Synchronous Lecture

Termination of employment (Second Phase)

 Phase that will end the EER

Four Ways of Termination of Employment (DO 147 s. 2016)

1. Expiration of Contract
 Presupposes that there is a contract
 It can be a project or a fixed-term employment.

2. Voluntary Resignation - Employee himself ends the EER

 There is no resignation pay; unless there is a policy of an Er.
Note: Different from Constructive Dismissal - Er makes the working conditions unbearable which will make the Ee
resign on his/her own.
 May be for cause or no just cause
Notice: 1 month before effectivity

3. Dismissal of Employee - Employer ends the EER

 It is a managerial prerogative; but it must be exercised in good faith and there is no malevolent intent to
circumvent the Labor laws on the just/authorized causes.
 Expressly:
 Constructive: usually involuntary; illegal
Separation Pay
There must be compassionate justice: consider the length of service, no infractions.

4. Retirement
Follow company policy; if none: CBA; if none Labor Code Art 302
Coverage: Look first if there is an EER.
Provisions on termination applies to all establishments, for profit or non-profit

Two Kinds of (Contractual) Employment vis-a-vis termination

1. Seasonal Employment
a) XPN: Repeated hiring takes away the fixed period of the contract; this will convert the employment into
a regular capacity.
2. Project Employment
3. Fixed-term Employment - similar to project employment; the difference is that the employment is for a
particular period of time even if there is no project. It is a special kind of relationship.
 Brent Ruling: It will be acceptable if two conditions exist: a) the parties knowingly and voluntarily entered into
the agreement; and b) it will appear from the facts of the case that the Ee and Er are dealing with each other
on equal terms.

Retirement from Service

Article 302

Retirement
 BIlateral act and a voluntary agreement between the Ee and Er.
 In the absence of CBA, contract, company policies, or retirement plan, Art 302 shall apply.

Complulsory Retirement
 Once the Ee reaches 65 y/o.
 The Ee has no choice but to retire once he reaches the age requirement
Note: For underground and surface mining Ee: also 60 y/o

Optional Retirement
60-64 y/o.
Upon the election of the Ee
Note: For underground (aka miners) and surface mining Ee: 50-59 y/o
It is earlier due to the risks they are confronting on a daily basis due to the nature of their work.

Benefits if there is no retirement plan or agreement

Ee: at least 1/2 month salary for every year of service
 Notes: fraction of at least 6 mos. = 1 year
 If the company policy is broader, better benefits may be given. If the retirement benefits are lower than what
is provided in Article 302, then that is invalid. Supreme Court: the gauge is 22.5 days.

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Note: Those in the Private Sector are also entitled to benefits as provided for by SSS Law and other existing
companies.

Coverage: Who are those not included?

Retail, service, and agricultural establishments or operations with less than 10 employees.

See: GR176419 GMA v Pabriga

GR211892 Innodata v Inting
GR169170 v Consunji v Gobres
GR199554 Paz v Northern Tobacco
GR177845 Grace Christian School v Lavandura

Synchronous Lecture
April 24, 2021
Art 297 Just Causes
 Ee does something wrong which makes the Er terminate the services of Ee.
 There is no resignation pay; unless there is a policy of an Er.

(DO 147 s. 2016)

Art 298- 299 Authorized Causes

 Economic reasons or health reasons that arise from exigency reasons that make the Er
 Notice must be given to the Ee and DOLE-RO 30 days before the effectivity of termination.
 DOLE-RO is notified to activate the procedures in finding out if the termination is valid.

 Last In First Out Rule (LIFO)

 It is an equalizing factor: The last to be hired will be the first to be fired.
 An Ee with HIV cannot be dismissed from service because the HIV Law states that the dismissal is
discrimination.

Preventive Suspension DO 9 s 1997

Rule 23 Sec 8
 If the continued employment of the Ee is a serious or imminent threat to the life or property of a co-worker,
the Ee may be suspended; valid for only 30 days.
 The suspension may be extended beyond 30 days for as long as the suspension is with pay; otherwise it
is tantamount to constructive dismissal.

Do 147-15
No Ees may be dismissed except for just and authorized causes and with due process.

