Termination_of_Employment

UNIVERSITY OF CALOOCAN CITY COLLEGE OF BUSINESS AND ACCOUNTANCY CAMARIN CAMPUS CASE STUDY “TERMINATION OF EMPLOYMENT” Submitted By: Charilou M. Oliver BSBA-HRDM 4D CASE SYNOPSIS Mrs. Ashley Villahermosa started working for CLN Company on December 15, 1988 as a ticket seller assigned at Fly Me to the Moon, Recreation Area. Later on, she was promoted as cashier and then as clerk typist. On April 1, 1990, CLN Company instituted an Employees Non-Contributory Retirement Plan which provides that any participant with twenty (20) years of service, regardless of age, may be retired at his option or at the option of the company. On January 1, 2011, CLN Company amended the retirement plan in compliance with Republic Act (R.A.) No. 7641. Under the revised retirement plan, CLN Company reserved the option to retire employees who were qualified to retire under the program. Sometime in December 2010, CLN Company implemented a company-wide early retirement program for its 41 employees, including Mrs. Villahermosa, who, at that time, was 50 years old, with 25 years of continuous service to the company. She was offered an early retirement package amounting to P171, 982.90, but she rejected the same because she was so sure that she didn’t sign such agreement. CLN Company exercised its option under the retirement plan, and decided to retire Villahermosa effective at the end of business hours on February 15, 2011. A check of even date in the amount of P100, 811.70, representing her retirement benefits under the regular retirement package, was issued to her. CLN Company nonetheless pursued its decision and Villahermosa was no longer given any work assignment after February 15, 2011. I. TIME CONTEXT The said problem was noted on December 01, 2010. II. VIEWPOINT I will be the company’s consultant hired to recommend the most possible solution as menioned in this case. III. STATEMENT OF THE PROBLEM Can a company retire employees below legal age limit on the basis of Non-Contributory Plan Program' IV. OBJECTIVE This study aims to provide the most possible solution for this case in two (2) months time. V. SWOT ANALYSIS Strengths: * On April 1, 1990, CLN Company instituted an Employees Non-Contributory Retirement Plan. * CLN Company amended the retirement plan in compliance with Republic Act (R.A.) No. 7641 * Mrs. Villahermosa was 50 years old with 25 years of continuous service to the company. | Weaknesses: * Mrs. Villahermosa and the rest of the employees did not signed any contract or agreement regarding Non-Contributory Retirement Plan. * On, Feb. 15, 2011 the company decided to terminate Mrs. Villahermosa without further processes. | Opportunities: * Personal Meeting with the terminated employees including Mrs. Villahermosa and fixed problems on their favor instead of facing legal issues. * Resuming of work contracts and/or fixing separation and retirement benefits. | Threats: * Possible legal cases against the company. * Bad reputation and company disgrace. * Possible Legal Costs. | VI. AREAS OF CONSIDERATION As a rule, the compulsory age of retirement is 65 while optional retirement starts at 60.  Employers, however, are allowed to enter into agreements for early retirement below these age limits but they must be able to show, if questioned later, that their retirement plans or agreements were voluntarily accepted by the employees. Without proof of voluntary consent, a retirement made on the basis of this early retirement plan may be considered invalid as a “deprivation of property without due process of law.” VII. ALTERNATIVE COURSE OF ACTION 1. The company must stand firm in their decision of terminating the 41 employees in any courts. 2. The company must have personal meeting with all the terminated employees and fix the said problem in their favor. 3. The company must have a personal meeting with Mrs. Villahermosa and fixed the problem as how she wishes to and wait for other possible complainants and do the same. VIII. RECOMMENDATION * Alternative Course of Action # 1 is advantageous in terms of preserving company’s pride and credibility but disavantageous if they will loss possible cases. * Alternative Course of Action # 2 is more advantageous because it will prevent the company from facing possible legal cases against them and it will also keep their relationship with the employees but disadvantageous because it will surely cost the company so much and this might affect the company’s financial status. * Alternative Course of Action # 3 is the most advantageous because it will prevent the company from facing possible legal cases against them because surely, Mrs. Villahermosa will file a case against the company because she refuse to accept previously offered check by the company knowing that they neglected to have a contract signed by her regarding the said Retirement Plan. It is also good to wait for other complainants, if there will be, because it will prevent them from costing so much. IX. ACTION PLAN PERSON INVOLVED | DEPARTMENT | BUDGET | TIME FRAME | HR Manager and Mrs. Villahermosa | Human Resource Department | 0.00 | 1 Day | HR Manager, Finance Department Head/Staff and Mrs. Villahermosa | Human Resource Department and Finance Department | P 200, 000.00 to 300, 000.00 (estimated amount depending on the decision of Mrs. Villahermosa with the agreement of Finance Department) | 1 Month | | | | |