Below is an overview of the Philippine legal framework on illegal dismissal (also referred to as “unlawful termination” or “wrongful dismissal”). This discussion focuses on concepts, relevant laws, jurisprudence, and practical considerations. Please note that this is for general informational purposes only and does not constitute legal advice. For individual cases, it is best to consult an attorney or a legal professional.
1. Legal Basis
Labor Code of the Philippines (Presidential Decree No. 442, as amended)
- The primary law governing employment relations in the Philippines.
- Book VI, Title I of the Labor Code (Articles 279–294 [old numbering] or Articles 294–309 [renumbered]) deals with the topic of termination of employment, covering just and authorized causes and the procedures for lawful dismissal.
Constitutional Provisions
- The 1987 Philippine Constitution mandates the State to protect the rights of workers and promote their welfare (Article XIII, Section 3).
- Security of tenure is a constitutionally protected right, ensuring that no worker shall be dismissed except for cause provided by law.
Rules, Regulations, and Issuances
- Omnibus Rules Implementing the Labor Code (as amended) provides implementing details on termination causes and processes.
- Department of Labor and Employment (DOLE) regulations and pertinent National Labor Relations Commission (NLRC) rules further clarify procedural requirements for labor cases.
Supreme Court Decisions
- Philippine jurisprudence has firmly established employees’ security of tenure and affirms the strict requirements of substantive and procedural due process for valid termination.
2. Concepts of Illegal Dismissal
“Illegal dismissal” (or “unlawful termination”) occurs when an employee’s services are terminated without compliance with both:
- Substantive Due Process – There must be a valid or authorized cause under the law.
- Procedural Due Process – The proper procedure for dismissal must be followed.
Any violation of these principles typically renders the dismissal illegal or invalid.
2.1 Substantive Due Process
Just Causes (Labor Code, Article 297 [old Art. 282])
These causes relate to the employee’s conduct. They include (but are not limited to):- Serious misconduct or willful disobedience of lawful orders
- 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 family
- Other analogous causes
Authorized Causes (Labor Code, Articles 298–299 [old Arts. 283–284])
These causes are based on legitimate business reasons unrelated to misconduct. They include:- Installation of labor-saving devices
- Redundancy
- Retrenchment to prevent losses
- Closure or cessation of operation
- Disease – if the employee’s continued employment is prohibited by law or prejudicial to the employee’s health or co-workers’ health
If the employer fails to prove one of the legally recognized just or authorized causes, the dismissal will be deemed invalid.
2.2 Procedural Due Process
Alongside proving a valid cause, the employer must observe the correct procedure for dismissing an employee:
For Just Causes (Two-Notice Rule)
- First Written Notice: A notice to the employee containing the specific ground(s) for dismissal and a directive to explain (usually five days is allowed) why they should not be terminated.
- Opportunity to be Heard: The employer should hold a hearing or conference to allow the employee to defend themselves or clarify their side.
- Second Written Notice: A notice of decision to dismiss (or otherwise impose a penalty), which must clearly state the legal and factual bases for the decision.
For Authorized Causes
- Notice to the employee and to DOLE at least 30 days prior to the date of termination (or, in cases of disease, as soon as a medical certification is secured).
- Payment of due separation pay when required by law (for redundancy, retrenchment, closure not due to serious losses, etc.).
Non-compliance with these notice requirements can render the termination procedurally infirm—and potentially illegal—if the employee was not properly notified or heard.
3. Consequences and Remedies in Illegal Dismissal
When a dismissal is ruled illegal by the labor courts or by the Supreme Court, Philippine labor jurisprudence generally provides for the following reliefs:
Reinstatement
- The illegally dismissed employee is entitled to be restored to their former position without loss of seniority rights or other privileges.
- If reinstatement is no longer feasible or desired by the employee, the court may order separation pay in lieu of reinstatement.
Full Back Wages
- Payment of full back wages from the date of dismissal until final reinstatement (or the finality of the decision) without deduction or qualification.
- If the court allows separation pay instead of reinstatement, the computation generally ends at the date of final judgment.
