TERMINATION OF

EMPLOYMENT
Atty. Stephanie Joy A. Rolusta-Valdez
DMMMSU College of Law
Coverage of •Applies to all
Termination establishments or
undertakings whether
of for profit or not. (LC,
Employment Art 293, as
renumbered)
 • No worker shall be dismissed except for
a just or authorized cause provided by
law and after due process. (LC Art 294 as
SECURITY renumbered)
• The policy of the State is to assure the
right of workers to security of tenure.
OF (1987 Constitution, Art XII, Sec. 3) The
guaranty is an act of social justice.
• Security of Tenure is the right not to be
TENURE removed from one's job without valid
cause and valid procedure. It extends to
regular as well as non regular
employment.
 • The right to stay on the job against
the right to remove the employee
from the job are two differing
rights.
MANAGEMENT
RIGHTS • Labor relations endlessly requires
balancing the rights and
interests of both the employer
and the employee.
Basic Rights of the
Employer
1. Right to manage
people;
2. Right to discipline;
3. Right to transfer
employees;
4. Right to demote; and
5. Right to dismiss.
 • It is management prerogative to
transfer demote, discipline and
even to dismiss an employee to
Right to protect its business, provided it is
not tainted with unfair labor
practice.
Dismiss • A company has the right to dismiss
its erring employees if only as a
measure of self-protection against
acts inimical to its interest.
 • General Rule: An employer can
dismiss or lay-off an employee for just

Power to and authorized causes enumerated

under Art 297 and Art 298 of the LC.

Dismiss • Exception: The right of an employer to

freely discharge his employees is subject
to regulation by the State in the

Not exercise of its paramount police power

• NOTE: The employer is bound to
exercise caution in terminating the

Absolute services of his employees especially so

when it is made upon the request of a
labor union pursuant to the CBA.
• Dismissal must not be arbitrary and
capricious.
 Two-fold Requirement for Lawful
Dismissal
1. Substantive - legality or illegality
TERMINATION of the act of dismissal (just
and authorized causes);
BY EMPLOYER 2. Procedural - legality or illegality
of the manner of dismissal (due
process; notice and hearing)
 • Authorized cause dismissal
• is a form of terminating Er-Ee
JUST CAUSE relationship with a liability on the
part of the employer to pay
separation pay as mandated by law. Tt
vs. does not necessarily
delinquency or culpability on the
imply

AUTHORIZED part of the employee

• Instead, the dismissal process is
initiated by the employer's exercise
CAUSE of his management prerogative such
as installation of labor-saving devices,
closure of business or implementing
a retrenchment program.
 • On the other hand, a just cause dismissal
implies that the employee has committed,

JUST CAUSE or is guilty of, some violation against the

employer, that is, the employee has
committed some serious misconduct, is
guilty of fraud against the employer or he
vs. has neglected his duties such as
abandonment.
• Thus, the employee himself initiated the
AUTHORIZED dismissal process. Payment of separation
pay, as a rule, is not required in just cause
dismissal. However, where the employee is
CAUSE dismissed for causes other than serious
misconduct or those reflecting on his moral
character, separation pay may be allowed
as a measure of social justice.
 • It is a termination initiated
by the employee. This is an
exercise of management
JUST CAUSE prerogative; however, it
must not be exercised with
abuse of discretion.
 • As a measure of self-
protection against acts
JUST CAUSE OF inimical to its interest, a
company has the right to
TERMINATION dismiss its erring
employees. An employer
OF cannot be compelled to
EMPLOYMENT; continue employing an
employee guilty of acts
BASIS inimical to the employer's
interest, justifying loss of
confidence in him.
Procedural Requirements of Dismissal
for Just Causes
• 1. Notice (two-notice rule) - the employer is required to furnish an
employee who is to be dismissed with two (2) written notices before such
termination;
• a. Pre-notice - the notice to apprise the employee of the particular
acts or omissions for which dismissal is sought and is
considered as the proper charge;
• NOTE: The first written notice to he served on the employees should
contain the specific causes or grounds for termination against them,
and a directive that the employees are given the opportunity to
submit their written explanation within a reasonable period. This
should be construed as a period of at least five (5) calendar days from
receipt of the notice to give the employees an opportunity to study
the accusation against them, consult a union official or lawyer, gather
data and evidence, and decide on the defenses they will, raise against
the complaint.
Procedural Requirements of Dismissal
for Just Causes

• b. Post-notice - the notice informing the employee of the employer’s

decision to dismiss him which notice must come only alter the employee
is given a reasonable period from receipt of the first notice within which
to answer the charge, and ample opportunity to be heard and defend
himself.
• 2. Hearing (opportunity to be heard) - the worker may answer the
allegations against him in the notice of dismissal within a reasonable period
from receipt of the notice of dismissal with the ample opportunity to be
heard.
Procedural Requirements of Dismissal
for Just Causes

