Labor Law and Social Legislation › Suspension and Termination of Employment › Termination or Suspension by Employer

4. Due Process Requirements (DO 147, s. 2015)

Article III: Bill Of Rights

Sec. 1. No person shall be deprived of life, liberty, or property without due process of law, nor shall any person be denied the equal protection of the laws

Due process

Under the Labor Code, the requirements for the lawful dismissal of an employee by his employer are two-fold: the substantive and the procedural. Not only must the dismissal be for a valid or authorized cause as provided by law, but the rudimentary requirements of due process, basic to which are that an opportunity to be heard and to defend oneself must be observed before an employee may be dismissed. (Metro Eye Security v. Salsona, G.R. No. 167367, 2007)

To constitute valid dismissal from employment, two requisites must concur: (1) the dismissal must be for a just or authorized cause; and (2) the employee must be afforded an opportunity to be heard and to defend himself. (Nacague v. Sulpicio Lines, G.R. No. 172589, 2010)

Notice requirement not complied with by mere issuance of suspension order

Suspension orders are not enough to meet the notice requirement necessary in termination. These do not give the employee ample warning that he may be terminated for his infractions, only that he is being suspended for them. The notice must sufficiently apprise the employee of the instances or for which he is to be terminated, and he must not have already been punished for these (ex. with suspension) (Erector v. NLRC, G.R. No. 167218, 2010)

Compliance Order

Must observe due process in administrative proceedings:

  • Alleged violator must first be heard and given adequate opportunity to present evidence on his behalf.
  • Evidence presented duly considered before any decision reached.
  • Decision is based on substantial evidence
  • Decision based on evidence presented in the hearing, or at least contained in the record and disclosed to the parties.
  • Decision should explain the issues involved and the reasons for the decisions rendered.

Jaka Food v. Pacot, G.R. No. 151378, 2005

If the dismissal is based on a just cause but the employer failed to comply with the notice requirement, the sanction to be imposed upon him should be tempered because the dismissal process was, in effect, initiated by an act imputable to the employee.

If the dismissal is based on an authorized cause but the employer failed to comply with the notice requirement, the sanction should be stiffer because the dismissal was initiated by the employer’s exercise of management prerogative.

Elements of Redundancy

  • There must be superfluous positions or services of employees;
  • The positions or services are in excess of what is reasonably demanded by the actual requirements of the enterprise to operate in an economical and efficient manner;
  • There must be good faith in abolishing redundant positions;
  • There must be fair and reasonable criteria in selecting the employees to be terminated; and
  • There must be an adequate proof of redundancy such as but not limited to the new staffing pattern, feasibility studies/ proposal, on the viability of the newly created positions, job description and the approval by the management of the restructuring. (DO 147- 15)

Due Process Requirements of the Retrenchment Program:

  • The retrenchment is necessary to prevent or minimize losses and such losses are proven;
  • Written notice is given to the employees and the Department of Labor and Employment at least one month before the intended date of retrenchment;
  • Payment of separation pay equivalent to at least one month pay or at least ½ month pay for every year of service, whichever is higher;
  • The employer exercise its prerogative to retrench employees in good faith for the advancement of its interest; and
  • Fair and reasonable criteria in ascertaining who will be dismissed or retained. (Azucena, The Labor Code with Comments and Cases Volume II-B, 886-887, 2016)

Due Process Requirements for Termination

Employer Must Conduct Separate Investigation and Hearing

While the company may validly dismiss the employees expelled under the union security upon the recommendation by the union, this dismissal should not be done hastily and summarily thereby eroding the employees' right to due process, self-organization and security of tenure. Even if there are valid grounds to expel the union officers, due process requires that these union officers be accorded a separate hearing by respondent company. (Malayang Samahan ng Manggagawa sa M. Greenfield v. Ramos, G.R. No. 113907, 2000)

Due Process Requirements for Termination

Requisites for Valid Dismissal

  • Substantive Due Process: The dismissal must be for cause; and
  • Procedural Due Process: The employee must be afforded an opportunity to be heard and defend himself (Fujitsu Computer Products v. CA, G.R. No. 158232, 2005)

Employer may not substitute the required prior notice & opportunity to be heard with the mere payment of 30 days' salary. (PNB v. Cabansag, G.R. No. 157010, 2005)

