Dear PAO,
I was previously employed as a waitress in a restaurant. I worked there for five years until the establishment where I was working closed because the owner no longer wanted to continue with his business.

We were informed of this, three months prior to the actual closure. The closure of the business operation meant my termination from my work. I just want to ask if my termination was valid and whether or not I am entitled to a separation pay.
Jondee

Dear Jondee,
The Labor Code of the Philippines provides for causes or circumstances where an employer may validly terminate the services of his/her employees. Article 283 thereof states:

“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.”

One of the valid causes mentioned above is the cessation of business, which may or may not be due to business reverses. Unless the business operation was shut down in bad faith, nobody not even the courts can stop your employer from doing so. In the case of Alabang Country Club Inc. vs. NLRC (G.R. No. 157611, August 9, 2005), the Supreme Court had the occasion to enunciate the following:

“For any bona fide reason, an employer can lawfully close shop anytime. Just as no law forces anyone to go into business, no law can compel anybody to continue the same. It would be stretching the intent and spirit of the law if a court interferes with management’s prerogative to close or cease its business operations just because the business is not suffering from any loss or because of the desire to provide the workers continued employment.”

Assuming that your employer never intended to circumvent any law in his move to close his restaurant, your termination is valid. However, he must give you a separation pay amounting to the equivalent of your half-month’s salary for every year of service.

Again, we find it necessary to mention that this opinion is solely based on the facts you have narrated and our appreciation of the same. The opinion may vary when the facts are changed or elaborated.

We hope that we were able to guide you with our opinion on the matter.

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