• 3. Judgement/Decision to Dismiss - it should be in writing and

should clearly state all the reasons for dismissal.
• Under the Perez Doctrine, the two-notice-and-a-hearing rule was not
imposed because hearing may now be dispensed. The Supreme Court
held that what is important is that the parties are given the
opportunity to be heard unless they request in writing for a hearing.
What is required is that the complainant is given the opportunity to
be heard.
Note: • Where the employer had a valid reason
to dismiss the employee but failed to comply
with the procedural due process requirement,
the dismissal may be upheld but the
employer will be penalized to pay an
indemnity to the employee. (Perez v. Philippine
Telegram and Telephone Company, GR No.
152048, April 7, 2009)

• NOTE: The burden of proving that the

termination was for a valid or authorized cause
shall rest on the Er. (LC, Art 292(b))
 • An employer is liable to pay indemnity
Indemnity in in the form of nominal damages to an
employee who has been dismissed if, in
the Form of effecting such dismissal the employer
fails to comply with the requirements of
Nominal due process.

Damages • The violation of the petitioners right

to statutory due process by the private
respondent warrants the payment of
indemnity in the form of nominal
damages. The amount of such damages is
addressed to the sound discretion of the
court taking into account the
relevant circumstances (Agabon v. NLRC,
G.R. No. 158693, Nov. 17,2004)
 • 1. Serious misconduct or willful
disobedience by the Ee of the lawful
orders of his Er or representative in
connection with his work;
Just Causes • 2. Gross and habitual neglect by the EE
of his duties;
for • 3. Fraud or willful breach by the EE of
the trust reposed in him by his Er or
duly organized representative;
Termination • 4. Commission of a crime or offense by
the EE against the person of his Er or
any immediate member of his family or
his duly authorized representative;
• 5. Other causes analogous to the
foregoing. (LG Art 297, as renumbered)
 • It is an improper or wrong
conduct the transgression of some
established and definite rule of
action, a forbidden act, a dereliction
of duty, willful in character, and
SERIOUS implies wrongful intent and not
mere error in judgment. To be
MISCONDUCT serious within the meaning and
intendment of the law, the
misconduct must be of such grave
and aggravated character and not
merely trivial or unimportant.
 1. It must be serious or of such a
SERIOUS grave and aggravated character;
2. Must relate to the performance
MISCONDUCT; of the EEs duties;

Elements: 3. Ee has become unfit to continue

working for the Er.
 1. Sexual harassment;

SERIOUS 2. Fighting within the company

premises;
MISCONDUCT; 3. Uttering obscene, insulting, or
offensive words against a superior;
Examples: 4. Falsification of time records:
5. Gross immorality.
 • There is willful disobedience when
there is wanton disregard to follow
orders of the employer. Willful is
characterized by a wrongful perverse
mental altitude rendering the
WILLFUL employee’s act inconsistent with the
proper subordination.
DISOBEDIENCE • The employee's disobedience must
relate to substantial matters, not
merely to trivial or unimportant matters.
• Disobedience to be considered willful
must be resorted to without regard to
its consequences.
 Requisites:
1. The EEs assailed conduct must have been willful or Intentional the
willfulness being characterized by a wrongful and perverse attitude;
and
2. The disobeyed orders, regulations, or instructions of the Er must
be:
a) Reasonable and lawful;
b) Sufficiently known to the EE;
c) In connection with the duties which the EE has been engaged to
discharge.
Valid Transfer

Exception:
General Rule: Management has the right
to transfer or reassign an employee. The
right of the employer to transfer the Where the transfer is vitiated by
employees in the interest of the efficient
and economic operation of its business
improper motive and is merely a
cannot be seriously challenged.
disguised attempt to remove or
punish the employee sought to be
transferred.
 Invalid Transfer
• The right to transfer personnel should not be used as a subterfuge by the
employer to rid himself of an undesirable worker. Nor when the real reason is to
penalize an employee for his union activities and thereby defeat his right to self-
organization.
• In case of a constructive dismissal, the employer has the burden of proving that
the transfer and demotion of an employee are for valid and legitimate grounds
such as genuine business necessity. Particularly, for a transfer not to be considered
a constructive dismissal, the employer must be able to show that such transfer is
not unreasonable inconvenient, or prejudicial to the employee; nor does it
involve a demotion in rank or a diminution of his salaries, privileges and other
benefits. Failure of the employer to overcome this burden of proof, the employee's
demotion shall no doubt be tantamount to unlawful constructive dismissal.
 • The requisites for willful disobedience must be
observed before dismissing an employee who
disobeys an order transferring him from one job
or one location to another.

