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Outline on Post Employment

BOOK SIX of the Labor Code

TITLE I
Termination of Employment

ARTICLE 278.Coverage. — The provisions of this Title shall apply to

all establishments or undertakings, whether for profit or not.

ARTICLE 279.Security of Tenure. — In cases of regular employment,

the employer shall not terminate the services of an employee except for a just
cause or when authorized by this Title. An employee who is unjustly dismissed
from work shall be entitled to reinstatement without loss of seniority rights and
to his backwages computed from the time his compensation was withheld from
him up to time of his actual reinstatement. (As amended by RA 6715)

ARTICLE 280.Regular and casual employment. — The provisions of

written agreement to the contrary notwithstanding and regardless of the oral
agreements of the parties, an employment shall be deemed to be regular where
the employee has been engaged to perform activities which are usually
necessary or desirable in the usual business or trade of the employer except
where the employment has been fixed for a specific project or undertaking, the
completion or termination of which has been determined at the time of the
engagement of the employee or where the work or service to be performed is
seasonal in nature and the employment is for the duration of the season.
An employment shall be deemed to be casual if it is not covered by the
preceding paragraph: Provided, That any employee who has rendered at least
one year of service, whether such service is continuous or broken, shall be
considered a regular employee with respect to the activity in which he is
employed and his employment shall continue while such activity exists.

ARTICLE 281. Probationary employment. — Probationary

employment shall not exceed six months from the date the employee started
working, unless it is covered by an apprenticeship agreement stipulating a
longer period. The services of an employee who has been engaged on a
probationary basis may be terminated for a just cause or when he fails to
qualify as a regular employee in accordance with reasonable standards made
known by the employer to the employee at the time of his engagement. An
employee who is allowed to work after a probationary period shall be
considered a regular employee.

▲ CLASSES OF EMPLOYEES

1. REGULAR
- engaged to perform activities which are usually necessary or
desirable in the usual business or trade of the employer
- may be terminated only for just / authorized causes
- Regular employment may be by reason of: 1) nature of work, 2) by
years of service.

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2. PROBATIONARY
General Rule: Must not exceed 6 mos.
- Except:
a) when covered by an apprenticeship agreement stipulating a longer
period
b) when voluntary agreed by the parties (especially when nature of
work requires a longer period of training)
c) when the employer gives the employee a second chance to pass
the standards set
d) In case of school teachers.
*May not be terminated except for:
a) just or authorized causes
b) failing to qualify as a regular employee in accordance with
reasonable standards made known by the employer to employee
at the time of his engagement.
- if allowed to work after the probationary period, he shall be considered
a REGULAR employee

3. PROJECT
- one whose employment has been fixed for a specific project or
undertaking the completion of which has been determined at the time of
engagement of the employee.
*May not be terminated except:
a) Upon completion of the project
b) For just / authorized causes when the project is not yet completed.

*becomes regular if:

a. Job is usually necessary or desirable in the usual business or trade AND
b. There is repeated rehiring for the same or similar tasks.

4. SEASONAL
- one whose work or services to be performed is seasonal in nature and
the employment is for the duration of the season.

5. CASUAL
- activity performed is not usually necessary or desirable in the usual
business or trade of the employer, not project and not seasonal
EXCEPT: if he has rendered at least 1 year of service, whether such
service is continuous or broken = considered a REGULAR employee
with respect to the activity in which he is employed and his
employment shall continue while such activity exists
- May be terminated with or without just cause

6. FIXED TERM
Allowed if:
- period is agreed upon knowingly and voluntarily by the parties without
force, duress, or improper pressure exerted on the employee
- satisfactorily appears that employer and employee dealt with each
other on more or less equal terms with no moral dominance exercised by
the employer on the employee
- term employment is not resorted to defeat the rights of the workers’
rights

* NOTE:

There may be regular seasonal and regular project employees. Any employee
who has rendered at least one year of service, whether such service is continuous or
broken, shall be considered a regular employee with respect to the activity in which
he is employed and his employment shall continue while such activity exists

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ARTICLE 282.Termination by employer. — An employer may

terminate an employment for any of the following just causes:
(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 representative; and
(e) Other causes analogous to the foregoing.

