Chapter 8: Changes in Personnel Status PDF

# Chapter 8: Changes in Personnel Status Changes in employment status are bound to take place during the period of employment. There is a continuous movement of employees in the form of promotion, transfer, demotion, or separation. This movement is the function of placement wherein the objective is...

# Chapter 8: Changes in Personnel Status Changes in employment status are bound to take place during the period of employment. There is a continuous movement of employees in the form of promotion, transfer, demotion, or separation. This movement is the function of placement wherein the objective is to find or assign the right person to the right job. A change in employment status is effected by a personnel action generated by the HR department upon receipt of a written request from an authorized representative of a department expressing the intended change in employment status. ## Promotion - It involves the reassignment of an employee to a higher job position. - This also refers to the upward or vertical movement of employees in an organization from lower-level jobs to higher-level jobs involving increases in duties and responsibilities, higher pay, and privileges. - Promotion serves as encouragement and inspiration to other employees to exert their maximum effort. - This can also help instill loyalty to the firm. ## Approaches to Recruit Employees for Promotion - **Closed promotion system:** the responsibility of the supervisor to identify promotable employees for the job to be filled. - **Open promotion system:** also known as job posting, enhance participation and the achievement of equal opportunity goals. ## Criteria Used in Promoting Employees - **Seniority:** length of service - **Straight seniority:** the length of service of an employee is the sole basis for determining who gets the promotion. - **Qualified seniority:** the more competent employee as compared to another employee with longer service will be the one promoted. - **Current and past performance:** promotion is based on previous job performance and evaluation. ## "Unofficial" Promotion Criteria - **Personal characteristic** - **Nepotism:** showing of favoritism or patronage to relatives. - **Social factors/friendship** Remember that when an employee accepts a job, he/she does not expect to stay in the same job throughout his/her working life. It is normal for all employees to expect promotion in exchange for a job well done. ## Demotion - This is the reassignment of an employee to a lower job involving fewer skills and responsibilities. - It is also the movement of an employee to a less important job from a higher-level job in the organization. - It may not involve a reduction in pay but a reduction in status or privileges. - As a general rule, demotion should be cautiously resorted to for it badly affects individual and group morale and productivity. - The alternative to demotion should be re-training or reorientation on the job and attitude toward work, or as a last resort, termination of employment if no improvement is achieved. ## Reasons behind Demotion - **Reorganization**, company merger, or business reverses resulting to fewer jobs, forcing some employees to accept demotion. ## Transfer This is the reassignment of an employee to a job with similar pay, status, duties, and responsibilities or to another work shift, or from one unit to another in the same company just like being an invoice clerk to a sales clerk. The right to transfer an employee is part of management's inherent power or prerogatives. ## Reasons for Transfer - Due to job dissatisfaction. - In conflict with supervisor or coworkers. - For employee's convenience. - Organizational needs may require transfer due to business expansion, retrenchment, erroneous placement, or to meet departmental requirements during peak season. - For an employee to be better suited or adjusted to the job (remedial transfer). ## Employee Separation Different kinds of separation occur depending on whether the employee or the employer decides to terminate the employment relationship. ## Termination of Employment in the Philippines Terminating an employee in the Philippines is a complex process, especially if the employee subject for termination is already a regular employee. The following are governing laws regarding separation from the service. ## Governing Laws Regarding Separation from the Service 1. **Art. 279. Security of tenure.** In cases of regular employment, the employer shall not terminate the services of an employee except for a just cause or authorize cause and only after due process of law. An employee who is unjustly dismissed from work shall be entitled to reinstatement without loss of seniority rights and other privileges and to his full back wages, inclusive of allowances, and to his other benefits or their monetary equivalent computed from the time his compensation was withheld from him up to the time of his actual reinstatement. 