Disobeying • NOTE: The refusal to obey a valid transfer order

constitutes willful disobedience of a lawful
order of an employer. Employees may object
an Order to to, negotiate, and seek redress against
employers for rules or orders that they regard

Transfer as unjust or illegal. However, until and unless

these rules or orders are declared illegal or
improper by competent authority, the
employees ignore or disobey them at their
peril. But transfer should not result to
demotion of rank, which is tantamount to
constructive dismissal.
 • General Rule: Inconvenience to the
employee does not necessarily invalidate
a transfer order.
Disobedience • Exception:
• Inconvenience caused by
of an unreasonableness of the transfer order
makes the order itself invalid, and
Inconvenient disobedience thereof is not a reason to
dismiss the worker
Transfer • NOTE: The reasonableness and
awfulness of a rule, order or instruction
depend on the circumstance availing in
each case. Reasonableness pertains to
the kind or character of directives and
commands and to the manner through
which they are made.
 • It implies a want or absence of or
GROSS AND failure to exercise diligence that an
ordinary prudent man would use in
HABITUAL his own affairs. However, such
neglect must not only be gross but
NEGLIGENCE must also be habitual in character.
(DOLE Manual)
 • General Rule: Gross and habitual
negligence.
Degree of • a. Gross neglect has been defined as
the want or absence of or failure to
exercise slight care or diligence, or
Negligence the entire absence of care. It evinces
a thoughtless disregard
consequences without exerting any
of

as a Just effort to avoid them.

• b. Habitual neglect implies repeated
failure to perform one's duties over
a period of time, depending upon the
Cause for circumstance.
• Exception: An employee who was
grossly negligent in the performance of
Termination his duty, though such negligence
committed was not habitual, may be
dismissed especially if the grossly
negligent act resulted in substantial
damage to the company.
 • As a general concept “poor
performance’’ is equivalent to
inefficiency and incompetence in the
performance of official duties. The fact
Failure in that an EE's performance is found to be
poor or unsatisfactory does not
necessarily mean that the EE is grossly
Performance and habitually negligent of his duties.
Gross negligence implies a want or
absence of or failure to exercise slight
Evaluations care of diligence or the entire absence or
care. He evinces a thoughtless disregard
of consequences without exerting any
effort to avoid them.
• "Unsatisfactory Rating" can be a just
cause for dismissal only if it amounts to
gross and habitual neglect of duties.
Requisites of Poor Performance as a Ground
for Termination

1. Employer must 2. These standards must 3. There must be proof that the
prove that it has be reasonable and in employee failed to meet the
set standards of connection with the standards despite the given
performance employee's work; and reasonable opportunity to meet
exported of the the same.
employee;
 • Failure to observe prescribed

Inefficiency standards of work or to fulfill

reasonable work assignments due
to inefficiency may constitute
just cause for dismissal. Such
as a Just inefficiency is understood to
mean failure to attain work
goals or work quotas, either by

Cause for failing to complete the same

within the allotted reasonable
period, or by producing
unsatisfactory result. This ground
Dismissal is considered analogous to
those enumerated under Art
297.
Some 1. Habitual
absenteeism;
tardiness and

2. Abandonment:
Forms of a) Failure to report for work or
absence without justifiable
Neglect of b)
reason;
Clear intention to sever Er-Ee

Duty relationship manifested by some

overt acts.
Abandonment as a just cause for
termination
• It means deliberate and unjustified refusal of an employee to resume his
employment.
• Two (2) factors must be present:
1. The failure to report for work, or absence without valid or justifiable
reason; and
2. A clear intention to sever Er-Ee relationship, with the 2nd element
as the more determinative factor being manifested by some overt
acts.
How to Prove
Abandonment
Gross Negligence vs.
Habitual Neglect
• The former connotes want of care in the performance of one's
duties while the latter implies repeated failure to perform
one's duties over a period of time, depending upon the
circumstances.
FRAUD OR
WILLFUL
BREACH OF
TRUST
 1. There must be an act,
Requisites of 2.
omission, or concealment;
The act, omission, or
Fraud or concealment involves a breach
of legal duty, trust, or confidence
Willful 3.
justly reposed;
It must be committed against
Breach of the employer or his/her
representative; and

