Retrenchment or downsizing – refers to “the economic ground for dismissing employees and is resorted to primarily to avoid or minimize business losses.” (Section 4 [r], Rule I-A, DOLE D.O. 147-15)

DOLE D.O. 147-15 provides for the standards to be complied with for a valid separation of employment by the employee:

1) The retrenchment must be reasonably necessary and likely to prevent business losses;

2) The losses, if already incurred, are not merely de minimis, but substantial, serious, actual and real, or if only expected, are reasonably imminent;

3) The expected or actual losses must be proved by sufficient and convincing evidence;

4) The retrenchment must be in good faith for the advancement of its interest and not to defeat or circumvent the employees’ right to security of tenure; and,

5) There must be fair and reasonable criteria in ascertaining who would be dismissed and who would be retained among the employees, such as status, efficiency, seniority, physical fitness, age, and financial hardship for certain workers. (Section 5.4.[c], Rule I-A, Ibid.)