This article explains, in practical detail, the substantive and procedural due process rules that govern employee termination in the Philippines—across just causes, authorized causes, special employment statuses, and common pitfalls. It includes timelines, checklists, and sample notices you can adapt.
1) Due Process in a Nutshell
Two pillars
- Substantive due process — there must be a legally valid ground for dismissal.
- Procedural due process — the employer must follow the correct steps before dismissal.
Standards of proof
- For termination cases, the employer bears the burden of proof and must present substantial evidence (relevant evidence that a reasonable mind might accept as adequate).
Consequences of lapses
- No valid ground → dismissal is illegal (reinstatement or separation pay in lieu, plus backwages and damages as may be awarded).
- Valid ground but flawed procedure → dismissal stands, but employer may be liable for nominal damages for the due process breach.
2) Substantive Due Process: Lawful Grounds
A. Just Causes (employee’s wrongful act)
(Labor Code, renumbered—formerly Art. 282; now Art. 297) Typical just causes include:
- Serious misconduct or willful disobedience of lawful orders.
- Gross and habitual neglect of duties.
- Fraud or willful breach of trust.
- Commission of a crime or offense by the employee against the employer, any immediate family member, or authorized representative.
- Analogous causes (e.g., gross inefficiency, dishonesty outside strict fraud, etc., if of similar gravity and defined in policy).
Key notes
- Loss of trust and confidence applies to genuine fiduciary roles (e.g., cash-handlers, key custodians, senior roles) or those regularly handling significant property or confidential matters.
- Neglect must usually be gross and habitual, except in particularly grave single acts.
- Company rules help establish standards and proportional penalties; ensure they’re written, disseminated, and consistently enforced.
B. Authorized Causes (business/health grounds)
(Labor Code, renumbered—formerly Arts. 283–284; now Arts. 298–299)
- Installation of labor-saving devices
- Redundancy
- Retrenchment to prevent losses
- Closure or cessation of business or undertaking
- Disease not curable within six months and continued employment is prohibited by law or prejudicial to the employee or co-workers (requires medical certification)
Separation pay (minimum)
- Labor-saving devices / Redundancy: 1 month pay per year of service, or 1 month pay, whichever is higher.
- Retrenchment / Closure not due to serious losses: ½ month pay per year of service, or 1 month pay, whichever is higher.
- Disease (with proper certification): ½ month pay per year of service, or 1 month pay, whichever is higher. (A fraction of at least 6 months is typically considered a full year.)
Documentation expectations
- Redundancy: business rationalization plan, new staffing patterns, comparative job analyses, fair selection criteria (e.g., efficiency, seniority), board or management approvals.
- Retrenchment: proof of actual or imminent losses (financial statements, audited where possible), cost-reduction measures tried, fair criteria in selection.
3) Procedural Due Process Requirements
A. For Just-Cause Dismissals: The “Twin-Notice and Hearing” Rule
First Notice (Notice to Explain, NTE)
- Written; specific narration of facts and acts complained of (not vague labels).
- Cite company rules / policies / lawful orders allegedly violated.
- Give the employee ample opportunity to be heard, typically at least 5 calendar days to submit a written explanation and evidence, and to prepare for a conference.
Opportunity to be heard
- May be through a conference or hearing where the employee can explain, present evidence, and rebut the employer’s evidence.
- A formal trial-type hearing isn’t mandatory; what matters is a genuine chance to be heard.
- If the employee requests a hearing or if credibility issues or complex facts are present, hold a hearing for prudence.
Second Notice (Notice of Decision/Termination)
- Written; states the findings, the reasons for the decision, and the effective date of termination.
- Should show that the employer considered the employee’s explanation and the evidence.
Preventive Suspension
- Allowed pending investigation if the employee’s continued presence poses a serious and imminent threat to life/property or the integrity of records.
- Maximum 30 calendar days. If the investigation extends beyond 30 days, either reinstate the employee or pay wages during the extended suspension.
B. For Authorized-Cause Terminations
30 days prior written notice to:
- The affected employee; and
- The DOLE (nearest Regional Office).
Pay separation pay (if applicable) on or before the effectivity date.
