Employee Termination During Sick Leave under Philippine Labor Law

Introduction

In the Philippine labor landscape, the relationship between employers and employees is governed primarily by the Labor Code of the Philippines (Presidential Decree No. 442, as amended), along with relevant Department of Labor and Employment (DOLE) issuances, Supreme Court jurisprudence, and international labor standards ratified by the country, such as those from the International Labour Organization (ILO). A critical aspect of this framework is the protection of employees during periods of illness or sick leave. Terminating an employee while on sick leave raises significant legal concerns, as it intersects with principles of security of tenure, just and authorized causes for dismissal, due process, and non-discrimination.

The Constitution of the Philippines, under Article XIII, Section 3, mandates the State to afford full protection to labor, ensuring security of tenure and humane working conditions. This constitutional imperative underpins labor laws that generally prohibit arbitrary dismissals, especially when an employee is vulnerable due to health issues. However, termination is not absolutely barred during sick leave; it must align with specific legal grounds and procedures. This article explores the intricacies of employee termination during sick leave, including entitlements, prohibitions, procedural safeguards, remedies, and jurisprudential insights, all within the Philippine context.

Sick Leave Entitlements and Benefits

Before delving into termination, it is essential to understand sick leave as a protective mechanism for employees. Under Philippine law, sick leave is not a statutory entitlement for all private sector employees in the same way as vacation leave. Instead, it is typically provided through collective bargaining agreements (CBAs), company policies, or voluntary employer practices. However, the Social Security System (SSS) administers sickness benefits for covered employees who are unable to work due to illness or injury.

Key elements include:

SSS Sickness Benefits: Eligible employees who have paid at least three monthly SSS contributions in the 12 months preceding the semester of sickness can claim benefits. The benefit is equivalent to 90% of the average daily salary credit, payable for up to 120 days in one calendar year, provided the employee notifies the employer and SSS within specified periods. This applies to non-work-related illnesses.
Company-Provided Sick Leave: Many employers offer paid sick leave as a fringe benefit, often ranging from 5 to 15 days per year, accumulative or not, depending on policy. If provided, these leaves must be administered fairly and without discrimination.
Maternity, Paternity, and Other Special Leaves: Related but distinct are leaves under Republic Act No. 11210 (Expanded Maternity Leave Law), Republic Act No. 8187 (Paternity Leave Act), and Republic Act No. 9262 (Violence Against Women and Their Children Act), which include health-related components but are not strictly sick leave.

During sick leave, employees retain their employment status, and the period is not considered abandonment or grounds for dismissal unless proven otherwise through due process.

Grounds for Termination under the Labor Code

The Labor Code delineates two categories of termination: just causes (Article 297, formerly Article 282) and authorized causes (Article 298, formerly Article 283, and Article 299, formerly Article 284). Termination during sick leave must fall under one of these to be valid; otherwise, it constitutes illegal dismissal.

Just Causes

Just causes pertain to employee fault or misconduct and include:

Serious misconduct or willful disobedience.
Gross and habitual neglect of duties.
Fraud or willful breach of trust.
Commission of a crime against the employer or their family.
Analogous causes.

An employee's absence due to legitimate sick leave does not qualify as neglect of duties or abandonment. Abandonment requires clear intent to sever the employment relationship, evidenced by overt acts, and cannot be inferred from mere sick leave, even if prolonged. Supreme Court rulings, such as in Arc-Men Food Industries, Inc. v. NLRC (G.R. No. 130638, 2000), emphasize that illness excuses absence, and employers must accommodate reasonable recovery periods.

Authorized Causes

Authorized causes are business-related or health-related and include:

Installation of labor-saving devices.
Redundancy.
Retrenchment to prevent losses.
Closure or cessation of operations.
Disease (Article 299).

The disease provision is particularly relevant to sick leave scenarios. Article 299 states: "An employer may terminate the services of an employee who has been found to be suffering from any disease and whose continued employment is prohibited by law or is prejudicial to his health as well as to the health of his co-employees." This requires:

A certification from a competent public health authority (e.g., DOLE-accredited physician or government health officer) confirming the disease and its prejudicial nature.
Payment of separation pay equivalent to at least one month's salary or one-half month's salary for every year of service, whichever is higher.

