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Termination By Employer

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Whether you are an employer or employee, when it comes to termination of employment it’s important to know your rights and obligations under the law. Let’s take a close look.

 

The right to security of tenure of an employee is granted under the 1987 Philippine Constitution and the Labor Code of the Philippines (both of which you can find in the Resources section on our Homepage). An employer cannot terminate an employee except for what are termed ‘Just Causes’ or ‘Authorized Causes’.

Article 297 of the Labor Code of the Philippines enumerates the Just Causes for terminating an employee as follows:

  1. Serious misconduct or willful disobedience by the employee of the lawful orders of his employer or representative in connection with his work;

  2. Gross and habitual neglect by the employee of his duties;

  3. Fraud or willful breach by the employee of the trust reposed in him by his employer or duly authorized representative;

  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 representatives; and

  5. Other causes analogous to the foregoing.

Article 298 of the Labor Code of the Philippines, meanwhile, enumerates the Authorized Causes for terminating an employee as follows:

  1. Installation of labor-saving devices;

  2. Redundancy;

  3. Retrenchment to prevent losses; and

  4. Closure or cessation of operation of the establishment.

An employer may also terminate 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 pursuant to Article 299 of the Labor Code of the Philippines.

Before terminating an employee, the employer must observe procedural due process. This varies depending on whether an employee is being terminated on the ground of just causes or on the ground of authorized causes.

The case of Unilever Philippines Inc. vs. Maria Ruby Rivera, G.R. No. 201701, 03 June 2013, provides the procedural due process to be observed before termination of an employee based on a just cause thus:

  1. First written notice to the employee containing the specific causes or grounds for termination against them, and a directive that the employees are given the opportunity to submit their written explanation within a reasonable period. “Reasonable opportunity” under the Omnibus Rules means every kind of assistance that management must accord to the employees to enable them to prepare adequately for their defense. This should be construed as a period of at least five (5) calendar days from receipt of the notice to give the employees an opportunity to study the accusation against them, consult a union official or lawyer, gather data and evidence, and decide on the defenses they will raise against the complaint.

  1. A hearing or conference during which the employee concerned, with the assistance of counsel if employee so desires, is given opportunity to respond to the charge, present his evidence or rebut evidence presented against him or her; and

  1. A written notice of termination served on the employee indicating upon due consideration of all circumstance, grounds has been established to justify his or her termination.

However, it must be noted that a hearing or conference is not mandatory so long as the employee has been given ample opportunity to be heard.  In the case of Felix B. Perez vs. Philippine Telegraph and Telephone Company, G.R. No. 152048, 07 April 2009, the Court held that, “A hearing means that a party should be given a chance to adduce his evidence to support his side of the case and that the evidence should be taken into account in the adjudication of the controversy. “To be heard” does not mean verbal argumentation alone inasmuch as one may be heard just as effectively through written explanations, submissions or pleadings. Therefore, while the phrase “ample opportunity to be heard” may in fact include an actual hearing, it is not limited to a formal hearing only. In other words, the existence of an actual, formal “trial-type” hearing, although preferred, is not absolutely necessary to satisfy the employee’s right to be heard.”

The procedural due process of terminating an employee based on authorized cause is provided in Article 298 of the Labor Code of the Philippines, to wit:

  1. Written Notice to the employee at least one (1) month before the intended date of termination; and

  2. Written Notice to the Department of Labor and Employment at least one (1) month before the intended date of termination;

An employee’s termination would be considered illegal if the employer did not observe the afore-stated due process.

I hope this information has been useful. Don’t forget, if you have a labor-related problem, we are here to help.

And we find solutions.

Atty. Cindy Climaco.  Sept. 12, 2018

LINK :  Labor Code of the Philippines


Demotion….Is it Legal?

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The case of Norkis Trading Co., Inc. vs. Melvin Gnilo[1] defines “demotion” as a situation in which an employee is relegated to a subordinate or less important position constituting a reduction to a lower grade or rank, with a corresponding decrease in duties and responsibilities, and usually accompanied by a decrease in salary.

 

In the Philippines, the Courts have recognized that management has considerable latitude in regulating all aspects of employment, including the freedom to transfer and reassign employees according to the requirements of its business.