No “twin notice” is required here; the statutory 30-day dual notice and proper documentation suffice.
4) Special Employment Situations
Probationary employees
- Employer must have reasonable standards made known at engagement.
- If terminated for cause, follow twin-notice and hearing.
- If for failure to meet standards, the notice should (a) refer to the standards earlier communicated and (b) explain how the employee failed to meet them.
Fixed-term employees
- Expiry of term ends employment without the need for an authorized-cause process or separation pay (unless contract/CBA/company policy provides otherwise).
- If pre-termination for cause, follow twin-notice and hearing.
Project/Seasonal employees
- Completion of project/season ends employment (no separation pay unless provided by policy/CBA).
- If pre-completion dismissal for cause, follow twin-notice and hearing.
Abandonment
- A just cause requiring two elements: (1) failure to report for work without valid reason; and (2) clear intention to sever employment.
- Notices: first, to explain absences and return to work; second, termination if abandonment is established.
Union officers/members & disciplinary actions
- Follow CBA and company rules consistent with law; ensure non-discrimination and respect for concerted activities.
5) Remedies and Liabilities
Illegal dismissal (no valid ground):
- Reinstatement without loss of seniority rights and full backwages from dismissal until actual reinstatement.
- If reinstatement is impracticable (e.g., strained relations), separation pay in lieu of reinstatement plus backwages until finality of judgment.
- Possible moral/exemplary damages and attorney’s fees, depending on circumstances.
Valid ground but defective procedure:
- Dismissal remains valid; employer may be ordered to pay nominal damages for the due process breach (amount varies by jurisprudence and cause).
6) Practical Checklists
A. Just Cause (Twin-Notice) Checklist
- Gather and preserve evidence (documents, CCTV, system logs, witness accounts).
- Issue NTE: specific facts, alleged violations, ≥5 calendar days to respond.
- Provide access to evidence reasonably needed for the employee’s defense.
- Conduct hearing/conference when requested or when credibility issues exist; record minutes.
- Evaluate impartially; apply consistent penalties under the code of conduct.
- Issue Decision/Termination Notice with reasons and effectivity date.
- If preventive suspension, keep within 30 days (beyond that, pay).
- Turnover/final pay/COE handled per rules (final pay typically within 30 days from separation absent a shorter company/CBA commitment).
B. Authorized Cause Checklist
- Prepare business case (redundancy/ret trenchment/closure) or medical certification (disease).
- Observe fair selection criteria if not all similarly situated employees are affected.
- Serve 30-day written notice to employee and DOLE.
- Compute and pay separation pay (if applicable) by effectivity.
- Settle final pay/benefits and release COE.
7) Timelines & Counting Rules
- “At least 5 calendar days” for the employee to respond to an NTE is a widely accepted benchmark to ensure a real chance to defend.
- 30 calendar days dual notice (employee and DOLE) is mandatory for authorized causes.
- Preventive suspension: up to 30 calendar days (with pay if extended).
- When counting “per year of service” for separation pay, a fraction of at least six (6) months counts as one (1) whole year.
8) Documentation Tips
- Policies & Code of Conduct: clear definitions of offenses and calibrated penalties; proof of dissemination (acknowledgments, LMS receipts, onboarding sign-offs).
- NTE & Decision quality: detailed facts (who/what/when/where/how), cited rules, specific directives (submit explanation, attend hearing), and analysis in the decision.
- Consistency evidence: prior cases showing similar penalties for similar offenses; if deviation, explain the distinction.
- Authorized causes: organization charts before/after, savings estimates, audited financials for retrenchment, board resolutions, vendor notices for closures.
9) Preventive Suspension vs. Administrative Leave
- Preventive suspension is not a penalty; it’s a risk-control measure during investigation.
- Do not use preventive suspension for minor offenses or as a de facto punishment.
- If risk can be mitigated by reassignment or access restrictions, consider those less-intrusive options.
10) Final Pay, Certificates, Quitclaims
- Final pay should cover unpaid wages, prorated 13th month, unused convertible leaves, separation pay (if any), tax adjustments, and other accrued benefits.
- Certificate of Employment (COE) must be issued upon request, stating dates of employment and position(s).
