The Supreme Court (SC) has ruled that employers who reduce employees’ workdays and rotate schedules due to economic difficulties must comply with labor requirements and justify the arrangement, clarifying when such measures may amount to constructive dismissal.
In a decision penned by Associate Justice Amy C. Lazaro-Javier, the SC En Banc granted a petition and reversed earlier rulings dismissing a labor complaint arising from reduced workdays and a rotating work schedule, ruling that unlawful reductions in workdays may amount to constructive dismissal.
“Flexible work arrangements similar to those enumerated under DOLE Department Advisory No. 2, Series of 2009 disregard the foregoing protective measures. As such, by default, flexible work arrangements of such nature are presumed illegal until proven otherwise,” the Court said.
FACTS AND ISSUE
The case stemmed from a complaint filed by production workers of Fiber Textile Manufacturing Corp. (FMC), who alleged that the company unlawfully reduced their six-day workweek to two to three days and later constructively dismissed them.
After seeking assistance from the Department of Labor and Employment (DOLE), the workers alleged that company officials told some of them to find another job or leave, leading them to file complaints over constructive dismissal, reduced workweek, and non-remittance of mandatory contributions.
FMC countered that it temporarily implemented a work rotation scheme after an ejectment dispute allegedly cut access to its warehouse and raw materials, disrupting operations. The company argued that the reduced workdays were a valid exercise of management prerogative to address material shortages and avert losses.
In June 2019, a labor arbiter ruled in favor of most of the workers, finding them constructively dismissed and awarding monetary relief. The labor arbiter held that FMC failed to notify DOLE of the flexible work arrangement and failed to substantiate its claimed lack of raw materials.
The National Labor Relations Commission (NLRC) later reversed the ruling, holding that the absence of notice to DOLE was only a procedural infirmity and did not invalidate FMC’s exercise of management prerogative. The Court of Appeals affirmed the NLRC and found the reduced workdays justified by the company’s alleged lack of raw materials.
Before the SC, the main issue was whether FMC’s unilateral reduction of workdays and rotating schedules, without prior notice to DOLE and sufficient proof of economic necessity, amounted to constructive dismissal.
RULING
The SC granted the petition, finding that the NLRC committed grave abuse of discretion and that FMC’s unlawful reduction of workdays and rotating schedule resulted in constructive dismissal.
The Court clarified that flexible work arrangements are valid only if temporarily adopted with workers’ support, reported to DOLE before implementation, and justified by actual or imminent economic difficulties undertaken in good faith.
Although the Court said failure to notify DOLE does not automatically invalidate a flexible work arrangement, it stressed that employers must still justify the measure with substantial evidence and comply with labor safeguards.
The Court found FMC failed to establish by substantial evidence that it faced actual or imminent economic difficulties sufficient to justify reducing workdays. It also noted that FMC continued hiring workers to replace absent employees, undermining its claim of insufficient available work.
“The only means for the DOLE to fulfill this duty is when it receives notice of the employer’s intention to implement such arrangements,” the Court said.
The Court reinstated the labor arbiter’s finding of constructive dismissal and restored the workers’ monetary awards.
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