Basic Labor Code Workers Rights

What is the right to security of tenure?

The right to security of tenure means that a regular employee shall remain employed unless his or her services are terminated for just or authorized cause and after observance of due process of law.

What are the provisions in the Labor Code that protect the right to security of tenure?

The Labor Code protects the right of security of tenure, specifically through the following provisions:

a. Arts. 280-281 – Differentiation of kinds of employment;

b. Arts. 282-285 – Just and authorized causes for termination of employment;

c. Art. 227 – Observance of administrative due process;

d. Art. 279 – Right to contest dismissal;

e. Art. 277 [b] – Right of workers to demand proof that dismissal is for just or authorized cause;

f. Art. 223 – Right to appeal and to reinstatement pending appeal;

g. Art. 279 – Right to reinstatement without loss of seniority rights, full backwages and other benefits;

h. Arts. 283-284 – Right to separation pay; and

i. Art. 288 – Right to retirement benefits.

What is the difference between a just and authorized cause of termination?

Just cause refers to a wrong doing 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 about by changing economic or business conditions of the employer.

What are the just causes for termination?

The just causes for termination by the employer are:

a) Serious misconduct;

b) Willful disobedience of employer’s lawful orders connected with work;

c) Gross and habitual neglect of duty;

d) Fraud or breach of trust;

e) Commission of a crime or offense against the employer, employer’s family or representative; and

f) Other analogous causes.

The just causes for termination by the employee are:

a) Serious insult by the employer or his or her representative on the honor and person of the employee;

b) Inhuman and unbearable treatment accorded the employee by the employer or his or her representative;

c) 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; and

d) Other analogous causes.

What are the authorized causes for termination?

The authorized causes for termination are:

a) Installation of labor-saving devices;

b) Redundancy;

c) Retrenchment to prevent losses;

d) Closure or cessation of business; and

e) 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.

What is due process in the context of termination of employment?

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.

What are the components of due process in termination cases?

In a termination for a just cause, due process involves the two-notice rule:

A notice of intent to dismiss specifying the ground for termination, and giving to said employee reasonable opportunity within which to explain his or her side;

A hearing or conference where the employee is given opportunity to respond to the charge, present evidence or rebut the evidence presented against him or her;

A notice of dismissal indicating that upon due consideration of all the circumstances, grounds have been established to justify the termination.

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 (DOLE).

May an employee question the legality of his or her dismissal?

Yes. The legality of the dismissal may be questioned before the Labor Arbiter of the National Labor Relations Commission (NLRC), through a complaint for illegal dismissal. In establishments with a collective bargaining agreement (CBA), the dismissal may be questioned through the grievance machinery established under the CBA. If the issue is not resolved at this level, it will be submitted to voluntary arbitration.

In a case of illegal dismissal, who has the burden of proving that the dismissal is legal?

The employer has the burden of proving that the dismissal was legal.

On what grounds may an employee question his or her dismissal?

An employee may question his or her dismissal based on substantive or procedural grounds.

The Substantive aspect pertains to the absence of a just or authorized cause supporting the dismissal.

The Procedural aspect refers to the notice of termination or the opportunity to present an explanation.

What are the rights afforded to an unjustly dismissed employee?

An employee who is dismissed without just cause is entitled to any or all of the following:

a) Reinstatement without loss of seniority rights, or separation pay if reinstatement is not possible;

b) Full backwages, inclusive of allowances and other benefits or their monetary equivalent from the time compensation was withheld from him or her up to the time of reinstatement;

c) Damages and attorney’s fees if the dismissal was done in bad faith.

What is reinstatement?

Reinstatement means restoration of the employee to the position from which he or she has been unjustly removed.

Reinstatement without loss of seniority rights means that the employee, upon reinstatement, should be treated in matters involving seniority and continuity of employment as though he or she had not been dismissed from work.

When a Labor Arbiter rules for an illegal dismissal, reinstatement is immediately executory even pending appeal.

In what forms may reinstatement be effected?

Reinstatement may be actual or payroll in nature, at the option of the employer.

What is meant by ‘full backwages’?

