2018 Guide to Terminating Regularized Employees for the Philippine HR

by | Jun 21, 2018 | Corporate Law, Labor Law

If you are a HR practitioner in the Philippines, you know that it’s important to be familiar with the laws that regulate employee termination.

An employee surrounded by notices that are used when following the correct termination process.

You’ll need to know the correct process to follow when terminating an employee.

While the laws grant that there are certain causes that lead to termination, they also protect an employee’s security of tenure.

This requires that you know how to balance the needs of the company and those of its employees.

Below I’ve provided an overview of termination and added links with actual termination stories and cases as well as processes to help a busy HR comply with the law.

Why you need to know Labor Law to Terminate 

Everyone’s got a problem employee.

There are many ways to deal with one. However, termination becomes a distinct possibility when things become difficult.

An employer scolding an employee

Do you have a problem employee?

If you’re at this point, you’ll need to figure out which legal cause applies and which process to follow, both of which are guided by the law.

It’s costly not following the law – separation pay or fines can be levied against you.

There are 2 kinds of causes when the employer terminates employment:

  1. Just Causes
  2. Authorized Causes

Just causes are primarily causes were the employee is at fault.

On the other hand, authorized causes are when there are business contingencies that force termination.

An employee’s health situation may also be a reason for termination.

Let’s first talk about just causes.

Just Causes or when the Employee is at Fault

You can terminate due to just cause when the employee is at fault.

Just causes are listed in Article 282 of the Labor Code and reproduced below:

  • Serious misconduct or willful disobedience by the employee of the lawful orders of his employer or representative in connection with his work
  • Gross and habitual neglect by the employee of his duties
  • Fraud or willful breach by the employee of the trust reposed in him by his employer or duly authorized representative
  • 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 causes analogous to the foregoing

You and I may have our own notions about which specific situations correspond to the above.

An employee whose poor performance has led to termination.

There are several legal grounds that can be used for termination.

However, these are technical terms around which the Supreme Court has built jurisprudence which defines each and provides guidance as to what conditions must be present for anyone to be invoked.

For instance, loss of confidence covers only two types of employees that have an employer’s trust and confidence:

  1. An employee with managerial functions; OR
  2. An employee who manages and safeguards his employer’s money or property

It also stresses that loss of confidence applies to acts which are deliberate, work-related, and backed up by substantial evidence.

There’s an entire body of doctrine which examines what constitutes fraud in labor, this in addition to the doctrine defining the process that must be followed to determine whether such fraud exists or not in the case of a particular employee.

HRs actively using labor law in their profession.

You need to know Labor Law to properly do your job as an HR officer.

What this means to you as an HR practitioner is that to effectively terminate, you need to understand what each of the grounds means legally and what process you need to follow to comply with the legal process in order to best serve your company.

Considering the repercussions if a Labor Arbiter determines that the employee’s dismissal was against the law, the stakes can be just as high for the company as for the employee. This necessitates the close study of the grounds and processes on the part of HR, as well as coordination with legal counsel.

Just Causes: Process to Follow

In addition to knowing what ground to use, you’ll need to follow the specific process for just causes.

  • Notice to Explain
  • Hearing where the employee may air his side
  • Notice of Termination

Let’s take each one in turn.

Notice to Explain

The Notice to Explain (NTE or Show Cause Memo or Show Cause Order) is the start of the process.

A document being written by the employer to be furnished to an employee.

A notice to explain is the first step when terminating due to just causes.

It is a written notice to the employee that should have the following:

  • Details the cause for termination based on Art 282
  • Lists the facts and instances that might lead to dismissal
  • Cites the particular company item in the company’s code of discipline
  • Asks for a written explanation within 5 days [King of Kings Transport vs. Tinga and Velasco, G.R. 166208]
  • Should be served at the employees last known address

Every effort should be made to deliver to the employee in person. If it cannot be then you should send it by registered mail to his last known address.

A signed receipt is also good practice, should you, later on, need to present evidence.

Administrative Hearing

An administrative hearing is really for the employee to air his side.

He can present facts in his defense and counter the employer’s charge. He can explain his side, and even bring along counsel.

A witness stand where an employee is given a chance to explain his side.

An employee explains his side in administrative hearing.

You may correctly think that some employees might skip this step in an effort to avoid the administrative hearing and therefore later claim that the company did not follow process.

You’d be correct – this does happen.

However, the law recognizes that this isn’t the employer’s fault.

By providing an opportunity to be heard, you’ve complied with the law.

It’s up to the employee to now appear.

A good practice would be to send a written notice of the time and place of the hearing to the employee and to keep an attendance sheet.

Notice of Termination

If, after the administrative hearing, you find that the employee should be terminated, you’ll have to issue a notice of termination.

