Introduction

In the Philippine labor landscape, the Certificate of Employment (COE) serves as a vital document for employees transitioning between jobs or seeking new opportunities. It is a formal attestation from the employer verifying an individual's employment history, including details such as position held, duration of service, and sometimes compensation. Governed primarily by the Labor Code of the Philippines (Presidential Decree No. 442, as amended) and relevant issuances from the Department of Labor and Employment (DOLE), the COE is not merely a courtesy but a legal requirement under certain circumstances. A key question that arises in employment disputes and HR practices is whether employers can include the reason for an employee's termination in this certificate. This article explores the legal framework, permissible contents, potential risks, and implications for both employers and employees in the Philippine context.

Legal Basis for the Certificate of Employment

The obligation to issue a COE stems from Article 279 of the Labor Code, which mandates that employers provide a certificate of employment upon request by a terminated employee. This provision is reinforced by DOLE Department Order No. 147-15, which outlines rules on the disposition of labor standards cases, and Department Order No. 18-02, series of 2002, on the registration of contractors and subcontractors, though the core requirement applies broadly to all employers.

More specifically, DOLE Advisory No. 06, series of 2020, and earlier guidelines emphasize that employers must issue a COE within three (3) days from the employee's request, free of charge. Failure to comply can result in administrative sanctions, including fines imposed by DOLE regional offices. The COE is intended to facilitate the employee's re-employment by providing factual verification of their work history, without serving as a tool for judgment or prejudice.

Standard Contents of a Certificate of Employment

A typical COE in the Philippines includes the following essential elements:

Employee's full name and position or designation.
Dates of employment (start and end dates).
Nature of work or duties performed.
Salary or compensation details (optional, but often included for visa or loan purposes).
A statement confirming the employee's separation from the company, such as "separated due to resignation" or "employment terminated."

These contents are designed to be factual and neutral. DOLE guidelines, including those from the Bureau of Labor Relations, stress that the certificate should be straightforward and avoid subjective assessments. For instance, including performance evaluations or disciplinary records is generally discouraged, as the COE is not equivalent to a clearance certificate or a reference letter.

Permissibility of Stating the Reason for Termination

The central issue is whether employers can explicitly state the reason for termination in the COE. Philippine labor law does not expressly prohibit including the cause of termination, but it imposes significant caveats to prevent abuse.

Voluntary Separation vs. Involuntary Termination

Resignation or Voluntary Separation: If the employee resigns, the COE may simply state "resigned" without further elaboration. Including a reason, such as "personal reasons" or "better opportunities," is permissible if mutually agreed upon or if it reflects the employee's stated cause. However, employers are advised to keep it minimal to avoid misinterpretation.
Termination for Just or Authorized Causes: Under Articles 282-284 of the Labor Code, terminations can be for just causes (e.g., serious misconduct, willful disobedience) or authorized causes (e.g., redundancy, retrenchment). If the termination is upheld as legal by DOLE or the courts, employers might argue that stating the reason is factual. However, DOLE issuances, such as Department Advisory No. 01, series of 2015, caution against including derogatory information that could hinder the employee's future employability. This aligns with the principle of "blacklisting" prohibition under Article 286 of the Labor Code, which makes it unlawful for employers to furnish false or defamatory statements about an employee to prospective employers.

Judicial and Administrative Interpretations

Philippine jurisprudence provides guidance on this matter. In cases like People's Broadcasting Service (Bombo Radyo Phils.), Inc. v. Secretary of DOLE (G.R. No. 179652, May 8, 2009), the Supreme Court emphasized the protective nature of labor laws, favoring employees in disputes. Courts have ruled that COEs should not contain prejudicial remarks, as they could constitute constructive defamation or violate the employee's right to due process.

For example, if an employer states "terminated for gross negligence" in a COE, and this is later contested and overturned in a labor arbitration, the employee may claim damages for moral injury or lost opportunities. The National Labor Relations Commission (NLRC) has handled cases where employees successfully argued that such inclusions amounted to "malicious certification," leading to awards of backwages or separation pay.

DOLE's position, as articulated in various labor advisories, is that reasons for termination should only be included if they are neutral and non-damaging, such as "end of contract" for project-based employees or "closure of business." For contentious terminations, employers are encouraged to omit the reason entirely or state "separated from service" to maintain neutrality.

Exceptions and Special Cases

Government Employment: In the civil service, under Civil Service Commission (CSC) Memorandum Circular No. 12, series of 2002, certificates of service may include reasons for separation if required for official records, but even here, derogatory details are minimized.
Probationary Employees: For those terminated during probation, the COE may note "failed to qualify as regular employee," but without elaborating on specifics to avoid litigation.
Overseas Filipino Workers (OFWs): Under the Migrant Workers and Overseas Filipinos Act (Republic Act No. 8042, as amended), COEs for OFWs must comply with POEA (Philippine Overseas Employment Administration) rules, which prohibit statements that could affect repatriation or future deployment.

Risks and Implications for Employers

Including the reason for termination carries risks for employers:

Liability for Defamation: If the stated reason is proven false or exaggerated, the employee can file a civil suit for damages under Articles 19-21 of the Civil Code, which address abuse of rights.
Administrative Penalties: DOLE can impose fines ranging from PHP 1,000 to PHP 10,000 per violation for non-issuance or improper issuance of COE.
Reputational Harm: Employers risk being seen as vindictive, potentially affecting talent acquisition.

To mitigate these, many companies adopt a policy of issuing "neutral" COEs, confirming only basic facts. HR best practices, informed by the Philippine Association of Legitimate Service Contractors (PALS) and similar bodies, recommend consulting legal counsel before adding any cause-related details.

Remedies for Employees

If an employee receives a COE with an objectionable reason for termination:

Request for Amendment: The employee can formally request the employer to revise the certificate, citing DOLE guidelines.
File a Complaint with DOLE: Through the Single Entry Approach (SEnA) under Department Order No. 107-10, disputes can be mediated swiftly.
Labor Arbitration: Escalate to the NLRC for illegal dismissal claims, where the COE's content may serve as evidence.
Civil Action: Sue for damages if the statement causes actual harm, such as job loss elsewhere.

Employees are entitled to a clean COE, and persistent refusal by the employer can lead to mandatory issuance orders from DOLE.

Best Practices and Recommendations

For employers:

Adopt a standard COE template approved by legal teams.
Train HR personnel on DOLE guidelines.
Document terminations separately in internal files, not in the COE.

For employees:

Request the COE in writing immediately upon separation.
Review the document carefully and seek DOLE assistance if needed.
Maintain personal records of performance to counter any potential negative implications.

Conclusion

In summary, while Philippine law does not outright ban employers from stating the reason for termination in a COE, it strongly discourages inclusions that could be prejudicial or derogatory. The overriding principle is to protect the employee's right to seek new employment without undue hindrance, balancing this with the employer's need for accurate record-keeping. Employers should err on the side of caution, opting for neutral language to avoid legal pitfalls. Employees, meanwhile, have robust remedies to challenge improper certifications. As labor laws evolve, staying informed through DOLE updates is essential for compliance and fairness in the workplace. This framework underscores the Philippines' commitment to labor rights, ensuring that the COE remains a tool for empowerment rather than obstruction.