Dear Attorney,

I am a manager who recently faced a situation where I had to terminate an employee due to performance issues. I believe I followed the correct procedure, but the employee claims that their termination was unjust and plans to file a complaint against our company. I want to ensure that we are compliant with Philippine labor laws, particularly regarding the grounds and due process for termination. Could you provide guidance on this matter?

Insights

Under Philippine labor law, termination of employment must be grounded on either just or authorized causes, as outlined in the Labor Code of the Philippines. Unlawful termination, often referred to as illegal dismissal, can lead to serious legal repercussions for employers, including reinstatement of the employee, payment of back wages, and other forms of compensation.

Just Causes for Termination

Just causes for termination refer to reasons attributable to the employee’s actions. According to Article 297 of the Labor Code, these include:

Serious Misconduct – This encompasses acts that show willful disobedience, breach of trust, or gross negligence in duties.
Gross and Habitual Neglect – A pattern of consistent and severe negligence in fulfilling job responsibilities.
Fraud or Willful Breach of Trust – Engaging in fraudulent activities or actions that result in a loss of trust from the employer.
Commission of a Crime – Any criminal act committed by the employee, particularly if it affects the business or its operations.
Other Analogous Cases – Situations that are similar in nature to the above grounds, though these must be assessed on a case-by-case basis.

Authorized Causes for Termination

Authorized causes, on the other hand, are not related to employee misconduct but are due to business necessities, such as:

Redundancy – The position is no longer necessary for the operations of the business.
Retrenchment – The company is reducing its workforce due to financial losses or downturns.
Closure or Cessation of Operations – The business is shutting down entirely or in part.
Health Conditions – The employee has a disease that cannot be cured within six months and is detrimental to the health of others.

Due Process in Termination

Regardless of the cause, employers must observe due process to avoid claims of illegal dismissal. For just causes, this involves:

Notice of Intent – A written notice must be given to the employee, stating the grounds for termination.
Opportunity to be Heard – The employee must be given the chance to explain and defend themselves, typically through a hearing or a formal reply.
Notice of Decision – After considering the employee’s explanation, a final decision is communicated in writing.

For authorized causes, due process requires notifying both the employee and the Department of Labor and Employment (DOLE) 30 days before the intended termination.

Legal Consequences of Unlawful Termination

If termination is found to be unjust or if due process was not properly observed, the dismissal can be ruled as unlawful. The employee can file a complaint with the National Labor Relations Commission (NLRC), which could lead to the following consequences for the employer:

Reinstatement – The employee may be reinstated to their former position without loss of seniority rights.
Back Wages – The employer may be ordered to pay back wages covering the period from the time of dismissal until reinstatement or final resolution.
Damages – In certain cases, the employer may also be liable for moral and exemplary damages.

Practical Advice

To minimize legal risks, it is crucial to maintain thorough documentation of the entire termination process. This includes written records of any misconduct, performance issues, or business decisions that led to the termination. Additionally, seeking legal advice before carrying out a termination can help ensure compliance with the law and prevent potential disputes.

In your situation, it is advisable to review the grounds for termination and ensure that the process you followed adheres to the standards set by Philippine labor laws. If there is any doubt, consulting with a legal expert before responding to the employee's claims may help mitigate potential legal challenges.

By following these guidelines, you can better protect your organization from the risks associated with unlawful termination and ensure that your actions are legally defensible.