Hybrid Work Is Not Reduced Workdays: In Bacani, the Supreme Court Fixes the Price of Non-Compliance at PHP 100,000 per Employee

Authors: Rashel Ann C. Pomoy, Lawrence Ivan Manalo and Annie Erika T. Dee

Fuel costs are climbing, a state of national energy emergency is in force, and employers are once again looking to the workweek as a way to save money. The Supreme Court’s En Banc decision in Bacani is a timely reminder that a flexible work arrangement which cuts employee pay enjoys no presumption of validity, and that failing to file a single notice with the Department of Labor and Employment (DOLE) now carries a fixed price of PHP 100,000 per employee.

Hybrid setups, compressed workweeks, reduced onsite operations, rotating schedules, and shortened workweeks have re-entered management discussions as ways to control costs while avoiding retrenchment or closure. Memorandum Circular No. 114 (6 March 2026) directed government agencies and instrumentalities to adopt a four-day onsite work arrangement to conserve energy, and Executive Order No. 110 (24 March 2026) declared a state of national energy emergency. Neither issuance binds private employers. But EO 110 matters to them for a different reason: DOLE Department Advisory No. 02, Series of 2009, the Guidelines on the Adoption of Flexible Work Arrangements, is triggered by economic difficulties and national emergencies, and one has now been formally declared.

Against this backdrop, Bacani v. Fiber Textile Manufacturing Corp., G.R. No. 271518, 30 September 2025 (En Banc, Lazaro-Javier, J.), holds that unilaterally reducing employee workdays, compensation, or work opportunities without complying with Department Advisory No. 02-09 may amount to constructive dismissal. The Court went further and laid down prospective guidance on what happens when an employer gets the substance right but the paperwork wrong.

The Bacani Ruling

Production workers at Fiber Textile Manufacturing Corp. (FMC) had a six-day workweek. In July 2018, after an ejectment case resulted in FMC being locked out of the Valenzuela City warehouse holding its raw materials, FMC issued a memorandum cutting the workweek to two or three days and placing the workers on rotation. It announced the change at a meeting and posted the memorandum in the factory. It did not notify the DOLE.

FMC defended the measure as a valid exercise of management prerogative, temporary in nature and intended to prevent heavier losses. The Court ruled for the workers.

The Court accepted that employers may resort to temporary flexible work arrangements in times of economic difficulty or national emergency. It held, however, that an arrangement which reduces pay or benefits enjoys no presumption of validity. Because such arrangements depart from the statutory standards on work hours and workdays, they are presumed illegal until the employer proves otherwise, and Department Advisory No. 02-09 separately requires the employer to keep documentary proof that the arrangement was voluntarily accepted.

To discharge that burden, an employer must establish all four of the following requisites:

• express and voluntary support from a majority of the affected workers, following genuine prior consultation;
• temporariness — a reduction of workdays must not exceed six months;
• prior notice to the DOLE Regional Office with jurisdiction over the workplace, using the Report Form prescribed by the Advisory; and
• actual or reasonably imminent economic difficulty or national emergency, with the arrangement adopted in good faith to cope with it.

FMC satisfied only the second requisite: it restored the six-day workweek in January 2019, six months after the memorandum issued. On consultation, the Court was blunt: informing workers is one thing, securing their consent is another. FMC produced no attendance record, manifestation, or conformity showing majority support. It gave the DOLE no notice at all. And on economic difficulty, it offered pleadings from the ejectment case, which were allegations rather than proof; a raw-material shortage that FMC resolved within months did not establish difficulty of the required gravity.

With three of the four requisites not met, the arrangement was invalid. The resulting cut in salaries rendered continued employment unreasonable, which is constructive dismissal. FMC was ordered to pay full back wages, separation pay in lieu of reinstatement, and attorney’s fees.

