Updated: Oct 5, 2021
Employees are the greatest asset of a company. Whether there is a law enforcement regarding how terminations should proceed or not, it is important that both the employer and the employee are in good standing during the separation.
Good separation can mean that notice has been given, clearance has been fulfilled, turn over has been done, and issues have been resolved, if possible.
In the Philippines, the laws regarding termination of employment are interpreted in favor of the employees. Let’s discuss the types of employment termination and their processes.
I. Termination by the Employee
According to Article 285 of the Labor Code of the Philippines, an employee may terminate their employment with or without just cause.
Without just cause: serving a written notice on the employer at least one (1) month in advance. The employer upon whom no such notice was served may hold the employee liable for damages.
With just cause: an employee may terminate the employment immediately.
Serious insult by the employer or his representative on the honor and person of the employee
Inhuman and unbearable treatment accorded the employee by the employer or his representative
Commission of a crime or offense by the employer or his representative against the person of the employee or any of the immediate members of his family
Other similar causes
II. Termination by the Employer
According to Article 282 and 283 of the Labor Code of the Philippines, an employer may dismiss a probationary employee based on just cause or when he fails to qualify as a regular employee. On the other hand, regular employees are protected by the right to security of tenure where their employment can only be terminated due to just or authorized cause and after observance of procedural due process.
A. Just Causes (Article 282):
Gross and habitual neglect of duty
Fraud or breach of trust
Commission of a crime or offense against the employer, his family or representative
Other similar causes
B. Authorized Causes (Article 283):
Installation of labor-saving devices
Retrenchment to prevent losses
Closure and cessation of business
Disease / illness prohibited by law or is prejudicial to his health and to the health of his coworkers
Procedural Due Process
An employer shall observe procedural due process before terminating one’s employment.
A. Just Causes: involves the two-notice rule.
A notice of intent to dismiss specifying the ground for termination, and giving said employee reasonable opportunity within which to explain his or her side;
A hearing or conference where the employee is given opportunity to respond to the charge, present evidence or rebut the evidence presented against him or her; and
A notice of dismissal indicating that upon due consideration of all the circumstances, grounds have been established to justify termination.
B. Authorize Causes: involves a 30-day notice.
Submission of a written notice of dismissal to the employee specifying the grounds for dismissal at least 30 days before the date of termination; and
A copy of the notice which shall be provided to the Regional Office of the Department of Labor and Employment (DOLE) where the employer is located.
An employee who is unjustly dismissed from work shall be entitled to reinstatement without loss of seniority rights and other privileges and to his full backwages, inclusive of allowances, and to his other benefits or their monetary equivalent computed from the time his compensation was withheld from him up to the time of his actual reinstatement. If reinstatement is impossible, separation pay may be granted.
Termination by the Employee: Unless it is stated in the employment agreement, CBA, or company policy, an employee who voluntarily terminated his/her contract will not receive a separation pay.
Termination by the Employer: The employer is mandated to provide separation pay if the termination is based on the following reasons:
Installation of labor-saving devices or redundancy
Closure or cessation of business
Illegal termination if not reinstated
Installation of labor-saving devices or redundancy: one month pay or one month for every year of service, whichever is higher.
Retrenchment, closure or cessation of business, or incurable disease: one month pay or one-half month pay for every year of service, whichever is higher.
Illegal termination if not reinstated: one month pay for every year of service.
If the company has provided other computation policy, the higher amount shall be applied in computing the separation pay.