To keep your business running smoothly, it is crucial to maintain good employer-employee relations. This is because not everything in business is about profits; goodwill towards your hired associates is important, too. Whether you are just starting or already growing your business, it is prudent to heed employment laws. After all, as the old joke says, your employees can decide whether your next customer will get a fly in his soup or not.

As a business owner, you have prerogatives that the law respects, but the law also protects the welfare of your employees. Courts will not interfere with your business judgment as long as you don't violate the law and any collective bargaining agreement that you may have entered into with your employees.

If you have been in business for a while now, you surely already know some of the basic guidelines on lawful employment, such as the probationary period, 13th month pay, sick and vacation leaves, maternity leave, and so on.

Here are six other important  employment guidelines you need to observe:

1. TRANSFER OR REASSIGNMENT
The transfer or reassignment of personnel from one area of operation to another is inherently a managerial prerogative that the courts will not interfere with. This is for as long as it is exercised in good faith and solely for the purpose of advancing business interests.

Usually, employers transfer personnel in order to maximize the use of their talent or skill. Some of the instances of valid transfers are rotation of employees from the day shift to the night shift, transfer of employees from one branch to another, and transfer of security guards to other posts.

Reassignments or transfers pending investigation of irregularities allegedly committed by employees are also valid, their purpose being to protect the company's property pending investigation.

The specific guidelines on transfer or reassignment of personnel are as follows:

1. The transfer should be a movement from one position to another of equivalent rank, level, salary, privileges, and other benefits without break in the service (lateral movement).
2. It should be for a legitimate business purpose.
3. It should not be effected as a form of punishment or as a demotion.
4. It should not be unreasonable, inconvenient, or prejudicial to the employee.
   

As the employer, you have the burden of proof to show that the employee's transfer is lawful; otherwise, the employee can claim constructive dismissal.

Constructive dismissal occurs when an employee quits because his continued employment has been rendered impossible, unreasonable or unlikely, such as when there are clear acts of discrimination, insensibility, or disdain by an employer towards the employee. Thus, there is constructive dismissal when the transfer or reassignment of an employee involves a demotion in rank or a diminution in pay.

2. LAYOFF DUE TO INEFFICIENCY
You may lawfully lay off workers if they fail to make their work or sales quota, regardless of the status of their employment (whether permanent or probationary). This is because failure to observe prescribed standards of work or to fulfill reasonable work assignments due to inefficiency constitutes valid cause for dismissal.

3. DEMOTIONS
Demotion, like dismissal, is a punitive action. You may lawfully demote employees only for just causes (see causes for dismissal below) and only after the employee has been given a chance to contest the demotion.

4. RETRENCHMENT
Retrenchment is the termination of employment initiated by you as employer through no fault of your employee. It is a reduction in manpower, a measure utilized by an employer to minimize business losses incurred in the operation of its business.

You may resort to retrenchment during periods of business recession, industrial depression or seasonal fluctuations, or during lulls when there is a shortage of materials. Considering that it will mean your employees' loss of livelihood, you must exercise your prerogative to retrench your employees only as a last resort.

Retrenchment is justified only when all other less drastic means have been tried and found insufficient or inadequate to save your business. To justify retrenchment, you must be able to show that your losses increased through a period of time and that the condition of your company will not likely improve in the near future.

You may lawfully retrench for the following reasons:

1. Closure of your establishment;
2. Reduction of personnel;
3. Installation of labor saving devices such as production line machinery;
4. Redundancy (when the service capability of the work force is in excess of what is reasonably needed to meet the demands of the enterprise); and
5. Prevention of losses or preventing the closing of the establishment.
   

Retrenchment is a controversial issue because many business owners use it as an excuse to unjustly lay off workers. Thus, to ensure that you will not be charged with illegal retrenchment, you should do the following:

1. Serve written notice on the workers and Department of Labor at least one month before the intended date of retrenchment.
2. Use fair and reasonable criteria in ascertaining who would be dismissed and who would be retained among your employees. Criteria may include efficiency, seniority, physical fitness, age, etc.
3. In case of termination due to the installation of labor-saving devices or redundancy, you must pay the affected employee separation pay equivalent to at least his one-month pay if he has been in service for less than one year, or at least his one-month pay for every year of service if he has served for more than one year. A fraction of at least six months is considered as one whole year.
4. In case of retrenchment to prevent losses and in cases of closures or cessation of operations of establishment or undertaking not due to serious business losses or financial reverses, you must pay the affected employee separation pay equivalent to one month pay or at least one-half-month pay for every year of service, whichever is higher.
   

5. EARLY RETIREMENT
You may validly retire employees who have not yet reached the compulsory retirement age (65 years old) as long as there is a voluntary agreement between you and your employee to that effect, such as in the collective bargaining agreement of employment contract.

An employee who turns 60 years old and who has served at least five years in your establishment may retire; you are obligated to give him retirement pay equivalent to at least one-half-month salary for every year of service.

If you are in the retail, service, and agricultural business and you employ less than 10 employees, you are exempt from the above requirement.

6. TERMINATION OF EMPLOYMENT FOR CAUSE
You may terminate an employment for any of the following causes:

1. Serious misconduct or willful disobedience by the employee of your lawful orders or those of your representative;
2. Gross and habitual neglect by the employee of his duties;
3. Fraud or willful breach by the employee of the trust reposed in him by you or your duly authorized representative;
4. Commission of a crime or offense by the employee against you or any immediate member of your family or that of your duly authorized representatives; and
5. Other causes similar to the above.
   

7. TERMINATION OF EMPLOYMENT DUE TO DISEASE
You may terminate the services of an employee who has been found to be suffering from any disease and whose continued employment is prohibited by law or is prejudicial to his health as well as to the health of his co-employees. However, you must pay him separation pay equivalent to at least his one month  salary or one-half-month salary for every year of service, whichever is higher.