Letter to a Lawyer

Dear Attorney,

I hope this message finds you well. I am seeking your guidance regarding a situation involving an employee who was recently hired by a company and has not yet completed one month of employment. The manager of this employee sent a message instructing them not to come to work anymore, citing grounds of being AWOL (Absent Without Official Leave) or possibly involved in a case of malversation of funds. The employee, upon receiving this message, has not reported to work since.

Given these circumstances, I would like to understand the potential legal implications, especially in the context of whether this would be classified as an "End of Contract" (ENDO) scenario or if it falls under a different form of termination. Additionally, could you provide insight into how Philippine labor laws handle such cases, particularly when the employee has not yet completed their probationary period or reached a full month of employment?

I look forward to your expert legal advice on this matter.

Sincerely,
A Concerned Employer

Legal Implications of Termination Due to Allegations of AWOL and Malversation of Funds Under Philippine Law

Introduction

The issue raised presents a situation where an employee, recently hired, is alleged to have committed either AWOL or malversation of funds, and the employer has taken action to prevent the employee from reporting to work. With the backdrop of such accusations, the employer seeks to terminate the employment of this individual, raising the question of whether such a termination constitutes a valid dismissal under Philippine law, or if it could be classified as an End of Contract (ENDO). This article will explore these legal concerns within the framework of Philippine labor law, considering both statutory and jurisprudential interpretations of key concepts such as AWOL, malversation of funds, and the rules surrounding employment probationary periods.

Understanding AWOL and Its Legal Consequences

AWOL Defined
Absent Without Official Leave, or AWOL, refers to an employee's failure to report for work without prior notification or approval from their employer. Under Philippine labor law, AWOL is considered a serious offense, especially if the absence is prolonged or repeated without justification. However, an isolated incident of AWOL, especially during the probationary period, may not automatically be grounds for immediate dismissal. Employers are required to follow due process in terminating an employee, even if the employee is in violation of attendance policies.

Due Process in AWOL Cases
In the case of an employee who fails to report for work, the employer must follow the twin-notice rule before terminating employment. This process involves:

Notice to Explain – The employer must issue a formal notice requiring the employee to explain the reason for their absence. This notice should give the employee ample time to respond.
Hearing or Opportunity to be Heard – After receiving the employee's explanation, the employer should conduct an investigation or provide the employee with an opportunity to be heard.
Notice of Decision – If the employer decides to terminate the employee after due consideration, a second notice should be sent, informing the employee of the decision and the grounds for dismissal.

In the absence of such procedural safeguards, the termination could be deemed illegal, even if the employee’s absence appears to justify dismissal. This principle applies regardless of whether the employee has rendered less than a month of service or is still in their probationary period.

Malversation of Funds and Its Legal Consequences

Malversation Defined
Malversation of funds is a criminal offense under Philippine law, primarily addressed in the Revised Penal Code (RPC), specifically Articles 217 and 220. It generally applies to public officers, but in a broader context, employers may also hold employees accountable for financial impropriety if they have mishandled company funds or property. Malversation typically involves an employee who has custody or control over company funds and who misuses, embezzles, or fraudulently disposes of those funds.

Criminal vs. Administrative Liability
In the case of private employment, an employee accused of malversation or a similar offense may face two types of legal consequences:

Criminal Liability – If an employer decides to pursue criminal charges, they may file a criminal complaint for malversation or qualified theft, depending on the specifics of the case. This would require the employer to present evidence to support the allegations of misappropriation or embezzlement of funds.
Administrative Liability – Independently of criminal proceedings, the employer may dismiss the employee for serious misconduct under Article 297 (formerly Article 282) of the Labor Code of the Philippines. The Code allows for termination on the grounds of serious misconduct, fraud, or willful breach of trust by an employee. As with AWOL cases, the twin-notice rule must still be observed, even when the misconduct involves financial malfeasance.

Probationary Employment and ENDO

Probationary Period Under Philippine Law
Under Article 296 (formerly Article 281) of the Labor Code, employers are permitted to place new hires under a probationary period of up to six months. During this period, the employer may terminate the employee’s contract for just cause or if the employee fails to meet the reasonable standards set for the job. However, even during this probationary period, employees are entitled to security of tenure and cannot be dismissed without due process.

Rights of Probationary Employees
Despite the probationary status of the employee, the employer must still provide clear standards for evaluating performance and behavior. Failure to inform the employee of these standards, or failure to adhere to the twin-notice rule in the event of termination, may result in the dismissal being declared illegal. This is crucial because probationary employees are not without legal protection under Philippine law. If an employee’s dismissal is challenged, the burden is on the employer to prove that it followed the lawful procedure.

ENDO: Understanding End of Contract
“ENDO” or “End of Contract” is a colloquial term in the Philippines used to describe the practice of terminating employees before they can attain regular or permanent employment status. It typically refers to fixed-term contracts that are not renewed after their expiration, often used to prevent workers from acquiring the benefits and security of regular employment.

However, in this case, the employee is not being terminated due to the expiration of a fixed-term contract but rather for alleged misconduct (AWOL or malversation). Thus, the term ENDO may not be strictly applicable here. The issue revolves around whether the employer has just cause to terminate the employee during the probationary period and whether due process was observed.

Legal Ramifications for the Employer

Given that the employee in question has not yet completed one month of employment, the employer may believe they have broad discretion to terminate the employment contract. However, as previously mentioned, even probationary employees are protected under the law, and any termination must adhere to due process requirements. If the employer has instructed the employee not to report for work without issuing a formal notice or conducting a proper investigation, this could constitute constructive dismissal.

Constructive Dismissal Defined
Constructive dismissal occurs when an employer makes working conditions so intolerable, or imposes unreasonable terms, that the employee is forced to resign or is effectively barred from working. In this case, if the employee was told not to report to work without any formal documentation or notice, it could be argued that the employer was preventing the employee from fulfilling their duties, amounting to constructive dismissal.

The employee could file a complaint for illegal dismissal, claiming that they were deprived of due process. The employer, in this case, would need to show that they followed the legal requirements for termination, including issuing a notice to explain and conducting an investigation.

Conclusion and Recommendations

In conclusion, the employer must be cautious when terminating an employee, even in cases of alleged AWOL or malversation, especially during the probationary period. Philippine labor law provides significant protections for employees, including those under probation, and employers are required to adhere to due process at all times.

Before taking any further action, the employer should issue a formal notice to the employee, outlining the reasons for the termination and providing the employee with an opportunity to respond. In cases involving allegations of malversation of funds, the employer should also consider whether to pursue criminal charges in addition to administrative dismissal.

Failure to follow these legal procedures could result in a finding of illegal dismissal, exposing the employer to liability for back wages, reinstatement, or payment of separation pay. Additionally, it is important to ensure that all actions are well-documented, including any communications with the employee regarding their absence or misconduct.

By observing due process and seeking legal guidance, employers can protect themselves from potential claims while ensuring that any termination is legally compliant and justified.