ee Republi ofthe Prippines oe DEPARTMENT OF LABOR AND EMPLOYMENT # Intramuroe, Marita yt DEPARTMENT ORDER NO. _/47- ‘Series of 2015, ‘AMENDING THE IMPLEMENTING RULES AND REGULATIONS OF BOOK VI ‘OF THE LABOR CODE OF THE PHILIPPINES, AS AMENDED SECTION 1. Pursuant to Article § of the Labor Code of the Philippines, as amended, on the rule-making power of the Secretary of Labor and Employment, the following ‘Rules governing the application of the just and authorized causes. of termination of employment under Articles 297-299 of the Labor Code, as amended, are hereby issued as follows: RULE LA APPLICATION OF JUST AND AUTHORIZED CAUSES OF TERMINATION Section 1. Guiding Principles. Tho workers’ right to security of tenure is uaranteed under the Philippine Constitution and other laws and regulations, No employee shall be terminated from work except for just or authorized cause and upon observance of due process Section 2. Coverage. This Rules shall apply to all parties of work arrangements where employer-employee relationship exists. It shall also apply to all Parties of legitimate contracting/subcontracting arrangements with existing employer- employee relationships Section 3. Employer-Employoe Relationship. To ascertain the existence of ‘an employer-employee relationship, the fourfold test shall apply, to wit (1) the ‘selection and engagement of the employee: (2) the payment of wages, (3) the power of dismissal, and (4) the power to control the employee's conduct, or the so-called “control test” The so-called "control test” is commonly regarded as the most crucial {and determinative indicator of the presence or absence of an employeremployee {elationship. Under the control test, an employer-emplayee relationship exists where the person for whom the services are performed reserves the ight to conto! not only the end achieved, but also the manner and means used to achieve that end.” Section 4. Definition of Terms. The folowing terms as used in this Rules, shall mean: {@) “Authorized Causes” refer to those instances enumerated under Articles 298 [Closure of Establishment and Reduction of Personrel] and 299 [Disease as a ‘Ground for Termination} of the Labor Code, as amended. These are causes brought * ows. Maca, GR, No. 185456, uy 2, 2018,by the necessity and exigencies of business, changing economic conditions and illness of the employee? (6) “Just Causes” refer to those instances enumerated under Article 297 [Termination by Employer] ofthe Labor Code, as amended, These are causes directly atibutable tothe fault or negligence of the employes? (6) "Closure or Cessation of Businoss’ refers to the complete or partial ‘cessation ofthe operations andior shut-down of the estabishment of the employer * i 1e oF Offense” refers to an offense by the employee against the person of his/her emplayer or any member of his/her family oF histher duly authorized representative® {¢) "Contractor" refers to any person or ently, inctuding cooperative, engaged in a legitmate contracting or subcontracting arrangement providing either services, sklled workers, temporary workers, ora combination of services to a principal under & Service Agreement () "Contractor's Employee" refers to one employed by a contractor to perform ‘oF complete a job, work, or Service pursuant to a Service Agreement with a princ/pal It shall also refer to regular employees of the comractor whose functions are ‘ot dependent on the performance or completion of a ssecific job, work or service within @ definite period of me, ie. administrative staff {g) “Employee" refers to any person in the employ of an employer. i shall include any individual whose work has ceased as a result of or in connection with any current abor dispute or because of any unfair labor practice " (h) “Employer” refers to any person acting in the interest of an employer, irectly or indirectly * it shall include corporation, partnerstip, sole proprietorship and cooperative, (0 "Fraud" refers to any act, omission, or concealment which involves a breach of legal duty, trust or confidence justly reposed, and i injurous to another > agency of he business ofthe employe (Lope. ln Construcion Cer, 6A Ne. 207253, ust 26, 2018, chong economic canon [ejucm v1 Pilgpes Cement CO. GR No ie, February 43, 205) and nes ofthe empaye Reyes vA Guatons Seay ageey ne, Gk he 198755, api 30,2013, {spina Court of peat GR. No. 16582, March 28, 2007. {1S5cOM ndepenéent Union Hon, Tre, 223 Seba 658, ‘section 36] DOLE Department Order 14 Srey of 011 {nce 238212] () a tne Labor Code the Pippa mene ‘tice 233212 fe Labor Coe he Phones, mre “Phil. Eduction Co. ion ofthe Phi Eesti employes, 6 4 No. L377, 29 Api 860, panto onslte ning CA, GA No, LISI71, Ap 29, 16h@) "Gross Neglect’ refers to the absence of that dllgence that an ordinary prudent man would use in hisher own affairs (Wo “Habitual Neglect’ refers to repeated failure to perform one’s duties over @ period of time, depending upon the circumstances "" (0 "Insubordination’ refers to the refusal to obey some order, which a superior 's ented to give and have obeyed. It is a wilful or intentional disregard of the fuful and reasonable instrucions of the employer.” ('m) “Installation of Labor-saving Devices" refers to the reduction of the number of workers in any workplace made necessary by the introduction of labor. saving machinery or devices." (0) ‘Loss of Confidence” refers to a concition arising from fraud or wilful breach of trust by employee of the trust reposed in himher by hisiher employer or hither duly authorized representative. There are two (2) classes of positions of trust. The first class consists of managerial employees, of those vested with the povier 1p lay down management policies; and the second class covsists of cashiers, aucitors, roperty custodians or those who, in the normal and routine exercise of their functions, regularly handle significant amounts of money or property. (6) "Misconduct refers to the transgression of some established and definte ‘ule of action, @ forbidden act, a dereliction of duty, willful in character and impos ‘wrongful intent and not mere error in judgment." () "Principal” refers to any employer, whether a person or entity including government agencies and goverment owned and controlled corporation, Wholwhich Puts out or farms out a job, service or work to @ contractor {g) "Redundancy" refers to the condition when the services of an employee are in excess of what Is, reasonably demanded by the actual requirements of the ‘enterprise or superfuous, * (9 “Rotrenchment’ refers to the economic grounc for dismissing employees ‘and is resorted to primarily to avold or minimize business lessee” Section 6. Due Process of Termination of Employment. In all cases of termination of employment, the standards of due process laid down in Artile 299 (o) ‘yess. Macn'sTea Hout, GR 140853, February 27,2003 "S46 Asociates, nev URC GN, 10838, More, 1688, aul servee consi. Arana, GR. No. 199588 Agr 7, 2088 “PhpaineShet Metal Wortes rion, #3 Phi 4, "Department of abor Mana econ 494301, “tie Fle Co, ne NLAC, GA Mo, 8229, Februar 7,295, "anti Gul an Pace Compan f Manse [AG & Pv. BURG GR. No 12756, May 28, 2908. 3of the Labor Code, as amended, and settled jurisprudence on the matter, must be ‘observed as follows: 5.1 Termination of Employment Based on Just Causes. As defined in Article 287 ofthe Labor Code, as amended, the requirement of two written notices served on the employee shall observe the folowing: (2) The first written notice should contain: 1. The specific causes or grounds for termination as provided for undee Article 297 ofthe Labor Code, as amended, and company policies, if any, 2, Delailed narration ofthe facts and circumstances that will seve as basis for the charge against the employee. A general description of the charge will not suffice; and 3. A directive that the employee is given opportunity to submit @ written ‘explanation within @ reasonable period “Reasonable period” should be construed as a period of at least five (8) calendar days from receipt of the notce to give the employee an ‘opportunity to study the accusation, consult or be represented by lawyer or union officer, gather data and evidence, and decide on the defenses against the complaint,” (b) After serving the first notice, the employer should afford the employee ample opportunity to be heard and to defend himselliherself with the assistance of hisiher representative i he/she so desires, as provided in Article 299 (b) of the Labor Code, as amended. “Ample opportunity to be heard” means any meaningful opportunity (verbal or waiter) given to the employee to answer the charges against him/her and submit ‘evidence in support of his her defense, whether in a hearing, conlerence or some ‘other fair, just and reasonable way. A formal hearing or conference becomes ‘mandatory only when requested by the employee in writ¢g of substantial evidentiary lsputes exist or a company rule ot practice requires i, or when similar circumstances iustiy i (©) After determining that termination of employment is justifed, the ‘employer shall serve the employee a wien notice of termination indicating that: (1) all circumstances involving the charge against the employee have been considered ‘and (2) the grounds have been established to justly the severance ‘of thelr ‘employment The foregoing notices shall be served personally to the employee or to the employee's last known address, {nieve ivera GR No. 20170, une 3,223; secon 12, DOLE Department Order 8. * Perea PTTG GR No, 152088, ge 7, 208 Seton 1, 0012 Deserenent Order EA,‘52 Standards on Just Causes. An employer may terminate an employee for any ofthe following grounds: (8) Serious Misconduct. -To be a valid ground for termination, the folowing must be present: 41, There must be misconduct 2. The misconduct must be of such grave and aggravated character; 3. Htmust relate to the performance of the employee's duties. and 4, There