Two Facets of Valid Termination of employment

WHY: Substantive
HOW: Procedural

Procedural Due Process

GR: No prior notice is required;
XPN: unless the parties agree that a week prior to the termination, there is a notice.

There must be TWO NOTICES

1. Show Cause Order - detailed narration requiring the Ee to explain within 5 calendar days (minimum; and
includes holiday)
 In between the two notices, time is given to Ee to explain his side, to be heard and to defend himself;
 But hearing is not necessary unless an Ee asks for a hearing; or when the evidence is insufficient that a
hearing must be in order.

2. Final Notice - showing that after all considerations, the Ee is deemed terminated.

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 Broadcast on Termination of Employment Relationship
32:38

Security of Tenure (Art 294; 1987 PH Constitution)

1987 Constitution
Note: Always refer to the Constitution Art III. BOR:
“Section 1. No person shall be deprived of life, liberty, or property without due process of law, nor shall any
person be denied the equal protection of the laws..”
 The person’s employment is considered property of said person; thus, there must be due process of law
before a person may be deprived of his/her employment.

Labor Code
 Note: [Only] Regular Ees can be terminated for just or authorized causes.
 But the Supreme Court stated that even Non-regular Ees enjoy security of tenure: limited security of tenure

DOLE DO 147-15 (amendment to IRR of Book 6)

The dismissal of Ees should only be based on just or authorized causes and due process must be observed.
 A worker’s right to security of tenure is guaranteed both under the PH Constitution as well as other laws, like
the Labor Code, and jurisprudence.
 No Ee shall be terminated from employment except for just and authorized causes AND upon observance of
due process.
 The provisions of DO 147-15 applies to all parties where there is an Ee-Er Relationship.
 Refer to the Four-Fold Test
 The coverage extends to parties where there is an existing legitimate contracting or sub-contracting
arrangement; provided that there is an Er-Ee Relationship.

Ending the Er-Ee Relationship

1. Expiration of period of contract
 This is the mode of ending the Er-Ee when there is a fixed or definite period period agreed upon by the
parties. Upon reaching the period agreed upon; there is expiration of the period of the contract.
 This covers the Er-Ee that arises from project employment or other modes of fixed-term contracts.

2. Retirement (Art 302)

 This is the mode of ending where at a certain age, the Ee agrees or is compelled to end his/her employment.
 Agreed upon by parties: company policy — contract — agreement — or imposed by law.

Note: Conditions for eligibility to retirement must be met at the exact date of retirement. It must occur at the
period of time when the relationship will be ended by operation of law: or by agreement, CBA, company policy, or
by law.

What laws to apply?

For an Ee to be qualified to retire and avail retirement pay:
1st: provisions of retirement plan of the company (company policy); if none:
2nd: by CBA or agreement; if none:
3rd: Art 302 - It will only come into play when there is no agreement, company policy, or CBA.

Art 302.
Workers In General
Optional Retirement
 Age: 60-64 y/o
 Years of service: Minimum of five (5) years

Compulsory Retirement
 Age: 65 y/o
 Years of service: Minimum of five (5) years

Underground/Surface Mining Ees

Who are surface mine workers?
 They are mill plant workers, electrical, mechanical and tailings pond personnel
*The effect of mining is different because it’s an unnatural working environment.

Optional Retirement
 Age: 50-59 y/o
 Years of service: Minimum of five (5) years

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 Compulsory Retirement
 Age: 60 y/o
 Years of service: Minimum of five (5) years

Two Retirement Benefits Payable

 Art 302 states that:
 First find out if there is a company policy or CBA.
 If there is company policy or CBA: the retirement benefits payable shall be what is provided in the
company policy or CBA; provided that it is not lower than what is provided by art 302. If the
retirement benefits payable are lower than those provided for by Art 302, then Art 302 shall be
applied.
 If there is no company policy or CBA: apply Art 302
 at least one-half (1/2) month salary for every year of service
Note: 1 whole year of service = A fraction of at least six month. Therefore, in computing
retirement pay, at least six months of service is considered 1 whole year.

First Retirement Benefit

What does “1/2 month salary” mean?

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1/2 month salary = 15 days + 1/12 of the 13th month pay + the cash equivalent of not more than 5
days of service incentive leaves (unless the parties provide for broader inclusions).
In other words it is equivalent to 22.5 days.
It can be higher if the parties agree because the provisions of the Labor Code is the minimum.

