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Padilla, a Marketing Associate was retrenched by Am-Phil Concepts, a corporation engaged in the restaurant business. The latter claimed that it was suffering business losses which necessitated the retrenchment of Padilla, who filed a complaint for illegal dismissal. Am-Phil did not submit financial reports during the proceedings and only after the Labor Artiber rendered a decision that Petitioner sought to present its audited financial reports to prove its losses. decision of the Labor Arbiter that the retrenchment was illegal.
Whether or not Padilla was illegally dismissed?
Yes. Am-Phil Concepts failed to established that it had complied with the requisites for a valid retrenchment. As correctly pointed out by the Petitioner, retrenchment is a n exercise of the management prerogative to terminate the employment of its employees en masse, to either minimize or prevent losses or when the company is about to close or cease operations for causes not due to business losses.
Retrenchment is used interchangeable with the term “lay-off”. It is the termination of employment initiated by employer. There is no fault on the part of the employee. This is resorted to by the management during periods of business recession, industrial depression, or seasonal fluctuations. In simple terms, it is an act of the employer of dismissing employees because of losses in the operation of a business, lack of work, and considerable reduction on volume of business. This is a right that recognized and affirmed by the court.
However, this right is not absolute. It cannot be exercised in a cruel, repressive, or despotic manner. In case of business losses, such losses must be actual and real or reasonably imminent. Imagined or undocumented business losses cannot justify retrenchment. Thus, retrenchment is a measure of last resort when other less dramatic means have been tried and have been found inadequate.