligence coupled with a grave
consequence;
3.â Incompetence without improvement;
4.â Habitual commission of minor offenses;
and
5.â Unfit for continued employment based on
the âTotality of Infractionâ doctrine.
31. Company Policy
â˘â Causes Analogous is the LEGAL BASIS
for employers to create new offenses
penalized by termination.
â˘â New offenses must have the same
gravity as the offenses in Article 296.
â˘â Must be written, well defined and
circulated (e.g. Employee Handbook).
32. Other Problem Employees
1.â Employee isnât the problem (what then?);
2.â Problem employee, yes; but he isnât
dismissible (yet);
3.â Problem employee, yes; but he can be
severed without firing him;
4.â Employee who lacks motivation or skills;
and
5.â Non-employee worker;
33. 3 Ways to I.D.T.
â˘âEfficient but not necessarily legal.
â˘âLegal but not necessarily effective.
â˘âEffective (which should be legal).
34. Legal Way To I.D.T.
â˘âSubstantive Due Process.
â˘âProcedural Due Process.
â˘âSubstantial Evidence.
35. Substantive
Due Process
â˘âJust Cause
â˘âReasonableness
â˘âGood Faith
Procedural
Due
Process
â˘âNotice to Explain
â˘âNotice of Hearing
â˘âNotice of
Termination
Substantial
Evidence
â˘âProof of Substantive
Due Process
â˘âProof of Procedural
Due Process
â˘âProof of Good Faith
LEGAL
WAY
37. Substantive Due Process
â˘âJUST CAUSE:
ââbased on Article 296*, Labor Code.
ââbased on âCauses Analogousâ.
ââmust overcome:
âSecurity of Tenure.â
38. Article 296*, Labor Code
1.â Serious misconduct;
2.â Willful disobedience (or insubordination);
3.â Gross and habitual neglect of duties;
4.â Fraud;
5.â Willful breach of trust; and
6.â Crime against person of the employer or
his immediate family or representatives.
39. Causes Analogous
1.â Loss of trust;
2.â Gross negligence coupled with a grave
consequence;
3.â Incompetence without improvement;
4.â Habitual commission of minor offenses;
and
5.â Unfit for continued employment based on
the âTotality of Infractionâ doctrine.
41. Substantive Due Process
â˘âGOOD FAITH:
ââGood faith is presumed.
ââBad faith must be proven.
ââBut in labor law, itâs the reverse!
â˘âBecause ALL DOUBTS
favor employees!
43. Procedural Due Process
â˘âNOTICE TO EXPLAIN:
ââDescribes the who, what, when, where,
why and the how much or the manner the
offense was committed.
ââGives at least 5 DAYS to submit the
written explanation.
ââSpecifies TERMINATION as possible
penalty, if found guilty.
44. Procedural Due Process
â˘âNOTICE OF HEARING:
ââGives opportunity to the employee to
verbally explain his side and present his
evidence.
ââStates that he has right to counsel or
representative of his own choice.
ââLays down the hearing procedure.
45. Procedural Due Process
â˘âNOTICE OF TERMINATION:
ââSummarizes what happened since the
start of the disciplinary process.
ââEnumerates the basis of the decision.
ââStates the verdict clearly, including
monetary liability (if any); and advises
employee of the next step.
47. Substantial Evidence
â˘âPROOF OF SUBSTANTIVE DUE
PROCESS:
ââOffense is defined and justified.
ââEmployee committed the offense.
â˘âAffidavits and Testimonial Evidence.
â˘âAdmissions.
â˘âDocumentary Evidence.
â˘âObject Evidence.
48. Substantial Evidence
â˘âPROOF OF PROCEDURAL DUE
PROCESS:
ââNotices are written and served.
â˘âPersonal service.
â˘âSubstituted service.
ââHearings are recorded.
â˘âAttendance.
â˘âMinutes.
49. Substantial Evidence
â˘âPROOF OF GOOD FAITH:
ââShow the effect of the offense on the
organization or on the business.