Not all illnesses during sick leave qualify; the disease must be chronic, incurable, or contagious in a manner that endangers others. Temporary conditions like flu or minor injuries do not suffice. For instance, tuberculosis might qualify if certified as prejudicial, but recovery periods must be considered.

Procedural Requirements for Termination

Even with a valid ground, termination during sick leave demands strict adherence to due process, as outlined in Article 292 (formerly Article 277(b)) and DOLE Department Order No. 18-02.

Twin-Notice Rule: For just causes, the employer must issue a first notice specifying the grounds and giving the employee an opportunity to explain (at least five days). A hearing or conference may follow. A second notice then informs of the decision. For authorized causes, a 30-day advance notice to the employee and DOLE is required, along with separation pay.
Burden of Proof: The employer bears the onus to prove the validity of termination. In cases involving disease, medical evidence is crucial.

Failure to comply renders the dismissal illegal, entitling the employee to reinstatement, backwages, and damages.

Prohibitions and Special Protections

Philippine law prohibits termination based on discriminatory grounds, including health status, under various statutes:

Republic Act No. 7277 (Magna Carta for Disabled Persons): Protects persons with disabilities from dismissal due to impairment, unless it prevents performance of essential functions.
Republic Act No. 11166 (HIV and AIDS Policy Act): Bars termination solely due to HIV status; confidentiality and non-discrimination are mandated.
Mental Health Act (Republic Act No. 11036): Ensures employees with mental health conditions are not dismissed arbitrarily and are entitled to reasonable accommodations.
COVID-19 Related Issuances: During the pandemic, DOLE advisories (e.g., Labor Advisory No. 17-20) prohibited termination of employees under quarantine or with COVID-19, classifying such as illegal.

Unionized employees or those on probation enjoy additional safeguards under CBAs or probationary rules, where sick leave does not extend probationary periods unduly.

Remedies for Illegal Dismissal

If terminated unlawfully during sick leave, employees can seek redress through:

DOLE Complaint: File with the National Labor Relations Commission (NLRC) for illegal dismissal, seeking reinstatement without loss of seniority, full backwages from dismissal to reinstatement, and moral/exemplary damages if bad faith is proven.
Computation of Backwages: As per Bustamante v. NLRC (G.R. No. 111525, 1996), backwages include allowances and benefits.
Separation Pay in Lieu of Reinstatement: If reinstatement is infeasible (e.g., strained relations), separation pay is awarded, typically one month's pay per year of service.
Criminal Liability: Under Article 293 (formerly Article 278), illegal termination can lead to fines or imprisonment for employers.

Prescription period for claims is four years from the cause of action.

Jurisprudential Insights

Supreme Court decisions provide nuanced interpretations:

In De Guzman v. NLRC (G.R. No. 114315, 1998), the Court ruled that prolonged absence due to illness does not constitute abandonment if the employee communicates and provides medical certificates.
Cebu Royal Plant v. Deputy Minister of Labor (G.R. No. L-58639, 1987) clarified that for disease-based termination, the prejudicial nature must be substantiated by competent authority, not mere employer assertion.
In Triple Eight Integrated Services, Inc. v. NLRC (G.R. No. 129584, 1998), termination during sick leave for redundancy was upheld only if business necessity was proven and selection criteria were fair.
Recent cases, such as those involving remote work post-pandemic, emphasize that health-related absences must be handled with compassion, aligning with ILO Convention No. 155 on occupational safety.

These rulings underscore that courts favor employee protection, often reinstating workers unless overwhelming evidence supports termination.

Conclusion

Employee termination during sick leave in the Philippines is tightly regulated to balance employer prerogatives with worker rights. While possible under specific authorized causes like incurable disease, it requires rigorous proof, due process, and compensation. Arbitrary dismissals are illegal, inviting severe penalties. Employers are advised to document all actions, provide accommodations, and consult legal experts or DOLE. Employees, conversely, should maintain communication and seek medical documentation to safeguard their positions. This framework not only upholds security of tenure but also promotes a humane work environment, reflecting the nation's commitment to social justice in labor relations.