Unfair Termination: Legal Remedies at the NLRC
(Philippine Context)

Unfair termination—commonly referred to in Philippine jurisprudence as “illegal dismissal”—occurs when an employer ends an employee’s services without complying with both the substantive and procedural requirements mandated by law. In the Philippines, the principal source of labor law on termination of employment is the Labor Code of the Philippines (Presidential Decree No. 442), supplemented by various Department of Labor and Employment (DOLE) issuances and Supreme Court decisions.

One of the most common venues for seeking redress for illegal dismissal is the National Labor Relations Commission (NLRC). This article aims to provide an overview of unfair termination (illegal dismissal), the legal framework, and the remedies available before the NLRC, guiding both employees and employers in understanding their rights and obligations.

1. Legal Framework

1.1 The Labor Code of the Philippines

Book VI, Title I of the Labor Code outlines the grounds and procedures for terminating employment.
Under Article 294 [formerly 279], illegally dismissed employees are generally entitled to reinstatement and full backwages, among other reliefs.

1.2 Relevant DOLE Issuances

The Department of Labor and Employment issues rules and regulations that clarify statutory provisions. For instance, Department Order No. 147-15 provides guidelines on labor dispute resolutions and due process in termination cases.

1.3 Jurisprudence

Supreme Court decisions interpret statutory provisions and define employer-employee rights and duties regarding dismissal. Leading cases repeatedly emphasize the dual requirements of substantive and procedural due process.

2. Substantive and Procedural Due Process

2.1 Substantive Due Process

An employer must dismiss an employee only on valid (just or authorized) grounds as enumerated by law.

Just Causes (Article 297 [formerly 282]):
- 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 immediate family
- Other analogous causes
Authorized Causes (Article 298 and 299 [formerly 283 and 284]):
- Redundancy
- Retrenchment (to prevent losses)
- Closure or cessation of business
- Disease that is prejudicial to the employee and to the rest of the workforce

If an employer cannot prove one of the causes recognized by law, or the evidence is insufficient, the dismissal is deemed illegal.

2.2 Procedural Due Process

Even if a cause for termination exists, an employer must follow the proper procedure. The procedure differs slightly between just causes and authorized causes.

For Just Causes:
1. First Written Notice (Notice to Explain): Informing the employee of the specific acts or omissions for which dismissal is sought.
2. Opportunity to be Heard: The employee should be given a chance to present evidence or arguments in defense, usually through a hearing or a written explanation.
3. Second Written Notice (Notice of Decision): Communicating the employer’s decision to dismiss (or impose a lesser penalty), stating the factual and legal basis.
For Authorized Causes:
- Notice to both the employee and the DOLE at least 30 days before the effective date of termination, specifying the authorized cause (e.g., redundancy, retrenchment).

Failure to adhere to these procedural steps can make a dismissal illegal or, in certain circumstances, subject the employer to nominal damages even if the substantive grounds are valid.

3. Filing a Complaint at the NLRC

3.1 Jurisdiction

The NLRC (particularly the Labor Arbiters under its jurisdiction) has original and exclusive jurisdiction over illegal dismissal cases. It handles cases where employer-employee relationships and the legality of dismissals are in question.

3.2 Single Entry Approach (SEnA)

Before filing a formal complaint, disputing parties are typically required to undergo SEnA for mandatory conciliation-mediation at the DOLE’s regional offices or field offices. If settlement fails, a referral or a notice to proceed is issued, enabling the complainant to file a case with the NLRC.

3.3 Steps to File a Complaint

Preparation of the Complaint: The complainant (employee) will file a verified complaint stating the facts, grounds, and relief sought.
Docketing of the Case: The complaint is assigned to a Labor Arbiter for handling.
Mandatory Conference/Mediation: The Labor Arbiter will summon the parties to explore amicable settlement, clarify issues, or consider alternative dispute resolution.
Submission of Position Papers: Both parties will be required to submit their position papers, affidavits, and evidence supporting their claims.
Clarificatory Hearings (if necessary): The Labor Arbiter may call additional hearings to clarify facts or evidence.
Decision of the Labor Arbiter: After evaluation, the Arbiter will issue a decision based on the evidence and applicable laws.