ââShow that you walked the Extra Mile.
â˘âBecause employers have the
BURDEN OF PROOF*.
â˘âBecause ALL DOUBTS favor the
employees.
50. Substantive
Due Process
â˘âJust Cause
â˘âReasonableness
â˘âGood Faith
Procedural
Due
Process
â˘âNotice to Explain
â˘âNotice of Hearing
â˘âNotice of
Termination
Substantial
Evidence
â˘âProof of Substantive
Due Process
â˘âProof of Procedural
Due Process
â˘âProof of Good Faith
LEGAL
WAY
51. CONSTRUCTIVE DISMISSAL
â˘â A form of ILLEGAL TERMINATION;
â˘â No formal termination or disciplinary
proceeding was initiated;
ââ No due process; Presumably, no just or
authorized cause as well.
â˘â Employee was forced to resign because:
ââ Demotion or diminution of benefits; or
ââ Impossible or unbearable for the employee to
continue with his employment; or
ââ Directed by the employer to resign.
52. PREVENTIVE SUSPENSION
Ground:
ââ Serious and imminent threat to the:
â˘â Life and/or property of theâŚ
â˘â Employer and/or co-workers.
Maximum period: 30 days.
Otherwise, it shall be CONSTRUCTIVE DISMISSAL.
Ideally, the Notice of Preventive Suspension is incorporated in the
Notice to Explain (or 1st Notice) issued to the employee.
It may be credited to the penalty of suspension, if Employee is
found guilty of an offense punishable with suspension.
53. TEMPORARY TRANSFER
Requirements:
ââ Genuine business need or necessity;
ââ Good faith;
ââ No undue hardship upon employee; and
ââ Not meant as a form of penalty.
Otherwise, the transfer will be considered as a form of
CONSTRUCTIVE DISMISSAL.
If there is just cause, transfer may be resorted to as an
alternative to preventive suspension; but a
disciplinary proceeding must be initiated.
54. Effective Way
â˘âLegal Way isnât enough. Why?
â˘âBecauseâŚ
ââFiling a labor case is so easy and itâs free;
ââAn employee who felt mistreated will try to
vindicate himself or get even;
ââA guilty employee will try to save face;
ââMany lawyers, paralegals, and labor
leaders accept contingency fees.
56. How to D.O.C.U.M.E.N.T. Š 2013
D ocumentation, documentation, documentation!!!
O pen-mindedness.
C larity.
U nderstand LR.
M aster HR.
E mbrace best practices: Progressive Discipline
N egotiate, negotiate, negotiate!!!
T ake advice only from experts.
73. What is Social Justice?
Business Labor
Law
Law
Law
Law
Law
74. Rule of Law
Constitution
Laws (including Labor Laws)
Rules & Regulations
Jurisprudence
Public Policies
and Principles
of Equity
Contracts
Company
Policies
75. Elements of Labor Law
Labor
Law
Shared
Responsibility
Social
Justice
Rule of
Law
78. 3 Kinds of Win Scenarios
â˘âWin â Lose
â˘âCompromise (or Half-baked Win)
â˘âWin â Win (Mindset)
âââThink Win-Winâ by Steven Covey
79. 3 Ways To Win
â˘âBy âHookâ or by âCrookâ.
â˘âOut Last. Out Wit. Out Pay!
(âSurvivorâ).
â˘âWIN with INtegrity (âWIN-wINâ).
ââItâs more than just winning legally.
80. Why WIN-wIN?
â˘âI canât compartmentalize my life.
â˘âI canât justify the means with the end.
â˘âI reaped what Iâve sown.
â˘âI almost lost my soul.
81. Whatâs WIN-wIN?
â⌠what king would go to war against
another king without first sitting down with
his counselors to discuss whether his army
of 10,000 could defeat the 20,000 soldiers
marching against him? And if he canât, he
will send a delegation to discuss terms of
peace while the enemy is still far away.â
- Jesus Christ
(Luke 14:31-32 NLT)
83. How to D.O.C.U.M.E.N.T. Š 2013
D ocumentation, documentation, documentation!!!
