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Transfer of Employee Philippines: A Legal Guide for HR Practitioners
The transfer of employees in the Philippines is recognized as a valid management right under Philippine law.
However, the transfer of employees has also been extensively commented on in Supreme Court cases because transfers improperly done may prompt an employee to file a case for Constructive Dismissal.
We’ll discuss jurisprudence in this article so that you can see real-life examples of what you should and shouldn’t do as an HR.
It’ll also show you how the law plays out in real life, and the considerations we Labor Lawyers look at for this.
Is the Transfer of Employees in the Philippines legal?
Yes, the transfer of employees in the Philippines is legal and is one of management’s prerogatives.
In Tinio vs Court of Appeals, the Court stated:
“This Court has consistently recognized and upheld the prerogative of management to transfer an employee from one office to another within the business establishment, provided there is no demotion in rank or a diminution of salary, benefits and other privileges. As a rule, the Court will not interfere with an employer’s prerogative to regulate all aspects of employment which include among others, work assignment, working methods and place and manner of work. Labor laws discourage interference with an employer’s judgment in the conduct of his business.”
So, the court recognizes that transfers are done for business reasons.
Insofar as these transfers are done for a valid reason and are not prejudicial to the employee, a transfer is a valid transfer.
In the case above, Tinio was transferred from Cebu to Manila for business reasons. He did not suffer any diminution as a result of this, nor did the court find anything other than business reasons for the transfer.
Jurisprudential Guidelines on the Transfer of Employees
Transfer of employees in the Philippines is allowed by the law so long as certain guidelines are followed.
Transfer of Employee Philippines Guidelines as per G.R. 198534:
- a transfer is a movement from one position to another of equivalent rank, level or salary without break in the service or a lateral movement from one position to another of equivalent rank or salary
- the employer has the inherent right to transfer or reassign an employee for legitimate business purposes
- a transfer becomes unlawful where it is motivated by discrimination or bad faith or is effected as a form of punishment or is a demotion without sufficient cause
- the employer must be able to show that the transfer is not unreasonable, inconvenient, or prejudicial to the employee
In other words, a transfer should simply be a transfer for a business reason, instead of punishment or demotion.
The Court supported a transfer in several situations.
I listed them down below, just to show you some examples. (This is not the complete list, just some I found).
Transfer of employee Philippines, list of transfers:
- An employee can be transferred to the night shift when the rotation of day and night shifts is a standard operating procedure (Castillo v. CIR, 39 SCRA 81).
- Rotations among different locations to prevent connivance (Cinema, Stage and Radio Entertainment Free Workers v. CIR, 18 SCRA 1071).
- Re-assignment of one from the position of a supervisor to that of engineer at the power-house (Interwood Employees Assn. v. Interwood, 99 Phil. 82)
- The transfer from messenger clerk in a hotel to purely office work and 2 other unionists from the position of hotel guard to line and elevator men, without diminution of pay or other employee’s rights (Bay View Hotel Employees Union v. Bay View Hotel, L-10393, March 30, 1960),
- Temporary assignment of a sales clerk to another section of the store (Marcaida v. PECO, 63 O.G. 8559).
- The transfer from category buyer to Provincial Buyer (G.R. 198534)
- The transfer from Cebu to Manila office GR 171764
In all these transfers, the Court found only genuine business reasons and no prejudice to any of the employees in their transfers.
Let’s take a look at a case in-depth to understand the valid transfer of employees.
The Valid Transfer of Employees
The transfer of employees for business reasons and without a reduction in pay, responsibilities or benefits is valid.
In GR 83239, Philippine Japan Active Carbon corporation transferred employee Olga Quinanola from secretary to General Manager to Production Secretary.
Olga considered this a demotion and so filed a case for Illegal Dismissal.
However, the Court decided that this was a valid transfer.
The Court noted that there was no demotion in rank nor diminution in pay, benefits and privileges.
