Module 12

SEPARATION AND
TERMINATION OF
EMPLOYMENT
 Objectives
1. Cite the difference between just causes and authorized causes
of termination;
2. Describe due process in the context of termination of
employment; and
3. Discuss and explain the provisions of the Labor Code of the
Philippines on Termination of Employment and Retirement from
Service

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 Introduction
Terminating an employee in the Philippines is taken very seriously and can be a complex
process, especially after the employee is regularized. The Philippine Constitution says, no
involuntary servitude in any form shall exist, except as punishment for a crime whereof the
party shall have been duly convicted. In view of the prohibition on involuntary servitude, an
employee is given the right to resign under Art. 285 of the Labor Code. The provision
recognizes two kinds of resignation: without cause and with cause. If the resignation is
without cause, the employee is required to give a 30-day advance written notice to the
employer, to enable the employer to look for a replacement to prevent work disruption. If the
employee fails to give a written notice, he or she runs the risk of incurring liability for damage.
The same provision also indicates the just causes for resignation with cause:
serious insult to the honor and person of the employee;
inhuman and unbearable treatment;
crime committed against the person of the employee or any of the immediate
members of the employee’s family.
other analogous causes.
In this second type of resignation, the employee need not to serve a written notice. Forced
resignation is not allowed and is considered “constructive” dismissal, a dismissal in disguise.
Employee retirement is either voluntary of compulsory under Art. 287 of the Labor Code.
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 TERMINATION BY EMPLOYER
An equality of rights exists between employer and employee. While the employer
cannot force the employee to work against his or her will, neither can the
employee compel the employer to continue giving him or her work if there is a
lawful reason not to do so.

Just causes are blameworthy acts on the part of the employee such as serious
misconduct, willful disobedience, gross and habitual neglect of duties, fraud or
willful breach of trust, commission of a crime and other analogous causes (Art.
282 of Labor Code).

Authorized causes are of two types: business reasons and disease. The business
reasons could be: installation of labor-saving device, redundancy, retrenchment,
and closure or cessationo of operation (Art. 283 of Labor Code).
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Before the employer can terminate employment on the ground of disease, he
must obtain from a competent public health authority a certification that the
employee’s disease is of such a nature and at such a stage that it can no longer
be cured within a period of six months even with medical attention (Art. 284,
Labor Code; Implementing Rules of Book VI, Labor Code).

Those hired on temporary basis, that is, for a “term” or “fixed period” are not
regular employees but are “contractual employees.” Consequently, there is no
illegal dismissal when their services are terminated by reason of the expiration
of their contracts.

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JUST AND AUTHORIZED CAUSES
Just cause refers to a wrongdoing committed by the employer or employee on
the basis of which the aggrieved party may terminate the employer-employee
relationship. Authorized cause refers to a cause brought by changing economic
or business conditions of the employer.

JUST CAUSES
Causes for Termination by the Employer
Serious misconduct
Willful disobedience of employer’s lawful orders connected with work
Gross and habitual neglect of duty
Fraud or breach of trust
Commission of a crime of offense against the employer, employer’s family orepresentative
Other analogous causes

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Causes for Termination by the Employee
Serious insult by the employer or his or her representative on the honor and person of
the employee.
Inhuman and unbearable treatment accorded the employee by the employer or his or
her representative
Commission of a crime by the employer or his or her representative against the person
of the employee or any of the immediate members of his or her family
Other analogous causes

AUTHORIZED CAUSES
Installation of labor-saving device
Redundancy
Retrenchment to prevent losses
Closure or cessation of business
Disease not curable within six months as certified by competent public authority, and
continued employment of the employee is prejudicial to his or her health or to the
health of his or her co-employees
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 SEVERANCE PAY WITH TERMINATION
separation pay is required to be paid to the employee when there is termination
of employment by the employer for an authorized cause, the amount of which
depends on the cause. If the termination is due to the installation of labor-
saving devices or redundancy, the separation pay is one month’s pay for every
year of service or one month pay, which ever is higher (Art. 283 or Labor Code).

if the termination is due to retrenchment to prevent losses, or closure or

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 DUE PROCESS
Due process means the right of an employee to be notified of the reason for
his or her dismissal and, in case of just causes, to be provided the
opportunity to defend himself or herself.
In a termination for an authorized cause, due process means a written notice
of dismissal to the employee specifying the grounds given, at least 30 days
before the date of termination. A copy of the notice shall be furnished the
Regional Office of the Department of Labor and
Employment of the Philippines (DOLE).
PRESIDENTIAL DECREE NO. 442 - A DECREE INSTITUTING A LABOR CODE THEREBY
REVISING AND CONSOLIDATING LABOR AND SOCIAL LAWS TO AFFORD PROTECTION
OF, LABOR, PROMOTE EMPLOYMENT AND HUMAN RESOURCES DEVELOPMENT AND
INSURE INDUSTRIAL PEACE BASED ON SOCIAL JUSTICE (Labor Code of the
Philippines)
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 BOOK SIX
POST EMPLOYMENT

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Title I
TERMINATION OF EMPLOYMENT
Art. 278. Coverage. The provisions of this Title shall apply to all establishments or
undertakings, whether for profit or not.

Art. 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 other privileges
and to his full backwages, inclusive of allowances, and to his other benefits or
their monetary equivalent computed from the time his compensation was with
held from him up to the time of his actual reinstatement. (As amended by
Section 34, Republic Act No.6715, March 21, 1989)

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Art. 280. Regular and casual employment. The provisions of written agreement to the
contrary not with standing and regardless of the oral agreement 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 83 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.

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Art. 281. Probationary

employment. Probationary employment shall not exceed six (6)
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 beconsidered a regular
employee.
Art. 282. Termination by employer. An employer may terminate an employment for any
of the following 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.

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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.
Art. 283. Closure of establishment and reduction of personnel. The employer may also
terminate the employment of any employee due to the installation of laborsaving 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 Ministry 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 his 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.
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Art. 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 to the health of
his co-employees: Provided, That he is paid separation pay equivalent to at least one (1)
month salary or to one-half (1/2) month salary for every year of service, whichever is
greater, a fraction of at least six (6) months being considered as one (1) whole year.
Art. 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 (1) 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;

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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.

Art. 286. When employment not deemed terminated. The bona-fide suspension of the
operation of a business or undertaking for a period not exceeding six (6) 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 (1) month from the
resumption of operations of his employer or from his relief from the military or civic duty.

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 Title II

RETIREMENT FROM THE SERVICE

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
therein. 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.
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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 ten (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 under Article 288 of this Code.

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