3.4 Appealing an Adverse Decision

Either party can appeal the Labor Arbiter’s decision to the NLRC Commissioners within ten (10) calendar days from receipt of the decision.
Subsequent appeals may be elevated to the Court of Appeals (via a Petition for Certiorari) and, in exceptional cases, to the Supreme Court.

4. Remedies for Unfair (Illegal) Termination

4.1 Reinstatement

The primary remedy under the Labor Code for an illegally dismissed employee is reinstatement to the former position (or a substantially equivalent role). This ensures the employee returns to work without loss of seniority or benefits.

4.2 Full Backwages

Illegally dismissed employees are typically entitled to full backwages, computed from the time of dismissal until finality of the decision or actual reinstatement. Backwages include basic salary and regular allowances or benefits but exclude purely discretionary benefits.

4.3 Separation Pay (In Lieu of Reinstatement)

If reinstatement is no longer feasible (due to strained relations or closure of business), the NLRC or the courts may award separation pay in lieu of reinstatement, computed based on the employee’s length of service (commonly one month’s pay for every year of service, though the specific amount may vary depending on court/commission discretion and the circumstances).

4.4 Damages

Moral Damages: May be awarded if the employer is found to have acted in bad faith or in an oppressive manner.
Exemplary Damages: May be awarded to set an example or correct an employer’s wrongful behavior if the dismissal involved malice or gross misconduct.
Attorney’s Fees: May be granted if the employee was forced to litigate to protect their rights, generally capped at 10% of the award.

5. Employer’s Defenses and Burden of Proof

5.1 Burden of Proof on Employers

In illegal dismissal cases, the employer carries the burden to prove that the dismissal was for a valid cause and that due process was observed. Failure to do so, even if the employee does not present overwhelming evidence, usually results in a finding of illegal dismissal.

5.2 Documentation and Evidence

Employers must ensure they have documentary evidence (e.g., incident reports, written notices, attendance records, performance evaluations) to back up disciplinary action. Good recordkeeping can help in defending against unwarranted claims.

6. Practical Tips for Employees and Employers

6.1 For Employees

Keep Documentation: Secure copies of employment contracts, company policies, notices, and written communications.
File Promptly: The prescriptive period for illegal dismissal cases is four (4) years, but immediate action is recommended.
Explore Settlement: Consider amicable settlement or mediation as a faster route to resolution, if fair and feasible.

6.2 For Employers

Policy Compliance: Develop clear, written policies on disciplinary action and ensure consistent enforcement.
Follow Due Process: Issue proper notices and conduct a fair hearing.
Consider Amicable Solutions: Early settlement discussions can save resources, preserve goodwill, and avoid protracted litigation.

7. Conclusion

Unfair termination or illegal dismissal is a serious matter in Philippine labor law. The Labor Code, supplemented by DOLE regulations and Supreme Court rulings, requires employers to strictly observe both substantive and procedural due process. When these requirements are not met, the dismissal is deemed illegal, entitling the employee to reinstatement and full backwages, among other remedies.

The National Labor Relations Commission (NLRC) is the primary forum for resolving illegal dismissal disputes. Aggrieved employees may file complaints following mandatory conciliation and mediation procedures. If a Labor Arbiter’s decision is unfavorable, appeal remedies are available up to the Supreme Court in exceptional cases.

Ultimately, both employees and employers should be mindful of their respective rights and obligations. Proper documentation, adherence to legal processes, and good faith negotiations can go a long way in preventing and resolving unfair termination disputes. Should there be any doubt, seeking professional legal counsel is always advisable to ensure that one’s rights and interests are properly protected.