The notice of termination is a written letter that is ideally given to the employee in person. If that isn’t possible, then sending it through registered mail to his last known address can suffice.

A picture of two pieces of paper with sad faces and exclamation points to represent a notice of termination.

A notice of termination can result after management has decided on the employee’s case.

You’ll need to state:

  • all circumstances involving the charge against the employees have been considered; and
  • grounds have been established to justify the severance of their employment.

The ground in the notice of termination should, of course, be the same as that which was in the Notice to Explain.

By complying with the process and correctly identifying the grounds needed for termination, you will be following the law and properly supporting your employer.

Authorized Causes or Business Exigencies

Sometimes, business pressures force down-sizing or letting go of employees.

Philippine law does recognize this in Article 283:

  • The installation of labor-saving devices
  • Redundancy
  • Retrenchment to prevent losses or
  • The closing or cessation of operation

By now, you know enough to wonder how this has actually played out in jurisprudence.

You’d be right to wonder.

Cases have given us a common understanding of these items and the correct criteria to apply before invoking them.

An employer terminating employees due to a business slowdown.

You can also terminate when business is bad.

For instance, for retrenchment to be used, the Court has specified that the following must exist:

that the losses expected are substantial and not merely de minimis in extent; that the expected losses are reasonably imminent such as can be perceived objectively and in good faith by the employer; that the retrenchment is reasonably necessary and likely to effectively prevent the expected losses; and that the imminent losses sought to be forestalled are substantiated. [G.R. 121314, Feb 12, 1998]

In other words, you’ve got to substantiate the above rather than simply just claiming retrenchment.

In the above quoted case, the employer was upheld by the Supreme Court.

The employer Edge Apparel showed evidence of its difficult financial position due to a loan and reported a loss from 1989 to 1992. It also rebutted claims that cutting the entertainment expenses would have enabled it to keep the 27 employees.

Authorized Cause Process to Follow

You need to follow a few guidelines if you are using authorized cause:

  • Written notice to the employees 1 month before
  • Notice to the DOLE 1 month before using their forms

Here’s what the DOLE form for retrenchment/closure looks like now:

Department of Labor and Employment Closure Form

DOLE form for closure

It is a simpler process than termination for just cause.

Still, make sure to follow that process and file the forms correctly to ensure compliance with Philippine labor laws.

By doing this, you are serving the company’s interests and ensuring that the business is protected in court.

An employer drowning in bills and separation pay requirements.

Separation pay may be needed.

You will need to pay your employee his separation pay, with the amount depending on what ground was used:

  • At least 1 month of pay or 1 month per year of service, whichever is higher for the installation of labor-saving devices or redundancy
  • At last 1 month pay or at least ½ month pay for every year of service for retrenchment or the closing of operations not due to serious business losses or financial reverses.

Note that a fraction of a year of at least 6 months is considered one year.

Termination due to Illness

You can terminate due to illness under Art 284.

However, you can’t terminate simply because someone has a fever.

An ill man in a hospital bed unable to work.

You can also terminate if there is a serious health issue.

In fact the Court, laid down substantive requirements for this:

  • Certification by a competent public health authority
  • Serious or contagious disease that cannot be cured within 6 months

Recently, the Supreme Court has decided that termination due to health reasons needs to follow the two notice process. [G.R. No. 202996]

This is the same process described in the above section for just causes. Briefly, this means that there must be a Notice to Explain, an Administrative Hearing and a Notice of Termination.

Other Instances of Termination

an employer removing an employee.

You can also terminate for other reasons.

You can cut the employee-employer relationship in other instances.

Some of them are when:

  • When the project ends and the employees are project based
  • When the employee was hired for seasonal labor
  • When the employee was as a casual laborer

You can terminate when the employment is of this type as these are all understood and legally recognized.

Still, don’t forget to keep your papers in order and ensure you are following correct processes for termination.

Just to Sum It Up

You’ll notice that this post deals with both the process and the grounds for valid termination.

That’s because both are equally important if you want to protect your employer and fully do your job as an HR.

A woman holding a laptop, a calculator, law book, and other things an HR Officer must possess to be an effective one

To fully do your job as an HR Officer, you have to have a deep understanding of the process and grounds of valid termination

I’ve dealt with many HRs but one of the best that I knew had absolutely impeccable documentation, ably transacted with government agencies and knew the law like a man knew his wife.

If you are trying to terminate, you’ve got to know the law.

It’s the best defense for your employer and will absolutely set you apart from other HRs.


  1. Aldrich

    Good Morning,

    Paano po kung ang employee ang nagrequest for termination due to illness, kailangan pa po ba ng hearing at notice to explain?

    thank you

    • Lawyers in the Philippines

      Hi. An employee is free to resign if he wishes to.