Trust 4. It must be in connection

with the employee's work.
 • There is loss of confidence when
the employer has reasonable
ground or has basis to believe that
Loss of the employee is responsible
for the misconduct and the nature of
his participation renders him
Confidence unworthy of the trust and
confidence demanded by his
position. Proof beyond reasonable
doubt it not required.
Loss of Trust
and
Confidence
as a Just
Cause For
Termination:
Loss of Trust
and
Confidence
as a Just
Cause For
Termination
Loss of Trust
and
Confidence
as a Just
Cause For
Termination
 1. Loss of confidence should not be
simulated (reasonable basis for
Guidelines for loss of trust and confidence);
2. Not used for subterfuge for causes
the Doctrine which are improper and/or illegal
or unjustified;
of Loss of 3. Not arbitrarily asserted in the
face of overwhelming evidence
Confidence to to the contrary;

apply 4. Must be genuine, not a mere

afterthought to justify earlier
action taken in bad faith; and
5. The EE involved holds a position
of trust and confidence.
 • This refers to an offense committed
by the EE against the person of his
COMMISSION Er or any immediate member of his
family or his duly authorized
OF A CRIME representative and thus, conviction
of a crime involving moral turpitude
OR OFFENSE is not analogous thereto as the
element of relation to his work or to
his Er is lacking.
 1. There must he an act or
omission punishable/prohibited by
law; and

2. The act or omission was

Requisites: committed by the employee

against the person of the
employer, any immediate member
of his/her family, or his/her
duly authorized representative.

• NOTE: A criminal case need not be

actually filed. Commission of acts
constituting a crime itself is sufficient
Conviction • The conviction of an employee in a
criminal case is not indispensable to
warrant his dismissal by his
not a employer.
• Rationale: The quantum of evidence
Condition needed is merely substantial
evidence to terminate an employee
sine qua non under these grounds.
 • For an act to be included in
analogous cases of just causes of
termination, it must be due to the
voluntary and/or willful act or
omission of the EE
ANALOGOUS • Requisites:

CASES 1. There must be an act or

omission similar to those
specified just causes; and
2. The act or omission was
voluntary and/or willful on the
part of the employee.
 EXAMPLES:
1. Violation of company rules and regulations;
2. Immorality, Drunkenness or Fighting inside the premise;
3. Gross inefficiency;
4. llegally diverting ER's products;
5. Failure to heed an order not to join an illegal picket
6. Violation of safety rules and code of discipline;
7. Theft of company property

• To fall within the ambit of "analogous cases" the act or omission

must have an element similar to those found in the specific just
cause enumerated under Art 297.
 • Where the Ee has done
something that is contrary or
Doctrine of incompatible with the faithful
performance of his duties, his Er has
Incompatibility a just cause for terminating his
employment.
 • In this regard, it is a doctrine that
infractions committed by an
employee should merit only the
Doctrine of corresponding penalty demanded,
by the circumstance. The penalty
Commensurate must he commensurate with the act,
conduct or omission imputed to the
Penalty employee and must be imposed in
connection with the disciplinary
authority of the employer.
Factors that can be
considered:
1. Length of service
2. Gravity of the offense
3. Nature of the position
4. Nature of the business
5. First offense rule
6. Totality of infractions
7. Principle of charity, compassion and understanding
8. Principle of equity
 • The totality of infractions or the number
of violations committed during the
period of employment shall be considered

Totality of in determining the penalty to be imposed

upon an erring employee.
• The offenses committed by an employee

Infractions
should not be taken singly and separately.
Fitness for continued employment cannot
be compartmentalized into tight little
cubicles of aspects of character, conduct

Doctrine
and ability separate and independent of
each other. While it may be true that an
employee was penalized for his previous
infractions, this does not and should not
mean that his employment record would
be wiped clean of his infractions.
Totality of • After all, the record of an
employee is a relevant
consideration in determining the

Infractions penalty that should be meted out

since an employee's past
misconduct and present behavior
must be taken together in
Doctrine determining the proper imposable
penalty.
Guidelines to • Validity of termination per se is
determined by compliance with
Determine the two-notice rule, hearing
(opportunity to be heard) and
Validity of the presence of a just or
Termination authorized cause.
 Break
(10
Minutes)
 • Authorized causes - initiated by the
employer's exercise of management
prerogative, who shall be liable to pay
separation pay as mandated by law. It
does not usually require delinquency
or culpability on the part of the
AUTHORIZED employee.
• Authorized causes of termination by the
CAUSES ER:
1. Installation of labor-saving devices;
2. Redundancy;
3. Retrenchment;
4. Closing or cessation of operation of
the establishment or undertaking;
5. Disease
 • Automation - is a management
prerogative of replacing manpower with
machine power in order to effect
more economy and greater efficiency
INSTALLATION in method of production.
• Requisites for a valid automation;
OF LABOR- 1. Written notice to the employee and to
SAVING DEVICES the DOLE at least one (1) month before
the intended date of termination;
(AUTOMATION) 2. Payment of separation, pay of at least
one (1) month for every year of service;
3. Good faith in the discharge of
employees; and
4. Reasonable criteria to be used
in implementing automation.
 • Robotics is the switch from 'men'
employment to 'mechanical'
employment.
• Reduction of the number of workers
in a company's factory made
necessary by the introduction of

