Wrongful Dismissal Philippines

Dear Attorney,

I would like to inquire about a concern regarding the termination of my employment. I believe I was terminated unfairly and I am considering legal action. Could you please provide advice on what steps I should take and the legal grounds I might have to challenge this termination?

Sincerely,
Concerned Employee

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Insights

Wrongful dismissal, or unlawful termination, is one of the most pressing issues faced by employees in the Philippines. It happens when an employer dismisses an employee without just cause or without following due process as mandated by law. In the Philippines, the law governing labor relations is primarily found in the Labor Code of the Philippines (Presidential Decree No. 442), which provides comprehensive guidelines on the legal process of termination and the rights of both employers and employees.

Types of Dismissal Under Philippine Law

There are generally two types of dismissal recognized under Philippine law:

1. Just Causes for Termination (Art. 297 of the Labor Code):

   • These are instances where the employer has a legitimate reason to terminate the employment contract due to misconduct or poor performance on the part of the employee. Under the Labor Code, the following are considered just causes:
     • Serious Misconduct or willful disobedience to the lawful orders of the employer.
     • Gross and habitual neglect of duties.
     • Fraud or willful breach of trust.
     • Commission of a crime against the employer, his family, or representatives.
     • Other analogous causes.

2. Authorized Causes for Termination (Art. 298 of the Labor Code):

   • These are reasons for termination that do not stem from any fault of the employee but are instead due to business exigencies or other lawful reasons:
     • Installation of labor-saving devices.
     • Redundancy.
     • Retrenchment to prevent losses.
     • Closing or cessation of business.
     • Disease that cannot be cured within six months and whose continued employment is prejudicial to the health of the employee or his/her co-workers.

In both just and authorized causes, the employer is required to observe due process. The violation of due process in employee termination is what often constitutes wrongful dismissal.

What Constitutes a Wrongful Dismissal?

A dismissal is considered wrongful if it fails to meet the following two-fold requirements:

1. Substantive Due Process (Valid Ground for Termination):

   • The employer must have a valid ground for terminating the employee, whether based on just or authorized causes. If the termination is based on a ground not recognized by the Labor Code, the dismissal is considered illegal. For instance, terminating an employee due to personal differences or favoritism does not constitute just or authorized causes.

2. Procedural Due Process (Fair Procedure):

   • The employer must follow proper procedure in terminating the employee. This typically involves:
     • Notice to Explain (NTE): For just causes, the employee must be given a written notice specifying the grounds for dismissal and a reasonable period to respond.
     • Notice of Decision: After conducting an investigation, if the employer decides to terminate the employee, a second written notice informing the employee of the dismissal must be served.
     • In cases of authorized causes, such as retrenchment or redundancy, a 30-day notice is required to both the employee and the Department of Labor and Employment (DOLE).

Failure to comply with these requirements renders the termination unlawful, even if there was a valid cause for dismissal.

Remedies for Wrongful Dismissal

An employee who has been wrongfully dismissed has several remedies under the law, including:

1. Reinstatement:

   • The unlawfully dismissed employee may be reinstated to his or her former position without loss of seniority rights. If reinstatement is not possible (e.g., due to strained relations), the employee may instead be awarded separation pay in lieu of reinstatement.

2. Back Wages:

   • The employee is entitled to the payment of back wages, which are computed from the time of dismissal up to the final resolution of the case. This aims to compensate the employee for lost earnings during the period of wrongful termination.

3. Damages:

   • In certain cases, the employee may be awarded moral and exemplary damages if the dismissal was done in bad faith or in a malicious manner.

4. Attorney’s Fees:

   • The employee may also be entitled to attorney’s fees equivalent to 10% of the total amount of wages recovered.

Recent Jurisprudence on Wrongful Dismissal

Several recent Supreme Court rulings have further clarified the standards of wrongful dismissal in the Philippines:

• St. Luke's Medical Center, Inc. v. Fadrigo (G.R. No. 220605, March 9, 2022): In this case, the Supreme Court reaffirmed that the burden of proof is on the employer to show that the termination was valid and that due process was followed.
• San Miguel Properties, Inc. v. Gucaban (G.R. No. 215142, February 13, 2019): This decision emphasized the importance of observing procedural due process. The Court ruled that failure to issue a notice to explain was sufficient to render the dismissal unlawful, even if there was a just cause.
• Equitable Banking Corporation v. Sadac (G.R. No. 164772, September 4, 2009): The Court held that even if an employee committed serious misconduct, the employer’s failure to observe procedural due process entitles the employee to indemnity.

Conclusion

Wrongful dismissal remains a crucial issue in the Philippine labor landscape. Employees who believe they have been terminated unfairly have legal remedies available to them under the Labor Code. Employers, on the other hand, must ensure that terminations are not only based on valid grounds but are also carried out in strict adherence to procedural due process. Failure to meet these legal requirements exposes employers to liability for damages, reinstatement, back wages, and attorney's fees.

It is recommended that employees facing wrongful termination consult with a labor lawyer to assess their case and initiate the appropriate legal action. Legal representation is essential, especially if the case involves complex issues of law and fact. The Labor Arbiter of the National Labor Relations Commission (NLRC) has primary jurisdiction over these cases, and employees can file complaints for unlawful dismissal within four years from the date of termination.