Authorized Causes of Termination

Authorized Causes of Termination

In the Philippines, both the employer and employee can terminate the contract of employment. Therefore neither the employer can force an employee to continue working nor the employee is able to force the employer to give him work if there is no lawful reason to do so. Although both parties may terminate the employment relationship, the employer faces more difficulties when executing his right to dismiss the employee. While the employee may resign from work after rendering 30 days notice, the termination initiated by the employer is by no means easy.

This is due to the fact that termination of an employee is taken very seriously in the Philippines and can be a complicated and difficult process to manage especially after the employee has been regularized. It shall be noted that no employer shall terminate an employee without any valid cause recognized under the Labor Code as employees enjoy the right to security of tenure. This means that a regular employee shall not be terminated unless for a just or authorized cause and after the observance of procedural due process. The failure to comply with the substantive or procedural aspect of termination shall result in an illegal termination in which the employee may claim for relief.

Such relief can be in different forms such as reinstatement without loss of seniority rights or in lieu of reinstatement, an employee may also be given separation pay of one month pay for every year of service. On top of reinstatement, the employee may also be entitled to full backwages, inclusive of allowances and other benefits or their monetary equivalent from the time compensation was withheld up to the time of reinstatement and damages if the dismissal was done in bad faith.

In the Labor Code of Philippines, authorized causes can be found under article 283 and 284. These provisions allow the employer to legally terminate the employee’s service by reason not due to employee’s fault or negligence. In such cases, the employee shall be entitled to separation pay which is at least 1 month of the employee’s salary depending on the tenure of the employment and the termination cause. In general, the longer the employee has worked in the company, the higher the separation pay would be.

The authorized causes of termination stipulated in the Labor Code includes installation of labor-saving devices; redundancy; retrenchment to prevent losses; closure and cessation of business; and disease/ illness. In terminating the employee under article 283 of the labor code, the employer shall be required to prove that the dismissal is for a valid and lawful cause and not done in ill intention of depriving the employees’ of any privileges. The employer must also adopt fair, reasonable and transparent criteria when selecting the employees to be dismissed. However, the procedure is different for terminating the service of the employee by reason of disease. The law requires the employer to obtain from a competent public health authority a certification that the employee’s disease is of such a nature and at such a stage that it can no longer be cured within a period of six months even with medical attention before effecting the termination.