 

However, the transfer of an employee may constitute constructive dismissal when it amounts to “an involuntary resignation resorted to when continued employment is rendered impossible, unreasonable or unlikely; when there is a demotion in rank and/or a diminution in pay; or when a clear discrimination, insensibility or disdain by an employer becomes unbearable to the employee.”[2]

 

From the foregoing, you might infer that a demotion constitutes constructive dismissal; and if that is indeed so, how is it that many companies regularly ‘get away with’ demoting employees?

 

Well, to clarify, demotion only constitutes constructive dismissal when no reasonable or valid cause is shown for demoting the employee, or when said demotion is an act of clear discrimination, insensibility or disdain by an employer.

 

In fact, the case of Danilo Leonardo vs. National Labor Relations Commission[3] provides that the right to demote an employee falls within the prerogative of the management. The Court held, however, that the due process required by law in dismissals also applies to demotions since these likewise affect the employment of a worker whose right to continued employment, under the same terms and conditions, is also protected by law. Moreover, considering that demotion is, like dismissal, also a punitive action, the employee being demoted should, as in cases of dismissal, be given a chance to contest the same.

 

In sum, as long as there are reasonable grounds for demoting an employee and said demotion is coupled with the twin-notice requirement, demotion is allowed and does not constitute constructive dismissal.

 

Atty. Cindy Climaco

[1] G.R. No. 159730, 11 February 2008

[2] Benguet Electric Cooperative vs. Josephine Fianza, G.R. No. 158606, 09 March 2004

[3] G.R. No. 125303, 16 June 2000


Atty. Cindy Climaco asks: Is There Divorce in the Philippines?

Did you know that aside from Vatican City the Philippines is the only country left in the world where divorce remains illegal? Yes, you read that correctly, divorce is not allowed in the Philippines (except under very specific circumstances, which I will come to later).

Generally speaking, there are two ways for married Filipinos to separate, namely: 1) Legal Separation pursuant to Article 55 of the Family Code of the Philippines; and 2) Annulment pursuant to Article 45 of the Family Code of the Philippines.

There are instances where divorce is judicially recognized here in the Philippines, but it only applies where the marriage contracted is between a Filipino and a Foreigner. Under paragraph 2 of Article 26: “Where a marriage between a Filipino citizen and a foreigner is validly celebrated and a divorce is thereafter validly obtained abroad by the alien spouse capacitating him or her to remarry, the Filipino spouse shall likewise have capacity to remarry under the Philippine law”.

However, recently, the Supreme Court held in the case of Republic of the Philippines vs. Marelyn Tanedo Manalo, G.R. No. 221029, 24 April 2018, that, a foreign divorce decree that was initiated and obtained by a Filipino spouse is now judicially recognized in our courts.

The Supreme Court interpreted Paragraph 2 of Article 26 of the Family Code of the Philippines based on its intent. It stated that the Court would not follow the letter of the statute when to do so would depart from the true intent of the legislature or would otherwise yield conclusions inconsistent with the general purpose of the act. Laws have ends to achieve, and statutes should be construed as not to defeat but to carry out such ends and purposes.

Thus, the Court held that, “the purpose of Paragraph 2 of Article 26 is to avoid the absurd situation where the Filipino spouse remains married to the alien spouse who, after a foreign divorce decree that is effective in the country where it was rendered, is no longer married to the Filipino spouse. The provision is a corrective measure to address the anomaly where the Filipino spouse is tied to the marriage while the foreign spouse is free to marry under the laws of his or her country”.

Now I come to the ‘specific circumstances’ I mentioned earlier. Aside from the divorce obtained abroad under Paragraph 2 of Article 26, the Philippines also recognizes divorce obtained by virtue of Presidential Decree No. 1083, known as the “Code of Muslim Personal Laws of the Philippines.”

The Philippines recognizes divorce obtained pursuant to P.D. 1083 as long as both parties are Muslims, or wherein only the male party is a Muslim and the marriage is solemnized in accordance with Muslim law. However, under Article 45 of P.D. 1083, divorce may be granted only after the exhaustion of all possible means of reconciliation between the spouses.

So, to sum up, a Filipino who validly contracted his or her marriage with a foreign national and obtained a divorce decree abroad may now file a petition for recognition of foreign judgment in the regular court, while Muslims may file a petition for divorce before the Shari’a Courts.  But, for now, that’s as far as it goes.

Atty. Cindy T. Climaco

LINKS:

The Family Code of the Philippines : EO No. 209. July 1987.

The Code of Muslim Personal Laws of the Philippines: PD No 1083


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