Robotics machinery in the manufacture of its

products is justified. There can be no
question as to the right of the
manufacturer to use new labor-
saving devices with a view to
affecting more economy and
efficiency in its method of
production
 • It is the superfluity in the performance
of a particular work. It exists where the
services of an Ee are in excess of what
is reasonably demanded by the actual
requirements of the enterprise.
• Redundancy in an Er's personnel does
not necessarily or even ordinarily refer to
REDUNDANCY duplication of work. The characterization
of services as no longer necessary or
sustainable and therefore properly
terminable, was an exercise of business
judgment on the part of the Er. The Er has
no legal obligation to keep in its payroll
more Ees that arc necessary for the
operation of its business.
A position is 1. Over-hiring o f workers;
redundant when it is 2. Decline in volume of business;
superfluous. 3. Closure of a particular line of
Superfluity is the an economic activity
previously engaged by the
outcome of some employer.
factors:
 1. There must be superfluous positions or services of
employees;
2. The positions or services are in excess of what is
reasonably demanded by the actual requirements
of the enterprise to operate in an economical, and
efficient manner;
Requisites of 3. There must be good faith in abolishing
redundant positions;

redundancy: 4. There must be fair and reasonable criteria 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 patter, feasibility studies/ feasibility
proposal, on the viability of the newly created
positions, job description and the approval by
the management of the restructuring.
Requisites of a Valid Redundancy

1. Written notice served on both the Ees and the DOLE at least 1 month
prior to separation from work;
2. Payment of separation pay equivalent to al least 1 month pay or at least 1
month pay for every year of service, whichever is higher;
3. Good faith in abolishing redundant position;
4. Fair and reasonable criteria in ascertaining what positions are to be
declared redundant:
a) Less preferred status, e.g., temporary Ee
b) Efficiency; and
c) Seniority (DAP v. Court of Appeals, GR No. 165811, Dec. 14, 2005)
 • The employee was terminated on
the ground of redundancy. But it
Redundancy was found out that the employer
had been hiring new employees
while it was firing the old ones,
in Bad Faith negating the claim of redundancy.
(General Milling Corp., v. V.I. Viajar,
G.R. No. 181738, Jan. 30,2013)
 • It is the reduction of personnel usually due to
poor financial returns as to cut down on costs of
operations in terms of salaries and wages to
prevent bankruptcy of the company
• Cutting of expenses includes the reduction of
personnel, it is a management prerogative, a
means to protect and preserve the ERs viability
and ensure his survival. To be an authorized
cause it must be effected in good faith and for
the retrenchment, which is after all a drastic
recourse with serious consequences for the
livelihood of the Ee is or otherwise Iaid-off
• NOTE: The kind of losses contemplated under
the Labor Code is actual or anticipated
RETRENCHMENT /impending losses. There is NO prohibition for
the ER to embark on retrenchment program if
he could perceive that its economy will go
down the drain.
 • To prevent losses justifies
retrenchment. Such phrase
means that retrenchment or
termination of the services of
some employees is authorized to
be undertaken by the employer

Preventive sometime before the losses

anticipated are actually sustained
or realized. It is not the intention
Retrenchment of the lawmaker to compel the
employer to stay his hand and

is Allowed keep all his employees until

sometime after losses shall have
been materialized.
 1. The losses expected should be
substantial and not merely de
minimis in extent; The substantial
loss apprehended must be
reasonably imminent;

Standards of 2. It must be reasonably necessary

and likely to effectively prevent the
expected losses; and
Preventive 3. Alleged losses if already realized,
and the expected imminent losses
Retrenchment sought to be forestalled, must
be proven by sufficient and
convincing evidence.
 1. Lack of Work
Causes of 2. Business Recession
3. Fire
Retrenchment 4. Conservatorship
 1. Written notice served on both the Ee and the
DOLE at least 1 month prior to the intended
date of retrenchment;
2. Payment of separation pay equivalent to at
Requisites of a least one month pay or at least 1 /2 month pay
lor every year of service, whichever is higher;

Valid 3.
4.
Good faith in effecting retrenchment;
Proof of expected or actual losses;
Retrenchment 5. To show that the employer first instituted cost
reduction measures in other measures in other
areas of production before undertaking
retrenchment as a last resort; and
6. The Er used fair and reasonable criteria in
ascertaining who would be retained among the
Ees, such as status, efficiency, seniority, physical
fitness, age, and financial hardship of certain
workers.
Criteria In • There must be fair and reasonable

Selecting criteria to be used in selecting Ees to

be dismissed such as:

Employees 1. Less preferred status;

To Be 2. Efficiency rating;
3. Seniority
Retrenched
 • It applies to termination of
"Last In employment in the same line of
work. What is contemplated in the
LIFO rule is that when there are two
First Out” or more Ees occupying the same
position in the company affected by
the retrenchment program, the last
(LIFO) Rule one employed will necessarily he the
first one to go.
 • General Rule: In cases of
installation of labor-saving
LIFO Rule devices, redundancy, and
retrenchment, the LIFO rule
shall apply.
Mandatory • Exception: When
employee volunteers to be
an

separated from employment.