  2. Bryan

    Papano po pag ang situation ay Ibebenta ng employer ang company? Subject po ba for termination ang mga employee? Same benefits as sa termination?

    • Lawyers in the Philippines

      It does depend on the situation, but a change in the ownership of a company – if there is no change in the company existence itself – does not result in termination benefits.

  3. A.S.

    What is the role if the erring employee brings his legal counsel or guardian? Can they ask question during an administrative hearing or answer in employee’s behalf?

    • Lawyers in the Philippines

      The assistance of lawyers is not indispensable as long as a party is given opportunity to defend his interests and to be heard but an employee is not prohibited from bringing his counsel.

  4. Sara

    What if the employee refused to received the Notice of Decision for Termination? When can I terminate the employee?

    • Lawyers in the Philippines

      Some options are:

      1. To send it through registered mail at the last known address of the employee and file the receipt as proof that it was sent;
      2. To note on the notice that it was not accepted by the person delivering it and another witness to the delivery. An affidavit can be created stating that the delivery was refused and signed by both.

  5. Anna

    Pano po kung ang employee lageng absent?

  6. Lovely

    Hi ask ko lang po may isa kasi kaming employee na hindi maganda ang performace at sumulat na samin yung immediate superior nya na gusto na syang paalisin. 3 months palang po sya? Binigyan na rin po sya ng notice of termination and alam nya narin po na aalisin na sya. Ngayon ang ittanong ko po ano po ba unang procedure pag nagkausap na kmi. Thanks

    • Lawyers in the Philippines

      Sent you an email.

  7. josh

    Hi can we terminate an employee right away? or how immediate is immediate termination? thanks

    • Lawyers in the Philippines

      Hi Josh:

      Philippine law has certain requirements before termination.

      In some cases, it is may possible but this very much depends on the facts of the case.

  8. Ghie

    Good day! May employee po na several times committed violations. Maaari na po ba xa i-terminate since the agency have issued warning, notice (giving him chance to explain his side) and then set a conference pero hindi xa dumating. May grounds po kaya xa against us if we terminate him? Thank you.

    • Lawyers in the Philippines

      Hi Ghie:

      It appears as though due process has been followed.

      Make sure that your documentation is complete, and that the correct legal requirements have been followed. Make sure you cite the correct ground.

      However, as I do not know the exact details of the case, I can only provide an opinion and not legal advice. I provide legal advice when I am familiar with the facts of the case, the documentation and have spoken with the principals as this is the only way to be certain and to protect the company.

      It is possible

  9. Chris A

    Can an employer terminate an employee for not submitting the Cert. of Employment from his previous employer. The employee has been with the current company for 2 years, and the required document has just been asked from him after 2 years of being with the current company.

  10. Maricel M

    Hi! Can we terminate the regular employee due to poor performance? working for 1.5 years in the company. What is the procedure? thanks

    • Lawyers in the Philippines

      You can certainly terminate for just cause for poor performance.

      The two notice rule and due process must be observed as well as all the documentary requirements.

      Note that I cannot comment on your exact situation/employee as more information would be needed.

  11. Jesse

    How can I dismiss an employee who has not gave the payment of customer to me? nakita talaga sa CCTV na tinago niya yung pera galing sa customer at hindi naibigay sa cashier

    • Lawyers in the Philippines

      If you have proof begin due process as per the labor code.

      Depending on the situation, you may wish to file a criminal case against her.

      I advise you speak with your company lawyer for exact advise for your situation.

      In labor cases, it is advisable to work with someone who knows the details of the case and can guide you through the process.


    Hi, Can an employee be terminated due to not meeting the sales target for two consecutive years? if there’s an agreement that after not meeting the sales target for the first year, the employee will be put under PIP and training needed will be given in between and after interventions made by the company the employee still does not meet the quota/target set by the company can this be ground for termination?

    • Lawyers in the Philippines

      Yes. One of the grounds for termination is when an employee has shown he cannot meet performance targets.

      This is perfectly within a company’s right as it needs to ensure that the people it hired are capable of doing the work needed.

  13. Albert Danting

    Is it possible to terminate regular employees hired at a BPO when the BPO’s client abroad disengaged business with them?

    • Lawyers in the Philippines

      This may be an occasion for retrenchment or redundancy, but this depends on the specific facts of the situation.


    Good day,
    how to terminate a regular employee who has been found out that cheating the cash register? The said employees has been with the company for
    1 year and to other is 7 months. They also get medicines without informing the owner.


    • Lawyers in the Philippines

      Hi Jocelyn:

      This would fall under termination for loss of trust or confidence.

      Gather your evidence. Follow due process. Make sure that the termination is properly documented.

