Why many companies lost labor cases in 2012

Despite the tremendous advantages being enjoyed by employers, despite being defended by giant law firms that bill them in millions, and notwithstanding the fact that their HR executives and managers are topnotch and well-paid, companies are still losing their cases before the labor tribunals and courts. They were served adverse decisions and writ of executions that direct them to pay millions to workers. I have a favorite example involving a global company, manufacturing and selling consumer goods and represented by a very big and influential law firm, that has produced many top officials in government. This company lost a multi-million case to poor contractual workers who were represented only by a low profile lady lawyer, who used to be my law student. The question is why.

Being a Law professor and Bar reviewer for more than three decades now, and as an author of Labor Law books, it has become my yearly routine to review every January, all the Supreme Court decisions in labor cases in the past year. I have found out that management lost 60% of all labor cases in 2012. I did examine how these cases were handled by the line management that decided to hire, fire and manage people, by HR managers who documented the management decisions, and by the lawyers who handled the litigation in court. My findings are very revealing. This month, I shall share this in a symposium in Shangri-La Makati with CEOs, HR executives and labor lawyers.

The first reason is making the wrong decisions about people, like hiring the wrong person or putting him in the wrong position, dealing with labor-only contractors, major errors in wage-fixing and benefits administration, or anti-labor and anti-union acts and other unfair labor practices. About 75% of cases filed against management are illegal dismissal cases, either due to lack of just cause or for failure to follow the rules on due-process. Others are lack of management skills in undertaking corporate transformation, like mergers and consolidations, and lack of basic knowledge on the proper procedure to undertake retrenchments, redundancy, mechanization and installation of labor-saving devices.

The second reason is the propensity of certain company owners and COOs/CEOs not to listen to the expert advice of their own HR professionals, labor relations consultants and even DOLE officials and the companies' failure to invest in the acquisition of adequate knowledge and skills in leading and managing people. Related to this is the lack of basic knowledge in the company on the art and science of documentation related to personnel, from hiring to retiring. They do not even know how to conduct administrative investigation properly and in accordance with the Labor Code. Neither do they have any skill on the proper technique in HR documentation. They need to study again from the masters.

The third reason for losing cases is getting the wrong lawyers, those who are not experts in labor cases. They may be the most expensive corporate, criminal, civil or tax lawyers in town but labor cases are a different banana altogether. These expensive lawyers might not even be familiar with the latest labor jurisprudence, and they might not have rapport with Labor Arbiters, NLRC Commissioners and the staff in labor tribunals. The labor lawyers would tell you that it is not enough that your lawyer knows the law. He must know the Arbiter too.

In 2012, some illegal dismissal cases were lost by management because some lawyers failed to file the required position papers before the Labor Arbiter. Such failure is deemed a waiver of management's right to contest the allegation of illegality in the termination of employment. Normally, such default would be a virtual confession of judgment. Lawyers who commit this gross negligence deserve to be disbarred, or at least suspended from the practice of law. How can employers claim of being deprived of a day in court when it is their own lawyers who bungled the case from the very beginning. Clients should not be condemned to spend millions for lawyers who are incompetent and grossly inept. Employers should fire these kinds of lawyers to avoid major legal disasters.

The fourth reason for losing cases is perhaps because, in the first place, the complainant really deserves to win on the merits. No brilliant lawyer can turn around a losing case. Lawyers cannot, should not manufacture evidence. If employers fire people indiscriminately, without due respect to both the law and the workers' rights, they should not expect to win.