Business closures

With barely two months into the year, the country’s labor sector has been hit by painful job losses.

It started with the announcement by Wells Fargo, a US-based financial services company, that it is laying off 750 employees in its local office and moving their jobs to India.

This was followed by Nokia Technology Center Philippines’ decision to transfer its research and development work to other offices abroad and, in the process, terminate the services of 700 IT (information technology) employees and administrative staff.

Then came Honda Cars Philippines’ move to close its assembly plant in Santa Rosa, Laguna , and, as a result, throw out of job more than 380 employees. Citing poor sales and high operating costs, Honda would instead import cars assembled elsewhere in the region to serve its Philippine customers.

Rounding up the situation, so far, is the termination by Philippine Airlines of the services of 300 employees due to losses caused, in part, by coronavirus-related travel restrictions. The loss of jobs due to the closure of a business is an emotional issue for the affected employees, especially for those who have spent the best years of their lives in the company and may find difficulty in getting employment elsewhere on account of age.

Thus, unless these employees have sufficient savings or possess marketable skills other companies may be interested in, their financial lifeline may be limited to the separation benefits they would receive from their employer.

Under the Labor Code, in case of cessation of business, the employees shall be entitled to a separation pay equivalent to one month salary or one-half month salary for every year of service, whichever is higher. A fraction of at least six months shall be considered as one year.

However, if the company has a collective bargaining agreement with its employees that provides for higher or better separation benefits, the latter shall prevail.

For companies with viable retirement programs, the retireable employees can apply for retirement ahead of the closure and claim retirement benefits commensurate to their years of service. Note that the payment of severance or termination pay is mandatory. The employer has to cough up the money needed to pay its employees by hook or by crook, including selling the remaining assets of the company if warranted.

Regardless of the manner that pay is computed, its objective is to give the soon-to-be out of job employee financial assistance in adjusting to a life without the employment lifeline he or she has depended on for years.

To soften the impact of the job loss, HR (human resources) practitioners advise that the decision to cease operations should be formally announced at the proper forum rather than be learned through the employee grapevine or from media reports.Although the announcement may be heartbreaking, the company owes it to its employees to be honest and candid with them and to truthfully and patiently answer all questions the employees may raise on this issue.No doubt, tears would be shed, voices would be raised, bottled-up gripes would come out and finger-pointing would happen, but that is to be expected (and endured) because job loss for reasons beyond the employee’s control is considered one of the most stressful moments in a person’s life, more so if he or she still has children of school age and has no work alternative.

Thus, a lot of “social engineering” work has to be undertaken by the company weeks or months ahead of the closure.

Principally, the employees have to be inspired into believing there is life after their employment and that despair is not an option in meeting the new challenges.

Additionally, the employees should be advised on the proper handling of their severance pay, i.e., it is money to be used to meet present and future needs, and not to be spent to satisfy pent-up caprices.

Only time will tell if more job losses are in the offing for natural or man-made reasons.

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