Below is an in-depth discussion regarding the legality of terminating an employee’s services before issuing a Notice to Explain (NTE) in the Philippines. This article covers essential concepts under Philippine labor law, including statutory bases, implementing regulations, relevant Supreme Court rulings, and practical considerations for both employers and employees.

1. Overview of Philippine Labor Law on Termination

1.1 The Labor Code of the Philippines

The primary source of Philippine labor law is Presidential Decree No. 442, also known as the Labor Code of the Philippines (as amended). The Labor Code sets out specific grounds and procedures for legally dismissing an employee. Employers are mandated to comply with substantive and procedural due process before effecting termination.

Under the Labor Code, there are generally two recognized categories of termination by the employer:

Just Causes (Article 297, formerly Article 282) – e.g., serious misconduct, willful disobedience, gross negligence.
Authorized Causes (Articles 298 and 299, formerly Articles 283 and 284) – e.g., redundancy, retrenchment, cessation of business, disease not curable within six months.

1.2 Due Process Requirement (Twin-Notice Rule)

Regardless of whether the ground for termination is a just cause or an authorized cause, Philippine law requires adherence to due process. In relation to just causes (employee-related offenses or violations), the Supreme Court has consistently laid out the twin-notice rule:

First notice: A written notice stating the specific ground/s for termination and giving the employee the opportunity to explain his or her side (“Notice to Explain” or “Show-Cause Memo”).
Second notice: If the employer finds the employee’s explanation unsatisfactory (after due consideration or a hearing, if warranted), the employer must issue a Notice of Termination stating the precise reasons for the dismissal.

Failure to observe the twin-notice requirement typically renders the termination procedurally defective and can open the employer to liability for illegal dismissal.

2. Can an Employee be Terminated Before Issuing a Notice to Explain?

2.1 General Rule: No, It Is Not Allowed

Terminating an employee before issuing the first notice—often called the “Notice to Explain” (NTE)—is generally illegal. Courts and quasi-judicial bodies such as the National Labor Relations Commission (NLRC) and the Office of the Labor Arbiter have consistently held that an employer cannot legally dismiss an employee before giving them a fair opportunity to explain or defend themselves.

Key takeaways:

Procedural due process is mandatory: The Supreme Court firmly requires that an employee must receive the first notice (or an opportunity to explain) before any final decision to dismiss is reached.
Premature termination: Dismissing or sending a termination letter before the show-cause memo or NTE denies the employee the right to due process and, thus, is considered illegal dismissal.

2.2 What if the Employee Already Knows the Accusation?

Even if the employee is aware of the offense or alleged wrongdoing, the employer must still properly issue a formal NTE. Actual knowledge or prior admission of guilt does not cure the absence of the mandated written notice. The objective is to guarantee that the employee’s right to be heard is respected.

2.3 “Summary Dismissal” and Its Illegality

Under Philippine labor laws, “summary dismissal”—firing on the spot without notice and without hearing—runs afoul of the twin-notice rule and is typically deemed illegal termination. The same principle applies where an employer announces outright termination and only afterward issues a notice to explain as a “formality.” Such actions also result in procedural defects.

3. Legal Consequences of Not Following the Twin-Notice Rule

Failure to issue a timely Notice to Explain or to conduct due process before termination can lead to:

Reinstatement – If the dismissal is found illegal, the employee may be entitled to be returned to the former position without loss of seniority.
Backwages – The employer can be ordered to pay backwages from the time of dismissal up to final reinstatement (or in lieu of reinstatement, separation pay plus backwages, depending on the circumstances).
Damages and Attorney’s Fees – In certain cases, moral and/or exemplary damages and attorney’s fees may be awarded by the labor tribunals or the courts.

Additionally, even if there is a valid just cause for termination, ignoring procedural due process usually results in the employer being liable for damages or indemnities, often referred to as an award of nominal damages, as recognized by the Supreme Court in various cases (e.g., Agabon v. NLRC, G.R. No. 158693).