Second Retirement Benefit

SSS (Pension) Benefits (RA 7641)
It is not correct to say that if an Ee already receives his/her SSS benefit, s/he is no longer entitled to

2 a retirement pay.
RA 7641 says: “Section 2. Nothing in this Act shall deprive any employee of benefits to which he
may be entitled under existing laws or company policies or practices.” (Reiterated in RA 10757)

Who are included in the provisions re retirement pay?

 It covers all Ee, except Ees in retail, service and agricultural establishments or operations which do not
employ more than 10 workers; unless company policy or CBA (by operation of law) provideds so.
 Note: They are merely exempted, not precluded

3. Termination of Er-Ee by Ee himself/herself (Art. 300)

 An Ee has the privilege of ending the Er-Ee Relationship: to resign
 Resignation is a voluntary act of an Ee of ending his/her employment with the Er.
 There is no separation pay since resignation is voluntary.
 If the resignation is involuntary; it is deemed constructive dismissal
Constructive Dismissal: The Ee is forced to resign because of certain acts of the Er; thus, an illegal
dismissal. Therefore, resignation is only valid if it is voluntary.

No Just Cause for Resignation (Verbatim: “Wala lang, feel lang ng Ee na magresign”)
 Notice, in writing, to the Er is required that s/he wants to end his/her employment; which must be given
to the Er at least one (1) month before the intended date of effectivity of resignation.
 If the Ee does not comply with the service of written notice; or when the Ee complied with the service of
written notice but fails to serve the same within at least one month prior the intended date of effectivity
of resignation: the Er may hold Ee liable for damages.

Just Cause for Resignation

 The Er/ representative insults the honor of the Ee;
 Inhuman/ unbearable treatment or unconducive working conditions;
 Er/ representative commits a crime or offense against the person of the Ee of his/her or the immediate
family of the Ee

*In such cases, the Ee is allowed to resign and is no longer required to serve a written notice.

Can an Ee withdraw his/her resignation?

Yes, provided that the Er has not yet accepted the resignation because once the resignation ha been accepted, it
will be the management prerogative whether or not to allow the Ee to withdraw his/her resignation?

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Is there a resignation pay?
There is no such thing as resignation pay; unless there is a company policy or CBA that provides that when an Ee
resigns, s/he is entitled to accept a resignation pay.

4. Dismissal/ Ending of Er-Ee by Management

Note: One of the management prerogatives is the power to dismiss the employee from employment; but the same
is not absolute because the Er must comply with certain parameters so that the dismissal is not deemed illegal.

Grounds for Dismissal of Employee from Employment

 JUST CAUSES FOR TERMINATION (Art 297) — Just causes for termination means that there are grounds
arising from the guilt, fault, or negligence of the Ee that allowed the Er to invoke said grounds and
terminate the employment of the said Ee.
 AUTHORIZED CAUSES FOR TERMINATION — either economic reasons or health reasons.

Broadcast on Termination of Employment

Relationship: Just Causes
(Continuation of the immediately preceding transcript)
46:59

JUST CAUSES FOR TERMINATION (Art 297)

 The Er has sufficient ground to terminate the services of an Ee because of reasons arising from guilt, fault, or
negligence of an Ee.
GR: The Ee is not entitled to separation pay.
XPNs: The Ee may be given separation pay:
1. If it is expressly provided in the company policy or the CBA.
2. If the Principle of Compassionate Justice is applicable: An Ee may be allowed compensation because the
behavior is mitigated by certain circumstances, such as length of service or that it is the first offense, etc. But, this
principle is allowed only if the Ee’s infraction has nothing to do with moral depravity (moral turpitude).

Just Cause
Just Causes require compliance with requisites for the same to be a valid basis (DO 147-15):

A) Serious Misconduct
1. There must be a misconduct;
2. The misconduct is of a grave and aggravated character;
3. The misconducted is related to the performance of the Ees duties; and
4. There must be proof that because of that grave misconduct in relation to his/her functions, the
Ee has become unfit to continue working for the Er.

