Disclaimer: The following information is provided for general educational purposes and does not constitute legal advice. If you need guidance on a specific situation, consult a qualified labor law attorney or the Philippine Department of Labor and Employment (DOLE).

Introduction

In the Philippines, employers sometimes find themselves in a situation where they prefer that an employee resign, but the employee refuses to do so. Employers must then navigate the Labor Code of the Philippines, relevant regulations, and judicial precedents to address the situation properly. This article discusses the legal landscape surrounding employer options when an employee refuses to resign, focusing on lawful termination grounds, due process, alternative routes, and best practices to minimize disputes.

1. Voluntary Resignation vs. Forced Resignation

Voluntary Resignation
- A resignation is generally considered voluntary when an employee freely decides to end their employment.
- For a valid voluntary resignation, the employee must provide a written resignation letter (commonly providing 30 days’ notice unless a shorter period is mutually agreed upon).
Forced Resignation (Constructive Dismissal)
- Under Philippine law, a forced or coerced resignation is equivalent to dismissal without a valid cause. This is called “constructive dismissal.”
- Constructive dismissal occurs when an employer’s actions are so unreasonable or unbearable that the employee is effectively left with no other option but to resign.
- If an employee can prove constructive dismissal, the employer may be held liable for illegal dismissal and required to pay back wages, reinstatement (or separation pay in lieu of reinstatement), plus damages and attorney’s fees in certain cases.

Key Insight: An employer cannot lawfully force or coerce an employee to submit a resignation letter. If an employee refuses to resign, the employer must explore other legitimate grounds or processes recognized by law.

2. Legal Grounds for Termination of Employment

Employers have the prerogative to dismiss employees only under specific grounds provided by the Labor Code of the Philippines. If no lawful ground exists, forcing an employee out or pressuring them to resign would constitute illegal dismissal. Below are recognized grounds for termination:

Just Causes (Article 297 of the Labor Code)
The following are examples of just causes, wherein the employee is at fault:
- Serious misconduct or willful disobedience
- Gross and habitual neglect of duties
- Fraud or willful breach of trust
- Commission of a crime or offense against the employer or the employer’s representatives
- Other analogous causes (e.g., violation of reasonable company rules and regulations)
Authorized Causes (Articles 298 and 299 of the Labor Code)
The following are reasons attributed to the business or the economy, not necessarily the employee’s fault:
- Redundancy
- Retrenchment to prevent losses
- Closure or cessation of business operations
- Installation of labor-saving devices
- Disease (if the employee’s continued employment poses health risks and no accommodation is possible)
Termination Based on Probationary Employment
- If the employee is on probationary status, the employer can terminate for failure to meet the standards of regular employment, provided these standards were communicated at the start of employment.
- Even then, the employer must observe due process and clearly document the employee’s shortcomings relative to the stated standards.

Key Insight: An employer who wishes to separate an employee who refuses to resign must ensure that one of the valid grounds applies. If the employer cannot prove a just or authorized cause and does not follow due process, the dismissal may be declared illegal.

3. Due Process in Employee Termination

Due process is a critical element in lawful termination. Even if a just or authorized cause exists, the employer must strictly comply with procedural requirements:

For Just Causes
- Two-Notice Rule
  1. First notice (show-cause memo): Informs the employee of the specific act or omission constituting the ground for dismissal. The employee is given the opportunity to explain or defend themselves.
  2. Second notice (decision notice): After the employer evaluates the evidence and the employee’s explanation, the employer issues a notice of decision stating whether dismissal or a lesser penalty is warranted.
- Opportunity to Be Heard: The employee should be given reasonable time to submit a written explanation or attend a hearing.
For Authorized Causes
- Notice to the Employee and DOLE
  - The employer must serve a written notice to the employee and to the DOLE at least 30 days before the intended date of termination.
  - The notice should clearly state the authorized cause (e.g., redundancy, retrenchment) and the effective date of termination.
- Separation Pay
  - Employees separated for authorized causes are entitled to separation pay. The amount depends on the specific cause (e.g., 1 month’s pay per year of service for redundancy, or 1/2 month’s pay per year of service for retrenchment).

