14/11/2024
The Supreme Court emphasized that compromise agreements and settlements between employers and employees that offer employees excessively low amounts are invalid.
The Court invalidated the compromise agreements executed by San Roque Metals, Inc. (SRMI) and Prudential Customs Brokerage Services, Inc. (PCBSI) with a group of illegally dismissed employees. Under the settlement, the employees shall receive only 5.20% to 23.42% of the backwages and separation pay due them from the judgment in the illegal dismissal case.
The Court ruled that settlements are also considered quitclaims or legal documents signed by employees to waive their rights in favor of their employers.
For a quitclaim to be valid, (1) it must be signed by the employee voluntarily; (2) there is no fraud or deceit on the part of the parties; (3) the amount stated in the quitclaim is credible and reasonable; and (4) it is not contrary to law, public order, public policy, morals or good customs.
The Court ruled that there is no fixed percentage that determines the reasonableness of settlement amounts; instead, this is evaluated on a case-by-case basis.
In this case, the amounts received in the settlements are significantly lower than the back wages and separation pay the employees are owed, making them unreasonable.
The Court ordered SRMI and PCBSI to pay the employees the amounts owed to them from the illegal dismissal case, after deducting any amounts they have already received. Additionally, legal interest of 6% per year will apply from the date of the Court’s Decision until full payment is made.
The Decision was from the Supreme Court’s Second Division, written by Associate Justice Antonio T. Kho, Jr.
Read the full text of the press release: https://sc.judiciary.gov.ph/sc-invalidates-compromise-agreement-offering-unfairly-low-payments-to-employees/
Read the full text of the Decision: https://sc.judiciary.gov.ph/255368-leo-a-abad-romeo-abella-et-al-vs-san-roque-metals-inc/
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