Lufthansa Technik pandemic layoffs upheld by CA

THE Court of Appeals (CA) has upheld the validity of Lufthansa Technik Philippines’ retrenchment program in dismissing a petition filed by former employees who had claimed illegal dismissal.

The appellate court’s Second Division found that the National Labor Relations Commission (NLRC) did not commit grave abuse of discretion in upholding the dismissal of the employees, as the decision was supported by substantial evidence.

It acknowledged that Lufthansa Technik’s serious financial losses due to the COVID-19 pandemic, with a loss of $28.9 million in 2020 and projected further losses in 2021, justified the retrenchment program as a necessary measure to prevent further losses.

“In sum, for a valid retrenchment, the employer must show that: (a) retrenchment was a necessary measure to prevent substantial and serious business losses; (b) it was done in good faith and not to defeat employees’ rights; and (c) the employer was fair and reasonable in selecting the employees who will be retrenched,” according to the 17-page ruling written by Justice Perpetua Susana T. Atal-Paño.

The ruling, released on Feb. 18, found that Lufthansa Technik implemented the retrenchment program in good faith, noting the various cost-cutting measures taken by the company before the retrenchment, including the cancellation of planned capital expenditure, alternative work schemes, dismissal of probationary and contractual workers, and offers of early retirement packages.

The tribunal also determined that the company used fair and reasonable criteria in selecting employees for retrenchment.

The criteria included competencies and skills, performance, values and behavior, potential, and seniority. The employees who were retrenched had the lowest scores based on these criteria.

The CA also noted that the company complied with the procedural requirements of Article 298 of the Labor Code, including serving notices of termination to affected employees, submitting an Establishment Report to the Department of Labor and Employment, and paying separation pay to the retrenched employees.

Meanwhile, it rejected the petitioners’ claim that they were entitled to higher separation pay based on an “Employees’ Manual,” as the document was not a valid Collective Bargaining Agreement (CBA) item.

The manual lacked essential particulars, such as the parties involved and the date of the agreement, and was not signed by either party, it noted.

“We are also not impressed with petitioners’ assertion that they must be paid 200% of their wages as their separation pay for every year of service in accordance with a purported CBA. A review of the records reveals that petitioners referred to a document denominated “Employees’ Manual” as the applicable CBA to them,” the ruling said.

“It provides that a retrenched employee shall be entitled to any of the following whichever is highest: a) at least one (1) month of pay for every year of service; b) benefits under the retirement plan; or c) entitlement under existing legislation,” it added.

The case originated from separate complaints filed by seven workers, who were regular employees of the company.

They alleged they were constructively dismissed due to an improperly implemented retrenchment program during the COVID-19 pandemic.

The employees claimed that the company did not adhere to its “last in, first out” policy and that they were not given notice of their subpar performance ratings.

The Labor Arbiter initially dismissed the employees’ complaint, a decision that was later reversed by the NLRC.

However, the NLRC eventually reversed its decision and affirmed the Labor Arbiter’s ruling, with a modification awarding nominal damages to the employees. — Chloe Mari A. Hufana