Full backwages refer to all compensations, including allowances and other benefits with monetary equivalent, that should have been earned by the employee but was not collected by him or her because of unjust dismissal. It includes all the amounts he or she could have earned starting from the date of dismissal up to the time of reinstatement.

In cases of illegal dismissal, may a dismissed employee who has found another job still be entitled to collect full backwages from his or her former employer?

Yes. Full backwages is a form of penalty imposed by law on an employer who illegally dismisses his or her employee. The fact that the dismissed employee may already be employed and earning elsewhere does not extinguish the penalty.

What if the former position of the employee no longer exists at the time of reinstatement?

In that case, the employee shall be given a substantially equivalent position in the same establishment without loss of seniority rights and to backwages from the time compensation was withheld up to the time of reinstatement.

Suppose it is the establishment that no longer exists at the time an order for reinstatement is made, what benefits can the employee claim?

The worker is entitled to a separation pay equivalent to at least one-month pay or at least one month pay for every year of service whichever is higher, a fraction of at least six months shall be considered as one whole year. The period of service is deemed to have lasted up to the time of closure of the establishment. He or she may also claim backwages to cover the period between dismissal from work and the closure of the establishment.

What is separation pay?

In authorized cause terminations, separation pay is the amount given to an employee terminated due to retrenchment, closure or cessation of business or incurable disease. The employee is entitled to receive the equivalent of one month pay or one-half month pay, whichever is higher, for every year service.

In just cause terminations, separation pay is also the amount given to employees who have been dismissed without just cause and could no longer be reinstated.

When is reinstatement not possible, such that separation pay shall be given to an illegally dismissed employee?

a) When company operations have ceased;

b) When the employee’s position or an equivalent thereof is no longer available;

c) When the illegal dismissal case has engendered strained relations between the parties, in cases of just causes and usually when the position involved requires the trust and confidence of the employer;

d) When a substantial amount of years have lapsed from the filing of the case to its finality.

May an employee dismissed for just cause be entitled to separation pay?

As a rule, no. But in instances where the just cause for dismissal is other than serious misconduct or moral turpitude, the employee may be awarded Financial Assistance in the amount of one month’s pay as a form of compassionate justice.

Is proof of financial losses necessary to justify retrenchment?

Yes. Proof of actual or imminent financial losses that are substantive in character must be proven to justify retrenchment.

Is proof of financial losses necessary to justify redundancy?

No. In redundancy, the existing manpower of the establishment is in excess of what is necessary to run its operation in an economical and efficient manner.

Are there other conditions before an employee may be dismissed on the ground of redundancy?

Yes. It must be shown that:

Good faith in abolishing redundant position;

There is fair and reasonable criteria in selecting the employees to be dismissed, such as but not limited to less preferred status (e.g. temporary employee), efficiency and seniority.

A one-month prior notice is given to the employee as prescribed by law.

Will the failure to comply with the due process requirements invalidate a dismissal with an otherwise established just or authorized cause?

No. The employee, however, will be entitled to backwages from the time of termination till finality of the decision confirming the presence of a just or authorized cause.

What is the difference between transfer and promotion?

Promotion is the advancement of an employee from one position to another with an increase in duties and responsibilities, and is usually accompanied by an increase in salary. Promotion is a privilege and as such may be declined by the employee.

Transfer is a lateral movement that does not amount to a promotion. It constitutes a valid exercise of management prerogative, unless it is done to defeat an employee’s right to self-organization, to get rid of undesirable workers, or to penalize an employee of his or her union activities. If done in good faith, management’s decision to transfer an employee may not be questioned. An employee’s refusal to transfer may constitute willful disobedience, a just cause for his or her dismissal.

May an employer transfer an employee to another place of work without prior notice?

No, but if the urgency of the service requires a transfer, and such transfer is exercised in good faith for the advancement of the employer’s interest and will not adversely affect the rights of the employee, the transfer may be undertaken even without the employee’s consent.

Can a non-union member avail of the grievance machinery in case of termination?

It depends. If a non-union member belonging to an appropriate bargaining unit of the recognized bargaining agent and pays agency fees to the union and accepts the benefits under the collective agreement, said non-union members may avail of the grievance machinery. On the other hand, if the non-union member is not part of the appropriate bargaining unit of the recognized bargaining agent and is expressly excluded in the collective agreements, said employee cannot avail of the grievance machinery.

