Introduction

In the Philippine legal framework, the dismissal of employees, particularly those with long tenure, is a sensitive matter governed by constitutional protections and statutory labor laws. The 1987 Philippine Constitution, under Article XIII, Section 3, guarantees security of tenure to workers, ensuring that they cannot be dismissed except for just or authorized causes and after observance of due process. This principle is codified in the Labor Code of the Philippines (Presidential Decree No. 442, as amended), which balances the employer's right to manage its business with the employee's right to job security.

Long-tenured employees—those who have served for many years—often enjoy heightened protections due to their accumulated service, but they are not immune to dismissal for underperformance. Underperformance typically falls under "just causes" for termination, such as gross and habitual neglect of duties or inefficiency. However, employers must navigate a rigorous procedural and substantive landscape to avoid claims of illegal dismissal, which can result in reinstatement, full backwages, and damages. This article comprehensively explores the legal basis, procedural requirements, evidentiary standards, and jurisprudence surrounding the dismissal of underperforming long-tenured employees.

Legal Basis for Dismissal

Security of Tenure and Its Limits

Security of tenure is a fundamental right, but it is not absolute. The Labor Code distinguishes between regular employees (including long-tenured ones) and others, emphasizing that regular employees can only be terminated for valid reasons. Long tenure does not create an exemption; instead, it may strengthen the employee's position in disputes, as courts often scrutinize dismissals more closely for potential discrimination or retaliation.

Just Causes Under the Labor Code

Article 297 (formerly Article 282) of the Labor Code enumerates just causes for termination, relevant to underperformance:

Serious misconduct or willful disobedience of lawful orders connected with work.
Gross and habitual neglect of duties, which is the primary ground for underperformance. "Gross" implies recklessness or wanton disregard, while "habitual" requires repetition, not isolated incidents.
Fraud or willful breach of trust reposed by the employer.
Commission of a crime against the employer or their family/representatives.
Analogous causes, such as chronic inefficiency or incompetence, provided they are similar in gravity to the enumerated causes.

For underperformance, employers often invoke gross and habitual neglect. Inefficiency alone may not suffice unless it rises to the level of neglect, as mere poor performance due to factors like age or health might not qualify without evidence of willfulness or habituality.

Authorized Causes

While underperformance is typically a just cause, it could overlap with authorized causes under Article 298 (formerly 283), such as retrenchment or redundancy. However, these require different procedures, including separation pay (one month's pay per year of service, with a minimum of one month) and notice to the Department of Labor and Employment (DOLE). Long-tenured employees dismissed under authorized causes are entitled to higher separation benefits due to their service length.

Substantive Requirements for Valid Dismissal

To substantiate underperformance, employers must prove:

Objective Standards: Performance must be measured against clear, reasonable, and known standards. These could include job descriptions, key performance indicators (KPIs), or company policies. For long-tenured employees, standards should account for any changes in roles or expectations over time.
Evidence of Underperformance: Documentation is crucial, including performance evaluations, warnings, memos, incident reports, and comparative data showing deviation from norms. Isolated poor ratings are insufficient; a pattern over time (e.g., multiple appraisal periods) is needed to establish habituality.
Willfulness or Negligence: The underperformance must not stem from excusable factors like illness, lack of training, or external circumstances. For long-tenured employees, courts may consider if decline is age-related or if the employer failed to provide support, such as retraining.
Proportionality: The penalty of dismissal must fit the offense. Lesser sanctions like suspension or demotion should be considered first, especially for long-service employees, unless the neglect is gross.

The burden of proof lies with the employer, who must present substantial evidence—more than a mere scintilla but not necessarily preponderance in civil cases. In labor disputes, the standard is substantial evidence, as per Supreme Court rulings.

Procedural Due Process: The Twin-Notice Rule

Due process is mandatory under Article 292 (formerly 277) of the Labor Code and Department Order No. 147-15 (Rules on Employee Termination). Failure to comply renders the dismissal illegal, even if a just cause exists. For long-tenured employees, strict adherence is emphasized to prevent abuse.

