MANILA – The Supreme Court of the Philippines has ruled that the unilateral imposition of reduced workdays and a worker rotation scheme may constitute constructive dismissal.

In a decision penned by Associate Justice Amy C. Lazaro-Javier, the SC En Banc found a textile manufacturing firm liable for constructively dismissing seven workers after it cut their six-day workweek to only two to three days and implemented a rotation system without their consent.

The case stemmed from the employment of workers hired in 2017 by Fiber Textile Manufacturing Corp. (FMC) as production staff. Their schedules were later reduced due to an alleged shortage of raw materials.

The company said it held a meeting with employees to discuss the shortage and the proposed rotation scheme, and that the workers agreed to the temporary arrangement.

However, the workers filed a complaint for constructive dismissal, arguing they were effectively removed from work after being told not to report back.

The Labor Arbiter ruled in favor of the workers, but the National Labor Relations Commission and the Court of Appeals initially upheld FMC’s actions as a valid exercise of management prerogative.

The Supreme Court stressed that while employers may adopt flexible work arrangements during economic difficulties, these must comply with Department of Labor and Employment guidelines under Department Advisory No. 2, Series of 2009.

The Court said employers must consult workers, secure voluntary agreement from the majority, notify the DOLE, and show evidence of actual or imminent economic hardship before implementing such arrangements.

It ruled that FMC failed to prove that the workers voluntarily consented to the reduced work schedule, noting that mere notification does not amount to agreement.

The SC also found that the company failed to notify the DOLE and failed to establish genuine economic necessity to justify the reduction in workdays.

The Court emphasized that while flexible work arrangements may be allowed to prevent business losses, they must be implemented in good faith and with respect for labor rights.

It added that FMC’s reduction of workdays led to decreased earnings, making continued employment unreasonable and amounting to constructive dismissal.