What is a reasonable period for an employee subjected to dismissal to answer charges against him or her by the employer?

A reasonable period should be provided wherein the employee can answer all the charges against him or her, gather evidence and confront the witnesses against him or her. It should include the opportunity to secure the assistance of a representative who could be a union officer. Reasonableness of the period should be based, among others, on the gravity of the charges against the employee.

May an employee charged with an offense be placed under preventive suspension while he or she is preparing to answer charges filed against him or her by the employer?

Yes, but only on grounds that his or her continued presence inside the company premises poses a serious imminent threat to the life or property of the employer or his or her co-workers, and only for a period of 30 days. After 30 days, the employee should be reinstated to his or her former position or in a substantially equivalent position.

The employer, however, may extend the period of suspension provided that the employee is paid his or her wages and other benefits during the extension. If the employer decides to dismiss the employee after completion of the investigation, the employee is not bound to reimburse the amount paid to him or her during the extended period. The employer is required to immediately notify the employee in writing of a decision to dismiss him or her stating clearly the reasons for the dismissal.

Preventive suspension is not a disciplinary measure, and should be distinguished from suspension imposed as a penalty.

Is the employer’s decision on termination final?

No. A dismissed employee may still question the validity or legality of his or her dismissal by filing a complaint for illegal or unjust dismissal before the Arbitration Branch of NLRC. In such a case, the burden of proving that the dismissal is for a valid or authorized cause rests on the employer.

During the pendency of the termination case, may an employee be retained in his or her work?

An employee may be retained in his or her work even during the pendency of a termination case under the following circumstances:

1. Upon serving the preventive suspension period of 30 days; and

2. Upon management prerogative allowing the employee to be retained at work and his or her continued employment poses no serious nor imminent threat to the life or property of the employer or his or her co-employees.

May the effects of termination be suspended pending resolution of the case?

Yes. The Secretary of Labor may provisionally order a reinstatement in the event of prima facie finding that the dismissal may cause a serious labor dispute as in a strike or lock-out, or is in implementation of mass lay-off.

May the services of an employee be terminated due to disease?

Yes. The employer may terminate employment on ground of disease only upon the issuance of a certification by a competent public health authority that the disease is of such nature or at such stage that it cannot be cured within a period of six months even with proper medical treatment.

Should the employer for valid reasons suspend operations of his business, can the workers be reinstated upon resumption of operations?

If the period of suspension of operations do not exceed six months, the workers shall be reinstated to their respective positions without loss of seniority rights if they indicated their desire to resume work not later than one month from the resumption of operations of business.

If the shutdown is for a period of not more than six months such as may occur in equipment check or repair, stock inventory or lack of raw materials, the employee is only temporarily laid off and, therefore, employer-employee relationship is not severed. If it will last for a period of more than six months and is of an indefinite character, it may be considered as equivalent to closure of the establishment leading to termination of employment. In such a case, the requirements of the law and rules on employee dismissals must be observed.

EFFECTS OF TERMINATION

Just Causes	With Due Process	Without Due Process
With Just Cause	Dismissal Legal	Dismissal legal, but employee entitled to: ü Full Backwages (Serrano vs. NLRC
Without Just Cause	Dismissal illegal, but employee entitled to: Separation pay in lieu of reinstatement Backwages Damages and attorney’s fees if in bad faith	Dismissal illegal, but employee entitled to: Reinstatement Separation pay in lieu of reinstatement Backwages Damages and attorney’s fees if in bad faith
Authorized Causes	With Due Process	Without Due Process
With Authorized Cause	Dismissal Legal, but employee entitled to: ü Separation Pay	Dismissal legal, but employee entitled to: ü Separation Pay ü Full Backwages (Serrano vs. NLRC
Without Authorized Cause	Dismissal illegal, but employee entitled to: Reinstatement Separation pay in lieu of reinstatement Backwages Damages and attorney’s fees if in bad faith	Dismissal illegal, but employee entitled to: Reinstatement Separation pay in lieu of reinstatement Backwages Damages and attorney’s fees if in bad faith