Labor Laws in the Philippines allow employers to terminate employees.  The termination, however, must not be based on mere whim or caprice of the employer against his employee.  It must stand on reasonable ground for the termination to be considered legal.  These grounds are called the Authorized Causes of Termination.

Differentiated from the Just Causes of Termination, Authorized causes are those which do not arise from fault or negligence of the employee.  These authorized causes are attributable to the employer and are anchored on management prerogative.  Enumerated as the authorized c1auses are: 1) Installation of Labor-Saving Devices, 2) Redundancy, 3) Retrenchment to Prevent Losses, 4) Closure or Cessation of Operation and 5) Disease.

Installation of labor-saving devices concerns the introduction of machinery or automation processes in the work system in order to improve productivity.

Redundancy happens when there is an overlap of the services rendered by employees than what is required in the business.  This may result from decreased volume of business or the dropping of a product or service previously offered by the company.

Retrenchment to prevent losses involves the preemptive cutting of costs in salaries and wages in order to avoid perceivable business losses.  The losses perceived must be serious, actual and real.

Closure or cessation of business points to the actual shutting down of a business.  The closure may be total or partial, as when only a department ceases its operations.  The cessation of business is essential to thwart the establishment’s further financial drain.

Lastly, an employee may be terminated because of the affliction of a disease.  The continued employment of the sick person must be prejudicial to his health and his co-workers.  The disease must also be one that is not curable within 6 months even with proper medical treatment.

Proper due process must be observed when dismissing employees due to authorized causes.  If the basis is installation of labor-saving devices, redundancy, retrenchment to prevent losses and closure or cessation of operations, the employer is mandated to serve written notice to both the employee and the concerned Regional Office of the Department of Labor at least 30 days before the effectivity of the termination.

In addition, the termination for an authorized cause must be attended with good faith.  There must also be a fair and reasonable criteria in the selection of employee termination.  In the appropriate cases, separation pay must be paid to the employee at the time of his dismissal from work.



If you notice, before you can actually start reporting for a new job, human resource personnel of the company would ask you if you have a Pag-Ibig number, otherwise they will ask you to apply for one or they will do it for you. It is one of the requirements that a new employee must accomplish. While we know that a minimal amount is being deducted from our salary to be contributed to the Pag-Ibig fund, we do not have a clear understanding of what it has for us or what it has to offer to its members. All we know is that we can seek its aid by allowing us to apply for a housing loan and nothing else. But the truth of the matter is that, it has more than what we think of and expect for.

As a result of the passing of RA No. 9679 or the Home Development Mutual Fund Law of 2009, Pag-IBIG Fund was created. Pag-IBIG stands for Pagtutulungan sa Kinabukasan: Ikaw, Bangko, Industriya at Gobyerno. Its primary object is to provide housing benefits to Filipinos in harmony with the policy of the state to strengthen public welfare. A fund is created which will serve as a government financial institution where members are required to contribute to finance low-cost or socialized housing.

Who are Covered

Contribution to Pag-IBIG fund is mandatory to the following:

1. Employees covered by the Social Security System and/or Government Service Insurance System
2. Employers
3. Other working groups
4. OFWs
5. Filipinos employed by foreign-based employers, locally or abroad

Employees receiving a salary of less than four thousand (4,000) pesos can also contribute to the Fund voluntarily. All others are not restricted to apply for membership to Pag-IBIG Fund.


A Pag-IBIG member who have contributed to the Fund for at least twenty-four (24) months can avail of loan benefits.

Short Term Loans. An active Pag-IBIG member can apply for a Multi-Purpose Loan in case money is needed for medical, educational or house repair and improvement and other basic needs. The other short term loan which a member can take advantage of is a Calamity loan, only if affected by a recent calamity.

Housing Loan. A member must not be more than sixty-five (65) years old can avail of a housing loan provided that he pass the background investigation conducted by Pag-IBIG and he has no outstanding housing loan or arrears in Multi-Purpose loan.

Withdrawal of Savings

A member can also withdraw the savings he has in the Fund under several circumstances like death, retirement, immigration to other countries, voluntary withdrawal or other causes which the Board of Trustees may deem reasonable.