2022 Guide for the Termination of Regularized Employees for the Philippine HR
The 2022 Guide to the Termination of Regularized Employees covers what an HR Officer needs to know about the process for terminating Regularized Employees in the Philippines, including Just Cause and Authorized Cause, the Administrative Hearing Process for both, and useful reminders about the Notice to Explain.
It is important to know & follow the correct Process when considering the termination of a Regularized Employee.
If you are a HR practitioner in the Philippines your role is to balance both the needs of the company and those of its employees.
And you are already aware that the laws that grant termination of regularized employees for certain causes are the same laws that protect an employee’s security of tenure.
Below I’ve provided an overview of Employee Termination in the Philippines and added links with actual Termination stories and cases. I also cover the Administrative Hearing Process to help a busy HR Practitioner comply with Philippine Labor law.
If you have any specific questions regarding the Termination of Regularized Employees please contact me.
Termination of Employment under Philippine Labor LawÂ
Termination of Employment has strict requirements under Philippine Labor Law.
If you are considering the Termination of a Regularized employee, then you will need to determine which legal cause applies. You will also need to follow the Admin Hearing Process. Both are guided by Philippine Labor Law.
Do you have a problem employee?
Not following Philippine Labor Law is costly!
Separation Pay or fines can be levied against the company by DOLE (Department of Labor and Employment).
An employer uses 2 types of legal causes when considering Termination of Employment:
- Just Causes – primarily causes where the employee is at fault.
- Authorized Causes – 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.
Termination of Employment Philippines: Just Causes (or when the Employee is at Fault)
Termination can take place under 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
There are several legal grounds that can be used for the Termination of Regularized Employees.
You and I may have our own notions about which specific situations correspond to the above.
However, these are technical terms around which the Supreme Court has built Jurisprudence that defines each and provides guidance as to what conditions must be present for any one to be invoked.
For instance, Loss of Confidence can only be applied to two types of employees that have an employer’s trust and confidence:
• An employee with Managerial functions; OR
• An employee who manages and safeguards his employer’s money or property
It also stresses that Loss of Confidence only 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 Admin Hearing Process that must be followed to determine whether such fraud exists or not in the case of a particular employee.
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 an employee, 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 they are for the employee.
This necessitates the close study of the Grounds and Admin Hearing Process on the part of HR, as well as coordination with legal counsel.
Just Causes: The Process to Follow
When it comes to terminating an employee using Just Causes the HR Practitioner must follow a specific set of steps and a particular Administrative Hearing Process.
You will need the following:
- Notice to Explain (NTE Meaning)
- An Admin Hearing where the employee has an opportunity to air his side
- Issuance of a Notice of Termination
Let’s take each one in turn.
Notice to Explain
What is a Notice to Explain and how is it used in Termination for Just Cause?
The term Notice To Explain is often shortened to NTE by HR personnel but employees may not know what it means and ask for the NTE meaning. It may also be called a Show Cause Memo or Show Cause Order. It is the start of the Admin Hearing Process under Just Cause.
A Notice to Explain is the first step when terminating an employee due to Just Causes.
A Notice to Explain is a written notice to the employee. It should have the following:
- Details of the Cause for Termination based on Art 282
- A List of the facts and instances that might lead to Termination
- Cites the particular company item in the company’s Code of Discipline
- A request for a written explanation within 5 days [King of Kings Transport vs. Tinga and Velasco, G.R. 166208]
The Notice To Explain should also:-
- Be served at the employees last known address
- Delivered to the employee in person. If it cannot be delivered in person then you should send it by registered mail to the employees last known address.
When sending an NTE a signed receipt is also good practice. You could be required to present evidence that you correctly followed the Just Cause Admin Hearing Process later on.
In our modern world we also use Text, Emails and Work Platforms to deliver messages direct to employees. It can be considered good practice to either send the Notice To Explain to the employee through these mediums as well, OR advise them that an important letter has been sent to their home address through these channels.
It is important to note that it will be harder to evidence in court that you have followed the correct process if you use any of these mediums as the primary way of delivering the Notice To Explain, rather than a physical letter delivered to their home with a Receipt Request.
Administrative Hearing
What is the Administrative Hearing Process in Termination for Just Cause?
The Admin Hearing Process is the main opportunity an employee has to air his side.
An an HR Practitioner it is important that you follow the Administrative Hearing Process correctly.
During the Hearing the employee can present facts in his defense to counter the employer’s charge. The employee can also bring along counsel.
An employee has the opportunity to explain his side during an Administrative Hearing.
What if an employee does not show up to this Hearing?
Some employees try to avoid this step in an effort to avoid the Admin Hearing Process and later claim that the company did not follow due process.
However, the law recognizes that this isn’t the employer’s fault, especially if you can prove that a letter about the Hearing was sent to the employee. (This is why it is important to request a Signed Receipt of the letter).
By providing an opportunity to be heard, you have complied with the law.
It is up to the employee to now appear.
It is also good practice to have and keep an attendance sheet for all participants attending the Administrative Hearing Process meeting.
Notice of Termination
You will have to issue a Notice of Termination if it is found that the employee should be terminated under Just Cause after the Administrative Hearing Process.
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 notice of Termination may result after Management has decided on the employee’s case.
You will need to state:
- All circumstances involving the charge against the employee have been considered; and grounds have been established to justify the severance of their employment.
- The Ground/s in the Notice of Termination should, of course, be the same as that which was listed in the NTE (Notice to Explain).
