Employee Demand Letter Response in the Philippines
(A practitioner-style guide, updated to June 24 2025)
Scope & Purpose – This article explains what a demand letter from an employee is, why it matters, and how employers (or their counsel/HR) should draft a legally sound response under Philippine law. It also touches on the employee’s perspective so both sides can appreciate the procedural and substantive rules that will frame any ensuing dispute.
1. Anatomy of an Employee Demand Letter
| Typical Heading | Key Content | Governing Basis |
|---|---|---|
| Addressee & Date | Identifies employer, franchisee, or corporate officers | Civil Code Art. 1311 (relativity of contracts) |
| Statement of Facts | Unpaid wages, illegal dismissal, non-remittance of SSS/PhilHealth/Pag-IBIG, harassment, etc. | Labor Code (now renumbered) Arts. 301-306 on wages & benefits |
| Specific Monetary/Non-Monetary Demands | Backwages, 13th-month pay, reinstatement, damages | Constitution Art. XIII § 3; Labor Code Arts. 94, 279 |
| Deadline to Comply | Usually 5-15 days; can be shorter if counsel letter | No statute; governed by reasonableness test under Art. 19, Civil Code |
| Notice of Further Action | Filing before DOLE-NCMB under the Single-Entry Approach (SENA) or a complaint before the NLRC/NCMB | R.A. 10395; NCMB Procedural Guidelines |
2. Legal Framework Employers Must Know
Constitutional Policies
- Labor is a “primary social economic force”; protection of labor is a constitutional mandate (Art. II § 18, Art. XIII § 3).
Labor Code of the Philippines (PD 442, as renumbered 2017)
- Wage & Benefit Claims – Arts. 99-120 (minimum wage, 13th-month); non-payment may also trigger criminal liability under Art. 303 (formerly 288).
- Security of Tenure – Arts. 294-299 (illegal dismissal, separation pay).
- Due Process for Discipline/Dismissal – Two-notice rule and opportunity to be heard; leading cases Jaka Food Processing v. Pacot (G.R. 151378, Mar 10 2005) and King of Kings Transport v. Mamac (G.R. 166208, Jun 29 2007).
Department of Labor & Employment (DOLE) Regulations
- D.O. 147-15 – Guidelines on termination; clarifies twin-notice, “reasonable period” (5 calendar days) to submit written explanation.
- SENA Rules (D.O. 107-10; R.A. 10395) – Mandatory 30-day conciliation-mediation before docketing a labor complaint, except for certain cases (e.g., wage distortion strikes).
Civil Code & Jurisprudence
- Art. 19-21 (abuse of rights & quasi-delict) may ground moral or exemplary damages.
- Gotesco v. Ganao (G.R. 196364, Feb 13 2019) reminds employers that ignoring a demand letter can be evidence of bad faith.
Data Privacy Act (R.A. 10173)
- Personnel files used to evaluate the claim must be processed with legitimate purpose, proportionality, and transparency.
3. Strategic Road-Map for Responding
Step 1 – Acknowledge Receipt Immediately
- Send a brief email/letter within 24-48 hours acknowledging the demand and promising a detailed reply.
- Stops the “silence-is-admission” argument and shows good faith.
Step 2 – Internal Investigation & Documentation
- Gather payroll records, contracts, timecards, disciplinary memos, statutory remittance proofs.
- Interview supervisors and co-employees, but caution them on confidentiality and retaliation prohibitions (Art. 118, Labor Code).
Step 3 – Legal Assessment & Decision Tree
| Scenario | Recommended Course | Risks if Mishandled |
|---|---|---|
| Claim is meritorious (e.g., payroll slip shows wage deficit) | Compute liability, include penalties (10% simple interest p.a. per Nacar v. Gallery Frames), and prepare payment or settlement offer. | Criminal wage cases; 10% NLRC attorney’s fees; moral & exemplary damages. |
| Claim is partially valid | Offer payment for uncontested portion, explain legal basis for rejecting the rest; invite SENA. | Partial admission may preclude later defenses if not carefully worded. |
| Claim is baseless | Set out factual defense + legal citations; propose SENA or internal grievance route. | Potential perception of stone-walling; could escalate to strike or social-media backlash. |
Step 4 – Drafting the Full Response Letter
Key Parts
- Heading & Reference – Include company address, employee’s address, “Re: Response to Demand Letter dated …”
- Brief Chronology of Facts – Stick to undisputed facts first.
- Employer’s Position – Cite specific provisions (e.g., “Art. 301, Labor Code”); if relying on management prerogative, cite General Milling Corp. v. CA.
- Disposition / Action Plan – Payment enclosed OR explanation of why claim cannot be granted.
- Offer of Amicable Settlement – Reference SENA or voluntary arbitration; signal openness to discuss.
- Deadline for Employee to Respond – Provide a reasonable period (usually 5-10 days).
- Non-Admission Clause – “This reply is without prejudice and is not an admission of liability.”