4. Illustrative Supreme Court Rulings

4.1 King of Kings Transport v. Mamac (G.R. No. 166208, 2007)

The Supreme Court underscored the twin-notice rule, specifying that an NTE must clearly state what the employee is being charged with, and that a hearing or conference may be required if the employee requests it or if the employer deems it necessary.

4.2 Philippine Aeolus Automotive United Corporation v. NLRC

In this case, the Court emphasized that the first written notice must be given before any termination decision is made. Issuing the termination notice without allowing the employee to respond beforehand violates procedural due process.

4.3 Agabon v. NLRC (G.R. No. 158693, 2004)

While Agabon primarily focused on the consequences of failing to observe procedural due process, it remains a landmark case that underscores the employer’s obligation to comply with both the substantive and procedural aspects of a valid dismissal. Although the presence of a valid just cause can absolve the employer from paying backwages in certain scenarios, a penalty in the form of nominal damages is imposed for non-compliance with procedural due process requirements.

5. Exceptions or Special Circumstances

5.1 Preventive Suspension Pending Investigation

In cases where an employee’s continued presence in the workplace poses a serious threat to the life or property of the employer or co-workers, the employee may be placed on preventive suspension pending the outcome of the administrative investigation. This suspension is not equivalent to termination; it is merely a temporary measure to protect business interests. During this period, the employer should:

Issue a formal NTE or show-cause memo.
Conduct a fair investigation.
Decide on the penalty (if any) only after the employee’s explanation or hearing.

5.2 Resignation vs. Dismissal

An employee’s voluntary resignation is distinct from dismissal. In a true voluntary resignation, the employee initiates separation from the company. However, if an employee’s signature is forced or coerced on a resignation letter to circumvent due process, labor tribunals may treat such “resignation” as constructive dismissal, triggering the usual protective remedies.

6. Practical Guidelines

6.1 For Employers

Always Issue an NTE: Before deciding to terminate, serve a written notice specifying the alleged offense(s). Provide sufficient details and evidence so that the employee can properly respond.
Observe Reasonable Periods: Give the employee enough time (commonly 48–72 hours or more, depending on company policy) to prepare and submit a written explanation.
Conduct an Investigation or Hearing: If the employee’s explanation is not satisfactory or if the offense is serious, you may hold a conference or hearing, especially if the employee requests it.
Issue a Second Notice: After evaluating the evidence and the employee’s explanation, issue a Notice of Decision (or Notice of Termination) if dismissal is warranted. Clearly state the reason(s) for termination.
Document Everything: Maintain complete records: the complaint or incident report, the show-cause memo, the employee’s explanation, minutes of any hearing, and the final notice. These records are crucial in defending against illegal dismissal claims.

6.2 For Employees

Know Your Rights: Insist on receiving written notice explaining the accusations or charges against you.
Respond Properly: Submit a written explanation within the allowed time. Seek legal advice if necessary, especially for serious allegations.
Attend Hearings: Participate in any administrative hearing or meeting to present evidence and defend yourself.
Check Your Company Policy: Many employers have internal rules or a code of conduct that must be followed, including investigation protocols and disciplinary procedures. Familiarize yourself with these procedures.
Seek Redress: If you believe you were terminated without due process, you may file a complaint for illegal dismissal before the National Labor Relations Commission (NLRC).

7. Conclusion

In the Philippines, terminating an employee before issuing a Notice to Explain is almost always illegal because it violates the twin-notice rule mandated by due process. The first written notice (NTE) is indispensable: it informs the employee of the grounds for termination and offers them the chance to defend themselves. The employer can only legally effect a dismissal after carefully evaluating the employee’s explanation—or after conducting a hearing if necessary—and then issuing a final Notice of Termination.

Failure to observe these procedures exposes employers to the risk of illegal dismissal findings, with serious financial and legal repercussions. For employees, knowing these rights ensures they can safeguard themselves against premature or summary terminations. Ultimately, strict compliance with the twin-notice rule serves the interests of both parties and upholds the constitutional guarantee of due process in the Philippine workplace.