Redundancy vs. Retrenchment

REDUNDANCY RETRENCHMENT
Does not involve losses or the Involves losses closures or cessation of
closing or cessation of operations of operations of establishment or
the establishment undertaking due to serious business
losses or financial reverses. In preventive
retrenchment, retrenchment may be
undertaken by the employer before
losses are actually sustained.
Evidence to Prove Losses

Alleged losses if already realized and the

expected imminent losses must be proved by
sufficient and convincing evidence.

Evidence presented in NLRC Proceedings

must have modicum of admissibility.
CLOSURE OF BUSINESS

It must be done in good faith and not for the purpose of

circumventing pertinent labor laws.

A change of business ownership does not create an obligation on the part of the new
owner to absorb the employees of the previous owner, unless expressly assumed.
Labor contracts being in personam, are generally not enforceable against a transferee
(Fernando w Angat Labor Unit, 5 SCRA 248)

Closure contemplated is a unilateral and voluntary act on the part of the

Er to close the business establishment.
 • 1. Partial Closure - although grounded
on economic losses, partial closure is a

Two (2) form of retrenchment.

• Requirements:
a. Written notice to die EE and
Kinds of to the DOLE at least 1 month
before the intended date of
termination;

Closure: b. Separation pay equivalent to

al least 1/2 month pay for
every year of service;
c. Cessation of business is bona
fide in character.
 • 2. Total Closure due to economic
reverses or losses
• Requisites:
a. Written notice served on both the
EEs and the DOLE at least 1 month

Two (2) prior to the intended date of

closure;
b. Payment of separation pay

Kinds of equivalent to at least one month

pay or at least 1/2 month pay for
every year of service, whichever is

Closure: higher, except when closure is due

to serious business losses;
c. Good faith;
d. No circumvention of the law;
e. No other option available to the Er
 To be a valid ground for
Test for the termination the following must be
present:
validity of 1. There must be a decision to close
or cease operation of the
closure or enterprise by the management;
cessation of 2. The decision was made in good
faith; and
establishment 3. There is no other option
or undertaking available to the employer except
to close or cease operations.
 • Payment of separation pay is required
Payment of only where closure is neither due to
serious business losses nor due to an act
of Government.
separation • There is no obligation to pay separation

pay in case pay:

1. When the closure of the business is
of closure due to serious business loss
2. Where closure of business is by
compulsion of law because closure of
business is not attributed to ERs will
( the land where the building is
situated was declared covered by the
Comprehensive Agrarian Reform Law)
 • It must be incurable within 6 months
and the continued employment is
prohibited by law or prejudicial to
his health as well as to the health of
Disease his co-Ees with a certification from
the public health officer that the
disease is incurable within 6 months
despite due to medication and
treatment.
 When the EE suffers from, a

Disease as disease, and

1. His continued employment is
prohibited by law or prejudicial
a ground to his health, or to the health
of his co-Ees; and
2. With a certification by
for competent public health
authority that the disease is

dismissal incurable within 6 months

despite due medication and
treatment.
 Procedure in terminating employment on the
ground of disease
That the disease is of
such nature or at such
a stage that it cannot
The Er shall not There is a be cured within a
certification by a period of 6 months
terminate his competent public
even with proper
employment unless: health authority; medical treatment.
•NOTE: In terminating
employment on the ground of
disease, the employer must
comply with the twin-notice
rule.
2. If the disease or
ailment can be cured
within the period, the
Er shall not terminate
the Ee's employment
but shall, ask the Ee to
take a leave. The Er
shall reinstate such Ee
to his former position
immediately upon the
restoration of his
normal health.
 • GR: Dismissing or terminating the
services of a disabled employee by

Disability, reason of his disability is not a valid

ground.
• XPN: The employer can prove that he
not a impairs the satisfactory performance of
the work involve to the prejudice of the
business entities; provided, however

Ground for that the employer first sought provide

reasonable accommodations for
disabled persons.