It further went on to note that it is an employer’s prerogative to move employees around based on its assessment of their qualifications to where they will function with maximum benefit to the company.
It further went on the say that when the:
“…transfer is not unreasonable, nor inconvenient, nor prejudicial to him, and it does not involve a demotion in rank or a diminution of his salaries, benefits, and other privileges, the employee may not complain that it amounts to a constructive dismissal…”
In Olga’s case, the employer offered her first a position in Laoag and then one in Manila. The employer also sent her several notices to report to work.
The Court did not see any subterfuge on the part of the company nor any attempt to penalize the employee in the transfer and so found that there were legitimate reasons for the transfer.
Let’s look at another valid transfer.
In G.R. 198534, employee Jenny Peckson was transferred from Category buyer to Provincial coordinator in Robinsons Supermarket.
She refused this position saying that it was a demotion.
She also refused to turn over to the new buyer, refused to explain why, and refused further to report to work despite being called twice to report.
This was despite the salary structure and pay to be the same as her former position with like responsibilities.
In light of these facts, the court decided in favor of the company since all the facts showed that the transfer was not inconvenient or prejudicial to her.
The Invalid Transfer of Employees
The Transfer of Employees to punish or ease out an employee or one that has a reduction in pay, rank or benefits is not valid.
Let’s look at a case with an invalid transfer.
In G.R. 163091, the Court decided in favor of the employee.
In this case, the Court discussed the events leading up to his Illegal Dismissal, including the transfer of the employee (We’ll zero in on this aspect of this case since this is what is pertinent to our discussion).
Employee Del Villar was transferred from Transportation Services Manager to Staff Assistant in the Purchasing Department.
He had a lower position in rank and in responsibility.
He was no longer a manager and he had much less work – so much so that Del Villar even complained that he was not given any meaningful work at all.
The Court also noted there was a diminution in benefits as Del Villar could no longer use the company car, gas allowance and foreign travel that his previous position offered.
The Court went on to note:
“The Labor Arbiter was correct in his observation that had Del Villar resigned immediately after his “transfer,” he could be said to have been constructively dismissed. There is constructive dismissal when there is a demotion in rank and/or diminution in pay…”
So, transferring an employee should be done in consideration of these legal limits.
As Labor Lawyers, we find that working with HR is very important.
Labor Lawyers can best advise on the transfer of employees and the correct data for an employee’s file so that you can always properly defend your company in court.
The Transfer of Employees and Bad Faith
When the Transfer of Employees is done for reasons other than purely business reasons – for instance, to punish an employee – then this transfer is done in bad faith.
In GR 188269, supervisor Baya was transferred to a sister company at a rank-and-file position.
Baya protested this.
He stated that his transfer was due to the fact that he did not want to transfer his loyalty to the new company-owned cooperative, and so his transfer was one of Constructive Dismissal.
The Court examined the records.
It noted that in Constructive Dismissal, the employer “…has the burden of proving that the transfer and demotion of an employee are for valid and legitimate grounds such as genuine business necessity…”
It found in this case that the company could not prove that and that the transfer was done to punish him.
The transfer was found to be in bad faith, and Baya was awarded Separation Pay, 13th Month Pay, Moral Damages and Attorney’s fees.
How to Transfer an Employee the Right Way
If you are an HR trying to transfer an employee, the above cases should inform what you do so that you transfer an employee correctly.
To Transfer an Employee correctly do the following:
- Ensure it is for a business reason
- There is no diminution
- It is not prejudicial to the employee
The right to transfer an employee is respected by the Courts – in fact, there are several other cases that show that lateral transfers for business reasons are supported by the court.
But a transfer must be done correctly so that cases of Illegal Dismissal or Constructive Dismissal please can be avoided.
As you can see above, an employee can claim that a transfer somehow “forced” him to resign – and it was the actions of the HR and management working together that cause these cases to fail.
If you are an HR contemplating transferring an employee, please contact a Labor Lawyer to do things right – it will save your company time and hassle.