must be showing that the employee becomes unfit to continue ‘working for the employer. (©) Wittul Disobedience or insubordination, - To be a valid ground for termination, the following must be present" 41. There must be disobedience or insubordination; 2, The disobedience or insubordination mast be wilful or intentional characterized by a wrongful and perverse atitude, 3. The order violated must be reasonable, lawful, and made known to the employee; and ‘4. The order must pertain to the duties which he has been engaged to discharge (©) Gross and Habitual Neglect of Duties. - To be a valid ground for termination, the following must be present = 41. There must be neglect of duty: and 2, The negligence must be both gross and habitual in character. (a) Fraud or Wilful Breach of Trust - To be a valid ground for termination, the folowing must be present” ® Figning win company premises Teno ght PhilppinesCrporaton v. NLC and Denis Amu, GAN. 187605, Api 33, 2010), tering obscene, Inering orem Woresapsatt oper (utobus Workers Union, of av. NURG eal, GR Mo 17459 Joy 1 1998) fabreaton tne ‘ecards (Manuel Fen Enerech Systers Industrie, ne GAN 143007 ren 38, abt, sg employes property equipment and personnel inthe pean busines of he erpane ores Soles, nee NLRC, GA Na TILL, August 2 2984). Refusal to trans (Senin Securiy gory, bv. MRC GR Me, 1222468, September 3, 968) and ‘esl to report to new workasgnment (Westin Phung Pia Fotev. MC BA No Lae oy 3,199, * naital tardiness, absetesom and abandonment (Labor eta NIRE, GA. No, 110368, eptember 14,1998) 2 eo superior iting and leading boynt [Top Form Wi. Co, In. v NLRC GR. 65706, ‘ecember 1, 1982], habeus absence of manageral erploye (Gt Peters NIRG,G Ne 10079, ‘or 242953 faluce of eater to account forthe sartage of camoeny fans [sb Miguel eo RG, GR. No. 86268, ne 2, 1952) comply nthe ater oer up please te compare {ol coletons {COP Tetvays Operation Employes snd Wortenion MRC, GA. hes Tend a, ‘uly 3, 2902, sing company ronerty(Zmbeanga Water Ds: arom 90 Seth 88) a sing double or Fitlousregustion sips in order to widow conpany ateiss [STS hase cae 163, 54. There must be an act, omission, or concealment; 2 The act, omission or concealment involves a breach of legal duty, trust, or confidence justly reposed, 3. Itmust be committed against the employer or hisiher representative: and 4, Itmust be in connection withthe employees! work. (2) Loss of Confidence - To be a valid ground for termination, the following must be present * 4. There must be an act, omission or concealment, ‘The act, omission or concealment justiies the loss of trust and ‘confidence of the employer to the employse: 3. The employee concemed must be holding a postion of trust and confidence; 44. The loss of trust and confidence should not be simulated: 5. Itshould not be used as a subterfuge for causes which are improper, legal, o unjustified; ana 6. It must be genuine ‘and not a mere afterthought to justify an earlier ‘ction taken in bad faith, (Commission of 9 Crime or Offense - To be a valid ground fer termination, the following must be present: 41. There must be an act or omission punishable/prohibited by law, and 2 The act or omission was committed by the employee against the pperson of employer, any immediate member of hishher family, oF histher duly authorized representative, (@) Analogous Causes - To be valid ground fer termination, the folowing ‘must be present: 11. There must be act or omission similar to those specified just causes; and 2. The act or omission must be voluntary and/or wilful on the part ofthe ‘employees, No act or omission shall be considered as analogous cause unless expressly ‘specified in the company rules and regulations or policies, 5.3 Termination of Employment Based on Authorized Causes. As defined in Articles 298 and 299 of the Labor Code, as amended, the requirements of due process shall be deemed complied with upon service of a writen notice fo the employee and the appropriate Regional Office of the Department of Labor and cana Cy Restaurant Crp w NLRC, 217 SRA AD; Mids Tue. NRG, GA. No. 1363, 28, se * hegaty dering employer's products, olson of eompany res and regulars, drinkenes, oss inaficene (MF olga ler Tank Truce ALR. 217 SCRA 4 1582,Employment (DOLE) at least thirty days (30) before the effectivity of the termination, specifying the ground or grounds for termination 54 Standards on Authorized Causes. An employer may terminate an employee for any of the following grounds: (2) installation of Labor-saving Devices. - To be a valid ground for termination, the folowing must be present. 