Transfer of Employees

1. Summary

▪ Transferring of employees is a management prerogative.

▪ There are jurisprudential guidelines for a valid transfer.

▪ Non-compliance with requirements for a valid transfer may result in constructive dismissal.

2. Concepts

“Under the doctrine of management prerogative, every employer has the inherent right to regulate, according to his own discretion and judgment, all aspects of employment, including… transfer of employees…” (Rural Bank of Cantilan, Inc. v. Julve, G.R. No. 169750, 27 February 2007)

A “transfer” – is a “movement from one position to another which is of equivalent rank, level or salary, without break in service.” (Tinio v. CA, SMART Communications, Inc., G.R. No. 171764, 08 June 2007)

Promotion is the “advancement from one position to another with an increase in duties and responsibilities as authorized by law, and usually accompanied by an increase in salary.” (Ibid.)

Demotion involves a situation where an employee is relegated to a subordinate or less important position constituting a reduction to a lower grade or rank, with a corresponding decrease in duties and responsibilities, and usually accompanied by a decrease in salary. (Ibid.)

3. Transfer of employees

The exercise of management’s prerogative concerning the employees’ work assignments is based on its assessment of the qualifications, aptitudes and competence of its employees, and by moving them around in the various areas of its business operations it can ascertain where they will function with maximum benefit to the company. (Peckson v. Robinsons Supermarket Corporation, G.R. No. 198534, 03 July 2013)

It is the employer’s prerogative, based on its assessment and perception of its employees’ qualifications, aptitudes, and competence, to move them around in the various areas of its business operations in order to ascertain where they will function with maximum benefit to the company. An employee’s right to security of tenure does not give him such a vested right in his position as would deprive the company of its prerogative to change his assignment or transfer him where he will be most useful. When his transfer is not unreasonable, nor inconvenient, nor prejudicial to him, and it does not involve a demotion in rank or a diminution of his salaries, benefits, and other privileges, the employee may not complain that it amounts to a constructive dismissal. (Ibid.)

As a privilege inherent in the employer’s right to control and manage its enterprise effectively, its freedom to conduct its business operations to achieve its purpose cannot be denied. (Ibid.)

4. Jurisprudential Guidelines

Concerning the transfer of employees, these are the following jurisprudential guidelines:

1) A transfer is a movement from one position to another of equivalent rank, level or salary without break in the service or a lateral movement from one position to another of equivalent rank or salary;

2) The employer has the inherent right to transfer or reassign an employee for legitimate business purposes;

3) A transfer becomes unlawful where it is motivated by discrimination or bad faith or is effected as a form of punishment or is a demotion without sufficient cause; and,

4) The employer must be able to show that the transfer is not unreasonable, inconvenient, or prejudicial to the employee. (Ibid.)

a. No grave abuse of discretion by the employer

The managerial prerogative to transfer personnel must be exercised without grave abuse of discretion, bearing in mind the basic elements of justice and fair play. Having the right should not be confused with the manner in which that right is exercised. Thus, it cannot be used as a subterfuge by the employer to rid himself of an undesirable worker. (Ibid.)

b. Not unreasonable, inconvenient, or prejudicial to the employee

In particular, the employer must be able to show that the transfer is not unreasonable, inconvenient or prejudicial to the employee. (Ibid.)

c. No demotion in rank or diminution of benefits

Nor does it involve a demotion in rank or a diminution of his salaries, privileges and other benefits. (Ibid.)

d. Burden of proof on the employer

Burden of proof is on the employer to show that: (a) the transfer is not unreasonable, inconvenient or prejudicial to the employee; and (2) it does not involve a demotion in rank or a diminution of his salaries, privileges and other benefits. (Ibid.)

4. Abuse of transfer results in constructive dismissal

Should the employer fail to overcome this burden of proof, the employee’s transfer shall be tantamount to constructive dismissal, which has been defined as a quitting because continued employment is rendered impossible, unreasonable or unlikely; as an offer involving a demotion in rank and diminution in pay. Likewise, constructive dismissal exists when an act of clear discrimination, insensibility or disdain by an employer has become so unbearable to the employee leaving him with no option but to forego with his continued employment. (Ibid.)

When the transfer of an employee is not unreasonable, or inconvenient, or prejudicial to him, and it does not involve a demotion in rank or a diminution of his salaries, benefits and other privileges, the employee may not complain that it amounts to a constructive dismissal. (Ibid.)

In the resolution of whether the transfer of the respondents from one area of operation to another was valid, finding a balance between the scope and limitation of the exercise of management prerogative and the employees’ right to security of tenure is necessary. We have to weigh and consider, on the one hand, that management has a wide discretion to regulate all aspects of employment, including the transfer and re-assignment of employees according to the exigencies of the business; and, on the other, that the transfer constitutes constructive dismissal when it is unreasonable, inconvenient or prejudicial to the employee, or involves a demotion in rank or diminution of salaries, benefits and other privileges, or when the acts of discrimination, insensibility or disdain on the part of the employer become unbearable for the employee, forcing him to forego her employment. (Chateau Royale Sports v. Balba, G.R. No. 197492, 18 January 2017)

In this case of constructive dismissal, the burden of proof lies in the employer to prove that the transfer of the employee from one area of operation to another was for a valid and legitimate ground, like genuine business necessity. (Ibid.)

a. 3 conditions when transfer is deemed a constructive dismissal

A transfer is deemed to be constructive dismissal when three conditions concur:

1) When the transfer is unreasonable, inconvenient or prejudicial to the employee;

2) When the transfer involves a demotion in rank or diminution of salaries, benefits and other privileges; and,

3) When the employer performs a clear act of discrimination, insensibility, or disdain towards the employee, which forecloses any choice by the latter except to forego his continued employment. (Tinio v. CA, SMART Communications, Inc., supra.)

5. When employee consents

An employee has no valid reason to disobey the order of transfer given by management, especially if he has tacitly given his consent thereto when he acceded to the company’s policy of hiring sales staff who are willing to be assigned anywhere in the Philippines which is demanded by the employer’s business. (Ibid.)

By the very nature of their employment, sales executives are expected to travel. They should anticipate re-assignment according to the demands of the employer’s business. Companies which rely heavily on sales are expected to assign their employees to areas where markets may be expanded or places where their sales could be improved. The right to transfer or reassign an employee is thus a reasonable exercise of management prerogatives and is recognized as an employer’s exclusive right in running its company. (Ibid.)

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/Updated: December 28, 2022