Notes on Misconduct:
 The improper behavior is done intentionally, willfully, knowingly.
 The Ee knows that s/he violates a rule of action, or neglects doing something.
 Misconduct implies that there is a wrongful intent; a malicious desire to do something that is wrong or
improper.
 A mere error of judgment is not the kind of misconduct that is contemplated by the rules; there must be in
intent and it is of a grave or aggravated character.

Examples of Grave Misconduct:

 A teacher forces a co-teacher to pass a student whom the former is related to.
 An Ee insults or shames a co-Ee.
 A subordinate who utters obscene and offensive words while the supervisor is giving work instructions.
 Using company facilities for personal use.
 Immorality among married co-employees (extra-marital relationship: grossly immoral conduct)
 Sexual Harrassment - automatically considered a grave misconduct especially when it is committed by one
who has moral ascendancy over the victim.

Examples of Causes for Termination of Employment which the SC Struck Down:

 “Nagbuntalan ang co-Ees sa workplace due to a private matter; e.g. unpaid debt.”
 A teacher who falls in love with a student an eventually marries the latter.

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 “(G.R. No. L-49549) If the two eventually fell in love, despite the disparity in their ages and academic levels,
this only lends substance to the truism that the heart has reasons of its own which reason does not know.
But, definitely, yielding to this gentle and universal emotion is not to be so casually equated with immorality.”
 A single teacher gives birth outside of wedlock to the common child of an unmarried co-teacher.
Grossly Immoral Conduct
 It means willful, flagrant, shameless conduct of an Ee that shows an indifference to what the community says.
 It is the conduct that is so corrupt that it is almost criminal.
 It is a conduct that has no principles at all.
 “Nakakahiya to a very high degree.”
 It revolts the common sense of decency.

B) Willful Disobedience or Insubordination (Refusal to perform a duty)

1. There is disobedience or insubordination;
 The emphasis is on disobedience to substantial matter, not on trivial matters.
 The disobedience is resorted to without regard of the consequences of disobeying.
2. The disobedience must be willful or intentional
 characterized by wrongful or perverse attitude; there is malice in the picture;
3. The order violated must be reasonable, lawful, and known to the Ee
Note: Unknowingly violating an order is not willful disobedience
What is reasonable order?
 It depends always on the facts and circumstances. It’s not only concerned with the
kind and character of order being given but also the manner in which they are
made.
4. The order must pertain to the duties for which s/he has been engaged.

Examples of Disobedience:
 An Ee is prohibited to use the company vehicle without authority; but the Ee still used the same for personal
gains.
 An Ee who smokes within the radius of a non-smoking area.
 Non-compliance with the submission of regular sales report.

What if the Ee does not obey a transfer order, if the transfer order is valid?
If it is a valid transfer order, the Ee must obey; otherwise, if there is an unjustified refusal to comply, the Ee is
deemed to have committed insubordination.

Requisites of a valid Transfer Order

1. It is done in good faith
2. The transfer is necessary, or required by the business
3. It does not demote or cause the Ee undue hardship or inconvenience.
Note: If the order is unlawful, then an Ee cannot be punished for disobeying an unlawful order.

C) Gross and Habitual Neglect of Duties

 There is a neglect of duty or failure to perform a duty;
Gross: “They know the consequences but they still do it.”
Habitual: “Hindi lang minsan.”
Neglect: “Dependent on the circumstances; but here it is the ordinary vigilance*
(diligence) of the person. Hindi yung vigilance* of a good father of a family.” [25:25]

 The test of negligence: Did the person who did the alleged negligent act used reasonable care and caution
that an ordinarily prudent person would have used in the same situation?

 It must be willfully and deliberately intended to be mindless of his/her responsibilities; or being so reckless in
his/her behavior without considering the consequences.
 Note: SC ruled that a conduct is negligence when a prudent person would have perceived or anticipated
the effects of his/her action and yet proceeded to do so even if there will be unwanted consequences.

Principle of Totality of Infractions

The number of violations committed by the Ee during the period of his/her employment should be considered in
determining what penalty should be imposed. The infractions should be related or at least have a semblance of
relationship to each other for it to be put together in determining whether or not there was gross and habitual
neglect.