2. **Art. 282. Termination by employer (Dismissal)** (See chapter about employee discipline.) An employer may terminate an employment for any of the following causes: - **Serious misconduct or willful disobedience** by the employee of the lawful orders of his employer or representative in connection with his work; - **Gross and habitual neglect** by the employee of his duties; - **Fraud or willful breach** by the employee of the trust reposed in him by his employer or duly authorized representative; - **Commission of a crime or offense** by the employee against the person of his employer or any immediate member of his family or his duly authorized representatives; and - **Other causes analogous** to the foregoing. 3. **Art. 283. Closure of Establishment and Reduction of Personnel/Layoffs** The employer may also terminate the employment of any employee due to the following authorized causes: - **Installation of labor-saving devices.** - **Redundancy.** - **Retrenchment** to prevent losses; and - **Closure or cessation of business**. ## Factors Behind Downsizing Leading to Layoff Management, as a temporary measure during periods of seasonal business recession, industrial depression, or fluctuation, resorts to layoff or downsizing. The recent trends toward downsizing leading to massive layoffs have been triggered by three factors: - **Decline or crisis** in the firm - there is a decrease in the demand for the firms' products or services due to a recession in business climate and increased international competition. - **Technological advances** - enabling many companies to produce more with fewer people. - **Organizational restructuring** - modification of the firm's structure to become less hierarchical by cutting out the layer of middle management. To help employees who have lost their jobs, employers can provide services providing such as outplacement or helping employees find a new job, or relocation assistance and family counseling. The following are some of the alternatives to layoff: - Freeze hiring - Restrict overtime - Re-train/redeploy - Switch to job sharing - Use unpaid vacations - Use a shorter workweek - Use pay reductions - Use sabbaticals - Implement early retirement programs ## Separation Pay In authorized cause terminations, separation pay is the amount given to an employee terminated due to retrenchment, closure or cessation of business, or incurable disease. The employee is entitled to receive the equivalent of one-month pay or one-half month pay, whichever is higher, for every year of service. In just cause terminations, separation pay is also the amount given to employees who have been dismissed without just cause and could no longer be reinstated. ## Art. 284. Disease as ground for termination. An employer may terminate the services of an employee who has been found to be suffering from any disease and whose continued employment is prohibited by law or is prejudicial to his health as well as to the health of his co-employees. ## Art. 285. Termination by employee (Resignation) - The Philippine Constitution says no involuntary servitude in any form shall exist except as punishment for a crime whereof the party shall have been duly convicted. In view of the prohibition on involuntary servitude, an employee is given the right to resign under Art. 285 of the Labor Code. This provision recognizes two kinds of resignation - without cause and with cause. - If the resignation is without cause, the employee is required to give a 30-day advance written notice to the employer, to enable the employer to look for a replacement to prevent work disruption. If the employee fails to give a written notice, he or she runs the risk of incurring liability for damages. - An employee may terminate, without just cause, the employee-employer relationship by serving a written notice (resignation letter) on the employer at least one (1) month in advance. The employer upon whom no such notice was served may hold the employee liable for damages. - An employee may put an end to the relationship without serving any notice on the employer for any of the following causes: - Serious insult by the employer or his representative on the honor of the employee; - Inhuman and unbearable treatment accorded the employee by the employer or his representative; - Commission of a crime or offense by the employer or his representative against the person of the employee or any of the immediate members of his family; and - Other causes analogous to any of the foregoing. ## Article 280. SECTION 9. Termination pay. (a) An employee shall be entitled to termination pay equivalent to at least one month's salary for every year of service, a fraction of at least six (6) months being considered as one whole year, in case of termination of his employment due to the installation of labor-saving devices or redundancy. ## SECTION 10. Basis of termination pay. The computation of the termination pay of an employee as provided herein shall be based on his latest salary rate, unless the same was reduced by the employer to defeat the intention of the Code, in which case the basis of computation shall be the rate before its deduction. ## Art. 287. Retirement. Any employee may be retired upon reaching the retirement age established in the collective bargaining agreement or other applicable employment contract. In the absence of a retirement plan or agreement providing for retirement benefits of employees in the establishment, an employee upon reaching the age of sixty (60) years or more, but not beyond sixty-five (65) years which is the compulsory retirement