A company has the right on how it will run and manage its business. For this purpose, instructions or orders are issued to employees, who are obligated to obey and follow. The refusal to obey the order is known as insubordination, which is a ground for termination. The law defines insubordination as the refusal to obey some order of a superior officer or willful disregard of the employer’s lawful and reasonable order.
As part of its right to manage its business, a company may transfer, promote or demote employees. There is transfer when an employee is moved from one position to another position of equal rank, level or salary. There is promotion when an employee is given a higher position with an increase in duties, responsibilities and salary. There is demotion if an employee is given a lesser position with a decrease in rank, duties and salary.
To prevent any abuse of management right to dismiss its employees for insubordination, the labor laws provide the following guidelines [1] employee’s conduct in disobeying the order must have been willful or intentional; [2] order must be reasonable and lawful; and [3] order must be made known and is related to one’s duties. As such, if the order is not reasonable or is not work connected, the refusal to obey cannot be a legal ground for dismissal.
If an employee does not want to be promoted and refused the order of promotion, may the company treat such refusal as insubordination and dismiss the said employee? Our Supreme Court decided the issue in Echo 2000 Commercial Corp., et. al. v. Obrero Filipino, G.R. 214092, 11 January 2016. In this case Cortes is a warehouse checker while Somido is a forklift operator. In the exercise of its management rights, Echo told them that they will be transferred to the Delivery Section as Delivery Supervisor. Treating their new assignment as promotion as it will entail additional responsibilities, both indicated their refusal to be promoted citing their lack of experience and expertise. An order for their new assignments without change in ranks, status and salary were issued. When they refused, they were terminated for insubordination.
They sued their company for illegal termination. After trial, the Labor Arbiter dismissed their complaint on the ground that they were not promoted, but were merely transferred. Their refusal is insubordination, which is a valid ground for termination. They appealed, after hearing, the National Labor Relations Commission [NLRC] reversed the ruling. On appeal by the company, the Court of Appeals, affirmed the NLRC decision because there is promotion and not mere transfer since there is increase in duties and upgrade of their work condition. Echo went to the Supreme Court. Echo argued that the employees’ refusal to comply with the order of transfer is insubordination. The employees argued that their transfer was in reality a promotion, which they can legally refuse.
The Supreme Court ruled that the subject order of the employer is not a transfer because a transfer involves a movement from one position to another position of equivalent rank, level or salary, without break in service. Promotion, on the other hand, is the advancement from one position to another with an increase in duties and responsibilities and usually accompanied by an increase in salary. But, increase in salary is considered incidental and not determinative of a promotion. Thus, “an employee is not bound to accept a promotion, which is in the nature of a gift or reward”. Refusal to be promoted is a valid exercise of a right. Such exercise cannot be treated in law as insubordination, or willful disobedience of a lawful order of the employer, hence, it cannot be the basis of employee’s dismissal from service. In this case, a warehouse checker and forklift operator are rank-and-file workers. The job of a delivery supervisor requires the exercise of discretion and judgment from time to time. The duties and responsibilities are not of the same weight as a warehouse checker or forklift operator. Despite the fact that no salary increases were effected, the assumption of the post of a delivery supervisor/coordinator is considered a promotion. Thus, the refusal of the employee to accept the same was therefore valid. The company was ordered to reinstate the employees and to pay their full backwages from the time they were terminated up to the finality of the decision.