▲ JUST CAUSES FOR TERMINATION

1. Serious misconduct or willful disobedience by the employee of the

lawful orders of his employer or representative in connection with his
work.

- Misconduct is an improper or wrong conduct. It is a transgression of

some established and definite rule of action, a forbidden act, a dereliction of
duty, willful in character, and implies a wrongful intent, not a mere error in
judgment.
- For misconduct to be serious it must be of such grave and aggravated
character and not merely trivial or unimportant.
- Some Examples of Serious Misconduct:
a) uttering obscene, insulting or offensive words against superior
b) challenging superior officers to a fight
c) immorality
d) Sexual harassments
- Dismissal not commensurate for the following misconduct:
a) fisticuffs which are plainly private and did not affect the company’s
interest.
b) Teacher falling in love and marrying a student

- Willful disobedience must be a willful AFFRONT to the employer’s

authority, not a mere FAILURE to obey. The requisites are:
a) The employee’s conduct is willful characterized by wrongful or
perverse attitude, and,
b) The order violated must be lawful, work related and made
known to the employee.
- Non-compliance to an order to transfer constitutes willful disobedience.
Except when the order is intended as a subterfuge to get rid of undesirable
employee or to penalize an employee for his union activities or affected with
mala fides.

2. Gross and habitual neglect by the employee of his duties –

- Gross Negligence has been defined as the want or absence of or

failure to exercise slight care or diligence, or the entire absence of care. It
evinces a thoughtless disregard of consequences without exerting any effort
to avoid them.
- In order to constitute just cause for dismissal, the neglect must not only
be gross but habitual. It is not necessary that damage or loss actually results

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from the neglect. It is sufficient that the gross and habitual neglect tends to
prejudice the employer’s interest.
- Abandonment, tardiness and absenteeism are forms of gross and
habitual neglect of duties.

3. Fraud or willful breach by employee of the trust reposed in him by his

employer or duly authorized representative.
- Fraud is any act, omission, or concealment which involves a breach of
legal duty, trust, or confidence justly reposed and is injurious to another.
- The fraud must be committed against the employer and in connection
with his work.
- Examples:
a) Falsification of Time Cards
b) Theft or pilferage of company property

- For Loss of Confidence to constitute as ground for dismissal the act

complained of must be related to the performance of the duties of the
employee such as would show him to be thereby unfit to continue working for
the employer.
- The employee concerned must be
1) holding a position of trust and confidence (Manager), and/or
2) entrusted with confidence on delicate matters, or with, the custody,
handling or care and protection of the employer’s property (bank teller,
cashier, salesmen, collectors, property custodians
- For loss of trust and confidence to be valid ground for dismissal, it
must be substantial and not arbitrary, and must be founded on some clearly
established facts. It must not be arbitrarily asserted against overwhelming
evidence to the contrary. It must be genuine and not a mere afterthought to
justify an action taken in bad faith.

4. Commission of a crime or offense by the employee against the person of

his employer or any immediate member of his family or duly authorized
representative – Conviction in a criminal case is not required. A case need
not even be filed. Commission of acts constituting a crime is sufficient.

5. Other causes analogous to the foregoing –

Commission of illegal acts or participation in an illegal strike.
Unreasonable behavior and unpleasant deportment with the people he
works with.
Immorality- a conduct which is so willful, flagrant, or shameless as to show in
deference to the opinion of good and respectable members of the
community.
Sexual Harrasment- a form of unlawful sex discrimination. It is unwanted
verbal or physical behavior of a sexual nature that occurs in the workplace
or in an educational setting under certain conditions.

Abandonment- the deliberate, unjustified refusal of an employee to resume

his/her employment.
- Two elements must be proved:
1) the intention to abandon; and
2) an overt act from which it may be inferred that the employee has
no more intent to resume his/her work.
*this is negated by immediate filing of an action for ILLEGAL
DISMISSAL
Dismissal in relation to Closed Shop Agreement-
- The company cannot dismiss an employee on the mere allegation of
the union. It must conduct an independent investigation of the charges
before taking action.