  15. Mark

    Can Employee Terminate due to Poor Performance? This is due to Low Quality results but delivered in deadline? at BPO Industries

    • Lawyers in the Philippines


      This is certainly a cause for termination.

      Always ensure that performance standards are clear, that you have documented this poor performance, and that you follow due process.

  16. Lina

    Can we terminate a supervisor who does not know that his area lost many items in the storage which caused the employers to have negative profits for 4 months? Will this be part of Gross negligence? And what about his subordinates who were supposedly incharge of those items that are lost? Can they be terminated too?

    • Lawyers in the Philippines

      If an employee has been given a position of trust and confidence and the company has proof that there was negligence, then the employees can be terminated provided that the company followed due process.

  17. James

    Good Morning!

    Can employer terminate a regular employee who is convicted to a crime (illegal gambling). It is stated in our company policy “Conviction of any criminal offense under law will be sanctioned to dismissal”.

    Please advised.


    • Lawyers in the Philippines


  18. Chinky DLR

    Hello. I am not sure how soon you post your answers. We have an employee who resigned last April 15. May resignation letter sya. Supposedly, 30 days ang grace period para makapagturnover. So until May 15 sya dito. However, just last Tuesday, nagpapaalam sya na until May 7 na lang daw sya kasi nakapagcommit na raw sya sa isang company na papasukan nya. She used our company time para makapag-apply at makapag-attend ng interview dun sa new company. Nalaman lang namin ito nung kinausap sya nung Tuesday, April 30. Could we terminate her effective immediately today, May 2? Because we are not sure if we could still undergo the due process for 30 days since she wants out of the company as soon as possible. Aside from poor performance, ground for termination will be willful disobedience, willful breach of trust and confidence and gross disregard of company’s rules and regulations. Also, are we required to give her separation pay and certificate of employment? Your advice will be much appreciated. Thank you.

    • Lawyers in the Philippines

      Sent an email.

  19. Kimberly

    Paano po kapag ang isang ee ay nag time padding? And first offense palang ito ay binigyan na sya ng 30 days suspension and after ng suspension ay tinerminate na sya? Is this legal?

    • Lawyers in the Philippines

      This is dishonesty.

      This often leads to dismissal.

      This has been taken up in many Supreme Court cases.

  20. crestine

    can we terminate an employee having a case of damaging a company property?

    • Lawyers in the Philippines

      Yes, however check to be sure that you follow the law as you terminate.

      Beyond this, it is impossible to comment as the situation is not clear to me.

  21. Melissa

    Hi! Do you have seminars for Company HR regarding labor code? This is for better understanding of our labor law?

    We are in services business and recently we found out during annual medical exams that one of our employee has been positive in illegal drugs? Is this ground for immediate termination? Do we still need to follow the step by step procedure in terminating the employee?

    How about conflict of interest? On what category does it fall?

    Hope to hear your reply the soonest.

    Thank you

    • Lawyers in the Philippines

      Sent an email.

  22. Audrey

    Hi, unde r the new maternity benefit which is 105 days paid leave, employee needs to report to work right after the said days. If she refuses to report due to some personal commitments like a trip for wedding, scheduled vaccination, is this a ground for termination due to absenteeism/ She claims she has to use her unused leaves wherein company policy states that they are entitled to 1 paid leave per month.

    • Lawyers in the Philippines

      Hi Audrey:

      What do you wish to do?

      Do you wish to terminate? Termination will depend on the situation.

      Perhaps at this point it is best to penalize as per your Code of Discipline.

      It is difficult to comment as to whether it is best to terminate since there is very little information on the situation available.

  23. Luna

    For the admin hearing, a minutes of the meeting is required right? Is there a specific format required for it to be formal and official if in case it’ll be used as evidence?

    Do you conduct seminars?

    • Lawyers in the Philippines

      Dear Luna –

      We conduct one on one meetings with companies to focus on their specific issues.

      We find this allows us to concentrate on the company better.

  24. Yam laviano

    Hi papano po kapag the company offered you verbally a forced resignation, without any warning or memo. Not even clear kung ano ang dahilan. Pwede po ba yun? And sabhin lang na feeling nila hindi kana fit to work. Kahit na performer ka sa company.

    When it comes to separation pay ano po ang tama 1month salary X yrs of service, or 1/2salary × yrs of service..

  25. Jen

    Hi! We have an employee that is due for termination. We have sent him multiple mails regarding his violations but did not reply to any of those. I read that there has to be a hearing, paano po kung hindi siya makakapunta or hindi siya sumagot sa invitation namin for hearing, paano po ang magiging next step namin for his termination? Thank you.

    • Atty. Francesco Britanico

      Sent an email.

      • Jen

        Thank you. Will wait for your email.

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