By complying with the Administrative Hearing Process and correctly identifying the Grounds needed for Termination, you will be following Philippine Labor Law and complying with Termination Philippines law.
Termination of Employment Philippines: Authorized Causes (or Business Exigencies)
Sometimes, business pressures force down-sizing or the letting go of employees and Philippine Labor Law does recognize this in Article 283.
Termination Philippines: Authorized Causes
- 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 terms and the correct criteria to apply before invoking them.
Under Authorized Causes an employer can terminate employees when business is bad.
For instance, the Court has specified that the following must exist for Retrenchment to be used:
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 the above quoted case, the employer’s Authorized Cause for Termination 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 made that cutting the entertainment expenses would have enabled it to keep the 27 employees.
As HR Personnel is it important to understand that a company or employer can not simply claim Retrenchment. They have to substantiate Authorized Causes for Termination as indicated above.
Authorized Cause: The Process to Follow
You need to follow a few guidelines if you are using an Authorized Cause for Termination:
- Written Notice to the employees 1 month before
- Notice to the DOLE (Department of Labor and Employment) 1 month before Termination date using the DOLE forms
Here is what the DOLE form for Retrenchment/Closure RKS Form 5 2010 looks like:
DOLE RKS Form 5 2010 for closure
Termination under Authorized Cause is a simpler process than Termination for Just Cause.
Still, it is important to follow the Process and file the forms correctly to ensure compliance with Philippine Labor Law.
By doing this, you are serving the company’s interests and ensuring that the business is protected in court.
Separation Pay may still be required.
You will need to pay your employee 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 where the Authorized Cause falls under 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.
Is Termination of Employment due to Illness allowed?
An employer can Terminate an Employee due to illness under Article 284.
However, an employer can’t Terminate someone simply because she or he has a fever.
You can Terminate an employee if there is a serious health issue.
In fact the Court, laid down substantive Requirements for Termination due to Illness cases:
- 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 earlier section about Just Causes. There must be:
- An NTE (Notice to Explain)
- An Administrative Hearing
- A Notice of Termination.
Other Instances for Terminating Employees
An employer can terminate people for other reasons.
You can sever the employee-employer relationship in other instances too. Some of these are:
- When the project ends and the employees were project-based
- When the employee was hired for seasonal labor
- When the employee was a casual laborer
You can terminate when the employment is of these types as these are all understood and legally recognized.
However, don’t become complacent. Keep your papers in order and ensure you are following the correct Termination process.
To Sum It Up
Terminating Regularized Employees in the Philippines requires that the Admin Hearing Process and the Grounds for valid Termination comply with Philippine Labor Law.
Both are equally important if you want to protect your employer and fully do your job as an HR Officer.
To fully do your job as an HR Officer, you have to have a deep understanding of the Process and Grounds for valid Termination
I have dealt with many HR Personnel but want to draw your attention to one of the best that I knew and why they were the best.
This HR Officer kept absolutely impeccable documentation. She ably transacted with government agencies and knew the Philippine Labor Code extremely well.
To be a good HR Officer you have got to know the law, be able to explain the law clearly to your employer, follow due process and record and file everything correctly and neatly.
Atty. Francesco C. Britanico, FCB Law Firm, Lawyers in the Philippines
See also Termination due to AWOL, Tardiness or Abandonment
Good day! Ask ko lang po. After ng hearing, ilang days po dapat mag issue ng termination letter? After 30 days suspension po ba or within the suspension? Thank you po
It can be within the suspension period. It is not necessary to expend the whole period.
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..
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?
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.
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.
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.
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
Sent an email.
can we terminate an employee having a case of damaging a company property?
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.
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?
This is dishonesty.
This often leads to dismissal.
This has been taken up in many Supreme Court cases.
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.
Sent an email.
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.
Thanks
Yes.
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?
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.
Can Employee Terminate due to Poor Performance? This is due to Low Quality results but delivered in deadline? at BPO Industries
Yes.
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.
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.
thanks
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.
Is it possible to terminate regular employees hired at a BPO when the BPO’s client abroad disengaged business with them?
This may be an occasion for retrenchment or redundancy, but this depends on the specific facts of the situation.
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?
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.
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
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 we terminate the regular employee due to poor performance? working for 1.5 years in the company. What is the procedure? thanks
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.
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.
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.
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
Hi can we terminate an employee right away? or how immediate is immediate termination? thanks
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.
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
Sent you an email.
Pano po kung ang employee lageng absent?
I deal with frequent absenteeism in this post: https://www.lawyerphilippines.org/2018/06/26/termination-due-to-awol-tardiness-or-abandonment/
This will help explain the considerations in this type of case.
What if the employee refused to received the Notice of Decision for Termination? When can I terminate the employee?
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.
If he refused, does the employer have the right to hold the final pay?
Employers are entitled to require the employee to go through the proper clearance proceedings provided this is done in good faith and with fairness.
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?
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.
Papano po pag ang situation ay Ibebenta ng employer ang company? Subject po ba for termination ang mga employee? Same benefits as sa termination?
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.
Hi po pano Kung isang beses kalang nagkamali Ang dating Kasi sa kanila itinago ko yun dko agad sinabi sa leader ko na may double pay ako Kasi sa record Nakita ng client..isang buwan lang binayad sakin for 6years yun lang po nakuha ko at Yung pinpasok ko ng ilang araw this pandemic pako terminate may Laban po ba ako doon?
I’d really have to be more familiar with the situation to say.
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
Hi. An employee is free to resign if he wishes to.