Termination of Employees in the Philippines

Termination of Employees in the Philippines–A Guideline to Foreign Employers

In the recent years, the Philippine government has supported campaigns in attracting foreign investments into the country. With these foreign investments, the problem of unemployment and underemployment is considerably solved. In welcoming foreigners in doing business in the Philippines, adequate information must be given to them, not just as regards the fiscal concerns of business, but also with the employment laws of the country.

Employing a worker is often a very happy event both for the employer and the employee. On the reverse, terminating an employee may be a nightmare not just for the employee, but even for the employer. The foreign employer must be reminded to keep guard of Philippine labor laws when dismissing an employee.

Terminating an employee in the Philippines is valid only when these two factors are present: 1) the attendance of a cause for dismissal, and 2) observance of due process.

Causes for terminating an employee are classified as Just Cause and Authorized Cause. JUST CAUSES are acts chargeable to the employee which will result to his termination. Enumerated as such are: a) serious misconduct, b) willful disobedience to lawful orders, c) gross and habitual neglect of duties, d) fraud or willful breach of trust or loss of confidence; e) commission of a crime or offense, and f) other analogous causes.

On the other hand, AUTHORIZED CAUSES of dismissal are those which pertain to the employer. This is further classified into two types – business and disease. The business reasons include: a) installation of labor-saving devices, b) redundancy, c) retrenchment and closure or cessation of business operation. The health reason pertains to the infliction of a disease which, as ascertained by a competent public authority, is incurable within six months, and one which is prejudicial to the health of the employee and his co-workers if employment is continued.

DUE PROCESS in terminating an employee in the Philippines is known as the TWO-NOTICE or TWIN-NOTICE RULE.

The FIRST NOTICE is that which is sent to the employee apprising him in detail of the basis for his possible termination. It must give the employee at least five days from receipt of the notice to prepare his answer.

A Hearing or Conference is schedules after the employee submits his answer. During the hearing, both employer and employee will have the equal chance to present evidence or refute the claims of the other party. This is also an opportunity for a possible amicable settlement between them.

After the hearing, a SECOND NOTICE is sent to the employee apprising him of the decision to terminate his employment. It must indicate how the decision was reached , and that upon careful consideration of all circumstances, basis has been established to justify the termination.

What Is Illegal Dismissal

Termination by the employer of its employees is one act tolerated by law. But, once an employee is terminated without any valid and justifiable cause, there is an illegal dismissal.

When can there be an Illegal Dismissal

There can be an illegal dismissal if the following circumstances are present:

1. The dismissal is without just cause and whether or not due process was observed.
2. The dismissal is for authorized cause and whether or not due process was observed.

If the dismissal is with just or authorized cause but procedural due process was not complied with, the dismissal done to the employee is legal nevertheless the employer is liable to pay for damages.

Just causes for dismissal of an employee are those serious wrongdoings or conduct of an employee, either against the employer or the company itself. Essentially, it is the employee himself who creates the cause for his dismissal.

On the other hand, authorized causes are those which arise not from the wrongful acts of the employee but from the employer’s plan to take some cost cutting programs or labor saving device. Naturally, the dismissal is initiated by the employer.

Case on Illegal Dismissal

In a recent case decided by the Supreme Court, an employee was dismissed due to his alleged absenteeism from the office. But since the employer has failed to produce proofs of the employee’s absenteeism and the fact that the employee was still able to collect his salaries after his alleged absences casts doubts on the truthfulness of such charge. In an illegal dismissal case, the onus probandi rests on the employer to prove that the dismissal of an employee is for a valid cause. (Real vs. Sangu Phils., Inc. and/or Kiichi Abe, G. R. No. 168757, January 2011).

Moreover, petitioner’s dismissal was affected without due process of law. Since in this case, petitioner’s dismissal was affected through a board resolution and all that petitioner received was a letter informing him of the board’s decision to terminate him, the abovementioned procedure is clearly not complied with. (Real vs. Sangu Phils., Inc. and/or Kiichi Abe, G. R. No. 168757, January 2011).

Reliefs of an Illegally Dismissed Employee

An illegally dismissed employee can claim for reinstatement, full backwages, damages, other benefits which rightfully belongs to him and attorney’s fee.
These claims should be stated in a complaint filed with the concerned tribunal.