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Definition

As maybe broadly defined, authorized causes for dismissal of employee refer to those lawful grounds for
termination which in general do not arise from fault or negligence of the employee. Authorized causes
are distinguished from just causes under Article 282 in that the latter are always based on acts
attributable to the employees own fault or negligence.
Authorized causes
The authorized causes for termination of employee are enumerated under Article 283 and 284 of the
Labor Code, as follows:
1.

Installation of labor-saving devices. The installation of labor-saving devices contemplates the


[1]

installation of machinery to effect economy and efficiency in the method of production .


2.

Redundancy. Redundancy exists where the services of an employee are in excess of what is reasonably
demanded by the actual requirements of the enterprise. A position is redundant where it superfluous, and
superfluity of a position or positions may be the outcome of a number of factors, such as over hiring of
workers, decreased of volume business, or dropping of a particular product line or service activity
[2]

previously manufactured or undertaken by the enterprise .


3.

Retrenchment to prevent losses. Retrenchment is an economic ground to reduce the number of


employees. Retrenchment is the reduction of personnel for the purpose of cutting down on costs of
operations in terms of salaries and wages resorted to by an employer because of losses in operation of a
[3]

business occasioned by lack of work and considerable reduction in the volume of business . It is
sometimes also referred to as downsizing. It is aimed at saving a financially ailing business establishment
from eventually collapsing.
4.

Closure or cessation of operation. The closure of a business establishment is a ground for the
termination of the services of an employee unless the closing is for the purpose of circumventing
pertinent provisions of the Labor Code.

5.

Disease. An employer may terminate the services of an employee who has been found to be suffering
from any disease and whose continued employment is prohibited by law or is prejudicial to his health as
well as the health of his co-employees.
It should be noted though that the above enumeration is not an exhaustive list of authorized causes of
termination of employment. Valid application of union security clause, relocation of business, among
others, may also considered authorized causes of termination.

Just Causes Under the Labor Code


Just causes for dismissal of employee may be defined as those lawful or valid grounds for termination of
employment which arise from causes directly attributable to the fault or negligence of the erring
employee. Just causes are usually serious or grave in nature and attended by willful or wrongful intent or
they reflected adversely on the moral character of the employees.
Just causes for termination under the Labor Code is found in Article 282 and enumerated here as follows:
1.

Serious misconduct. Serious misconduct is an improper conduct willful in character and of such grave
nature that transgressed some established and definite rule of action in relation to the employees work.

2.

Willful disobedience to lawful orders. The employees are bound to follow reasonable and lawful orders
of the employer which are in connection with their work. Failure to do so may be a ground for dismissal or
other disciplinary action.

3.

Gross and habitual neglect of duties. Gross negligence has been defined as the want or absence of or
failure to exercise slight care or diligence, or the entire absence of care. It evinces a thoughtless disregard
of consequences without exerting any effort to avoid them.

4.

Fraud or willful breach of trust / Loss of confidence. Fraud is any act, omission, or concealment which
involves a breach of legal duty, trust, or confidence justly reposed and is injurious to another.

5.

Commission of a crime or offense. Commission of a crime or offense by the employee against his
employer or any immediate member of his family or his duly authorized representative, is a just cause for
termination of employment.

6.

Analogous causes. Other causes analogous to the above grounds may also be a just cause for
termination of employment.
Examples of Analogous Causes

1.

Abandonment. Abandonment of job is a form of neglect of duty. There is abandonment when the
employee leave his job or position with a clear and deliberate intent to discontinue his employment
without any intention of returning back.

2.

Gross inefficiency. Gross inefficiency is analogous to and closely related to gross neglect for both involve
acts or omissions on the part of the employee resulting in damage to the employer or to his business.
(See Lim vs. NLRC, G.R. No. 118434, July 26, 1996.)

3.

Disloyalty/conflict of interest. Disloyalty exists when one asserts an interest, or performs acts adverse to
ones employer, such as secretly engaging in a business which renders him a competitor and rival of his
employer. It constitutes a breach of an implied condition of the contract of employment. (See Elizalde
International vs. Court of Appeals, G.R. No. L40553 February 26, 1981.)

4.

Dishonesty. Acts of dishonesty deemed to be patently inimical to the employer is analogous to breach of
trust and is a valid cause for termination of employment.
No Separation Pay
An employee who is terminated from employment for a just cause is not entitled to payment of
separation benefits. Section 7, Rule I, Book VI, of the Omnibus Rules Implementing the Labor Code
provides:
Sec. 7. Termination of employment by employer. The just causes for terminating the services of an
employee shall be those provided in Article 282 of the Code. The separation from work of an employee

for a just cause does not entitle him to the termination pay provided in Code, without prejudice, however,
to whatever rights, benefits and privileges he may have under the applicable individual or collective
bargaining agreement with the employer or voluntary employer policy or practice.