- Signature & Authority – Signed by HR head or authorized counsel; attach board resolution if the demand is substantial.
Tone – Professional, factual, non-defamatory; never attack the employee’s character.
Step 5 – Deliver & Keep Proof of Service
- Personal service with receiving copy, registered mail (with registry return card), or reputable courier.
- Keep same in a “Demand-Response File” for five (5) years per BIR Record-Keeping Rules; seven (7) years is safer.
4. Settlement, Quitclaims & Releases
Essential Validity Tests (per Periquet v. NLRC, G.R. 91298, Jun 22 1990)
- Voluntary, with informed consent
- Reasonable and adequate consideration
- Signed in the presence of DOLE or NCMB personnel (best practice)
Tax Implications – Separation pay due to redundancy or illness (Sec. 32(B)(6)(b), NIRC) is tax-exempt; others may be taxable.
Notarization & Witnessing – Always have at least one management witness and the employee sign each page; notarize in the employee’s hometown if practicable to avoid coercion allegations.
5. What Happens if the Employer Fails to Respond?
| Consequence | Legal Route | Typical Timeline |
|---|---|---|
| SENA Request (conciliation) | NCMB | Notice within 5 days of filing; 30-day window to settle |
| NLRC Complaint | Labor Arbiter proceedings | Employer must file Position Paper within 10 calendar days from receipt of summons; decision in ≈ 90 days |
| Criminal Wage Complaint | DOLE Regional Office → Prosecutor | Subpoena within 15 days; trial under regular rules |
| Constructive Dismissal | NLRC → CA → SC | Remedy includes backwages + reinstatement or separation pay; can stretch 5-7 years |
Ignoring the letter can be cited as proof of bad faith, inflating moral/exemplary damages (Art. 2224-2229, Civil Code).
6. Employee Perspective: Best Practices Before Sending a Demand
- Exhaust Internal Grievance Mechanisms – The CBA or the Employee Handbook often has a timeline.
- Compute Claims Carefully – Include basic salary, allowances, COLA, 13th-month, service incentive leave, premium pay, etc.
- Attach Evidence – Payslips, timecards, screenshots of chats directing overtime.
- Elect the Proper Remedy – Some claims (e.g., SSS non-remittance) may be filed with SSS or DOLE Regional Office instead of NLRC.
7. Checklist for HR/Counsel
- ☐ Acknowledged demand within 48 hours
- ☐ Secured all payroll & attendance records
- ☐ Reviewed employment contract & policy manuals
- ☐ Evaluated merits with counsel
- ☐ Drafted and served response within agreed timeline
- ☐ Logged matter in risk register; briefed executives
- ☐ Set calendar reminder for possible SENA/NLRC summons
- ☐ Ensured Data Privacy compliance (data minimization, secure storage)
8. Template: Basic Response Letter
(For illustration; tailor to facts & counsel advice)
XYZ Manufacturing Corporation 123 J.P. Rizal St., Makati City June 30 2025
Mr. Juan D. Cruz [Address]
Re: Response to your Demand Letter dated June 23 2025
Dear Mr. Cruz:
We acknowledge receipt on June 24 2025 of your demand for alleged underpayment of basic wages and overtime for the period March 1 to May 31 2025. After a thorough review of our payroll records, swipe logs, and approved overtime forms, we confirm an overtime differential of ₱7,200.00, which arose from a system cutoff error. A check in that amount plus 10% legal interest (₱120.00) is enclosed.
Your remaining claims for unpaid rest-day premium and service incentive leave cannot be granted, as records show you were paid corresponding premiums (see attached payslips) and have already exhausted your five-day SIL credits for 2025.
We remain open to discuss and settle any outstanding issues through the Single-Entry Approach (SENA) at the National Conciliation and Mediation Board (NCMB). Kindly let us know your availability within ten (10) calendar days from receipt hereof.
This response is made in good faith and without prejudice to any legal defenses available to the Company.
Very truly yours,
Maria S. Reyes HR & Legal Affairs Manager
9. Frequently Asked Questions
| Question | Short Answer |
|---|---|
| Is there a statutory deadline to answer? | No, but 5-10 days is industry practice; DOLE may view long delays as bad faith. |
| Can the employer talk directly with the employee? | Yes, but advisable to have HR present and minutes taken; avoid ex parte coercion. |
| Are emails valid evidence? | Yes; E-Commerce Act (R.A. 8792) recognizes electronic documents, subject to authenticity. |
| What if the employee hires a union lawyer? | Reply through counsel; still keep tone conciliatory—you may face a CBA grievance or strike vote. |
| Do we need board approval for settlement? | Best practice for amounts beyond the signatory’s authority under the company’s Limits of Authority policy. |
10. Closing Caveats
This article is for informational purposes and does not constitute legal advice. Laws, department orders, and jurisprudence evolve; always consult a Philippine labor practitioner for specific cases.