Step 1: Notice to Explain (First Notice)

The employer issues a written notice specifying the acts or omissions constituting underperformance.
It must detail the facts, dates, and evidence, allowing the employee to prepare a defense.
The notice should cite relevant company rules or laws violated.
Service must be personal or via registered mail to the employee's last known address.
The employee is given at least five days to respond in writing.

For long-tenured employees, the notice should acknowledge their service and explain why progressive discipline (e.g., verbal warnings, written reprimands) was exhausted or inapplicable.

Step 2: Hearing or Opportunity to Be Heard

After the response, the employer conducts an administrative hearing or conference.
This is not a formal trial but an opportunity for the employee to explain, present evidence, and question witnesses.
It can be waived if the employee fails to respond, but employers should document attempts to hold it.
Minutes or records must be kept.

Step 3: Notice of Termination (Second Notice)

If dismissal is warranted, a written notice is issued, stating the decision, summarizing the facts, evidence, and the employee's response.
It must be served similarly to the first notice.
Effective date is upon receipt or after 30 days if notice is required.

Preventive suspension (up to 30 days) may be imposed during investigation if the employee's presence poses a threat, with pay if exonerated.

Special Considerations for Long-Tenured Employees

Long tenure (e.g., 10+ years) does not alter the basic framework but influences application:

Progressive Discipline: Employers are expected to apply graduated penalties. Supreme Court cases like Philippine Long Distance Telephone Co. v. NLRC (G.R. No. 80609, 1988) stress that long service merits leniency unless offenses are grave.
Retirement Proximity: If the employee is near retirement age (60 for optional, 65 for compulsory), dismissal might be scrutinized for being a pretext to avoid retirement benefits under Republic Act No. 7641.
Health and Age Factors: Underperformance due to age or health may not qualify as neglect. The Magna Carta for Disabled Persons (RA 7277) or Senior Citizens Act (RA 9994) may apply if relevant.
Unionized Employees: If covered by a Collective Bargaining Agreement (CBA), additional procedures or just causes may apply.

Evidentiary and Documentation Best Practices

Employers should maintain:

Annual performance appraisals.
Records of coaching, training, or improvement plans.
Witness statements and data metrics.
Compliance with data privacy under RA 10173.

In disputes, the National Labor Relations Commission (NLRC) or DOLE regional offices handle complaints, with appeals to the Court of Appeals and Supreme Court.

Jurisprudence and Case Studies

Philippine Supreme Court decisions provide guidance:

Mendoza v. HMSI (G.R. No. 227915, 2018): Dismissal for inefficiency upheld where habitual neglect was proven through multiple warnings over years, despite long tenure.
Skippers United Pacific, Inc. v. NLRC (G.R. No. 217036, 2017): Court ruled that poor performance must be willful; mere subpar results due to market conditions did not justify dismissal.
Agabon v. NLRC (G.R. No. 158693, 2004): Established nominal damages for procedural lapses even if cause is valid.
Wenphil Corp. v. NLRC (G.R. No. 80587, 1989): Emphasized that long service does not excuse inefficiency but requires clear evidence.

These cases illustrate that while long tenure commands respect, it does not shield from accountability if procedures are followed.

Consequences of Illegal Dismissal

If dismissal is found illegal:

Reinstatement without loss of seniority and benefits, or separation pay if strained relations exist.
Full backwages from dismissal to reinstatement.
Moral and exemplary damages if bad faith is proven.
Attorney's fees (10% of award).

Long-tenured employees may receive higher awards due to service length.

Employer Strategies and Compliance

To mitigate risks:

Implement clear performance management systems.
Document all steps meticulously.
Consult labor lawyers or DOLE for guidance.
Offer voluntary resignation or early retirement packages as alternatives.

In summary, dismissing underperforming long-tenured employees requires meticulous adherence to substantive and procedural requirements under Philippine law. While challenging, it is feasible with proper evidence and process, upholding the balance between labor rights and management prerogatives.