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Examples of Gross and Habitual Neglect
 A bank appraiser who makes repeated wrong valuations to the detriment of the bank.
 Tardiness and absenteeism
 Inefficiency and Incompetence; provided that these are repeated, as reflected in the performance evaluation.
 Note: Abandonment is a form of neglect of duty but not necessarily a habitual neglect of duty. If you abandon
your work once, you cannot abandon it again as you could have not returned. Abandonment is not repeated.

D) Fraud or willful breach of trust

1. The Ee does something (act) wrong;
2. does not do something (omission) s/he was supposed to do; or
3. hides something (concealment) and the Ee has the duty not to hide the same.
 The act, omission, or concealment is done against the Er/ Representative, and it must be in
connection wit the Ee’s work.
 It implies willfulness or wrongful intent because there’s bad faith on the part of Ee to fail to do
his/her job to the detriment of the business of the Er.

Examples of Fraud or Willful Breach of Trust

 Falsification of time records.
 An Ee who uses a defective weighing scale at a cargo counter to facilitate “pagkukupit”
 Tampering entries in sales invoices
 Theft of company property

Related to Fraudulent Acts is LOSS OF CONFIDENCE

Note: In a sense, there is loss of confidence in fraud or breach of trust because of the actions of the Ee.
 Sometimes, if the Er cannot terminate the employment of the Ee on the ground of breach of trust, it’s usually
loss of confidence that is resorted to.

 Loss of confidence: The Ee does something that justifies the loss of trust and confidence of the Er where the
Ee is in a position of trust and confidence.
 However, the loss of trust and confidence should not be simulated. It must be in bona fide good faith
and must be genuine, not a mere afterthought.
 Breach of Trust:Ee is not in a position of trust and confidence.

Requisites of Loss of Trust and Confidence to be Valid Ground for Dismissal of Ee:
1. Must be substantial and not arbitrary;
2. Must be based on clearly founded facts (there must be proof)

Two Kinds of Ee for which the Loss Trust and Confidence can apply
1. First Class: Managerial Ees. Those who are vested with powers or prerogatives to lay down policies and hire,
fire, transfer, lay-off, suspend, or effectively recommend such to management. With a mere suspicion that a
managerial Ee is committing acts inimical; there is nothing that can be done as it is the prerogative of the Er.
2. Second Class: Cashiers, Auditors, Property Custodians, and Other Workers who in the normal and routine
exercise of their functions regularly handle significantly larger amounts of property or money of the Er. Loss of
trust and confidence for this second group of Ees requires proof.

Is an attitude problem a just cause to dismiss an Ee?

 Yes, and attitude problem can fall under any of the just causes for dismissal of an Ee; thus, is in itself a ground
to dismiss an Ee. The Er has the right to protect itself, especially if the Ee’s actions are already detrimental to
good working relationships and upsets the teamwork, then there is a just cause.
 But it must be proven along with compliance to due process.

E) Commission of a crime or offense

 There is an act or omission punishable by law and it is committed by the Ee against the Er, or
against Er’s immediate family member, or any authorized representative (The authorized
representative is an “extended official family member of Er”)

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 F) Analogous Causes
 There is an act or omission of the Ee that is similar to the other just causes.
 But the act or omission must be willful on the part of the Ee.
 To be considered “analogous,” these acts must be specified in company rules or regulations or
policies. If it is not specified expressly, even if it is similar, it cannot be considered as an
analogous cause.

*Nasamid si Prosec.

Broadcast on Termination of Employment

Relationship: Authorized Causes
22:50
Authorized Causes of Termination of Employment
 Instances that arise from economic/ business reasons or from health reasons

Authorized Causes
Economic Reasons
Note: This refers to the “health of the company.”
This is due to the necessity or exigencies of business, or changing economic conditions, e.g. COVID-19.

A. Installation of Labor-saving Devices

 It refers to the reduction of the number of workers in any workplace made necessary by the introduction of
labor saving machinery or devices (Section 4 (m) DEPARTMENT ORDER NO. 147-15) .