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ARTICLE 283.Closure of establishment and reduction of personnel. —

The employer may also terminate the employment of any employee due to the
installation of labor-saving devices, redundancy, retrenchment to prevent
losses or the closing or cessation of operation of the establishment or
undertaking unless the closing is for the purpose of circumventing the
provisions of this title, by serving a written notice on the workers and the
Department of Labor and Employment at least one (1) month before the
intended date thereof. In case of termination due to the installation of labor-
saving devices or redundancy, the worker affected thereby shall be entitled to
a separation pay equivalent to at least one (1) month pay or to at least one (1)
month pay for every year of service, whichever is higher. In case of
retrenchment to prevent losses and in cases of closures or cessation of
operations of establishment or undertaking not due to serious business losses
or financial reverses, the separation pay shall be equivalent to one (1) month
pay or at least one-half (1/2) month pay for every year of service, whichever is
higher. A fraction of at least six (6) months shall be considered one (1) whole
year.

▲ AUTHORIZED CAUSES FOR TERMINATION

1. Introduction of labor-saving devices:

- Reduction of workers as a result of introduction of new machinery or
new methods.
- Must be with the view to effecting more economy and efficiency
production.

2. Redundancy
- exists where the services of an employee are in excess of what is
reasonably demanded by the actual requirements of the enterprise
- a position has become superfluous as an outcome of a number of
factors such as overhiring of workers, decreased volume of business,
dropping of a particular product line or service activity previously
manufactured or undertaken by the enterprise (THUS IT ONLY
REQUIRES SUPERFLUITY NOT DUPLICATION OF WORK)
- The redundancy SHOULD NOT have been created by the
EMPLOYER.
- An employer can not declare as redundant a position created by law.

3. Retrenchment
- resorted primarily to avoid or minimize business losses
- Retrenchment may be resorted in case of
a) business losses
b) lack of work
c) reduction in the volume of business
d) fire
- reasonable criteria on who to lay off
(1) less preferred status
(2) efficiency rating
(3) seniority
(4) performance
(5) Last in-first out (optional)
- Standards of retrenchment
a. losses expected should be substantial and not merely de minimis
in extent
b. substantial loss apprehended must be reasonably imminent

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c. retrenchment must be reasonable necessary and likely to

effectively prevent the expected losses
d. alleged losses, if already realized, and the expected imminent
losses sought to be forestalled, must be proven by sufficient and
convincing evidence
e. The company should have undertaken other cost-cutting means
before retrenchment. I.e., retrenchment is the final option.

4. Closure of business as a result of grave financial loss

5. Closure not due to losses.

▲ THE EMPLOYER MAY TERMINATE THE SERVICES OF AN EMPLOYEE DUE TO

AUTHORIZED CAUSES AFTER NOTICE AND PAYMENT OF SEPARATION PAY

Authorized Cause: Amount of Separation Pay:

- Installation of labor-saving device - 1 month pay or 1 month pay for every

- Redundancy year of service whichever is higher.

- Retrenchment to prevent losses - 1 month pay or at least 1/2 month

- closures or cessation of operations pay for every year of service
of establishments or undertaking whichever is higher
NOT due to serious business losses
or financial reverses
- disease

- written notice served on the worker and the DOLE at least 1 month before
the intended date of termination.

ARTICLE 284.Disease as ground for termination. — An employer may

terminate the services of an employee who has been found to be suffering from
any disease and whose continued employment is prohibited by law or is
prejudicial to his health as well as the health of his co-employees: Provided,
That he is paid separation pay equivalent to at least one month salary or to
one-half month salary for every year of service, whichever is greater, a
fraction of at least six months being considered as one whole year.

▲ AILMENT OR DISEASE AS AUTHORIZED CAUSE FOR TERMINATION

- when his continued employment is prohibited by law or prejudicial to his

health or to the health of his co-employees.
- he is paid separation pay of 1 month salary or 1/2 month salary for every year
of service, whichever is greater.
- there is a certification by a competent public health authority that the disease
is of such nature or at such stage that it cannot be cured within a period of 6
months even with proper medical treatment.

