Article 297 of the Labor Code considers any of the following acts or omission on the part of the employee as just cause or ground for terminating employment:

(a) Serious misconduct or willful disobedience by the employee of the lawful orders of his employer or representative in connection with his work;

(b) Gross and habitual neglect by the employee of his duties;

(c) Fraud or willful breach by the employee of the trust reposed in him by his employer or duly authorized representative;

(d) Commission of a crime or offense by the employee against the person of his employer or any immediate member of his family or his duly authorized representatives; and

(e) Other causes analogous to the foregoing.

In Lim vs. National Labor Relations Commission, the Supreme Court (SC) considered inefficiency as an analogous just cause for termination of employment under Article 297 of the Labor Code. The SC held that gross inefficiency falls within the purview of other causes analogous to the foregoing, this constitutes, therefore, just cause to terminate an employee under Article 297 of the Labor Code.

One is analogous to another if it is susceptible of comparison with the latter either in general or in some specific detail; or has a close relationship with the latter. Gross inefficiency is closely related to “gross neglect, for both involve specific acts of omission on the part of the employee resulting in damage to the employer or to his business.

In Buiser vs. Leogardo, this SC ruled that failure to observe prescribed standards to inefficiency may constitute just cause for dismissal. Also, in Leonardo vs. National Labor Relations Commission the SC held that an employer is entitled to impose productivity standards for its workers, and in fact, non-compliance may be visited with a penalty even more severe than demotion.

The practice of a company in laying off workers because they failed to make the work quota has been recognized in this jurisdiction. (Philippine American Embroideries vs. Embroidery and Garment Workers, 26 SCRA 634, 639). Employees’ failure to meet the sales quota assigned to each of them constitute a just cause of their dismissal, regardless of the permanent or probationary status of their employment.

Failure to observe prescribed standards of work, or to fulfill reasonable work assignments due to inefficiency may constitute just cause for dismissal. Such inefficiency is understood to mean failure to

attain work goals or work quotas, either by failing to complete the same within the allotted reasonable period, or by producing unsatisfactory results.

This management prerogative of requiring standards may be availed of so long as they are exercised in good faith for the advancement of the employer’s interest.

In fine, an employee’s failure to meet sales or work quotas falls under the concept of gross inefficiency, which in turn is analogous to gross neglect of duty that is a just cause for dismissal under Article 297 of the Code.

However, in order for the quota imposed to be considered a valid productivity standard and thereby validate a dismissal, management’s prerogative of fixing the quota must be exercised in good faith for the advancement of its interest.

The duty to prove good faith, however, rests with employer as part of its burden to show that the dismissal was for a just cause. The company must show that such quota was imposed in good faith.

Employers must be reminded that while probationary employees do not enjoy permanent status, they enjoy the constitutional protection of security of tenure. They can only be terminated for cause or when they otherwise fail to meet the reasonable standards made known to them by the employer at the time of their engagement.

Where the employer miserably failed to prove the termination of employee was for a just cause nor was there substantial evidence to demonstrate the standards were made known to the latter at the time of his engagement, the employee’s right to security of tenure was breached.

Learn how to Validly Terminate Employee in the Philippines with this Tutorial Video of Atty. Elvin

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