27/05/2026
SUPREME COURT: UNILATERAL WORKDAYS REDUCTION AMOUNTS TO CONSTRUCTIVE DISMISSAL
The Supreme Court (SC) ruled that unilateral imposition of reduced workdays and a worker rotation scheme amounts to constructive dismissal.
In a 29-page ruling authored by Associate Justice Amy C. Lazaro-Javier, the SC En Banc found a textile manufacturing company liable for constructively dismissing seven of its workers after reducing their six-day workweek to only two to three days and implementing a work rotation plan without their consent.
Fiber Textile Manufacturing Corp. (FMC) hired the petitioners in 2017 as production workers. Initially working six days a week, their schedules were later reduced to only two to three days a week due to the company’s alleged lack of raw materials.
FMC claimed that they held a meeting with production supervisors and staff to discuss the shortage of raw materials and the implementation of a work rotation schedule. During the meeting, the workers reportedly agreed to the temporary work rotation plan.
The workers filed a complaint for constructive dismissal, claiming that they were effectively dismissed when they were told not to return to work.
The Labor Arbiter ruled in favor of the workers, but the National Labor Relations Commission and the Court of Appeals upheld FMC’s actions as a valid exercise of management prerogative.
The SC emphasized that while employers may adopt flexible work arrangements during economic difficulties or national emergencies, these arrangements must comply with the requirements set out in the Department of Labor and Employment (DOLE) Department Advisory No. 2, Series of 2009.
"We find that apart from its noncompliance with the notice requirement under DOLE Department Order No. 2, Series of 2009, FMC also failed to observe the other requisites for the valid adoption of flexible work arrangements, rendering FMC's implementation of rotation of workers' schedule and reduction of work days unlawful." the Supreme Court said.
It explained that employers must first consult affected employees and obtain the voluntary support of the majority of workers. Employers must also notify the DOLE before implementing the arrangement and prove that the company is suffering from actual or reasonably imminent economic difficulties.
In this case, the SC held that FMC failed to prove that the workers voluntarily agreed to the reduced workdays and worker rotation scheme. The Court ruled that informing employees of the arrangement does not equate to securing their consent.
FMC also failed to notify the DOLE before implementation and failed to prove that it was suffering from actual or imminent economic difficulties that would justify the reduction of workdays.
The SC emphasized that while employers may adopt flexible work arrangements to prevent business losses, such measures must be exercised in good faith and with due regard for workers' rights.
FMC’s unlawful reduction in workdays amounted to constructive dismissal because it resulted in reduced salaries, rendering continued employment unreasonable for the workers.
"Constructive dismissal occurs when there is cessation of work because continued employment is rendered impossible, unreasonable, or unlikely;
when there is a demotion in rank or diminution in pay or both; or when a clear discrimination, insensibility, or disdain by an employer becomes unbearable to the employee." the Supreme Court said.
It ordered the FMC to pay the workers full backwages, inclusive of allowances, and all other benefits accruing to them from the time of their dismissal up to the finality of the Decision, separation pay equivalent to one month pay for every year of service, and attorney's fees.
