Last week news headlines were filled with the narrative of an employee who claims to have been illegally dismissed for having contacted a human immunodeficiency virus (HIV). Since then, I was bombarded with questions regarding dismissals from employment. Thus, I have decided to revisit and discuss in a nutshell the salient prerequisites in severing an employer-employee relationship.
The Labor Code requires the observance of the statutory requirements of substantive and procedural due process in all cases of termination of employment. Relevantly, the substantive aspect comprises of just and authorized causes for dismissals, whereas the procedural aspect requires giving employees the opportunity to be heard in his defense.
Just causes for dismissal refer to work-related acts, which are directly attributable to the erring employee. These refer to acts that are grave in nature and render the employee unfit to continue working. Under Article 297 (formerly Article 282) of the Labor Code, just causes for termination committed by an employee include serious misconduct or willful disobedience, gross and habitual neglect of duties, fraud or willful breach of trust and other causes analogous to the foregoing.
The procedural aspect of just cause cases requires the observance of the twin requirements of notice and hearing. In the case of Perez v. Philippine Telegraph and Telephone Co. (584 SCRA 110), the Honorable Supreme Court (SC) held that in pretermination procedures, the employer must first serve a written notice to the employee apprising him of the charges against him. Thereafter, the employer must give the employee ample opportunity to be heard. This can be done by means of a verbal or written explanation from the employee or through the latter’s request for a formal hearing or conference. Note that the hearing requirement does not necessitate a mandatory conference. It is only required in the following instances: (1) if expressly so requested by the employee in writing, (2) when substantial evidentiary disputes exist, or (3) when a company rule or practice requires it. After considering the evidence and the employer is convinced that there exists sufficient cause to terminate the employment, it shall inform the employee by serving to him a second written notice indicating the decision to severe
his employment.
On the other hand, authorized causes usually refer to business or health-related concerns. These kinds of dismissals may be justified if resorted to in furtherance of a legitimate business necessity. Under Articles 298 and 299 (formerly Articles 283 and 284), authorized causes include installation of labor-saving devices, redundancy, retrenchment, closure or cessation of business operations and diseases. In instances falling under authorized causes, employers are mandated to observe good faith and shall only consider termination as a matter of last resort.
The procedural aspect of authorized causes requires that the employer furnish written notices both to the affected employees and the Department of Labor and Employment (DOLE) at least 30 days before the intended date of termination. Separation pay shall also be paid to the terminated employees unless there is a closure or cessation of the employer’s operations due to serious business losses or financial reverses.
In any event, terminations for just or authorized causes necessitate the observance of procedural due process. Unlike in grounds for just cause terminations save for abandonment, authorized causes do not normally require the conduct of a hearing. Procedural due process is satisfied so long as there is compliance with the two-notice requirement. However, in the case of Abbott Laboratories v. Alcaraz (701 SCRA 682), the SC ruled that when a company has prescribed in its existing policies due-process procedures for termination, such must be observed in addition to the statutory requirements.
It must be noted that failure to comply with the procedural aspect will not render the termination invalid. However, such omission shall obligate the employer to indemnify the employee for an amount dependent on the cause for termination. If based on a just cause, the SC has set the indemnity in the amount of P30,000 per Agabon v. NLRC (442 SCRA 573). The same amount of indemnity also applies when there is failure to comply with the existing company policy procedures for termination. For authorized causes, the indemnity shall be in the amount of P50,000 per Jaka Food Processing Corp. v. Pacot (454 SCRA 119). Relatively, the indemnity in authorized causes is higher because the cause for dismissal is not attributable to the employee.
An aggrieved employee, however, may pursue a case for illegal dismissal against his employer within four years from the date the cause of action accrues.
I hope to have enlightened you with this brief discussion. Let us keep in mind that our labor laws assure protection, both to the laborers and the employers. To be sure, our laborers are ensured adequate conditions of work, while the employers are accorded the right to regulate its undertakings, thus effecting a balance of interests between labor and business.