Employee Termination Guide Philippines 2019

How to terminate an employee in the Philippines in 2019

There are different ways to terminate an employee in the Philippines in 2019. Unlike other jurisdictions, the Philippines is not a country with “at-will employment,” where employers are allowed to terminate an employee for any cause and without warning. The Philippine Constitution itself grants security of tenure to employees, and employers must go through the meticulous process of termination an employee. If they fail in doing so, employer unknowingly commit illegal dismissal, and might be liable for costly expenses such as backwages, separation pay, damages, attorney’s fees, financial assistance, interest, and other monetary awards.

Hence, employers must know the proper grounds and procedure in terminating an employee. Otherwise, money which could have been spent for business operations would be used for costly and time-consuming litigation.

Employers are given are given two grounds to terminate under the Philippine Labor Code: “just cause” or an “authorized cause.” This post tackles the just causes of terminating an employee, including the procedures in doing so.

Essentially, just causes of termination are invoked by the employer if the employee commits certain wrongdoings in the course of employment. Article 297 of the Labor Code enumerates the following grounds which the employer may use:

  1. Serious misconduct or willful disobedience by the employee of the lawful orders of his employer or representative in connection with his work;
  2. Gross and habitual neglect by the employee of his duties
  3. Fraud or willful breach by the employee of the trust reposed in him by his employer or duly authorized representative.
  4. Commission of a crime or offense by the employee against the person of his employer or any immediate member of his family or his duly authorized representatives; and
  5. Other causes analogous to the foregoing.

The facts behind every situation that can potentially lead to termination of employment is different. However, all instances must be anchored on any of the five grounds to legally dismiss an employee. If you would notice, the wording of the law is very technical:

  • “Serious” misconduct, “willful disobedience;”
  • “Gross” and “Habitual neglect” … of his duties;
  • “Fraud,” or “willful breach” by the employee of the trust reposed in him; and
  • “Other causes analogous” to the foregoing.

A layman, businessperson, or an HR practitioner may put different meanings on these phrases. However, the interpretation of the Philippine Supreme Court is what is controlling when it comes to analyzing the just causes of termination, as it is the final arbiter of the laws of the Philippines. The Supreme Court, through its decisions, provide guidance and standards on how to interpret these seemingly uncomplicated terms. A labor lawyer will be able assist you and provide guidance, as he/she will keep track of the trending cases of the Supreme Court.

For example, an employee must commit both “gross” and “habitual” neglect of duties. Gross neglect refers to the absence of that diligence that an ordinary prudent man would use in his/her own affairs, while “habitual” neglect refers to repeated failure to perform one’s duties over a period of time, depending on the circumstances. Habitual employee absenteeism or tardiness may constitute a ground to terminate under gross and habitual neglect. Another example: an employee uttering obscene, insulting, or offensive words towards his or her superior may constitute “serious misconduct.”

Now that you know the grounds for just cause termination, what would you do next?

  1. Send a Notice to Explain (NTE) to the employee. Just cause termination requires sending two notices to the employee to fulfil the requirements under the Labor Code. The first notice is the NTE. An NTE must contain:
    • The specific causes for termination under the Labor Code and the company policies, if there are any;
    • A detailed narration of facts that will serve as the basis for the charge against the employee; and
    • A directive that the employee is given an opportunity to submit a written explanation within at least five (5) calendar days from receipt of the NTE.
  2. Give the employee an ample opportunity to be heard.
    • An “ample opportunity to be heard” is any meaningful opportunity (verbal or written) given to the employee to answer the charges against him/her and submit evidence in support of his/her defense. This can be done in a hearing, conference, or some other fair, just and reasonable way.
    • A formal hearing or conference becomes mandatory only when requested by the employee in writing or substantial evidentiary disputes exist, or a company rule or practice requires it, or when similar circumstances justify it.
  3. Send the second notice – a written notice of termination. If the internal investigation or hearing results to a finding that termination is justified, the employer may send a notice of termination.
    • The notice of termination must indicate all circumstances involving the charge against the employee have been considered. It must also state that grounds have been established to justify the severance of his/her employment.

Note: all notices shall be served personally to the employee or to the employee’s last known address. Be prudent in doing this and collect evidence as proof, as this the date of the receipt may be litigated as an issue in case the employee files a complaint against you as an employer.

If you need help or consultation in terminating an employee, you may email the attorneys at inquiries@sblaw.ph.

Sanchez & Bongalon has Labor Lawyers in Angeles City, Pampanga. You may contact the attorneys at +63 927 423 1703 (Globe) | +63 949 717 9229 (Smart) for any queries. If you wish for a personal consult, send a text or email to set a meeting at Workspace45, 2nd Floor, HTPT Building, MacArthur Highway, Angeles City, Pampanga, Philippines 2009.