Termination • Entitlement to reinstatement

• An Ee suffering from a disease is
entitled to a reinstatement, provided
he presents a certification by a
competent public health authority
that he is fit to return to work.
 • The requirements of a medical
Medical certificate are mandatory. Only
where there is a prior certification

Certificate as from a competent public authority

that the disease afflicting the Ee
sought to be dismissed is of such
a mandatory nature or at such stage that it
cannot be cured within six (6)
months even with proper medical
requirement treatment that the latter could be
validly terminated from his job.
 1. Total and permanent disability of Ee;
2. Valid application of union security
clause;
3. Expiration of period in term of
employment;
Other 4. Completion of project in project
employment;

authorized 5. Failure in probation;

6. Relocation of business to a distant
place;
causes 7. Defiance of return -to work-order;
8. Commission of Illegal acts in strike
9. Violation of contractual agreement;
10. Retirement
 1.Written Notice to DOLE 30 days prior to the
intended day of termination.
• Purpose: To enable it to ascertain
the veracity of the cause of
Steps required termination.

in termination 2. Written notice to Ee concerned 30 days

prior the intended date of termination;
of an EEs 3. Payment of separation pay - Serious
business losses do not excuse the Er from
complying with the clearance or report
employment for required in Art. 298 of t he LC and its IRR
before terminating the employment of its
authorized workers.
• When Notice is Not Needed:
causes • When an employee:
• 1. Consented to his retrenchment; or,
• 2. Voluntarily applied for
retrenchment
 • Separation pay refers to the amount
due to the Ee who has been
terminated from service for causes

Separation authorized by law such as the

installation of labor-saving losses or
the closing or cessation operation

Pay of the establishment or undertaking.

• Purpose:
• Separation pay is intended to
provide the Ee with the
wherewithal during the period
he is looking for another
employment
 1. When the termination of employment is
due to causes authorized by law (Art 298,
LC);
Instances 2. When the severance of employment is
caused by a disease, particularly when the
Ee is found to be suffering from any
when Ee is disease and whose continued
employment is prohibited by law or is
entitled to 3.
prejudicial to his health and of his co-Ees;
When the termination from service has
been declared illegal, but his
separation pay reinstatement to his former position is no
longer feasible for some valid reason;
4. In case of pre-termination of employment
contract in job contracting arrangement;
5. Where separation pay is awarded as a
measure of social justice.
TERMINATION BY EMPLOYEE

It is the voluntary act of an employee who finds himself in a situation where he believes
that personal reasons cannot be sacrificed in favor of the exigency of the service, then he
has no other choice but to disassociate himself from his employment.

With written notice - An employee may terminate without just cause the employer-
employee relationship by serving a written notice on the employer at least one (1) month
in advance. (Art 300)

NOTE: The employer upon whom no such notice was served may hold the employee
liable for damages from his employment.
 Serious insult by the employer or his representative
on the honor or person of the employee;
Without written
notice - An
employee may
put an end to Inhuman and unbearable treatment accorded the
the relationship employee by the employer or his representative;
without serving
any notice on
the employer
for any of the Commission of a crime or offense by the employer or
his representative against the person of the employee
following just or any of the immediate members of his family; and
causes: other causes analogous to any of the foregoing.
 • GR: An employee who voluntarily resigns
from, employment is not entitled Lo
separation pay.
Resignation • XPNs:

Pay 1. There is a stipulation for payment of such in

lieu employment contract or CBA; or
2. Payment of the amount is sanctioned by
established employment practice or policy
CONSTRUCTIVE DISMISSAL

• It occurs when there is cessation of work because continued

employment is rendered impossible, unreasonable, or unlikely as
when there is a demotion in rank or diminution in pay or when a
clear discrimination, insensibility, or disdain by an Er becomes
unbearable to the Ee leaving the latter with no other option but to
quit.
CONSTRUCTIVE DISMISSAL

• Burden of proof on the employee

• The employee who is complaining of constructive
dismissal has the burden of proof "to prove that her resignation
was not voluntary, but was actually a case of constructive
dismissal, with clear, positive, and convincing evidence.
RESIGNATION vs. CONSTRUCTIVE DISMISSAL

RESIGNATION CONSTRUCTIVE DISMISSAL

1. Voluntary 1. Involuntary
2. Not entitled to separation pay, 2. Entitled to either separation pay or
unless it is a company practice or reinstatement or backwages
provide in the CBA
3. Burden of proving voluntariness is 3. Burden of proving constructive
on the employer dismissal rest on the employee
RELIEFS FOR ILLEGAL DISMISSAL

In case where the worker is illegally terminated, his remedies are:

1. Reinstatement with out loss of seniority rights - Actual reinstatement or

payroll reinstatement;
2. Full backwages - Full backwages means no deduction;
3. Separation pay in lieu of reinstatement;
4. Damages, including Attorney's fees;
5. 6% legal interest on monetary award.
REINSTATEMENT PENDING APPEAL
(ART. 229. LC)

