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Rules on Retrenchment in the Philippines

Retrenchment refers to the termination of employment initiated by the employer through no fault of and without prejudice to the employees.

It is resorted to during periods of:

  • business recession,
  • industrial depression,
  • seasonal fluctuations, 
  • lulls occasioned by lack of orders,
  • shortage of materials,
  • conversion of the plant to a new production program, or
  • automation

While labor laws allow retrenchment as a company’s valid exercise of management prerogative, it must comply with certain requirements for it to be valid:

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