It is established that discipline of employees is part of management prerogative. But when the disciplinary action amounts to dismissal or termination of an employee, the Labor Code provides stringent rules that must be complied with. Otherwise, the termination of the employee is considered illegal.
To start, the dismissal must comply with Substantive Due Process, which means that the dismissal of an
employee must be for a just cause or authorize cause. Thus, the employer cannot just dismiss an employee out of whim.
The following are the Just Causes under the Labor Code:
1. Serious misconduct or willful disobedience by the employee of the lawful orders of his employer or
representative in connection with his work;
In willful disobedience, the following requisites must concur:
a. The employee’s assailed conduct must have been willful or intentional, the willfulness being characterized by a “wrongful and perverse attitude; and
b. The order violated must have been reasonable, lawful, made known to the employee and must pertain to the duties which he/she had been engaged to discharge.
On the other hand, misconduct must be serious for it to be a just cause for termination. Some examples of serious misconduct as a just cause for termination are falsification of time records and immorality.
2. Gross and habitual neglect by the employee of his duties. Mere neglect is not sufficient. The neglect must be both gross and habitual.
3. Fraud or willful breach by the employee of the trust reposed in him by his employer or duly authorized representative. For loss of confidence as a ground for dismissal, the employee concerned must be holding a position of trust and confidence.
4. 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.
5. Other causes analogous to the foregoing.
The following are the Authorized Causes under the Labor Code:
1. Closure of establishment and reduction of personnel
These are labor saving devices, redundancy, retrenchment to prevent losses, closing or cessation of the establishment. If the termination is based on this ground, the employer must serve a written notice to the employees and to the Department of Labor and Employment at least thirty (30) days prior to the intended date of termination.
2. Disease of the employee
The employee must be found to be suffering from any disease and whose
continued employment is prohibited by law or is prejudicial to his/her
health, as well as the health of his or her fellow employees.
It is not enough that the dismissal is based on a Just Cause or Authorized Cause, Procedural Due Process must also be observed.
The following is the procedure that must be complied with in terminating the services of an employee based on just causes:
1. Written Notice must be served on the employee specifying the ground(s) for termination and giving his reasonable opportunity within which to explain his/her side;
2. Hearing or conference shall be conducted wherein the employee is given an opportunity to respond to the charge and to present his/her evidence. The employee may be assisted by his/her counsel, if so desires.
3. Written notice of termination must be served on the employee indicating that upon due consideration of all the circumstances, grounds have been established to warrant his/her termination.
Entitlement to Separation Pay
It must be pointed out that when an employee is dismissed based on a just cause with compliance with the Procedural Due Process, the dismissed employee is not entitled to the payment of Separation Pay.
The following are the instances when an employee is entitled to the payment of separation pay:
a. Installation of labor-saving devices;
b. Redundancy;
c. Retrenchment;
d. Closure or cessation of business operations;
e. Disease of an employee and his continued employment is prejudicial to himself or his co-employees;
f. When an employee is illegally dismissed but reinstatement is no longer feasible.
Reinstatement and Backwages
If the dismissal is illegal, the employee unjustly dismissed is entitled to reinstatement and to the payment of full backwages.
Full backwages is inclusive of the allowances and other benefits computed from the time the compensation is withheld from the employee, until the time of his/her reinstatement.
Also, the reinstatement must be to the employee’s former or equivalent position without loss of seniority rights and other privileges.
If reinstatement is no longer feasible, that is the time that the employer must pay separation pay in lieu of reinstatement.
