- Statute
- Philippine Labor Code
- Article
- Art. 298
- Topic
- Authorized causes: redundancy, retrenchment, closure
- Status
- In force, as amended
- Formerly
- Art. 283
- Year
- 1974
- Cited by
- Multiple Supreme Court decisions
The provision
ARTICLE 283. Closure of establishment and reduction of personnel. The employer may also terminate the employment of any employee due to the installation of labor-saving devices, redundancy, retrenchment to prevent losses or the closing or cessation of operation of the establishment or undertaking unless the closing is for the purpose of circumventing the provisions of this Title, by serving a written notice on the workers and the Ministry of Labor and Employment at least one (1) month before the intended date thereof. In case of termination due to the installation of labor-saving devices or redundancy, the worker affected thereby shall be entitled to a separation pay equivalent to at least his one (1) month pay or to at least one (1) month pay for every year of service, whichever is higher. In case of retrenchment to prevent losses and in cases of closures or cessation of operations of establishment or undertaking not due to serious business losses or financial reverses, the separation pay shall be equivalent to one (1) month pay or at least one-half (1/2) month pay for every year of service, whichever is higher. A fraction of at least six (6) months shall be considered one (1) whole year.
Intellegal Wiki · In plain terms
This article covers the authorized causes for termination that arise from the employer's business rather than the employee's conduct: installation of labor-saving devices, redundancy, retrenchment to prevent losses, and closure or cessation of operations — the last unless the closing is meant to circumvent the Title. Two requirements run through it. Written notice must be served on the affected workers and on the labor department at least one month before the intended date. And separation pay is owed, at different rates: one month's pay or one month per year of service, whichever is higher, for labor-saving devices and redundancy; one month's pay or one-half month per year of service, whichever is higher, for retrenchment and for closures not due to serious business losses or financial reverses. A fraction of at least six months counts as a whole year.
An editorially maintained plain-language explanation of this provision — not legal advice.
Key points
Article 283 (renumbered Article 298) provides the authorized causes for termination based on business or operational grounds: installation of labor-saving devices, redundancy, retrenchment to prevent losses, and the closing or cessation of operations not done to circumvent the law.
It requires a written notice to the affected workers and to the Department of Labor and Employment at least one month before the intended date, and it fixes the corresponding separation pay, which varies with the ground invoked. Unlike just causes, authorized causes do not arise from employee fault. The article is read with Articles 279 and 282.
Cases applying this article
- Philippine Tobacco Flue-Curing & Redrying Corp. v. NLRC G.R. No. 127395
- Solidbank Corporation v. NLRC G.R. No. 165951