TWIN-NOTICE REQUIREMENT

The employer has the burden of proving that a dismissed worker has been served two notices:

  • First written notice: served on the employee specifying the ground or grounds for termination, and giving said employee reasonable opportunity within which to explain his side.
  • Second written notice: served upon the employee, indicating that upon due consideration of all the circumstances, grounds have been established to justify his termination.
First Notice 1. Contain specific causes or grounds for termination as provided under Art. 297 and company policies, if any;
2. Contain a detailed narration of the facts and circumstances that will serve as basis for the charge against the employee. (general description of the charge will not suffice); and
3. Contain a directive that the employee is given the opportunity to submit his written explanation within the reasonable period of FIVE (5) CALENDAR DAYS from receipt of the notice:
◦ to enable him to prepare adequately for his defense;
◦ to study the accusation against him;
◦ to consult a union official or lawyer;
◦ to gather data and evidence; and
◦ to decide on the defenses he will raise against the complaint. (DO 147-15)
Second Notice After determining that termination of employment is justified, the employer shall serve the employees a written notice of termination indicating that:
1. all circumstances involving the charge/s against the employee have been considered; and
2. grounds have been established to justify the severance of his employment.

An employee may be dismissed only if the grounds mentioned in the pre-dismissal notice were the ones cited for the termination of employment. (Erector Advertising Sign Group, Inc. v. Cloma, G.R. No. 167218, 2010)

Guiding principles in hearing requirement

  • "Ample opportunity to be heard" means any meaningful opportunity (verbal or written) given to the employee to answer the charges against him and submit evidence in support of his defense, whether in a hearing, conference or some other fair, just and reasonable way.
  • A formal hearing or conference becomes mandatory only when requested by the employee in writing or substantial evidentiary disputes exist or a company rule or practice requires it, or when similar circumstances justify it.
  • The "ample opportunity to be heard" standard in the Labor Code prevails over the "hearing or conference" requirement in the implementing rules and regulations (Perez v. PT&T, G.R. No. 152048, 2009)

Procedural Requirements in Termination Cases (Just Cause and Authorized Cause)

JUST CAUSES AUTHORIZED CAUSES
First Notice specifying the grounds for which dismissal is sought.

Hearing or opportunity to be heard.

Second Notice of the decision to dismiss		 Notice to the following:

Employee; and DOLE

At least 1 month prior to effectivity of the separation

Requisites for Notice in Authorized Causes

  • Notice is not needed when Employee consented to the retrenchment or voluntarily applied for one (Int’l Hardware v. NLRC, G.R. No. 80770, 1989)
  • Notice must be individual, and not collective (Shoppers Gain Supermart v. NLRC, G.R. No. 110731, 1996)
  • Voluntary Arbitration satisfies notice requirement for authorized causes (Revidad v. NLRC, G.R. No. 111105, 1995)

Consequences for Non-Compliance of Procedural Due Process

  • Just or Authorized Cause Exists + Due Process.
  • Valid Dismissal
  • For a valid authorized-cause dismissal, the employer pays statutory separation pay when required; closure or cessation of operations due to serious business losses or financial reverses is an exception.
  • Just or Authorized Cause + No Due Process
  • Valid Dismissal
  • The dismissal remains valid, but the employer is liable for nominal damages for violating procedural due process—generally ₱30,000 for a just-cause dismissal or ₱50,000 for an authorized-cause dismissal.
  • Employer pays statutory separation pay for an authorized cause when required; closure or cessation of operations due to serious business losses or financial reverses is an exception.
  • No Just or Authorized Cause + Due Process
  • Illegal Dismissal
  • Employer is liable to reinstate employee or pay separation pay.
  • Award reinstatement without loss of seniority rights and full backwages; if reinstatement is no longer feasible, award separation pay in lieu of reinstatement, in addition to full backwages. Note: Payment of backwages is an independent remedy, in addition to either reinstatement or separation pay.
  • No Just or Authorized Cause + No Due Process
  • Illegal Dismissal
  • Employer is liable to reinstate employee or pay separation pay.
  • Award reinstatement without loss of seniority rights and full backwages; if reinstatement is no longer feasible, award separation pay in lieu of reinstatement, in addition to full backwages. Note: Payment of backwages is an independent remedy, in addition to either reinstatement or separation pay.