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Termination of employment

Iris is 24 years old and works for one of the many call centers in Baguio City. She was dismissed by her company due to low evaluation and that her performance needed improvement according to her supervisor. She agreed to undergo six weeks of performance improvement and evaluation program. Unfortunately, she was still terminated.

Iris filed a complaint against the call center arguing in the position paper that she was dismissed without just cause and without due process. The respondent call center, argued that Iris was legally dismissed from her employment.

To make a long story short, Iris filed a labor case against the call center. The National Labor Relations Commission (NLRC) decided on her favor.

Unlike the United States of America, which has an “at-will employment” doctrine, employers in the Philippines can only terminate their relationship with an employee if a “just” or “authorized” cause, as defined under the law, has been established, after undergoing due process. Thus, terminating an employee in the country is taken seriously and can be a complex process, especially since when in doubt, the Labor Code of the Philippines is construed in favor of labor.

There are two types of employment termination. First is termination by employer and the second is voluntary resignation or termination by employee.

Employers can dismiss an employee based on just and authorized causes. Just causes are based on acts attributable to an employee’s own wrongful actions or negligence while authorized causes refer to lawful grounds for termination which do not arise from fault or negligence of the employee.

Voluntary resignation is defined as a voluntary act committed by employees who knowingly dissociate themselves from their employment for personal reasons. It does not cover instances where employees are forced to resign with the use of threats, intimidation, coercion, manipulation, or where dismissal is imposed as a penalty for an offense. Forced or coerced resignation is illegal and considered “constructive” dismissal or a dismissal in disguise.

Article 282 of the Labor Code states that an employer can terminate an employee for just causes, which could be any of the following: 1) serious misconduct or wilful 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 wilful breach by the employee of the trust reposed in him by his employer or duly authorized representatives; 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 other similar causes.

Employers can also terminate an employee based on authorized causes like business and health reasons. Article 283 of the Labor Code states that an employee can be terminated due to business reasons such as installation of labor-saving devices; redundancy; retrenchment (reduction of costs) to prevent losses; or the closing or cessation of operation.

For termination of employment based on health reasons, employers are allowed to terminate employees found suffering from any disease and whose continued employment is prohibited by law or is prejudicial to his health as well as to the health of his co-workers (Art. 284, Labor Code). The employer must obtain from a competent public health authority a certification that the employee’s disease is of such a nature and at such a stage that it can no longer be cured within a period of six months even with medical attention.

Voluntary resignation is the type of termination strengthened by the provisions of Art. 285 of the Labor Code which recognizes two kinds of termination an employee can initiate – without just cause and with just cause. If the resignation is without just cause, the employee must give a one month advance written notice for resignation (commonly referred to as a “resignation letter”) to the employer to enable them to look for a replacement and prevent work disruption. If the employee fails to provide a resignation letter, he or she runs the risk of incurring liability for damages.

If the resignation is with just cause, however, the employee need not serve a resignation notice. Art. 285 indicates the just causes for resignation as follows: serious insult to the honor and person of the employee; inhuman and unbearable treatment accorded the employee by the employer or his representative; crime committed against the person of the employee or any immediate members of the employee’s family; and other similar causes.

It should be noted that employees who voluntarily resign from work are not entitled to separation pay. The Labor Code only grant separation pay to those who were dismissed from service not due to their own fault or negligence but for reasons that are beyond their control, i.e. business closure, cessation of operation, retrenchment (reduction of costs) to prevent losses, etc. However, there are at least two cases where employees who resign voluntarily may be entitled to separation pay, and they are as follows: when payment of separation pay is provided in the employment contract or collective bargaining agreement (for companies with existing bargaining agent or labor union); and when it is authorized by established company practice or policy.

Due process in the context of employment termination is the right of an employee to be notified of the reason for his or her dismissal and, in case of just causes, to be provided the opportunity to defend himself or herself.

For more information about termination of employment, visit www.dole.gov.ph

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