Know your law: The process of job termination


Posted at Feb 12 2009 06:12 AM | Updated as of Feb 13 2009 10:00 AM

Thousands of Filipinos in the country and abroad have been laid off due to the deepening impact of the global financial crisis. But how does one know if he or she is terminated for legitimate and legal reasons?

Atty. Joyce Guirnalda, Senior Associate of the CVC law firm, said that an employee can only be terminated for two reasons--just causes and authorized causes--as provided by Presidential Decree No. 442, or the Labor Code of the Philippines.

"People need to know these so they know what they are entitled to and if they think the employer is not giving them benefits provided under the law, then they contest their termination and demand what is required," Guirnalda told "Mornings at ANC."

Just causes

A just cause is seen when there is fault on the part of the employee, such as serious misconduct or willful disobedience, gross and habitual neglect of duties, fraud or willful breach of trust, and commission of a crime or offense against the employer.

Authorized causes, on the other hand, refer to business or economic reasons such as installation of labor-saving devices, redundancy, retrenchment to prevent losses, cessation, and closing of establishment. Guirnalda said most employers who have laid off their workers due to the economic downturn fall under authorized causes.

Even with the respective causes, however, Guirnalda said the employer has no absolute power to sack its employees, saying that the company should comply with proper procedure for termination.


Guirnalda said a notice should be given to the employee to give him reasonable opportunity (at least five calendar days) to reply to charges filed against him (i.e. just causes). This is followed by a hearing or a conference where both the management and the employee can present evidence to support their respective claims.

Should the employee be terminated, a second notice will be sent to him or her stating concluded reasons for termination.

Regarding authorized causes, Guirnalda said the employer should provide a notice to the employee and to the appropriate regional office of the Department of Labor and Employment at least 30 days before the effective date of termination. Under the labor code, the employer is required to give a separation pay to the terminated employee, which depends on the reason for termination.


For grounds of installation of redundancy and installation of labor-saving devices, Guirnalda said a minimum amount equal to the employee's one-month pay or one month pay for every year of service should be given, whichever is higher. On the other hand, for instances of retrenchment and closures or cessation, the employee should be given a separation pay equivalent to his one-month pay or one-half month pay for every year of service, whichever is higher.

Guirnalda said the law does not compel the employer to give a separation pay if the company closed down due to serious business losses. However, she said an employee can question the authorized cause given by the employer for his or her termination.

"If an employee has already been terminated due to authorized cause, they can go to the National Labor Relations Commission (NLRC) and they can question their termination. So the NLRC has jurisdiction to decide whether there was illegal termination," she said. -- by KAREN FLORES,