Dear Attorney,

I recently lost my job under circumstances that I believe were unjust. I was not given a valid reason for my dismissal, nor was I given any chance to defend myself. I would like to know if this falls under illegal termination and what steps I can take to protect my rights.

Sincerely,
A Concerned Employee

Insights

What is Illegal or Wrongful Termination?

Wrongful termination, also known as illegal dismissal in the Philippines, occurs when an employee is terminated without just or authorized cause as provided by law, or without following due process. The legal framework governing wrongful termination is primarily found in the Labor Code of the Philippines and its implementing rules. The provisions aim to balance the interests of both employers and employees by clearly stating acceptable grounds for termination, as well as the procedures that must be followed.

Just Causes for Termination

According to the Labor Code, there are specific grounds that allow an employer to terminate an employee’s contract of service. These are called just causes, and they are related to the employee’s conduct. Under Article 297 (formerly Article 282) of the Labor Code, the following are considered just causes for termination:

Serious misconduct or willful disobedience by the employee of the lawful orders of their employer.
Gross and habitual neglect by the employee of their duties.
Fraud or willful breach of trust reposed in the employee by the employer.
Commission of a crime or offense against the employer, their family, or a representative.
Other analogous causes.

Each of these causes must be substantiated with clear evidence and established as grave enough to merit termination. For instance, serious misconduct refers to improper or wrongful behavior that violates the trust and good faith expected from the employee.

Authorized Causes for Termination

In addition to just causes, there are also authorized causes under which an employer can legally terminate an employee, even if the employee has not engaged in any misconduct. These authorized causes are typically related to business operations, and they include:

Installation of labor-saving devices.
Redundancy.
Retrenchment to prevent losses.
Closure or cessation of business.
Disease—if the employee has an illness that cannot be cured within six months, and their continued employment would be detrimental to their health or to that of their colleagues.

When terminating based on authorized causes, the employer is obligated to provide separation pay. In most cases, this is equivalent to one month’s pay or one-half month’s pay for every year of service, whichever is higher.

Due Process in Termination

The law not only sets out valid grounds for termination but also prescribes the procedure that must be followed before an employee can be dismissed. The Twin Notice Rule is a fundamental requirement in Philippine labor law, ensuring that employees are given a chance to defend themselves before being terminated. The rule includes:

First notice: A written notice specifying the ground for termination and giving the employee a reasonable opportunity to explain or defend themselves.
Hearing or conference: This allows the employee to present evidence and refute the charges, typically through a hearing.
Second notice: If after the hearing, the employer finds sufficient grounds for dismissal, a final written notice of termination must be given to the employee, detailing the reasons for the dismissal.

Failing to comply with this procedure, even if the termination is based on just or authorized causes, makes the dismissal illegal.

Consequences of Illegal Dismissal

If an employee is wrongfully terminated, they may file a complaint with the National Labor Relations Commission (NLRC) for illegal dismissal. If the NLRC finds that the termination was indeed illegal, the employer may be ordered to:

Reinstate the employee without loss of seniority rights and other privileges; or, if reinstatement is not viable, provide separation pay.
Provide the employee with back wages from the time of dismissal until reinstatement or payment of separation pay.
Compensate the employee for any additional damages, depending on the case.

Reinstatement may be waived by the employee, especially in cases where the relationship between the employee and employer has become strained.

Filing a Complaint for Illegal Dismissal

To initiate an illegal dismissal complaint, the employee must file a case with the NLRC. There is a four-year prescription period to file the complaint from the date of the illegal dismissal. The employee must provide proof of their employment, the terms of their dismissal, and any documentation or evidence to support their claim that the termination was unlawful.

The labor arbiter will then evaluate whether the employer had just or authorized cause for dismissal and whether the due process was followed. The decision of the labor arbiter can be appealed, first to the NLRC en banc, and eventually to the Court of Appeals or the Supreme Court.

Preventive Suspension

In cases where the employer has reason to believe that the employee’s continued presence in the workplace poses a threat to the company's operations or to others, the employer may place the employee on preventive suspension. However, this suspension cannot last more than 30 days without just cause.

Recent Developments and Landmark Cases

Recent jurisprudence has continually underscored the need for employers to provide substantive proof of just cause before terminating an employee. In Montinola v. PAL, the Supreme Court ruled that mere loss of trust or an unsubstantiated suspicion is not sufficient ground to dismiss an employee. Furthermore, in Tanseco v. Pantranco, the Court emphasized that redundancy must be proven with concrete evidence such as a decrease in company profits or a legitimate reorganization plan.

Employers must also be cautious in using authorized causes like retrenchment. In Lopez v. NLRC, the Supreme Court held that for retrenchment to be valid, the employer must demonstrate actual financial losses, and the measure taken must be necessary and reasonable.

Conclusion

Wrongful termination is a serious issue that affects the livelihood and dignity of workers. Employees who suspect they have been illegally dismissed must familiarize themselves with their rights under the Labor Code of the Philippines. Legal remedies, including reinstatement and compensation, are available, but understanding the legal grounds and processes is crucial to obtaining justice.

Employers, on the other hand, must carefully document and justify any decision to terminate an employee, adhering to both substantive and procedural requirements to avoid potential liabilities for illegal dismissal.