Key Insight: Failing to follow due process can make an otherwise valid dismissal illegal. It is insufficient to show just or authorized cause alone; strict compliance with procedural steps is mandatory.

4. Employer Options When the Employee Refuses to Resign

A. Proceed with Disciplinary Action (if Just Cause Exists)

If the employer has evidence of the employee’s misconduct, negligence, or any just cause, they may initiate the disciplinary process.
Comply with the two-notice rule and ensure the employee is given a fair chance to be heard.
If the investigation confirms a valid ground, the employer can lawfully terminate the employee.

B. Implement Authorized Causes (if Applicable)

If the refusal to resign aligns with a broader situation—e.g., redundancy, retrenchment, or closure of business—the employer may terminate the employee based on authorized causes.
Properly serve 30-day notices to both the employee and the DOLE, and pay the required separation pay.

C. Negotiate a Mutual Separation Agreement

Sometimes, the most pragmatic solution is a negotiated settlement, known as a mutual separation agreement.
Under this arrangement, the employer may offer a financial package (often similar or slightly higher than the standard separation pay) in exchange for the employee voluntarily leaving and waiving future claims.
This process should be genuinely voluntary; pressuring or misleading the employee could later be challenged as constructive dismissal.

D. Performance Improvement Plans (PIPs)

If the concern is substandard performance and there is no immediate ground for dismissal, the employer can place the employee under a Performance Improvement Plan (PIP).
The PIP should clearly outline:
- Performance objectives
- Targets and timelines
- Support and training to be provided
- Consequences of failing to meet the plan’s goals
If after due process and reasonable support the employee still fails to meet the standards, the employer may have grounds for termination based on poor performance.

E. Do Nothing (Retain the Status Quo)

If the employer has no lawful ground for dismissal and the employee refuses to resign, one option is simply to keep the employee.
This can be an interim measure while the employer observes if any valid cause may arise or if there’s a better solution later.

5. Potential Pitfalls and Employer Cautions

Constructive Dismissal
- Threatening, harassing, demoting without valid cause, or significantly altering work assignments or benefits to force a resignation can expose an employer to constructive dismissal claims.
Illegal Dismissal
- If an employer terminates an employee without a valid ground or without following due process, it results in illegal dismissal.
- Remedies for the employee typically include reinstatement (or separation pay in lieu of reinstatement), back wages, moral and exemplary damages (in certain cases), and attorney’s fees.
Labor Relations Issues
- Mishandling resignations or separations can damage workplace morale and potentially result in labor complaints, strikes, or negative publicity.
Documentation is Critical
- Keep detailed records of disciplinary actions, communications, performance evaluations, and notices.
- Proper documentation helps demonstrate good faith compliance with the Labor Code and relevant regulations.

6. Best Practices

Consult with HR or Legal Counsel
- Before taking any adverse action against an employee, consult a labor law expert for guidance.
Follow Your Company Policies
- Ensure that employment policies, handbooks, and codes of conduct align with labor laws and are consistently enforced.
Maintain Open Communication
- Open communication often helps avoid misunderstandings and can pave the way for amicable settlements.
Offer Reasonable Separation Terms
- If parting ways is inevitable, consider negotiating fair separation terms that both parties can accept.
Avoid Coercion or Pressure
- Any hint of coercion, harassment, or manipulation can be used against an employer in labor proceedings.

Conclusion

Philippine labor law mandates that dismissals be based on valid grounds and accompanied by due process. An employer cannot simply force an employee to resign; doing so risks claims of constructive or illegal dismissal. When an employee refuses to resign, employers must explore legally recognized options such as just or authorized causes, apply due process, or negotiate a mutually acceptable separation. Proper documentation, compliance with the Labor Code’s procedural requirements, and professional handling of employment disputes are essential to minimize risks and protect both the employer’s and the employee’s rights.

Reminder: This discussion serves as an overview. For any specific issues concerning an employee who refuses to resign, you should seek professional legal advice from a qualified attorney or a relevant government agency (e.g., the Department of Labor and Employment).