After resignation, what happens if an employee leaves before the 30 day turnover period? Can employees leave immediately? Can the employer file a case against them?
In today’s artice, we talk about what the law says about resigning employees. The general rule is if you resign, you have to give a 30 day notice so you can turn over your work over the next 30 days, and allow your employer to find a replacement for you.
This reminds me of Brent, who works as an accountant in Quezon City. He feels unsafe with the rising number of coronavirus cases in his community, and does not wish to compromise his frail health. So, while on a work from home set-up, Brent applied for a job in Iloilo, his home province, and got accepted right away.
As Brent starts drafting his resignation letter, he realized that his employment contract has clause for a 30-day turnover period before a resignation becomes effective.
What does he do after resignation?
This is a common story - an employee finds himself a new job but is being asked to start immediately by his new employer but is still undergoing (or is about to undergo) a turnover period in his previous employment.
Let’s make it more complicated. How about if the employee hasn’t filed his resignation? This employee may have just taken his chances in applying for a new job and hopes to convince his former boss to shrug off the turnover period and let him go without extra “hassle.”
This article will look at the serious and legal consequences of not undergoing the turnover period should a resigning employee be required to do so. It answers the question how come an employee gets to pay his employer?
As an initial matter, it is important that an employee does not ignore a turnover period before the effectivity of a resignation. He ought not to relegate it as something he can bargain or “mapapakiusapan” with the employer. If the employer decides to waive the turnover period, well and good, the employee is lucky to be given a pass.
But what if the employer insists for the employee to undertake the turnover period? Can the employee resist, march on, and leave his employer in the lurch? Unfortunately, a turnover period is not just a matter of “leaving the baggage behind.” Short-circuiting the process carries with it some consequences, which can be avoided in the first place.
What does the law say about resignation?
The Labor Code states that:
“Article 300 [285] Termination by Employee. (a) An employee may terminate without just cause the employee-employer relationship by serving a written notice to the employer at least one (1) month in advance. The employer upon whom no such notice was served may hold the employee liable for damages.”
The one (1) month advance written notice is the standard number of days for the employer and the employee to render a proper turnover. This period is usually found in most employment contracts or included in a company’s Collective Bargaining Agreement (CBA), if there is one.
The contract may provide, however, for a longer or shorter period. But in the absence of an express agreement by the parties, the one-month period provided by the Labor Code is the applicable standard. There is no prohibition, however, for the employer to entirely waive the turnover period and set free his employee.
For whose benefit is the turnover period given?
It is easy to understand the importance of a turnover period. This short window of time is primarily for the benefit of the employer. For one, it gives him enough number of days to look for another replacement. It also promotes continuity of duties. During this period, the resigning employee hands over his tasks to the person who will receive these responsibilities.
In a nutshell, a turnover period allows for a smooth transition of tasks from the predecessor to his successor. The end goal is to avoid, if not to lessen, financial damages on the part of the employer. Since it is the employer who benefits from this rule, it is also the employer who exercises the discretion to forego or waive it.
Besides, the employee also benefits from this period. During this time, he can process his clearance and other “exit” papers. The employee surely wants to move onto his new employment, having nothing to worry about previously unattended accountabilities and unsettled liabilities which may cause him headaches in the future.
What if the employee has a pending administrative case?
But take, for example, the case of an employee who has a pending administrative case or investigation with his employer. Can he make his resignation as his escape route? The answer is generally no. It is true that there are employers who allow its erring employees to simply resign.
The reason is for parties to avoid a tedious administrative charge or investigation. But it is entirely within the management’s prerogative to end pending cases upon the employee’s resignation. The employee may, however, negotiate for this compromise with his employer.
Since this form of settlement is for the employee’s own advantage and gain, he risks incurring the employer’s annoyance if the employee does not relent in his desire to avoid the turnover period.
This may lead to the continuation of the pending administrative case. The employee may eventually be found guilty of the charges, especially in a strong case against him. He may even be tagged as “terminated for a just cause” should it be justifiable.