1, There must be introduction of machinery, equipment or other devices, The introduction must be dona in good fet; ‘The purpose for such introduction must be valid such as to save on Cost, enhance efficiency and other jusiianle economic reasons, There is no other option available t the employer than the introduction of machinery, equipment or device and the consequent termination of employment of those affected thereby: and 5. There must be fair and reasonable critera in selecting employees to be terminated 2 3 (0), Redundancy. - To be a valid ground for termination, the following must be present” There must be supertiuous positions or services of employees; The positions or services are in excess of what is reasonably demanded by the actual requirements ofthe enterprise to operate in {an economical and efficient manner; 3, There must be good faitn in abolishing redundant positions; 4. There must be fair and reasonable cites in selecting the employees to be terminated, and 5. There must be an adequate proof of redundancy such as but not limited to the new staffing pattem, feasibity studiesiproposal, on the Viability of the newly created positions, job description and the approval by the management of the restructuring. (0) Retrenchment or Downsizing. - To be a valid ground for termination, the following must be present: 1. The retrenchment must be reasonably necessary and tkely to prevent business losses; ® automation Philippine Sheet Wet Works Unlen vO, £3 P1439) ? Rergaization (Dole hippies eet av NLRC ea} and dupeation of work Wisi Fe Co, ge AG spr ‘sian Acoal Corporation NLR, GR No. 831308, Meh 25,198, General ling orgration¥ Veta Viste GAN. 181738 [amen twimensf posse ampiny an Mil Caatony RGR No. 926, 72. The losses, if already incurred, are not merely de minimis, but substantial,” serious, actual and real, or # only expected, are reasonably imminent. 3. The expected or actual losses must be proved by sufficient and convincing evidence,*” 4. The retrenchment must be in good faith for the advancement ofits interest and not to defeat or circumvent the employees’ right to security of tenure; and 5. There must be far and reasonable criteria in ascertaining who would bbe dismissed and who would be retained among the employees, such as status, efficiency, seniority, physical ilness, age. and financial hardship for certain workers, (4) Closure or Cessation of Operation. - To be a valid ground for termination, the following must be present: 41, There must be a decision to close or cease operation of the ‘enterprise by the management; 2. The decision was made in good faith; and 3. There is no other option available to the amployer except to close or ‘cease operations, (@) Disease. - To be a valid ground for termination, the folowing must be present: ‘The employee must be suffering from any disease; The continued employment of the employee is prohibited by law or Prejudicial to his/her health as well as to the health of hisher co- ‘employees; and 3. There must be certiication by a competent public heath authority that the disease is incurable within a period of six (6) months even with proper medical treatment. In cases of installation of labor-saving devices, redundancy and retrenchment, the *Last.in, Firs Out Rule shall apply except when an employee volunteers to be separated from employment. 5.5 Payment of Separation Pay. Separation pay shal be paid by the employer to an employee terminated due to instalation of labor-saving devices, redunganey, Tetrenchment, closure or cessation of operations not due to serious business losses oF financial reverses, and disease. * balasabas NLRC, GA No 85286, August 24, 1952 Cel Acer le Cart NRG, GA o. 400092, december 29,2995, * Relogtion of busines (Cheer Deco rn Teens Crportons MLR, [GA Ne. 12876 Febuary 1,200) salen goo ath (Lucena factory Ine. MLRG No. 7880, Novena 17, 1908, Sen Dvsion Mute Rasoliion ® ven there are two employees occuying the sme postar inthe compen afte by the terencment program, ie last one empojed wil necessary be the tat to Maya avr Employes rgaiation LAC, GA No. 10555, Oeceber 2 153), 8‘An employee terminated due to installation cf laborsaving devices or ‘edundaney shall be paid by the employer a separation pay equivalent to at least one (1) month pay or at least one (1) month pay for every year of service, whichever is higher, a fraction of six (6) months service is Considered as one (1) whole year ‘An employee terminated due to retrenchment shal be paid by the employer @ separation pay equivalent to one (1) month pay or atleast one-half (1/2) month pay for every year of service, whichever is higher, a fraction of six (6) months service is considered as one (1) whole year. ‘An employee terminated due to closure or cessaticn of business operation not due to serous business losses shall be paid by the employer a separation pay {equivalent to ene (1) month pay or atleast one-half (1/2) month pay for every year of ‘service, whichever is higher, a faction of six (6) months serviee is considered as one (1) whole year. Where closure is due to setious business osses or financial reverses, 10 separation pay is required ‘An employee terminated due to disease shall be paid by the employer a separation pay equivaient to at least one (1) month salary or one-haif (1/2) month salary for every year of service, whichever is