What is Redundancy?

Redundancy is one of the grounds for termination allowed by labor laws in the Philippines.

It exists when the service capability of the workforce is in excess of what is reasonably needed to meet the demands of the enterprise.

A redundant position is one rendered superfluous by any number of factors, such as:

•  over hiring of workers,
• decreased volume of business,
• dropping of a particular product line previously manufactured by the company, or
• phasing out of a service activity previously undertaken by the business.

Under these conditions, the employer has no legal obligation to keep in its payroll more employees than are necessary for the operation of its business.

For a valid implementation of a redundancy program, the employer must comply with the following requisites:

(1) written notice served on both the employees and DOLE at least one month prior to the intended date of termination of employment;

(2) payment of separation pay equivalent to at least one month pay for every year of service;

(3) good faith in abolishing the redundant positions; and

(4) fair and reasonable criteria in ascertaining what positions are to be declared redundant and accordingly abolished.