- Quitclaims are valid only if voluntary, with full understanding, and for a reasonable consideration; they do not bar claims for illegal dismissal or statutory benefits if the law was not observed.
11) Frequently Asked Questions
Q1: Is a formal hearing always required? No. What’s essential is a real chance to be heard. But if requested or if credibility is in issue, hold one.
Q2: Can we dismiss immediately after a confession? Still issue an NTE and observe procedural steps. A confession doesn’t waive due process.
Q3: What if the employee refuses to receive the notices? Serve via registered mail to the last known address, and document attempts at personal service.
Q4: Can we dismiss a probationary employee without twin notices? If dismissal is for cause (misconduct, neglect, etc.), twin notices still apply. If for failure to meet known standards, at minimum give written notice stating the facts and standards not met, and ensure the standards were communicated at hiring.
Q5: Are small businesses exempt from these procedures? No. All employers must observe due process.
12) Sample Templates (Adapt as Needed)
A) First Notice (Notice to Explain)
Subject: Notice to Explain – [Alleged Offense] Dear [Employee Name], Based on our preliminary review, it appears that on [date/time] at [location], you [describe specific acts/omissions]. These acts, if true, may constitute a violation of [cite policy/rule/order]. You are hereby directed to submit a written explanation within five (5) calendar days from receipt of this notice, and to appear for an administrative conference on [date/time/place or video link], where you may present evidence and identify witnesses. You may review relevant documents at [where/how]. Failure to submit an explanation or attend the conference will be deemed a waiver of your right to be heard. Sincerely, [HR/Authorized Officer]
B) Preventive Suspension (if warranted)
Subject: Notice of Preventive Suspension In view of the pending investigation and because your continued presence poses a serious and imminent threat to [property/records/safety], you are placed on preventive suspension for [up to 30 calendar days] effective [date]. This is not a penalty. You will be notified of developments accordingly. [HR/Authorized Officer]
C) Second Notice (Decision/Termination)
Subject: Notice of Decision – [Outcome] Dear [Employee Name], After evaluating your explanation dated [date], the evidence you submitted, and the records presented at the conference on [date], we find that [findings of fact]. These acts constitute [just cause: specify] under [policy/Labor Code]. Accordingly, your employment is terminated effective [date]. Please coordinate with HR for clearance and final pay processing. [HR/Authorized Officer]
D) Authorized Cause (Redundancy/Retrenchment) – Employee Notice
Subject: 30-Day Notice of Termination Due to [Redundancy/Retrenchment/Closure] Dear [Employee Name], This is to inform you that due to [business reason], your position [title] has been [abolished/affected]. Your employment will end 30 days from receipt of this notice, or on [effectivity date]. You will receive separation pay in accordance with law and company policy, along with your final pay and Certificate of Employment. [HR/Authorized Officer]
13) Employer & Employee Best Practices
For Employers
- Keep policies current, acknowledge receipt, and train supervisors.
- Apply penalties consistently; document everything.
- When in doubt, err on the side of more process (longer response time, fuller hearings).
For Employees
- Respond on time and in writing; attach evidence.
- Attend conferences; request documents you reasonably need.
- If you disagree with the decision, consider filing a complaint within the prescriptive period.
14) Quick Reference: What to Use, When
| Situation | Substantive Ground | Procedure |
|---|---|---|
| Theft by cashier | Just cause (serious misconduct/fraud/breach of trust) | Twin notices + opportunity to be heard; preventive suspension if risk exists |
| Role eliminated after reorg | Authorized cause (redundancy) | 30-day notice to employee & DOLE + separation pay |
| Company closing due to losses | Authorized cause (closure) | 30-day notice to employee & DOLE; separation pay if not due to serious losses |
| Probationary failed standards | Failure to meet known standards | Written notice citing standards + facts; observe fairness; (twin notice if for cause) |
| Long absence, no contact | Just cause (abandonment) | NTE to explain and return; termination notice if elements proven |
Final Thoughts
Observing both the right ground and the right steps is essential. Most disputes arise not from the absence of a ground, but from gaps in process or documentation. If you build your case carefully, communicate clearly, and apply rules consistently, you reduce legal risk and uphold fair treatment—exactly what due process is designed to ensure.