Separation Pay (in lieu of reinstatement)
- An alternative to reinstatement.
- The typical computation is one month’s salary for every year of service, although the actual figure can vary depending on specific circumstances and judicial discretion.
Other Monetary Awards
- Damages (e.g., moral and/or exemplary damages), if proven the employer acted in bad faith.
- Attorney’s fees, often set at ten percent (10%) of the total monetary award, if warranted under prevailing jurisprudence.
4. Filing a Complaint and Process
Filing of Complaint before the National Labor Relations Commission (NLRC)
- Employees claiming illegal dismissal usually file a complaint with the Labor Arbiter at the NLRC.
- Settlement may be attempted through mandatory conciliation-mediation (Single Entry Approach or SEnA) before a formal case proceeds.
Burden of Proof
- In illegal dismissal cases, the employer bears the burden of proving that the employee’s termination was for a valid and authorized cause.
- If the employer cannot present substantial evidence for the dismissal, the presumption is that the dismissal was illegal.
Decision by Labor Arbiter
- The Labor Arbiter conducts hearings and rules on the legality of the dismissal.
- If either party disagrees with the decision, they may appeal to the NLRC en banc or its divisions, and further to the Court of Appeals, and ultimately to the Supreme Court, if necessary.
5. Common Issues and Clarifications
Constructive Dismissal
- This occurs when an employee resigns or leaves employment because the employer’s actions made continued employment impossible, unreasonable, or unlikely (e.g., demotion without valid cause, harassment, non-payment of wages).
- In such cases, the law treats the employee as if they were illegally dismissed.
Probationary Employment
- Probationary employees also enjoy security of tenure during the probationary period.
- They can only be dismissed for just cause, authorized cause, or failure to meet the reasonable standards set out at the start of employment.
- Failure to inform the probationary employee of these standards can render a subsequent dismissal illegal.
Project and Seasonal Employees
- Employers who hire project or seasonal employees must specify the project duration or season period.
- Dismissal before the end of the project or season without valid cause or notice can still be considered illegal.
- Conversely, legitimate completion of a project or season typically constitutes an authorized separation.
Managerial Employees
- Although managerial employees are held to a higher standard of trust, they are equally entitled to due process.
- Employers must still prove the cause for dismissal and observe the proper procedure.
Small and Medium Enterprises (SMEs)
- Even in small or family-run businesses, the same laws on illegal dismissal apply. There may be slight procedural lenience for the hearing process, but the fundamental right to due process remains.
6. Practical Tips for Employers and Employees
For Employers
- Always document any infractions and maintain records of disciplinary actions.
- Provide written notices and allow employees the opportunity to be heard.
- When resorting to authorized causes, ensure timely and proper notice to both employees and the DOLE, and be prepared to provide separation pay if required by law.
For Employees
- Keep personal records (employment contract, payslips, notices) that may be relevant in a labor dispute.
- If faced with potential dismissal or forced resignation, ask for written notices and the chance to respond.
- If an employee believes they have been dismissed illegally, they may consult with a lawyer or approach the nearest DOLE or NLRC office for guidance on filing a complaint.
7. Key Takeaways
- Security of tenure is a fundamental right of employees in the Philippines, protected by law and the Constitution.
- For a dismissal to be valid, the employer must prove valid (just or authorized) causes and observe procedural due process.
- An illegally dismissed employee is generally entitled to reinstatement, back wages, and potentially other monetary awards.
- The burden of proof lies with the employer to show that dismissal was valid.
- Constructive dismissal scenarios are treated as illegal dismissals under the law.
- DOLE, NLRC, and the courts provide an avenue for employees to seek remedies, though voluntary settlement and conciliation are encouraged before formal litigation.
Important Note
This article provides a general outline of illegal dismissal under Philippine law. Real-world cases often involve complex details and fact patterns requiring specific legal analysis. Anyone facing or contemplating employment termination issues is advised to seek professional legal counsel to ensure proper protection of rights and compliance with legal requirements.