A Fixed Price for Skipping the DOLE Notice

The Advisory says the employer shall notify the DOLE before implementation, and the Court confirmed that the word is mandatory. It declined, however, to make non-compliance fatal on its own: reasoning from Agabon v. NLRC, it observed that the emergency justifying the arrangement does not disappear because a form went unfiled. To guide the bench, bar, and public, the Court laid down two rules:

• where the arrangement is otherwise valid but no prior notice was given, it stands, and the employer pays nominal damages of PHP 100,000 for each affected employee; and
• where the failure to notify is accompanied by failure to meet any other requisite, the arrangement is invalid and the employees recover the reliefs for constructive or illegal dismissal.

FMC fell into the second category, so no nominal damages were assessed against it. Prospectively, though, the rule converts an unfiled form into a quantified, per-head liability: a 200-worker factory that gets everything else right is looking at PHP 20 million.

Hybrid Work Sits Outside the Advisory, But Not Outside the Law

The Court’s other significant move was to divide flexible work arrangements in two: those entered into voluntarily as ordinary business practice, which do not reduce pay or benefits, and those that do. Only the second kind falls within Department Advisory No. 02-09, which regulates arrangements meant to cushion and mitigate the loss of income of employees during economic difficulty or national emergency.

Work-from-home and hybrid setups therefore generally sit outside the Advisory. They are not remedial measures against financial difficulty and do not diminish pay or benefits, so the majority support and notice requirements do not apply to them.

That is not a license to impose them unilaterally. The Court expressly declined to pass on the wisdom, merits, or legality of arrangements that do not encroach on workers’ rights, and hybrid work remains governed by the Telecommuting Act (Republic Act No. 11165) and its implementing rules, which require a voluntary agreement and parity of treatment with onsite employees.

Arrangements that cut workdays, shorten schedules, or rotate workers in a way that reduces earnings are a different matter altogether. They carry the presumption of illegality, and the burden of displacing it sits with the employer.

Put simply: letting employees work remotely several days a week is legally nothing like paying them for fewer days.

What Employers Should Do Now

Classify the arrangement before implementing it. If it reduces pay, benefits, or work opportunities, Department Advisory No. 02-09 applies and the presumption runs against the employer. If it does not, the Advisory is beside the point, though the Telecommuting Act may still apply.

Build the evidentiary record while the difficulty is happening. Financial statements, order and delivery records, and fuel or utility cost data are proof. Pleadings from a related case are not, as FMC discovered.

Consult, and document the consultation. Majority support must be express and voluntary, and the burden of proving it is the employer’s. A memorandum on the wall is an announcement, not a consultation. Attendance sheets, written manifestations, and signed conformities are what the Court looked for in Bacani and did not find, and the Advisory independently requires those records to be retained.

Fix the duration and calendar the end date. A reduction of workdays may not exceed six months. Reassess before the deadline arrives and restore the schedule once the difficulty has passed. Compliance on this point was the one requisite FMC met.

File the notice with the DOLE Regional Office before implementation. The Report Form is prescribed by the Advisory. PHP 100,000 per employee is now the alternative, and it applies even when the arrangement is otherwise beyond reproach.

Do not assume hybrid work is unregulated. Being outside Department Advisory No. 02-09 is not the same as being outside the law. A telecommuting programme still requires a voluntary, documented agreement under Republic Act No. 11165.

Conclusion

Bacani does not close the door on flexible work arrangements during economic difficulty. It sets the terms on which the door opens, and it places the burden of proof squarely on the employer.

An arrangement that management regards as a temporary operational adjustment may be characterized by the courts as a unilateral reduction of work and pay that forces employees out of their jobs, and measures adopted to avoid retrenchment can end up costing more than the retrenchment they were meant to avoid. With a national energy emergency declared and cost pressure building, an employer contemplating a shorter workweek should be assembling the file before it issues the memorandum, not after it receives the complaint.

 

Read the Supreme Court decision here: https://sc.judiciary.gov.ph/271518-andro-t-bacani-et-al-vs-fiber-textile-manufacturing-corp-et-al/