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.