Under Philippine labor law, an employer may validly terminate an employee on the ground of disease under Article 299 (formerly Article 284) of the Labor Code, as further clarified by Department Order No. 147-15 of the Department of Labor and Employment (DOLE). This form of termination is recognized as an “authorized cause,” distinct from termination due to the employee’s fault or misconduct. Below is a meticulous, comprehensive discussion of all the essential elements, procedural requirements, jurisprudential interpretations, and practical applications pertaining to termination by reason of disease.

I. Legal Basis and Context

Statutory Provision:
The relevant provision is Article 299 of the Labor Code of the Philippines (as renumbered by Republic Act No. 10151). It formerly appeared as Article 284 prior to renumbering. Article 299 states that an employer may terminate the services of an employee who has been found to be suffering from a disease and whose continued employment is prohibited by law or prejudicial to his health as well as the health of his co-employees.
Related Issuances:
- Department Order No. 147-15 (DOLE): Issued to provide revised guidelines on the termination of employment under authorized causes, including disease. It reiterates the need for due process, documentation, and compliance with statutory notice and separation pay requirements.
- DOLE Implementing Rules and Regulations (IRR): The IRR under the Labor Code echo and further clarify the grounds and procedures for termination due to disease.

II. Conditions for Valid Termination Due to Disease

For an employer to validly terminate an employee on the ground of disease, the following conditions must be strictly met:

Existence of a Disease:
The employee must be actually suffering from a medical condition. Mere suspicion or unverified allegations that the employee is ill are insufficient. The law contemplates a disease or illness that is real and medically verifiable.
Nature and Effect of the Disease:
The disease must be of such a nature or at such a stage that:
- Continued employment of the afflicted employee is either prohibited by law (for instance, certain communicable diseases that endanger others in the workplace), or;
- Continuing to work would be prejudicial to the health of the employee himself or pose a serious risk to the health and safety of his co-employees.
Incurability within Six (6) Months:
A key statutory criterion is that the disease cannot be cured within a period of six (6) months even with proper medical treatment. This strict time frame prevents the employer from prematurely terminating an employee who may recover if given adequate and timely medical attention.
Certification by a Competent Public Health Authority:
Before terminating the employee, the employer must secure a medical certificate from a competent public health authority (e.g., a government physician) attesting that:
- The illness is not curable within six months, and;
- The continued employment of the employee would indeed jeopardize workplace health and safety or the employee’s own well-being.
This certification is not merely a formality; it must be issued by an authoritative and recognized health officer. Private physicians’ opinions may be considered, but best practice and the spirit of the law require a certification from a public health official.

III. Due Process and Procedural Requirements

Notice Requirements:
Although this is an authorized cause for termination (not requiring the same adversarial process as a just cause), the employer should still provide proper written notice. As clarified by Department Order No. 147-15, the procedural due process for authorized causes typically involves serving written notices on the employee:
- First Notice (At least 30 Days Before Termination): A notice informing the employee of the intent to terminate due to disease. This should include reference to the medical findings and the reason why continued employment is detrimental.
- Final Notice of Termination: After the lapse of the 30-day notice period, a final notice is issued confirming that the termination will proceed due to the authorized cause.
While the strict “two-notice rule” is more closely associated with just causes, prudence dictates providing ample written documentation to the employee for transparency and to preclude claims of illegal dismissal. Courts have upheld the necessity of due notice even for authorized causes.
Opportunity to Respond or Be Heard:
Although not required to the same extent as with just causes, it is good practice to give the employee the opportunity to present contrary medical evidence or to request a second opinion. Employers who fail to be transparent and considerate may expose themselves to disputes and claims of unfair termination.
Compliance with Labor Standards Inspections:
Employers should ensure compliance with labor standards and maintain records of the medical certificates, notices given, and documents supporting the claim that the disease renders continued employment impossible without risk.

IV. Separation Pay Entitlement

Amount of Separation Pay:
Under the Labor Code, if the termination is due to disease, the employee is entitled to a separation pay of at least half (1/2) month’s pay for every year of service. A fraction of at least six (6) months is considered one (1) full year. The calculation typically follows:
- Length of Service: Counted from the date of employment until the date of termination.
- Salary Basis: The “one-half month’s pay” includes basic salary plus any allowances or benefits that form part of the employee’s regular wage, if mandated by law or contract.
Enhancements by Company Policy or CBA:
If a Collective Bargaining Agreement (CBA) or company policy provides a more favorable rate, such as a full month’s pay per year of service, that higher rate prevails.

V. Jurisprudence and Case Law

Strict Construction and Evidence:
Philippine courts and quasi-judicial bodies like the National Labor Relations Commission (NLRC) and the Supreme Court have consistently held that authorized causes for termination must be proven with substantial evidence. In the context of disease, employers must present clear, credible medical certification issued by a public health authority.
Good Faith of the Employer:
The Supreme Court has highlighted the importance of good faith. Employers should not use the disease ground as a pretext to dismiss unwanted employees. Any evidence that the employer failed to comply with the medical certification requirement or did not consider the possibility of the employee’s recovery within six months could render the termination illegal.
Burden of Proof:
The employer bears the burden of proving that termination due to disease is justified. Failure to provide proper medical certification or to show that the disease is incurable within six months will likely result in a finding of illegal dismissal.

VI. Practical Considerations

Obtaining Medical Certification:
Employers should engage with DOH-accredited public health institutions or municipal/city health offices to secure the necessary medical clearance and certification. Waiting for an official certification ensures procedural correctness and shields the employer from litigation risks.
Extended Leaves and Accommodation:
Before resorting to termination, some employers consider granting extended sick leaves or exploring accommodations (when feasible) if the illness is expected to be curable within six months. Doing so not only fosters goodwill but also reduces legal exposure.
Documentation and Record-Keeping:
Keep a complete paper trail: medical results, physician’s findings, certifications, and notices to the employee. Good documentation is essential in defending the legality of the termination if challenged.

VII. Coordination with Government Agencies

Employers considering termination for disease are advised to consult or at least familiarize themselves with guidelines from the DOLE and other relevant government agencies. Coordination or verification ensures that the process meets the regulatory standards and that the health authority issuing the certification is recognized and competent.

In Summary:

Termination of employment due to disease, as an authorized cause under Article 299 of the Labor Code and Department Order No. 147-15, is a legally permissible but highly regulated ground. It requires:

A verifiable disease that endangers the health of the employee and/or co-workers.
A finding that the illness is incurable within six months despite treatment.
Certification from a competent public health authority.
Proper notice and compliance with procedural due process.
Payment of the appropriate separation pay.
Good faith, transparency, and strict adherence to documentary requirements.

When followed meticulously, these guidelines ensure that the employer’s right to protect the workplace and the health of its employees is balanced against the dismissed employee’s rights and the mandate of social justice underlying Philippine labor law.