Employment Termination in Philippines

Legal Grounds for Termination

Employers in the Philippines can terminate employees under specific conditions as stipulated by the Labor Code of the Philippines. These conditions are categorized into just causes and authorised causes:

Just Causes:

• Serious Misconduct: Inappropriate behavior that disrupts the workplace or poses a risk to safety and operations, such as harassment, violence, or theft.
• Willful Disobedience: Acts of insubordination or refusal to follow lawful orders and company policies.
• Gross Negligence: Severe neglect of duties resulting in significant harm or potential harm to the company, including repeated absenteeism or failure to perform job responsibilities.
• Fraud or Breach of Trust: Actions that break the employer’s trust, particularly in positions involving sensitive information or finances.
• Commission of a Crime: Criminal acts against the employer or representatives, such as embezzlement or assault.
• Other similar causes.

Authorized Causes like Business and Health Reasons:

• Installation of Labor-Saving Devices: Implementation of technology that reduces the need for employees.
• Redundancy: Reduction of workforce due to excess employees or organizational restructuring.
• Retrenchment: Termination to prevent losses.
• Closure of Business: Business ceases operations either temporarily or permanently.

Separation Pay Requirements

• Seperation Pay & Long Service Payment
  • Employers in the Philippines can terminate employees on the following conditions:
    • Wilful disobedience
    • Gross negligence towards duty
    • Serious misconduct
    • Breach of trust and fraud
    • Commission of any crime against the employer or his/her representative.

There is no seperation pay that is required to be paid for the above conditions.

• • • Replacement of labour-saving devices
    • Redundant placement
    • Closure of business
    • Disease or illness
    • Retrenchment to prevent losses.

Seperation pay is required to be paid for the above conditions. Severance payment is usually one month’s wages per year of service.

When termination is done under a ‘just cause’, the employer is required to provide the employee with 30 days of notice which can be in the form of:

• A notice of intent to dismiss the employee which must specify the dismissal grounds.
• A conference or hearing allowing the employee to respond to the charges.
• A notice of dismissal that the company has established grounds to justify termination.

The employer must provide the employee with:

• A written copy of the notice. This must also be provided to the Regional Office of the Department of Labor and Employment (DOLE) that governs the company’s region.
• Severance pay which depends on the reason for termination. If the employee is not at fault upon termination, the employer must provide one month’s pay or one month’s pay per year of service, whichever stands at a higher point.

Importance of Compliance

Compliance with termination procedures is crucial to avoid legal disputes and ensure a fair workplace environment. Employers must understand their obligations under the law, and employees should be aware of their rights. Proper documentation and adherence to due process minimize risks and foster a harmonious work environment.

Please note that all the information listed below are to be used as a general guideline. For more detailed accounts of Philippines employment laws and regulations, please visit the official governmental websites.

Updated on: 8^th August 2024