So, instead of avoiding further legal consequences by taking a graceful exit, the employee’s refusal to keep his end of the bargain would further fan the flames for his own burning.
So what are the possible liabilities for damages?
To repeat, the law simply states that “the employer upon whom no such notice was served may hold the employee liable for damages.” It did not qualify the kind of damages, which the employer may ask from his employee. It may refer to actual damages or liquidated damages. These are the forms of damages which the employer has sustained as a result of the employee’s instant termination of the employer-employee relationship.
Article 2199 of the Civil Code tells us what are actual or compensatory damages:
“Except as provided by law or stipulation, one is entitled to an adequate compensation only for such pecuniary loss suffered by him as he has duly proved. Such compensation is referred to as actual or compensatory damages.”
Actual damages may refer to loss of profits of the employer as a result of the abrupt absence of the employee during the supposed turnover period. This includes costs for cancelled transactions and disrupted operations of the employer, which can be reasonably linked to the employee’s failure to comply with his responsibilities due to immediate resignation.
Moreover, the employer may also incur expenses to hire an immediate replacement in order not to jeopardize the operations. If the employer proves these pecuniary losses and attributes them to the non-observance of the turnover period, the employee may be held liable therefor.
Aside from actual damages, liquidated damages may also be available for the employer. Under Article 2226 of the same Civil Code:
“Liquidated damages are those agreed upon by the parties to a contract, to be paid in case of breach thereof.”
The employee may have unintentionally forgotten that his employment contract contains this form of damages. This stipulation triggers when a violation of the agreement, including non-observance of the turnover period, occurs.
Aside from damages, the employee can also be required to reimburse certain expenses. The principle of unjust enrichment recognizes that one cannot enrich himself at the expense of another.
Here's an example. An airline company agreed to finance his employee's further studies, seminars, and trainings. This company now expects his employee to serve the airline for a reasonable amount time to offset these expenses or investment. If there is a breach of their agreement, the company can demand from the resigning pilot the reimbursement of these expenses and costs.
It is unfair for the employer to spend so much, only to be cast aside without a return of investment in the form of expected services.
Follow the process and compromise
The safest way for a resigning employee is simply to undergo the turnover period stated in a contract, or a CBA, or the period in the Labor Code. He may also seek a compromise with his employer, if possible, for a waiver of this period. He must remember that he bound himself to follow the terms of his contract when he got employed. His promise includes complying with the standard manner of voluntarily resigning and the process that attaches with it.
It is also advisable for the employee to check whether the contract or CBA provides a longer or a shorter turnover period. If none is provided, he must comply the 30 days stated in the Labor Code as the default period.
This prior knowledge on the applicable period gives the employee a necessary legroom to plan his next steps ahead. He can estimate the time of filing a resignation or even when to start searching for a new job. It is also more prudent for him to state in his application his current employment status. In this manner, his prospective employer will get informed of such circumstances.
Negotiate your way out
If the employee really needs to leave immediately, he must be ready to provide a valid and acceptable reason for his instant resignation. He can then try and respectfully ask his employer to shorten the number of days for the turnover period, if not to waive the whole period.
In this way, the resigning employee still gets to sever his employment ties without burning the bridges so to speak. If the employer insists for a turnover period, the employee should yield and comply with the turnover period. It is likely that his new boss will understand this situation.
Balance competing interests
It is the hope of this article that the employee will have an informed decision to plan accordingly. In the end, everybody’s interest must be accounted for. On one side, the employee desires to resign and move on. On the opposite side is the employer’s legitimate business interest in avoiding financial damages and operational bumps with the impending gap in his workforce. A turnover period strikes the proper balance between these two competing interests.
Additional Resouce if you’re thinking of resigning
I hope this was able to help you understand resignation better, but chances are, you still have questions. Click here for additional resources which I think can help you, as well as a preview video. Go to info.legalguide.ph/resignation to learn more.