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▲ DUE PROCESS REQUIREMENTS

1. written notice containing a statement of the causes for termination, and giving
the employee reasonable opportunity to explain his side.
2. a hearing or conference where the employee, who may be assisted by
counsel if he so desires, is given the opportunity to respond to the charge,
present his own evidence, or rebut evidence against him (ample opportunity to
defend himself)
3. written notice of termination served on the employee indicating that grounds
have been established to justify his termination based on due consideration of
all the circumstances

- The two notice rule requires the employer to furnish the worker sought to be
dismissed with two written notices before affecting the termination:
a) First notice apprising the employee of the particular acts or omissions for
which his dismissal is sought;
b) Second notice informing the employee of the employer’s decision to
dismiss him.
- The employer has the burden of proving with substantial evidence the lawful
cause sustaining the dismissal of the employer

▲ EFFECTS OF DISMISSAL WITHOUT JUST CAUSE:

1) Reinstatement without loss of seniority and other privileges

- Reinstatement shall be to his former work or position or to a substantially
equivalent position.
- If reinstatement is no longer possible, separation pay in the amount of 1
month pay per year of service
Instances when reinstatement is not possible:
a.) Strained relations – may be invoked only against employees
whose position demands trust and confidence, or whose
differences with their employer are of such nature or such degree
as to preclude reinstatement
b.) Position has been abolished
c.) Employee has reached retirement age
d.) Legitimate cessation of business
- The decision of the Labor Arbiter reinstating an employee shall be done
physically (actual reinstatement) or through payroll. The award is self-
executing and does not need a motion for its execution.

2) Full backwages, inclusive of allowances and other benefits or their

monetary equivalent.
- Backwages include the basic salary and regular allowances and other
benefits the employee had been regularly receiving.
- Generally an order of reinstatement carries with it the award of
backwages. But the court may absolve the employer from liability of
backwages when good faith is evident.

MERCURY DRUG RULE: Backwages is limited to a maximum of 3 years.

FERRER DOCTRINE: Employer may deduct any amount earned by the
employee during his unemployment.
BUSTAMANTE DOCTRINE: Full backwages without limit and deduction.

3) Damages – Relief available under the Civil Code against the illegality of the
manner of separation
a) Moral-If the dismissal is in bad faith, attended by fraud or is oppressive
to labor or if against public policy, good customs and morals. The award

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compensates for the diverse injuries such as mental anguish, besmirched

reputation, social humiliation, wounded feeling.
b) Exemplary-If the dismissal is wanton, oppressive, or malevolent. The
award is intended to discourage similar conduct.
c) Attorney’s Fees- When there is showing of bad faith on the part of the
employer or when the complainant is compelled to litigate or incur
expenses to protect his interest.

- Generally, officers of a corporation are not personally liable for their official
acts unless it is shown that they exceeded their authority. However, when the
veil of corporation fiction is used 1) as a means to perpetuate fraud or an
illegal act, or 2) as a vehicle for the evasion of an existing obligation, 3) the
circumvention of statutes, or 4) to confuse legitimate issues, the same may be
lifted.

- In our jurisprudence, quitclaims, waivers, or releases are looked upon with

disfavor. Such documents do not estop an employee from pursuing the full
extent of his claim. Exception: when the contract is entered into freely and
voluntarily.

▲ EFFECT OF TERMINATION WITHOUT DUE PROCESS:

1) In Wenphil Corporation vs. NLRC:

Payment of indemnity in the amount of P1,000.00 for the violation of due
process.

2) In Serrano vs. NLRC:

Affected employee shall be entitled to backwages from the time he was
terminated until the decision becomes final.

3) In Agabon vs. NLRC:

The dismissal is valid but the employer would have to indemnify the employee
for the violation of his right, in the amount of P30,000.00. The amount
indemnity shall depend on the gravity of the due process violation and the
facts of the case.

ARTICLE 285.Termination by employee. — (a) An employee may

terminate without just cause the employee-employer relationship by serving a
written notice on the employer at least one month in advance. The employer
upon whom no such notice was served may hold the employee liable for
damages.
(b) An employee may put an end to the relationship without serving
any notice on the employer for any of the following just causes:
(1) Serious insult by the employer or his representative on the
honor and person of the employee;
(2) Inhuman and unbearable treatment accorded the employee by
the employer or his representative;
(3) Commission of a crime or offense by the employer or his
representative against the person of the employee or any of the
immediate members of his family; and
(4) Other causes analogous to any of the foregoing.