higher, a fraction of six (8) months service is considered as one (1) whole year [An employee whose employment is terminated by reason of just causes is not enttled to separation pay except as expressly provided for in the company policy oF Collective Bargaining Agreement (CBA). Section 6. Other Causes_of Termination: In-addition-to- Section 4; the employer may also terminate an employee based on reasonable and lawiul grounds specified under its company policies. ‘An employee found positive for use of dangerous drugs shall be dealt with ‘administratively which shall be a ground for suspension or lermination * ‘An employee shall not be terminated from work based on actual, perceived or suspected HIV status.” ‘An employee shall not be terminated on basis of acta, perceived or suspected Hepattis B status An employee who has or had Tuberculosis shall not be discriminated against Helshe shall be entitted to work for as long as they are certiied by the company’s ‘accredited health provider as medically fit and shall be restored to work as sour! ae hishher illness is controlled” 2 DOLE Department Order Ne. 5, Saris of 200m relation to HER OF RAS " DOLE Deparment Orde N12, ees of 2030, ‘0.¢ oeparmenthavsry No, Serie of 2010 Par WC. par "DOLE Deparment Order. 75, Sere of 208‘Sexual harassment is considered @ serious misconduct. It is reprehensible enough but more so when inficted by those with moral ascendancy over thei victim Section 7. Causes of Termination Under the Collective Bargaining Agreement (CBA). An employee may also be terminated based on the grounds provided for under the CBA. Section 8. Mandatory Conciliation-Modiation on Termination Disputes. Al disputes arsing out of termination of employment shall be subject to mandatory Conciation-mediation pursuant to Republic Act No. 10396 and its Implementing Rules, ‘and Regulations. Request for assistance involving issues arising out of termination of ‘employment based on just or authorized cause shall be lodged before the Single Entry Assistance Desk Officers (SEADOs) at the RegionaliProvineialFiled Offices of DOLE or its attached agencies in the region pursuant to the Implementing Rules. and Regulations of Republic Act No. 10396. In case of settlement, the Desk Officer shall reduce the agreement into writing, hhave the parties understand the contents therefor, sign tha same in hisiher presence, and attest the document to be the rue and voluntary act ofthe parties, For organized establishment, all disputes shall undergo grievance machinery Under the CBA. In case of failure to reach an agreement, the parties may refer the same to conciiation-mediation under the Single Entry Arproach (SEA) of agree to submit it for voluntary arbitration in accordance with Amticles 274 and 275 of the Labor Code, as amended, Section 9. Settlement Agreement. Any settiemen: agreement reached by the Patties before the Desk Officer shal be final and binging. In case of failure to reach an agreement during the concilation-mediation period, the request shall be referred to compulsory arbitation, or i Both parties 50 agree, to voluntary arbitration, Section 10. Condition Precedent to Compulsory Arbitration. No Labor Arbiter shall take cognizance of the complaint for ilegal dismissal unless there is & ‘eferral from the Desk Officer pursuant to the Implementing Rules and Regulations of Republic Act No. 10396. Section 11. Non-compliance with Settlement Agreement; Execution. In case of non-compliance by the employer ar employee, the terms of the settiement agreement may be enforced by requesting the Desk Officer to refer the same to the proper Regional Arbitration Branch (RAB) ofthe National Labor Relations Commission (NLRC) for enforcement ofthe agreement pursuant fo Rule V, Section 1 () of the 2005 Revised NLRC Rules, as amended. The same shall be docketed by the RAB as arbitration case for enforcement of the settlement agreement. The employee ot ~ Fonding the hand, mastapng the shouéer and caresing the nage [brs v, NLR, National Stel (orm ea, GR. No, 123737 May 25,1998) 0employer may also disregard the settlement agreement end fie an appropriate case before the appropriate forum, SECTION 2. Repealing Clause. Section 2(4), Seaton 7, Section 8, Section 9, Section 10 and Section 11 of Rule |, Book VI of the Implementing Rules and Regulations of the Labor Code of the Philipines, as amended, are hereby repealed, All other rules and regulations issued by the Secretary of Labor and Employment inconsistent withthe provision ofthis Rules are hereby superseded, SECTION 3. Separability Clause. if any provision or portion of this Rules is declared void or unconsttutonal, the remaining portions or provisions hereof shall ‘continue to be valid and effective. SECTION 4. Etfectivity. This Order shall be affective fiteen (15) days after ‘completion of its publication in atleast two (2) newspapers of general circulation Manila, Philippines, °% September 2015, ROSALINDA DiMiAPitis.BALDOZ Seeratary n