age, who has served at least five (5) years, may retire and shall be entitled to retirement pay equivalent to at least one-half (1/2) month salary for every year of service, a fraction of at least six (6) months being considered as one whole year. ## Article 280. SECTION 14. Retirement benefits. (a) An employee who is retired pursuant to a bona-fide retirement plan or in accordance with the applicable individual or collective agreement or established employer policy shall be entitled to all the retirement benefits provided therein or to termination pay equivalent to at least one-half month salary for every year of service, whichever is higher, a fraction of at least six (6) months being considered as one whole year. For the purpose of computing retirement pay, "one-half month salary" shall include all of the following: - Fifteen (15) days salary based on the latest salary rate; - Cash equivalent of 5 days service incentive leave; and - One-twelfth (1/12) of the thirteenth-month pay. The computation should be as follows: (1/12 x 365/12)=0.083 x 30.41 = 2.52 Thus, "one-half month salary" is equivalent to 22.5 days. Minimum retirement = daily rate x 22.5 days x number of years in service The retirement benefits under R.A. 7641 and R.A. 8558 are separate and distinct from those granted by the Social Security System. Under the law, upon optional or compulsory retirement, the employee is also entitled to the proportionate thirteenth-month pay for the calendar year and to the cash equivalent of accrued leave benefits. ## Contractual Employees Those hired on a temporary basis, that is, for a "term" or "fixed period" are not regular employees, but are "contractual employees." Consequently, there is no illegal dismissal when their services are terminated by reason of the expiration of their contracts. Lack of notice of termination is of no consequence, because a contract for employment for a definite period terminates by its own term at the end of such period. ## Job Service/Labor Contracting Job or service contracting exists when a principal or employer enters an agreement with a contractor or subcontractor for the latter to perform a job or service. The contractor or subcontractor supplies the employees who will perform such particular job or service. The most common example of this is the engagement of a security agency to secure the premises of the company. Labor contracting, on the other hand, refers to a situation where the principal employer concludes an agreement with a manpower agency for the supply of manpower. The essential requisites for a valid labor contracting are: (a) such contractor must be engaged in business of supplying manpower; and (b) he must have substantial capital. ## Labor-Only Contracting "Labor-only contracting" is prohibited by law. There is labor-only contracting where: (a) the contractor or subcontractor merely recruits, supplies, or places workers to perform a job, work, or service for a principal; (b) he does not have substantial capital or investment to actually perform the job, work, or service under its own account and responsibility; and (c) the employees recruited, supplied, or placed by such contractor or subcontractor are performing activities which are directly related to the main business of the principal. ## Types of Employment - **Regular employment:** is a type of employment where the employee has been engaged to perform activities which are usually necessary or desirable in the usual business or trade of the employer except where the employment has been fixed for a specific project or undertaking, the completion or termination of which has been determined at the time of the engagement of the employee or where the work or service to be performed is seasonal in nature and the employment is for the duration of the season. - **Probationary employment:** refers to the services of an employee who has been engaged on probationary basis. He/she may be terminated only for a just cause or when authorized by existing laws, or when he/she fails to qualify as a regular employee in accordance with reasonable standards prescribed by the employer. The probationary employment period shall not exceed six (6) months reckoned from the date the employee actually started working. - **Part-time employment:** refers to workers employed to render work for a period less than the normal eight-hour working day or those who work less than the normal six working days in a week. This type of worker often maintains more than one employer to earn more." - **Commission-paid employment:** is when workers are paid depending on the income they brought in for their employer. They earn a percentage of the income they derived for their employer. - **Casual employment:** happens when employees are hired for a particular period or season. They may be hired as temporary replacements of on-leave regular employees or are hired during peak seasons when more workers are needed. - **Contractual employment:** is the state when workers are employed at any time but for a definite period not exceeding six (6) months. This type of employment is the most commonly used by the employers in the Philippines today in an effort to achieve more flexible workforce as a key factor for survival in the situation of heightened competition.