Out-Law Analysis 3 min. read
Navigating Philippine labour laws during a global restructure
Alexander Hafemann/Getty
25 Nov 2025, 12:40 am
Businesses undergoing a global restructure that impacts Philippine-based employees must be aware of legal requirements for changing positions or conditions, transferring to new organisations and terminating their employment.
Although terminating contracts of employment for reasons of redundancy is permitted under Philippine labour laws, employers must ensure their compliance with legal requirements of due process in terminating employees on such basis. This includes providing prior written notice to both the employees and the Department of Labor and Employment, making payment of separation pay, acting in good faith in abolishing the redundant position, and applying fair and reasonable criteria in determining which positions are abolished.
Employers should focus on proper documentation of the global restructuring, from board resolutions reflecting the business decision, to feasibility studies and updated organisational charts. Not doing this can open the validity of the redundancy up to challenge.
During global restructuring, employees may be transferred to other roles within the company or across countries to address business demands. In the Philippines, employers must strike the balance between employees’ welfare and management choices, as transfers that are unreasonable or prejudicial to employees are generally prohibited.
Employers must also be mindful of the labour requirements in relation to salary, tenure, and ranks when transferring an employee’s position, and the limitations imposed by state policies against discrimination and diminution of benefits. To minimise exposure to claims of constructive dismissal, it is recommended that any intended transfer is supported by documentation and is completed with an employees’ consent.
The right of the worker to self-organise and collectively bargain is constitutionally protected in the Philippines. As a result, the implementation of redundancy, transfers, and movement of positions due to global restructuring must comply with the employer’s obligations to employees, labour organisations, and unions, as determined in bargaining agreements.
These obligations usually involve economic provisions, such as the amount of separation pay provided to a terminated employee or the effect of transfer to salaries, or non-economic provisions, such as due process and selection criteria in identifying redundant positions or transfer of roles. Implementing a global restructure will therefore often require the assistance of labour lawyers in interpreting existing bargaining agreements and liaising with labour organisations and unions.
Following a global restructure, internal roles performed by regular employees are often outsourced to a third-party service provider or contractor to reduce costs. While outsourcing and labour contracting are legal and recognised in the Philippines, these arrangements are regulated under employment laws.
The contractor must comply with the requirements involving substantial capital or investment, control, and registration under Philippine law. Failure to do so will result in the employment agreement being regarded as labour-only contracting, which is prohibited.
As a result, employers must ensure that they engage with a legitimate job contractor, and that the nature of the work can be contracted. While a global restructure is frequently driven by cost minimisation, which can be achieved through outsourcing, companies must exercise caution to prevent engaging in labour-only contracting, as this arrangement can result in increased costs and exposure to labour disputes.
If a global restructure involves the movement of employees across countries and into the Philippines, employers must ensure compliance with local immigration laws, in addition to labour laws.
Foreign nationals are prohibited to work in the Philippines without an alien employment permit and a relevant visa. Notably, the requirement for this permit includes compliance with the labour market test, which allows for objections to the employment of foreign nationals to be raised during the period that permit applications are pending.
Earlier this year, the Department of Labor and Employment introduced the economic needs test, which provides for an additional condition when hiring foreign nationals. Employers must also be mindful of the processing periods for and validity of permits and visas, alongside deadlines for renewals, to avoid business disruptions, fines, or revocation of foreign nationals’ permits and visas. When navigating these challenges, the advice and expertise of immigration lawyers is crucial.
Co-written by Mel Macaraig and Regina Pimentel of Castillo Laman Tan Pantaleon & San Jose.
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