"The termination is in accordance with the finding that management’s prerogative to close and outsource services in the three departments was done in good faith and was in accordance both with the CBA and the Labor Code," said Baldoz.
"The CBA (Collective Bargaining Agreement) affirmed the management prerogative of PAL to organize, plan, direct and control operations, as well as the prerogative to reorganize its corporate structure for the viability of its operations," she said. She said that based on the CBA and Article 283 of the Labor Code of the Philippines, PAL’s closure of three departments, namely in-flight catering, airport services (cargo handling), and call center reservations operations, was reasonable and lawful as it was a measure to address PAL’s accumulated net losses and deficits.
Among the causes of the losses cited by PAL were the surge in fuel prices in 2008, the ban on PAL from the air space of 27 European Union member states and IATA’s suspension of PAL remittance facilities.
PAL said the lay-off is needed for it to survive in a highly competitive airline industry.
Baldoz said these conditions ultimately addresses the need to meet one of the two criteria in making a "valid termination" under the CBA, which is whether the exercise of the management prerogative was done in a just, reasonable, humane, and lawful manner.
The DOLE head said PAL was also able to meet the other criteria, which was the observance of the 45-day consultation period, required in the CBA, before implementing the reorganization.
"PAL more than complied with the 45-day consultation requirement under the CBA, considering the consultations and preventive mediation conferences between the PAL and the PALEA (PAL Employees Association) before the National Conciliation and Mediation Board as far back as September 2009," said Baldoz.
Aside from noting that the layoff was done above board, Baldoz also emphasized the "upgraded" benefits allocated for the affected employees.
The benefits include a separation pay equivalent to 1.25 percent per year of service; additional gratuity of P50,000 per affected employee; vacation leave balance that is 100 percent commutable to cash regardless of years of service; sick leave balance that is 100 percent commutable to cash regardless of years of service; extension of one year of the medical and hospitalization package; and trip pass benefits depending on the number of years of service.