The 2022 Guide to the Termination of Regularized Employees covers what an HR Officer needs to know about the process for terminating Regularized Employees in the Philippines, including Just Cause and Authorized Cause, the Administrative Hearing Process for both, and useful reminders about the Notice to Explain.
It is important to know & follow the correct Process when considering the termination of a Regularized Employee.
If you are a HR practitioner in the Philippines your role is to balance both the needs of the company and those of its employees.
And you are already aware that the laws that grant termination of regularized employees for certain causes are the same laws that protect an employee’s security of tenure.
Below I’ve provided an overview of Employee Termination in the Philippines and added links with actual Termination stories and cases. I also cover the Administrative Hearing Process to help a busy HR Practitioner comply with Philippine Labor law.
If you have any specific questions regarding the Termination of Regularized Employees please contact me.
Termination of Employment has strict requirements under Philippine Labor Law.
If you are considering the Termination of a Regularized employee, then you will need to determine which legal cause applies. You will also need to follow the Admin Hearing Process. Both are guided by Philippine Labor Law.
Do you have a problem employee?
Not following Philippine Labor Law is costly!
Separation Pay or fines can be levied against the company by DOLE (Department of Labor and Employment).
An employer uses 2 types of legal causes when considering Termination of Employment:
An employee’s health situation may also be a reason for Termination.
Let’s first talk about Just Causes.
Termination can take place under Just Cause when the employee is at fault.
Just Causes are listed in Article 282 of the Labor Code and reproduced below:
• Serious Misconduct or willful disobedience by the employee of the lawful orders of his employer or representative in connection with his work
• Gross and Habitual Neglect by the employee of his duties
• Fraud or Willful Breach by the employee of the trust reposed in him by his employer or duly authorized representative
• 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
• Other causes analogous to the foregoing
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There are several legal grounds that can be used for the Termination of Regularized Employees.
You and I may have our own notions about which specific situations correspond to the above.
However, these are technical terms around which the Supreme Court has built Jurisprudence that defines each and provides guidance as to what conditions must be present for any one to be invoked.
For instance, Loss of Confidence can only be applied to two types of employees that have an employer’s trust and confidence:
• An employee with Managerial functions; OR
• An employee who manages and safeguards his employer’s money or property
It also stresses that Loss of Confidence only applies to acts which are deliberate, work-related, and backed up by substantial evidence.
There’s an entire body of doctrine which examines what constitutes fraud in labor, this in addition to the doctrine defining the Admin Hearing Process that must be followed to determine whether such fraud exists or not in the case of a particular employee.
You need to know Labor Law to properly do your job as an HR Officer.
What this means to you as an HR Practitioner is that to effectively Terminate an employee, you need to understand what each of the Grounds means legally and what process you need to follow to comply with the legal process in order to best serve your company.
Considering the repercussions if a Labor Arbiter determines that the employee’s dismissal was against the law, the stakes can be just as high for the company as they are for the employee.
This necessitates the close study of the Grounds and Admin Hearing Process on the part of HR, as well as coordination with legal counsel.
When it comes to terminating an employee using Just Causes the HR Practitioner must follow a specific set of steps and a particular Administrative Hearing Process.
You will need the following:
Let’s take each one in turn.
What is a Notice to Explain and how is it used in Termination for Just Cause?
The term Notice To Explain is often shortened to NTE by HR personnel but employees may not know what it means and ask for the NTE meaning. It may also be called a Show Cause Memo or Show Cause Order. It is the start of the Admin Hearing Process under Just Cause.
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A Notice to Explain is the first step when terminating an employee due to Just Causes.
A Notice to Explain is a written notice to the employee. It should have the following:
The Notice To Explain should also:-
When sending an NTE a signed receipt is also good practice. You could be required to present evidence that you correctly followed the Just Cause Admin Hearing Process later on.
In our modern world we also use Text, Emails and Work Platforms to deliver messages direct to employees. It can be considered good practice to either send the Notice To Explain to the employee through these mediums as well, OR advise them that an important letter has been sent to their home address through these channels.
It is important to note that it will be harder to evidence in court that you have followed the correct process if you use any of these mediums as the primary way of delivering the Notice To Explain, rather than a physical letter delivered to their home with a Receipt Request.
What is the Administrative Hearing Process in Termination for Just Cause?
The Admin Hearing Process is the main opportunity an employee has to air his side.
An an HR Practitioner it is important that you follow the Administrative Hearing Process correctly.
During the Hearing the employee can present facts in his defense to counter the employer’s charge. The employee can also bring along counsel.
An employee has the opportunity to explain his side during an Administrative Hearing.
What if an employee does not show up to this Hearing?
Some employees try to avoid this step in an effort to avoid the Admin Hearing Process and later claim that the company did not follow due process.
However, the law recognizes that this isn’t the employer’s fault, especially if you can prove that a letter about the Hearing was sent to the employee. (This is why it is important to request a Signed Receipt of the letter).
By providing an opportunity to be heard, you have complied with the law.
It is up to the employee to now appear.
It is also good practice to have and keep an attendance sheet for all participants attending the Administrative Hearing Process meeting.
You will have to issue a Notice of Termination if it is found that the employee should be terminated under Just Cause after the Administrative Hearing Process.
The Notice of Termination is a written letter that is ideally given to the employee in person. If that isn’t possible, then sending it through registered mail to his last known address can suffice.
A notice of Termination may result after Management has decided on the employee’s case.
You will need to state:
By complying with the Administrative Hearing Process and correctly identifying the Grounds needed for Termination, you will be following Philippine Labor Law and complying with Termination Philippines law.
