TERMINATION OF EMPLOYMENT

 

Corollary to the employer’s right to hire, terminate and discipline employees is an employee’s right to security of tenure.

 

In general, an employer may terminate an employment only if there is a legal (i.e., just or authorized) cause for termination and it has followed the procedures required for the cause of termination. At-will employment, where the employer may dismiss an employee at any time, without cause and by mere notice or salary in lieu of notice, is not allowed under Philippine labor law.

 

On the other hand, an employee may terminate his or her employment for any reason by serving a written notice to his or her employer at least one month in advance. In the event that the employee does not give any notice, the employer may hold the employee liable for damages. Under certain instances, the employee may terminate his or her employment without need of any notice.

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CAUSE FOR DISMISSAL

An employer may terminate an employment for any of the just and authorized causes defined in the Labor Code. The just causes for termination of employment are as follows:

  • Serious misconduct or willful disobedience by the employee of the lawful orders of his or her employer or representative in connection with his or her work;

  • Gross and habitual neglect by the employee of his or her duties;

  • Fraud or willful breach by the employee of the trust reposed in him or her by his or her employer or duly authorized representative;

  • Commission of a crime or offense by the employee against the person of his or her employer or any immediate member of his or her family or his or her duly authorized representative; and

  • Other causes analogous to the foregoing.

 

On the other hand, the authorized causes for termination of employment are as follows:

  • Installation of labor-saving devices;

  • Redundancy;

  • Retrenchment to prevent losses;

  • Closing or cessation of operation of the establishment or undertaking; and

  • Disease, where the continued employment of the afflicted employee is prohibited by law or is prejudicial to his health as well as to the health of his co-employees.

Termination of employment by the employer without a legal cause will entitle the illegally dismissed employee to reinstatement without loss of seniority rights and other privileges, to payment of full back wages and of other benefits or their monetary equivalent computed from the time compensation was withheld until actual reinstatement, and to payment of damages.

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PROCEDURES FOR DISMISSAL

In dismissing an employee from work due to a just cause, the Labor Code requires the employer to serve a written notice to the employee informing him or her of the charges against him or her. After serving the notice, the employer must afford the employee an opportunity to be heard where the employee can answer the charges with the assistance of counsel, if he or she so desires. If the employer decides to dismiss the employee, it must serve another written notice to the employee to inform him or her of its decision to dismiss him or her.

 

In case of termination of employment due to an authorized cause, the employer must serve a written notice to each affected employee and to the DOLE at least one month before the intended effective date of the termination. For employment termination by reason of disease, there must also be a certification by a competent public health authority that the disease cannot be cured within a period of six months even with proper medical treatment. In all cases of authorized cause employment termination, the employee is entitled to receive separation pay. The separation pay is equivalent to half-month’s salary for every year of service or one-month’s salary for every year of service depending on the authorized cause of employment termination.

 

If an employee is dismissed without his employer observing the appropriate procedures, he or she is entitled to nominal damages, the amount of which is subject to the discretion of the court, even if there is a just or authorized cause for employment termination. For this purpose, the court will take into consideration the relevant circumstances of each case, particularly the gravity of the due process violation. The nominal damage serves as a penalty upon the employer for its failure to comply with the requirements of procedural due process for employment termination.

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