Yes, you can terminate a Philippine employee due to health reasons.

However, as with all things related to employee termination in the Philippines, you need to do this in accordance with the law.

The law is found in Article 299 [previously Article 284] of the Philippine Labor Code and the Omnibus Rules Implementing the Labor Code.

These provide that an employer may terminate an employee suffering from a disease if:

1. His continued employment is prohibited by law
2. Is prejudicial to his health as well as those of his co-workers
3. There is a certification by a competent health authority that it is of such a nature or such a stage that it cannot be cured in 6 months even with medical treatment

Note that if the disease can be cured within 6 months, the employer can ask the employee to take a leave of absence. When the employee returns to good health, he should be reinstated to his former position.

Note as well that, if you are terminating an employee due to health reasons, you will have to pay separation pay.

Separation Pay must be at least one (1) month salary or to one-half (1/2) month salary for every year of service, whichever is greater, a fraction of at least six (6) months being considered as one (1) whole year.

You can’t terminate an employee just for a cold.

The law contemplates particular types of diseases. Among these are diseases where continued work would further compromise the employee’s health.

This is particularly clear in the Baby Bus, Inc. vs. Minister of Labor [G.R. L-54223, February 26, 1988]. The Supreme Court here ruled that the several heart attacks experienced by an employee were clear indications that working would further compromise his health. The employee’s claim of illegal dismissal was dismissed.

Another requirement is that the disease cannot be cured in 6 months.

For example, in Deoferio vs. Intel, [G.R. No. 202996, June 18, 2014] a doctor certified that the employee’s schizophrenia could not be cured in 6 months. Here the Supreme Court upheld the dismissal.

The law also covers diseases that are contagious and which would be detrimental to the health of the employee’s co-workers. But the employer’s characterization of the disease cannot be arbitrary nor without expert basis.

For example, although advanced tuberculosis can be such disease, a competent public health official must nevertheless certify this when the employee’s disease is invoked as a ground for termination.

In cases where health is the reason for termination, a certification from a competent health authority is indispensable.

The Supreme Court has held that:

The requirement for a medical certificate under Article 284 of the Labor Code cannot be dispensed with; otherwise, it would sanction the unilateral and arbitrary determination by the employer of the gravity or extent of the employees illness and thus defeat the public policy on the protection of labor. (G.R. No. 129584)

This was later upheld in Crayons vs. Pula (G.R. 167727) despite the fact that the employee had been absent for 6 months.

In the Crayons vs. Pula case, it was further aggravated by the fact that the company seemed to lack documentary evidence and presented very little evidence.

Article 299 [284] does not explicitly state the process that should be followed in cases of termination for health.

This can cause confusion because there are two distinct processes for termination of employment under the law:

• Termination for Just Causes
• Termination for Authorized Causes

The processes are different depending on which type of termination it is.

For instance, termination for Just Causes requires you to fulfill the two notice rule:

• A notice of intent to dismiss specifying the ground for termination, and giving said employee reasonable opportunity within which to explain his or her side;
• A hearing or conference where the employee is given the opportunity to respond to the charge, present evidence or rebut the evidence presented against him or her;
• A notice of dismissal indicating that upon due consideration of all the circumstances, grounds have been established to justify termination.

Termination for Authorized Causes follows a different process:

• In a termination for an authorized cause, due process means a written notice of dismissal to the employee specifying the grounds at least 30 days before the date of termination. A copy of the notice shall also be furnished the Regional Office of the Department of Labor and Employment (DOLE) where the employer is located.

You’re probably wondering which process health reasons fall under.

Health reasons have historically been classified as an authorized cause for termination. Thus, in the discussion in Agabon vs. NLRC [G.R. No. 158693, Nov. 17, 2004] the Supreme Court says:

Procedurally … and (2) if the dismissal is based on authorized causes under Articles 283 and 284, the employer must give the employee and the Department of Labor and Employment written notices 30 days prior to the effectivity of his separation.

However, the Supreme Court walked back on this pronouncement in other decisions.

In 2014, it ruled in Deoferio vs. Intel [G.R. No. 202996], that:

In Sy v. Court of Appeals and Manly Express, Inc. v. Payong, Jr., promulgated in 2003 and 2005, respectively, the Court finally pronounced the rule that the employer must furnish the employee two written notices in terminations due to disease, namely: (1) the notice to apprise the employee of the ground for which his dismissal is sought; and (2) the notice informing the employee of his dismissal, to be issued after the employee has been given reasonable opportunity to answer and to be heard on his defense.

Thus, due process in the form of the two notice rule has since applied to terminations for health reasons.

In Fuji vs. Espiritu [G.R. No. 204944-45, December 3, 2014], decided later that same year, the Supreme Court briefly discussed what this due process entails:

For dismissal under Article 284 to be valid, two requirements must be complied with: (1) the employee’s disease cannot be cured within six (6) months and his “continued employment is prohibited by law or prejudicial to his health as well as to the health of his co-employees”; and (2) certification issued by a competent public health authority that even with proper medical treatment, the disease cannot be cured within six (6) months. The burden of proving compliance with these requisites is on the employer. Noncompliance leads to the conclusion that the dismissal was illegal.

There is no evidence showing that Arlene was accorded due process. After informing her employer of her lung cancer, she was not given the chance to present medical certificates. Fuji immediately concluded that Arlene could no longer perform her duties because of chemotherapy. It did not ask her how her condition would affect her work. Neither did it suggest for her to take a leave, even though she was entitled to sick leaves. Worse, it did not present any certificate from a competent public health authority. What Fuji did was to inform her that her contract would no longer be renewed, and when she did not agree, her salary was withheld. Thus, the Court of Appeals correctly upheld the finding of the National Labor Relations Commission that for the failure of Fuji to comply with due process, Arlene was illegally dismissed.

Thus due process requires not only that the disease’s incurability within 6 months must be established, and this supported by certification of a competent public health authority, but also that the employee should be informed and given the opportunity to respond to the findings.