Employer ULP 3: Contracting Out
It shall be unlawful for an employer to contract out services or functions being performed by union members when such will interfere with, restrain, or coerce employees in the exercise of their right to self-organization. (Art. 248, Labor Code)
● It is to be emphasized that contracting out of services is not illegal per se. It is an exercise of business judgment or management prerogative. Absent proof that the management acted in a malicious or arbitrary manner, the Court will not interfere with the exercise of judgment by an employer. (BPI Employees Union vs. BPI, G.R. No. 174912, July 24, 2013)
● As a general rule, the act of an employer in having work or certain services or functions being performed by union members contracted out is not per se an unfair labor practice. This is so because contracting-out of a job, work or service is clearly an exercise by the employer of its business judgment and its inherent management rights and prerogatives. Hiring of workers is within the employer’s inherent freedom to regulate its business and is a valid exercise of its management prerogative subject only to special laws and agreements on the matter and the fair standards of justice. The employer cannot be denied the faculty of promoting efficiency and attaining economy by a study of what units are essential for its operation. It has the ultimate right to determine whether services should be performed by its personnel or contracted to outside agencies.
It is only when the contracting out of a job, work or service being performed by union members will interfere with, restrain or coerce employees in the exercise of their right to self-organization that it shall constitute an unfair labor practice. Thus, it is not unfair labor practice to contract out work for reasons of business decline, inadequacy of facilities and equipment, reduction of cost and similar reasonable grounds. (Chan, 2017 Labor Law Pre-week)
It is only when the contracting out of a job, work or service being performed by union members will interfere with, restrain or coerce employees in the exercise of their right to self-organization that it shall constitute an unfair labor practice. Thus, it is not unfair labor practice to contract out work for reasons of business decline, inadequacy of facilities and equipment, reduction of cost and similar reasonable grounds. (Chan, 2017 Labor Law Pre-week)
● Facts: Bankard contracted an independent agency to handle its call center needs. The Bankard Employees Union alleged that Bankard committed ULP.
Held: Aside from the bare allegations of the Union, nothing in the records strongly proves that Bankard intended its program, the MRP, as a tool to drastically and deliberately reduce union membership. Contrary to the findings and conclusions of both the NLRC and the CA, there was no proof that the program was meant to encourage the employees to disassociate themselves from the Union or to restrain them from joining any union or organization. There was no showing that it was intentionally implemented to stunt the growth of the Union or that Bankard discriminated, or in any way singled out the union members who had availed of the retirement package under the MRP. True, the program might have affected the number of union membership because of the employees’ voluntary resignation and availment of the package, but it does not necessarily follow that Bankard indeed purposely sought such result. It must be recalled that the MRP was implemented as a valid cost-cutting measure, well within the ambit of the so-called management prerogatives. Bankard contracted an independent agency to meet business exigencies. In the absence of any showing that Bankard was motivated by ill will, bad faith or malice, or that it was aimed at interfering with its employees’ right to self-organize, it cannot be said to have committed an act of unfair labor practice.
Contracting out of services is an exercise of business judgment or management prerogative. Absent any proof that management acted in a malicious or arbitrary manner, the Court will not interfere with the exercise of judgment by an employer. Furthermore, bear in mind that ULP is punishable with both civil and/or criminal sanctions. As such, the party so alleging must necessarily prove it by substantial evidence. (Bankard, Inc. vs. NLRC, G.R. No. 171664, March 6, 2013)
Held: Aside from the bare allegations of the Union, nothing in the records strongly proves that Bankard intended its program, the MRP, as a tool to drastically and deliberately reduce union membership. Contrary to the findings and conclusions of both the NLRC and the CA, there was no proof that the program was meant to encourage the employees to disassociate themselves from the Union or to restrain them from joining any union or organization. There was no showing that it was intentionally implemented to stunt the growth of the Union or that Bankard discriminated, or in any way singled out the union members who had availed of the retirement package under the MRP. True, the program might have affected the number of union membership because of the employees’ voluntary resignation and availment of the package, but it does not necessarily follow that Bankard indeed purposely sought such result. It must be recalled that the MRP was implemented as a valid cost-cutting measure, well within the ambit of the so-called management prerogatives. Bankard contracted an independent agency to meet business exigencies. In the absence of any showing that Bankard was motivated by ill will, bad faith or malice, or that it was aimed at interfering with its employees’ right to self-organize, it cannot be said to have committed an act of unfair labor practice.
Contracting out of services is an exercise of business judgment or management prerogative. Absent any proof that management acted in a malicious or arbitrary manner, the Court will not interfere with the exercise of judgment by an employer. Furthermore, bear in mind that ULP is punishable with both civil and/or criminal sanctions. As such, the party so alleging must necessarily prove it by substantial evidence. (Bankard, Inc. vs. NLRC, G.R. No. 171664, March 6, 2013)
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