RESIGNATION is the voluntary act of an employee who “finds himself in a situation

where he believes that personal reason cannot be sacrificed for in favor of the
exigencies of the service, then he has no other choice but to dissociate

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himself from his employment. It may be withdrawn but not when already
accepted.

▲ TWO KINDS OF RESIGNATION

A) WITHOUT CAUSE
1. at least 1 month PRIOR NOTICE
2. employee may be held liable for damages for failure to give notice

B) WITH JUST CAUSE

1. GROUNDS
a. serious insult on the honor and person of employee by the employer
or his representative
b. inhumane and unbearable treatment accorded to the employee
c. commission of a crime against person of the employee or any of the
immediate members of his family
d. other causes analogous to the foregoing

2. NOTICE NOT NECESSARY

NOTE: Resigning employee not entitled to separation pay, unless company

policy gives it.

ARTICLE 286.When employment not deemed terminated. — The bona

fide suspension of the operation of a business or undertaking for a period not
exceeding six months, or the fulfillment by the employee of a military or civic
duty shall not terminate employment. In all such cases, the employer shall
reinstate the employee to his former position without loss of seniority rights if
he indicates his desire to resume his work not later than one month from the
resumption of operations of his employer or from his relief from the military or
civic duty.

▲ EMPLOYMENT NOT DEEMED TERMINATED

- bona fide suspension of the operation of a business/undertaking for a period

of not more than 6 months
- fulfillment by the employee of a military or civic duty
- Employer shall reinstate the employee to his former position without loss of
seniority rights IF employee indicates his desire to resume his work not later than 1
month from resumption of operations of his employer or his relief from the military or
civic duty

▲ CONSTRUCTIVE DISMISSAL

- a quitting because continued employment is rendered impossible,

unreasonable or unlikely.
- Examples:
a) demotion
b) diminution in benefits
c) transfers in bad faith
d) prolonged floating status.

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TITLE II
Retirement from the Service

Art. 287. Retirement. — Any employee may be retired upon

reaching the retirement age established in the collective bargaining
agreement or other applicable employment contract.
In case of retirement, the employee shall be entitled to receive such
retirement benefits as he may have earned under existing laws and any
collective bargaining agreement and other agreements: Provided,
however, That an employee's retirement benefits under any collective
bargaining and other agreements shall not be less than those provided
herein.
In the absence of a retirement plan or agreement providing for
retirement benefits of employees in the establishment, an employee upon
reaching the age of sixty (60) years or more, but not beyond sixty-five (65)
years which is hereby declared the compulsory retirement age, who has
served at least five (5) years in the said establishment, may retire and shall
be entitled to retirement pay equivalent to at least one-half (1/2) month
salary for every year of service, a fraction of at least six (6) months being
considered as one whole year.
Unless the parties provide for broader inclusions, the term one-half
(1/2) month salary shall mean fifteen (15) days plus one-twelfth (1/12) of
the 13th month pay and the cash equivalent of not more than five (5) days
of service incentive leaves.
Retail, service and agricultural establishments or operations
employing not more than (10) employees or workers are exempted from the
coverage of this provision.
Violation of this provision is hereby declared unlawful and subject
to the penal provisions provided under Article 288 of this Code.
(As amended by R.A. No. 7641)

▲ RETIREMENT PAY LAW (RA 7641)

A. WHO ARE EXEMPTED:

retail, service, agricultural establishments or operations employing not more
than 10 employees or workers
B. KINDS:
1. OPTIONAL - 60 years old / 5 years in service
2. COMPULSORY - 65 years old/ regardless or years of service
C. BENEFITS: 1/2 month salary per year of service which shall include: (22.5 days)
1. 15-day basic wage, plus
2. 1/12 of the 13th month pay, plus
3. 5-day Service incentive leave pay plus
* a fraction of at least 6 mos. considered as one whole year
4. other benefits as maybe agreed upon by the employer and employee

Outline on Post Employment

BOOK SIX of the Labor Code JS ALBARECE NOTES