The Different Grounds for Termination of Employment

Related article: Authorized causes in termination of employment

Termination of Employment means to sever the employer-employee relationship, and put an end on an employee’s current work. It can be made by the Employee through Resignation or by the Employer for just or authorized causes, as provided in the Labor Code of the Philippines.

Termination by Employee

Resignation

Resignation is the voluntary act of an employee who is in a situation where one believes that personal reasons cannot be sacrificed in favor of the exigency of the service, and one has no other choice but to dissociate oneself from employment. It is a formal pronouncement or relinquishment of an office, with the intention of relinquishing the office accompanied by the act of relinquishment. As the intent to relinquish must concur with the overt act of relinquishment, the acts of the employee before and after the alleged resignation must be considered in determining whether in fact, he or she intended to sever from his or her employment (Iladan v. La Suerte International Manpower Agency, Inc., et.al., G.R. No. 203882, dated January 11,2016).

Separation from Employment can either be voluntary (without just cause) or involuntary (with just cause).

Voluntary separation is based solely on the decision of the employee to terminate his employment, even for personal reasons. It is voluntarily tendered by the resigning employee. For this type of separation, the employee who wants to resign is required to submit a written resignation letter at least thirty (30) days before the effectivity date of his resignation. Failure to do so, the resigning employee may be held liable for damages.

In case of involuntary separation with just cause(s), the resigning employee is not required to submit a written notice or resignation letter to his employer. Article 300 (b) of the Labor Code of the Philippines provides for the aforementioned just causes, to wit:

“(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.”

An employee who voluntarily resigns is not entitled to separation pay unless otherwise stipulated in an employment contract or collective bargaining agreement, or sanctioned by established employer practice or policy. The Labor Code is devoid of any provision which grants separation pay to employees who voluntarily resign (CJC Trading, Inc., et.al., v. NLRC, et.al., G.R. No. 115884, dated July 20,1995).

Termination by Employer           

Termination by an Employer may be for a just cause or authorized cause, as the case may be. In doing so, the employer must comply with due process.

Just Causes

A dismissal based on just cause means that the employee has committed a wrongful act or omission. Article 297 of the Labor Code of the Philippines provides for said just causes, to wit:

“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.”

With regard to just cause stated in Article 297 (a) of the Labor Code of the Philippines, the Supreme Court in the case of Maula v. Ximex Delivery Express, Inc., G.R. No. 207838, dated January 25,2017, ruled that:

“Misconduct is improper or wrong conduct; it is the transgression of some established and definite rule of action, a forbidden act, a dereliction of duty, willful in character, and implies wrongful intent and not mere error in judgment. The misconduct, to be serious within the meaning of the Labor Code, must be of such a grave and aggravated character and not merely trivial or unimportant. Thus, for misconduct or improper behavior to be a just cause for dismissal, (a) it must be serious; (b) it must relate to the performance of the employee’s duties; and (c) it must show that the employee has become unfit to continue working for the employer.” (Emphasis Supplied)

 For just cause stated in Article 297 (b) of the Labor Code of the Philippines, gross negligence implies a want or absence of or failure to exercise even slight care or diligence, or the entire absence of care. It evinces a thoughtless disregard of consequences without exerting any effort to avoid them. Habitual neglect implies repeated failure to perform one’s duties for a period of time, depending upon the circumstances (Alaska Milk Corporation, et.al., v. Ponce, G.R. No. 228412, dated July 26, 2017).

For just cause stated in Article 297 (c) of the Labor Code of the Philippines, the Supreme Court in the case of Philippine Plaza Holdings, Inc. v. Episcope, G.R. No. 192826, dated February 27,2013, ruled that:

“In order for the said cause to be properly invoked, certain requirements must be complied with namely, (1) the employee concerned must be holding a position of trust and confidence and (2) there must be an act that would justify the loss of trust and confidence. x x x Primarily, it is apt to point out that proof beyond reasonable doubt is not required in dismissing an employee on the ground of loss of trust and confidence; it is sufficient that there lies some basis to believe that the employee concerned is responsible for the misconduct and that the nature of the employee’s participation therein rendered him absolutely unworthy of trust and confidence demanded by his position.”(Emphasis Supplied)

Further, for the just cause stated in Article 297 (d) of the Labor Code of the Philippines, means commission of any crime or offense punishable under the Revised Penal Code of the Philippines or under any special laws against the employer, his authorized agent or the employer’s immediate family.  A final conviction is not needed for an employee to be terminated under this just cause.

Lastly, for just cause stated in Article 297 (e) of the Labor Code of the Philippines, the phrase “other causes analogous to the foregoing” may include the following:

1. Violation of company rules and regulations;
2. Theft of property owned by a co-employee, as distinguished from theft of property owned by the employer.
3. Incompetence, inefficiency or ineptitude.
4. Failure to attain work quota.
5. Failure to comply with weight standards of employer.
6. “Attitude problem” is analogous to loss of trust and confidence.” (Chan, Joselito G., Bar Reviewer on Labor Law, 2017 Third Revised Edition, pg.312-313)

In case of termination due to any of the abovementioned just causes, the twin-notice requirement and hearing is required. It means that the employer shall serve a first notice to the employee which contains the specific ground(s) for his termination, a directive that the employee is given the opportunity to submit his written explanation within the reasonable period of five (5) days from receipt of notice, and contains a detailed narration of the facts and circumstances as basis for the charge against him. After serving the first notice, the employer shall schedule, and conduct a hearing or conference wherein the employee will be given the opportunity to be heard or to explain, and clarify his defenses against the charge against him. After determining that the termination of employment is justified, a second written notice shall be served to the employee indicating all the circumstances involved, and that grounds have been established to justify the termination of his employment.

Authorized Causes

 A dismissal based on authorized cause means that there exists a ground which the law itself allows or authorizes to be invoked to justify the termination of an employee even if he has not committed any wrongful act or omission.The authorized causes as provided in Art 298 of the Labor Code of the Philippines are as follows:

1. Installation of labor-saving devices;
2. Redundancy;
3. Retrenchment to prevent losses; or
4. Closing or cessation of operation of the establishment or undertaking.

Another authorized cause is when the employee is suffering from a disease as provided in Article 299 of the Labor Code of the Philippines, to wit:

“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 to the health of his co-employees.”

For termination of employment due to any of the abovementioned authorized causes, the concerned employee, who was terminated from work, is entitled to separation pay.

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Alburo Alburo and Associates Law Offices specializes in business law and labor law consulting. For inquiries, you may reach us at info@alburolaw.com, or dial us at (02)7745-4391/0917-5772207.

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