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SC says “excessively low” employer-employee compromise settlements invalid

Adrian Ayalin

ABS-CBN News

MANILA -- The Supreme Court ruled that excessively low amounts of compromise agreements and settlements between employers and employees are invalid.In a decision promulgated by the 2nd Division on May 29, 2024, the court invalidated the compromise agreements executed by San Roque Metals, Inc. and Prudential Customs Brokerage Services, Inc. with a group of illegally dismissed employees.The petitioners in the case are 12 of the original 35 employees declared by the Supreme Court to have been illegally dismissed by SRMI and PCBSI.The court then ordered that both companies pay the employees their back wages and separation pay.The employees later agreed to settlement amounts ranging from 5.2 percent to 23.42 percent of the back wages and separation pay they were entitled to due to the illegal dismissal case.The National Labor Relations Commission ruled that the compromise agreements were invalid because the amounts were unreasonable.When the matter reached the Court of Appeals, it ruled that the compromise agreements were valid for being voluntarily signed by the petitioners.The Supreme Court however agreed with the NLRC, noting the tabulated computation made by the executive labor arbiter on the amounts to which the employees are entitled.“It is immediately clear that the settlement amounts are startlingly lower than what petitioners are legally entitled to,” the court said in the decision penned by Associate Justice Antonio Kho, Jr.For the highest percentage of awards at 23.42 percent, only P99,000 was received by the employee from the final computation of P384,251.The lowest percentage at 6.94 percent, the employee only got P88,000 out of a final computation of P1.1 million.“The NLRC, therefore, did not commit grave abuse of discretion in denying the petition for extraordinary remedies and invalidating the compromise agreements,” the court said.

The Supreme Court ruled that excessively low amounts of compromise agreements and settlements between employers and employees are invalid.

The Supreme Court ruled that excessively low amounts of compromise agreements and settlements between employers and employees are invalid.

SC says 'excessively low' employer-employee compromise settlements invalid

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SC says 'excessively low' employer-employee compromise settlements invalid

Adrian Ayalin,

ABS-CBN News

Published Nov 14, 2024 06:12 PM PHT

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Supreme Court

Separation pay

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