Is an employer allowed to close an establishment merely to circumvent the termination provisions of the Labor Code?
The law grants employers the management prerogative to close or cease the operations of their establishment or undertaking. However, this right is not absolute and is subject to strict legal limitations to protect workers. An employer is explicitly prohibited from closing an establishment if the true purpose of the closure is to circumvent the worker protection provisions of Title I regarding termination. If a closure is done in bad faith to avoid legal obligations to employees, it will not be considered a valid authorized cause. This restriction is stated under Article 298 Labor Code of the Philippines. “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…” 02-Jun-26About Nicolas and De Vega Law Offices
Nicolas and De Vega Law Offices is a full-service law firm in the Philippines. You may visit us at the 16th Flr., Suite 1607 AIC Burgundy Empire Tower, ADB Ave., Ortigas Center, 1605 Pasig City, Metro Manila, Philippines. You may also call us at +632 84706126, +632 84706130, +632 84016392 or e-mail us at [email protected]. Visit our website https://ndvlaw.com/.
