Proper Dismissal of Employees

Atty. Hector Jamandre Diaz The procedure in dismissing employees depends on the cause of the termination1. Termination may be for JUST or AUTHORIZED causes under the Labor Code: 1. JUST CAUSES enumerated in Article 282 of the Labor Code: (a) Serious misconduct or willful disobedience by the employee of the lawful orders of his employer or representative in connection with his work; (b) Gross and habitual neglect by the employee of his duties; (c) Fraud or willful breach by the employee of the trust reposed in him by his employer or duly authorized representative; (d) 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 (e) Other causes analogous to the foregoing, The employer is required to observe the twin notice requirements, that is: FIRST NOTICE: Written notice of accusation and schedule for hearing; and SECOND NOTICE: Written notice of termination. Procedural Due Process: For termination of employment based on just causes, procedural due process requires that the employee be given the benefit of the so-called twin-notice and hearing, as follows: 1. First notice: Notice to Explain (NTE) or order to show cause. A written notice served on the employee specifying the ground or grounds for termination, and giving to said employee reasonable opportunity within which to explain his side. 2. Hearing or formal investigation. A hearing or conference during which the employee, with the assistance of his counsel, if the employee desires, is given opportunity to respond to the charge, present his evidence or rebut the evidence presented against him. 3. Second notice: Notice of decision. A written notice of termination served on the employee indicating that upon due consideration of all the circumstances, grounds have been established to justify his termination. (Art. 277 (b) and Sec 2, Rule I, Book VI, IRR) Service of Notices: Service of notice to show cause and notice of termination should both be served to the employee by personally handing him a copy. If this is not possible, the notices may be served on the employees last known address by registered mail. Posting of the notice on the bulletin board is not sufficient compliance. (Shoppers Gain Supermart, 1996) If the employee refused to receive notice, employer must serve the same by registered mail at his last known address.

See Sec. 2, Rule 1 of the Implementing Rules of Book VI of the Labor Code, as amended by Department Order No. 10 which took effect on June 22, 1997

Opportunity to Respond: The very purpose of requiring the employer to observe proper termination process is to give the employee ample opportunity to respond to the charges against him or to defend himself. What the law require is ample opportunity. Ample opportunity means every kind of assistance that management must accord the employee to enable him to prepare adequately for his defense including legal representation. Requirements for First Notice (NTE): The first notice informing the employee of the charges against him should set out clearly the charge/s. It should neither be pro-forma nor vague. This is consistent with the requirement that the employee should be afforded ample opportunity to be heard and not mere opportunity. Moreover, the dismissal, if necessary, must be based on the same grounds cited in the NTE. If the dismissal is based on grounds other than those specified in the notice, he is deemed to have been deprived of due process. (Glaxo Wellcome vs. NEW-DFA, 2005.) Effect of Refusal of Employee to Participate in Investigation: By refusing to participate, the employee is deemed to have waived his right to defend himself. (Leonardo vs. NLRC, 2000.) Effects or Consequences of Termination: 1. If dismissal is for just cause and with prior notice and hearing, the dismissal is valid. 2. If dismissal is for just cause but without prior notice and hearing, the dismissal is valid but the employer may be required to pay nominal damages to the dismissed employee. 3. If there is no just cause for dismissal, whether or not there is prior notice and hearing, the dismissal is illegal. The employee is entitled to reinstatement, backwages and damages. Cases: 1. The employee refused to participate in the investigation being conducted by the personnel management. The Court ruled that by refusing to participate, he cannot claim that he was denied due process. (Leonardo vs. NLRC, 2000.) 2. The employment contract contains stipulation that the employment may be terminated by either party after one month notice or one month salary in lieu of notice. The stipulation was held to be illegal. The requirement of prior notice and opportunity to be heard cannot be substituted by mere payment of salary. (PNB vs. Cabansag, 2005.) 3. Before the notice of termination is given, there must be a finding of guilt after conducting a hearing or conference wherein the concerned employee is afforded the opportunity to respond to the charge and explain his side. Nonetheless, in China Banking Corp.n v. Borromeo, G.R. No. 156515, Oct 19, 20042, the Supreme Court has ruled that a hearing or formal administrative investigation may be dispensed with if the employee expressly admitted his infractions.
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Citing Pampanga II Electric Coop., Inc. v. NLRC, 250 SCRA 31 (1995), Bernardo v. NLRC, 255 SCRA 108 (1996); and Magos v. NLRC, 300 SCRA 484 (1998).

2. AUTHORIZED CAUSES provided in Articles 283 and 284 of the Labor Code: (a) Installation of labor-saving devices; (b) Redundancy; (c) Retrenchment to prevent losses; (d) Closure or cessation of operation of the establishment or undertaking; or (e) Employee has a disease which makes his continued employment prohibited by law or prejudicial to his health as well as to the health of his co-employees and is certified by a competent public authority to be of such nature or at such a stage that it cannot be cured within a period of six months even with proper medical treatments. Procedure: A written notice of termination is given to the concerned employee and the appropriate Regional Office of the DOLE at least 30 days before the effectivity of the termination specifying the ground or grounds for termination. No hearing is required. However, if the termination is brought about by the completion of contract or phase thereof, or by failure of an employee to meet the standards of the employer in the case of probationary employment, then it is enough that the employee is given written notice within a reasonable time from the effective date of termination. But it must be noted that prior to the completion of the contract or phase thereof or before the end of the probationary period, the concerned employee can only be dismissed based on a just cause under Art. 282 or authorized cause under Articles 283 and 284 of the Labor Code. If the termination was really for a valid cause and was done after observing proper procedure, then the dismissal is legal. Hence, the employee is not entitled to the benefits provided in Article 279 of the Labor Code such as: a. reinstatement without loss of seniority rights and other privileges, b. payment of full backwages, inclusive of allowances, c. reenjoyment of his other benefits. What the employee is entitled to is the separation pay provided in Articles 283 and 284 of the Labor Code if the dismissal is based on an authorized cause enumerated therein. But if the dismissal was for a just cause, the dismissed employee is not entitled to separation pay except as a form of financial assistance on the ground of compassionate justice. As held by the Supreme Court in Philippine Long Distance Telephone Co. vs NLRC and M. Abucay, G.R. No. 80609, August 23, 1988, there should be no question that when it comes to such valid but iniquitous causes as failure to comply with work standards, the grant of separation pay to the dismissed employee may be both just and compassionate, particularly if he has worked for some time with the company. Thus, separation pay shall be allowed as a measure of social justice in those instances where the employee is validly dismissed for causes other than serious misconduct or those reflecting on his moral character. Indeed, termination of employment is a delicate issue. Considering that employment contracts are vested with public interest and labor is a constitutionally-protected social economic force, an employer who wishes to dismiss an employee should see to it that the dismissal is in accordance with labor laws.