Pre-requisites:
1. Introduction of machinery, equipment, or other devices
2. The introduction of these devices are done in good faith
3. There must be a valid reason for introducing these labor-saving devices; i.e. save costs, enhance efficiency
4. There is no other option available to the Er other than to install labor-saving devices; and
5. That the selection of the Ees whose services will be terminated based on fair and reasonable criteria.
a) The criteria depends on the er as long as it is valid: i.e. status, competence (performance evaluation),
seniority, skills, ability, performance, tenure, physical fitness, age, financial hardship.
b) Last In First Out (LIFO) Rule
i. It is an equalizing factor: The last to be hired will be the first to be fired.

 Labor-saving device: any machine, gadget, equipment which results in less work of humans in order to
accomplish the same thing.
 Examples: robotic cleaners; washing machine; clothes dryer; dishwasher; cars

B. Redundancy
 It refers to when the Ee services exceed what the company actually needs.
 Superfluity is existent.

Elements:
1. There is the existence of positions or services of Ees that have become superfluous;
 The positions or services exceed what is needed by the business to operate in an economical and
efficient;
 Consider good faith and the use of fair and reasonable criteria
2. There must be adequate proof of redundancy.
3. The management must have approved the restructuring.
 When there is redundancy, the organization is going to be restructured.
 The LIFO Rule shall apply; unless, an Ee volunteers to be separated from employment

C. Retrenchment or Downsizing or Lay-off

Note: Business does not close.
 Retrenchment must be done in good faith; that it is done to prevent or cut losses and is not resorted to only
to defeat the right of Ees to security of tenure.

Elements:

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1. The retrenchment, downsizing, or laying-off of Ees is reasonably necessary; otherwise, there will be business
losses;
2. If there are losses, these must be substantial, serious, actual, and real. There is proof.
 If the losses are only expected, the expected losses re reasonably imminent.
3. The losses must be proved by sufficient and convincing evidence.
4. There must be fair and reasonable criteria
 i.e. status, competence (performance evaluation), seniority, skills, ability, performance, tenure, physical
fitness, age, financial hardship.
 The LIFO Rule shall apply; unless, an Ee volunteers to be separated from employment

Causes that push a company to retrench Ees

 Business recession
 Lack of work
 If a business is converted to conservatorship.

D. Closure or Cessation of Operations

 The company closes; unlike in retrenchment that the laying-off of Ees is only to prevent losses.

Conditions:
1. There is a decision of management to close or cease the operation entirely;
2. The decision must be bona fide; in good faith;
3. There is no other option available to the Er except to close or cease operations.

Health Reasons (Art 299)

Note: This refers to the “physical health/ illness of the Ee.”

Elements:
1. The Ee is suffering from any illness;
2. The continued employment of the Ee is prohibited by law, or prejudicial to his/her health or his/her co-
employees
3. There is a certification from the competent public health authority (public doctor), that the disease cannot be
cure within six months even with proper medical treatment.
 Example: An Ee of Balatok Mines* was terminated from employment because of his illness. The
separation benefits were given to him. Suddenly, he filed a case with the NLRC questioning his
separation. The NLRC ruled in his favor because the certification of his illness was issued by Dr.
Mendoza, the company physician of Balatok.

Restrictions for Illness as a Ground:

1. TB patient or a person who had TB — A tuberculosis patient is entitled to work; provided that s/he is issued a
certification of fitness to work by the company’s accredited health provider.
Note: The reason why a company physician or health provider is allowed is because what will be issued is fitness to
return to work; whereas the ground for dismissal is unfitness.

Separation Pay

GROUND SEPARATION PAY

at least one (1) month pay or at least one (1) month pay for every year of
installation of labor-saving
service, whichever is higher, a fraction of six (6) months considered as one
devices or redundancy
(1) whole year
one (1) month pay or at least one-half (1/2) month pay for every year of
retrenchment
service, whichever is higher, a fraction of six (6) months considered as one
(1) whole year.
closure or cessation of business one (1) month pay or at least one-half (1/2) month pay for every year of
operation not  due to serious service,  whichever is higher, a fraction of six (6) months considered as one
business losses (1) whole year.
closure due to serious business
no  Separation pay required
losses or financial reverses:
at least one (1) month salary or one-half (1/2) month salary for every year
disease of service, whichever is higher, a fraction of six (6) months considered as
one (1) whole year.
NOT entitled to separation pay except as expressly provided for in the
just causes
company policy or CBA