• Reinstatement is the restoration of the Ee to the state from, which he

has been unjustly removed or separated without loss of seniority
rights and other privileges. The person reinstated assumes the
position he had occupied prior to his dismissal.
• Reinstatement presupposes that the previous position from which
one had been removed still exists, or that there is an unfilled position
which is substantially equivalent or of similar nature as the one
previously occupied by the employee.
 1. Actual or physical -The Ee should be
reinstated to his position which he
occupies prior to his illegal dismissal
under the same terms and conditions
prevailing prior to his dismissal or
separation or, if no longer available to a
Forms of substantially equivalent position.
reinstatement 2. Payroll - The Ee is merely reinstated in the
payroll. The Ee although not admitted
back to work, would nevertheless be
included in the payroll and entitled to
receive salary and other benefits as if she
were in fact working.
 • An order for reinstatement entitles
an Ee to receive his accrued
backwages from the moment the
Order of reinstatement order was issued up
reinstatement to the date when the same was
reversed by a higher court without
fear of refunding what he had
received.
Doctrine of Strained Relations
• It is when the Er can no longer trust the Ee and vice versa or there were
imputations of bad faith to each other; reinstatement could not effectively
serve as a remedy. This rule applies only to positions which require trust and
confidence
• The following must be proven before the strained relations rule can he applied to
a particular case:
1. The Ee concerned occupies a position where he enjoys the trust and
confidence of his Er; and
2. That it is likely if the Ee is reinstated, an atmosphere of antipathy and
antagonism may be generated as to adversely affect the efficiency and
productivity of the Ee concerned.
B ACKWAGES
It refers to the relief given to an Ee to compensate him for the lost
earnings during the period of his dismissal. It presupposes illegal
termination.

NOTE: Entitlement to backwages of the illegally dismissed Ee flows

from law. Even if the does not ask for it, it may be given. The failure to
claim backwages in the complaint for illegal dismissal is a more
procedural lapse which cannot defeat a right granted under
substantive law.
PREVENTIVE SUSPENSION
• It means that during the pendency of the investigation, the Er may place the Ee
under preventive suspension leading to termination when there is an
imminent threat or a reasonable possibility of a threat to the lives and properties
of the Er, his family and representatives as well as the offender’s co workers by
the continued service of the EE.

DURATION:
• It should not last for more than 30 days. The Ee should be made to resume his
work after 30 days. It can be extended provided the Ee's wages are paid after the
30-day period
 • Retirement has been defined as withdrawal
from office, public station, business,
occupation, or public duty. It is the result of
a bilateral act of the parties, a
RETIREMENT voluntary agreement between the Er and the
Ee whereby the latter after reaching a
certain age agrees and/or consents to sever
his employment with the former.
 • Persons covered by retirement benefit:
• All Ees in the private sector:
1. Regardless of their position, designation or status;
and
2. Irrespective of the method by which their wages
are paid (Sec. 1, Ride //, Book W, IRR);
RETIREMENT 3. Part-time Ees;
4. Ees of service and other job contractors;
5. Domestic Helpers or Persons in the personal
service of another (D.Q. No. 2ft s. 1994);
6. Underground mine worker (RA 8558);
7. Ees of GOCCs organized under the
corporation code (without original charters)
 1. Compulsory and contributory in nature;
2. One set up by the agreement between the Er
Kinds of and Ees in the CBA or other agreements
between them (other applicable employment
retirement contract);
3. One that is voluntarily given by the Er,
schemes expressly as announced company policy or
impliedly as in the failure to contest the Ee's
claim for retirement benefits,
Retirement age

It is the age of retirement that is specified in the:

• CBA;
• Employment contract;
• Retirement plan (Sec. 3, Rule II, Book IV, IRR); or
• Optional retirement age for underground mining Ees.
 1. Optional - Upon reaching 60 years old provided that
Retirement Ee has rendered 5 years of service. The option to
retire upon reaching the age of 60 years or more but
age in the not beyond 65 is the exclusive prerogative of the Ee if
there is no provision on retirement in a CBA or any
absence of a 2.
other agreement or if the Er has no retirement plan.
Compulsory - 65 years old, regardless of years of
retirement service. (Sec. 4, Rule II, Book IV, IRR)
• Retirement benefits, where not mandated by law, may
plan or other be granted by agreement of the Ees and their Er or as a
voluntary act on the part of the Er. Retirement benefits
applicable are intended to help the Ee enjoy the remaining years of
his life, lessening the burden of worrying for his
agreement financial support, and are a form of reward for his loyalty
and service to the Er.