Just Causes For Terminating Employees In The Philippines

In a previous article, we classified the causes for terminating employees in the Philippines as Just and Authorized Causes.  We now give focus to the Just Causes.

A Just cause is an act attributable to the employee which results in his termination.  These causes are normally attended by gravity of the act and willful intent of the employee.  Enumerated as just cause for termination are: a) serious misconduct, b) willful disobedience to lawful orders, c) gross and habitual neglect of duties, d) fraud or willful breach of trust and/or loss of confidence; e) commission of a crime or offense, and f) other analogous causes.


Serious misconduct is inappropriate behavior willfully committed by an employee, which is grave in nature and results to a risk in the reputation or productivity of the company.  The wrongful behavior is characterized by willful intent, and not by mere inadvertent error.


Willful disobedience to lawful orders is described as a transgression of established rules in the workplace.  The rules or orders must be lawful and reasonable, known by the employee, and must pertain to the duties which he has been assigned to discharge.


Gross and habitual neglect of duties implies a repeated failure to perform one’s duties.  Normally, isolated acts of negligence do not count as a cause for termination.  However, a single act of negligence which is grossly damaging to the employer may qualify as a cause for terminating the employee.


Fraud or willful breach of trust and/or loss of confidence is a cause often associated with the dismissal of employees holding managerial or fiduciary posts.  Fraud is an act or omission calculated to deceive another to one’s advantage.  Breach of trust is a violation of the trust and confidence given to an employee.  To be a cause for termination, the fraud or breach of trust must be in connection to the work of the employee and must result in the loss of confidence in him by his employer.


Commission of a crime or offense as a just cause for terminating employees is limited to those which are committed against the employer or any member of his immediate family.  Immediate family includes the spouse, ascendants, descendants, legitimate, natural or adopted siblings of the employer.  Also included are the relatives of the employer by affinity in the same degrees and those by consanguinity within the 4th civil degree.

Analogous cases do not have a definite meaning but is used as a catch-all classification of other just causes of termination.  It covers all unacceptable norms in a work environment which jeopardizes the business and the employment relationship. Samples include gross inefficiency and conflict of interest.

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.