O pen-mindedness.
C larity.
U nderstand LR.
M aster HR.
E mbrace best practices: Progressive Discipline
N egotiate, negotiate, negotiate!!!
T ake advice only from experts.
84. Master HR
â˘âER/LR is essentially HR.
â˘âHR is exemplified by MR.
â˘âMR is enhanced by GR.
88. Negotiate X 3
â˘âNegotiate before a labor dispute.
â˘âNegotiate during a labor dispute.
â˘âNegotiate after a labor dispute.
89. Take advice only from experts
â˘âLicensed or seasoned experts.
â˘âLocal labor law experts.
â˘âPractical and trust-worthy experts.
90. How to D.O.C.U.M.E.N.T. Š 2013
D ocumentation, documentation, documentation!!!
O pen-mindedness.
C larity.
U nderstand LR.
M aster HR.
E mbrace best practices: Progressive Discipline
N egotiate, negotiate, negotiate!!!
T ake advice only from experts.
91. Progressive Discipline
Definition:
It is a system of discipline where penalties
increase upon repeat occurrences.
Purpose:
It primarily aims to correct the negative behavior
rather than to punish the erring employee.
Range of Responses:
1. Counseling or coaching.
2. Verbal warning.
3. Written warning.
4. Suspension or demotion or fine or forfeiture.
5. Performance Improvement Plan.
6. Termination.
92. Progressive Discipline
Advantages:
1.â It addresses the silence of the Labor Code
regarding âIncompetenceâ as a ground for
termination.
2. It helps the Employer document habitual
negative behaviors, which is essential in
establishing âGross and Habitual
Negligenceâ as a ground for termination.
3. It helps the Employer prove that he was in
Good Faith in dealing with the Employee.
93. Progressive Discipline
Advantages (continuation):
4.â It helps build up a case for âAnalogous Causeâ
as a ground for termination.
5.â Since it is corrective in approach, it helps
preserve the existing members of the team while
improving their performance and behavior.
6.â It saves the Employer costly recruitment and
training expenses for new hires, as well as
prevents downtime due to vacancies.
7.â It promotes Employee morale.
94. Progressive Discipline
Requirements:
1. Employee Manual (with List of Offenses and
Penalties).
2. Step-by-step Implementation Guide.
3. Training for Managers and Supervisors.
a. Counseling or Coaching Skills.
b. Verbal and Written Warnings.
c. Performance Improvement Plan.
4. Employee Interview Log Sheets.
5. 201 File.
6. Templates and Scripts.
95. Progressive Discipline Process
1.â Pre-Investigation Stage.
a. Prepare: Company Policies and Employee Manual.
b. Prepare: Employment Contracts and 201 File.
c. Progressive Discipline: Train the Managers.
d. Progressive Discipline: Counsel or Warn Employees.
e. Preliminary: Fact-finding Activities.
2.â Investigation Proper.
a. Start: Notice to Explain or Show Cause Memo.
b. Progressive Discipline: Performance Improvement Plan.
c. End: Notice of Decision.
3.â Post-Investigation Stage.
a. Review: Company Policies and Employee Manual.
b. Review: Employment Contracts and 201 File.
c. Progressive Discipline: Re-train the Managers.
99. LR Best Practices
â˘âWalk-in Compromise Settlement.
â˘âSEnA (Single Entry Approach).
â˘ââThe Cordial Resignation Letter.â
100. Ethical Best Practices
â˘â Rotary Code of Conduct:
âââBe fair in all dealings with others and treat
them with the respect due to them as fellow
human being.â
â˘â Human Relations, Civil Code:
âââArticle 19. Every person must, in the exercise
of his rights and in the performance of his
duties, act with justice, give everyone his due,
and observe honesty and good faith.â
102. Spiritual Best Practices
â˘ââFor the whole law can be
summed up in this one
command: "Love your
neighbor as yourself.ââ
â˘â Galatians 5:14, The Bible (New Living Translation)