Employers may have disagreements with their employees and this is inevitable in any business operation. Sometimes, when an employee commits an infraction or wrongdoing, the employer offers the employee a chance to resign rather than face disciplinary proceedings.
For the employer, it may wish to focus on running its business rather than going through disciplinary proceedings which may disrupt its operations. On the part of the employee, a graceful exit allows them to leave the company without any derogatory record.
However, there are times when the employee will misinterpret this offer as being forced to resign and being unjustly terminated which results in the filing of a labor complaint for illegal dismissal claiming they were constructively dismissed.
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Constructive dismissal is quitting or cessation of work because continued employment is rendered impossible, unreasonable or unlikely. Some examples are:
a. When there is a demotion in rank;
b. When there is a diminution of pay and other benefits.
c. There is an act or acts of clear discrimination, insensibility, or disdain by an employer and this becomes so unbearable on the part of the employee that it could foreclose any choice by him except to forego his continued employment.
There is involuntary resignation due to the harsh, hostile, and unfavorable conditions set by the employer.
The test of constructive dismissal is whether a reasonable person in the employee’s position would have felt compelled to give up his employment/position under the circumstances.
The nature of constructive dismissal as a dismissal in disguise enables employers to do away with their obligation to prove just cause and comply with the twin requirements of notice and hearing before terminating their employees. This is a form of illegal dismissal as it undermines the security of tenure of the employee. (Lagamayo v. Cullinan Group, et al., G.R. No. 227718, November 11, 2021)
When an employee resigns but claims they were forced to do so, the employer has the burden of proving that the employee voluntarily resigned. (Pascual v. Sitel Philippines Corporation, et al., GR 240484, March 9, 2020)
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Accordingly, when an employer offers the employee the option to resign, it must be careful and aware that an employee may interpret this as a forced termination giving rise to a case for constructive dismissal case against the employer.
Notwithstanding the foregoing, an offer by the employer is not necessarily tantamount to a constructive dismissal or illegal dismissal.
In the case of Central Azucarera de Bais, et al. v Siason (GR 215555, July 29. 2015), the complainant employee Ms. Siason, a Purchasing Officer, was confronted by the President of the company when she ordered machine parts and had it sent via air freight which cost more than the previously approved method of sea freight.
The employee explained that the delivery via air freight was beneficial to the company but the president considered this as a big infraction of the rules. The president wrote her a letter informing her that she committed various purchasing policy violations which he deemed to be very unfavorable to the company and that she should tender her resignation to the company rather than force the president’s hand.
Another letter was given to the employee by the company’s legal officer following up on the her action to the president’s letter. Because of this, the complainant tendered her resignation where she stated that she was tendering her resignation because the president told her to do so.
The employee then filed a complaint for illegal dismissal claiming that she was forced to resign.
The National Labor Relations Commission (NLRC) ruled that the complainant was constructively dismissed by reason of the letters of the company president and its lawyer and awarded the employee PhP1,736,041,95 representing backwages, separation pay, and attorney’s fees. The Court of Appeals affirmed this ruling and stated that the complainant would not have resigned from her job had it not been the pressure exerted by the company’s president.
The Supreme Court reversed the NLRC and Court of Appeals and found that the employee was not constructively dismissed as she voluntarily resigned from the company.
An audit by the company’s accounting department shows that the employee made several purchases discovering that there were several questionable discrepancies in purchase transactions consisting of different price quotations for identical items.
The Court took into consideration the employee’s long tenure with the company and close relationship with the president such that the president’s letter asking her to resign which should be construed as the president telling her to resign rather than face an administrative complaint which might result in her dismissal, saving herself from the trouble of besmirching her employment record.
This offer from the president gave the employee a chance at a graceful exit which was within his discretion as it is not uncommon that an employee is permitted to resign to avoid the humiliation and embarrassment of being terminated for just cause after the exposure of her malfeasance. The Court found that there was nothing reprehensible or illegal in the offer to resign.
(The author, Atty. John Philip C. Siao, is a practicing lawyer and founding Partner of Tiongco Siao Bello & Associates Law Offices, an Arbitrator of the Construction Industry Arbitration Commission of the Philippines, and teaches law at the De La Salle University Tañada-Diokno School of Law. He may be contacted at jcs@tiongcosiaobellolaw.com. The views expressed in this article belong to the author alone.)