A Guide To Termination of Workers

Firing or Termination FAQ  (v.2022-1)

I think I need to terminate my employee. How do I check if my reason for termination is allowed?

First, you must be certain that you have grounds to terminate your employee.   The law provides a list of grounds, and you can also check your contract for additional grounds to what the law provides.  The law allows termination for “just” or “authorized” causes.

What are “just” causes?

Just causes of termination refer to:

  1. serious misconduct,
  2. willful disobedience or insubordination,
  3. gross and habitual neglect of duties,
  4. fraud or willful breach of trust,
  5. loss of confidence,
  6. commission of a crime or offense,
  7. analogous causes.

What would be considered an analogous “just” cause?

For acts or omissions to be considered as analogous causes, the same must be expressly specified in company rules and regulations or policies.

What are the “authorized” causes of termination?

Authorized causes of termination refer to:

  1. installation of labor-saving devices,
  2. redundancy,
  3. retrenchment or downsizing,
  4. closure or cessation of operation, and
  5. disease

What other grounds may be considered?

An employee may also be terminated from employment based on reasonable and lawful grounds specified in company policies and/or based on grounds provided for under Collective Bargaining Agreements (CBAs).

Do I need the grounds above, if my employee is still within the probationary period?

No. But, the probationary period can only be up to six months.

Do I have the option of simply extending the probationary period?

No. If you retain a probationary employee beyond the probationary period, the employee automatically becomes a regular employee.

If I am sure of my ground for termination, how do I fire/terminate?

You are required to notify the employee of their offense (in writing), and give them a chance to explain with at least an informal ‘hearing’ or meeting, and with a reasonable amount of time to prepare their explanation (a few days).  After the explanation is received, you are required to give another notice (in writing) of your final decision.  These notices are known as the ‘twin notice’ rule.

What is the consequence of not following the twin notice rule?

You can be liable for damages, even if the ground for termination is justified.  For practical reasons, it is important to not give reasons for employees or former employees to sue you. It is very easy for an employee to file a labor complaint, which in and of itself is already burdensome on the employer to answer. Even if an employer eventually prevails, he would have incurred significant expenses in defending against the complaint.

How do I know if I need to pay past contributions to SSS, Pag-Ibig and/or Philhealth?

In general, all employees are entitled to these benefits.  The exceptions are extremely limited. It’s best to request the agencies themselves to compute what past contributions must be paid as these can be recovered from you by the former employee if they file a labor compliant.