A practitioner-oriented guide for HR, in-house counsel, and physicians on when and how employment may be ended due to an employee’s illness, injury, or medical limitation—covering lawful grounds, procedure, evidence standards, separation pay, reasonable accommodation, and common pitfalls.

Quick map

“Medical incompetence” ≠ “poor performance.” If inability to do the job stems from a health condition, the proper basis is usually the authorized cause of “disease”—not a “just cause” like neglect or inefficiency (which implies fault or willfulness).
The gold rule: Termination for disease is lawful only if a competent public health authority certifies that (1) the employee is suffering from a disease, and (2) continued employment is prohibited by law or prejudicial to their health or that of co-employees, and (3) the disease cannot be cured within six (6) months even with proper treatment.
If curable within six months: termination is not allowed. Use leave, temporary reassignment, or reasonable accommodation instead.
Procedure matters: Give 30-day written notice to the employee and to DOLE, pay separation pay, and keep a defensible medical record.
Anti-discrimination & privacy laws limit what you can ask, store, and disclose about medical conditions.

Legal bases (in plain language)

Labor Code – Authorized cause: disease.
- An employer may end employment due to disease if, and only if, a competent public health authority issues the certification described above.
- This is an authorized cause, so the remedy is separation pay (not dismissal for cause).
Separation pay for disease
- At least one (1) month pay or one-half (1/2) month pay for every year of service, whichever is higher.
- Six months or more of a year counts as one whole year.
Notice requirement (authorized causes)
- 30-day prior written notice to the employee and to the DOLE office with jurisdiction.
OSH & workplace health
- Employers must keep workplaces safe and may exclude employees whose medical condition creates a material safety risk, but they must act within the disease-termination framework and with objective medical evidence.
Anti-discrimination overlays (illustrative)
- Persons with Disability (PWD) protections: require non-discrimination and encourage reasonable accommodation where feasible.
- Pregnancy/sex-based protections: no termination for pregnancy or conditions related to it.
- HIV, mental health, and other stigma-prone conditions: status alone is not valid ground; decisions must be job-related, evidence-based, and proportionate to actual risk.
Data Privacy
- Medical data are sensitive personal information: collect only what is necessary, limit access to need-to-know, and secure written consent where required.

When termination for disease is (and isn’t) allowed

Allowed (if all elements are met)

An employee’s condition (e.g., severe cardiopulmonary limitation, uncontrolled seizures, vision loss for safety-critical roles) prevents safe or effective performance and cannot be cured to fitness within six months, and a public health authority so certifies.

Not allowed

The condition is curable within six months with proper treatment.
The only basis is status (e.g., diagnosis without functional impact or risk).
The employer skips the required certification or relies only on a company doctor.
The employer uses “medical incompetence” to mask a performance or misconduct case (wrong legal track).
The employee can perform essential duties with reasonable accommodation that does not impose undue hardship.

The certificate you need (and who can issue it)

Must come from a competent public health authority (e.g., government physician at a DOH/municipal/provincial/city hospital or health office).
Should state clearly: diagnosis (in clinical terms), job-related risks, whether continued employment is prohibited by law or prejudicial to the employee/co-workers, and that the condition cannot be cured within six months with proper treatment.
You may obtain supporting opinions from the company physician or an independent specialist, but they do not replace the required public health certificate.

Process guide for HR (step-by-step)

Trigger & triage
- Receive medical information via PEME/AME, incident reports, or treating-physician notes (with consent).
- Separate: (a) temporary incapacity (expect recovery ≤6 months) vs. (b) long-term or permanent limitation.
Interactive process & accommodation assessment
- Meet with the employee; review essential job functions; consider light duty, reassignment, modified schedules, assistive devices.
- Document why an accommodation works or does not (e.g., safety risk, lack of vacant roles, undue hardship).
Medical evidence
- Secure objective findings. If termination appears necessary, request evaluation by a public health authority. Provide job description and risk profile to the physician.
Notice to DOLE & employee
- Issue 30-day written notice stating the authorized cause (disease), the medical certification, and the effective date.
- File the RKS Form 5 (termination report) or local equivalent to DOLE within the regulatory timeline, attaching or referencing the cause.
Compute & tender separation pay
- 1 month or 1/2 month per year of service, whichever is higher, plus pro-rata 13th month, unused convertible leave, and other final pay items.
- Prepare certificate of employment (issue within 3 working days upon request) and tax forms.
Confidential close-out
- Keep medical records confidential; disclose only to those with a legitimate need.
- Consider referrals (SSS sickness/disability, EC benefits if work-related).

Reasonable accommodation (what is “enough”?)

Scope: job restructuring, part-time/modified schedules, equipment, temporary light duty, transfer to a vacant suitable position.
Limits: No duty to create a new position, displace another employee, or accept undue hardship (significant difficulty or expense, or unacceptable safety risk).
Document: (a) requested accommodations, (b) options explored, (c) reasons for acceptance/denial.

Temporary incapacity vs. six-month threshold

If prognosis shows fitness within ≤6 months, use leave, S/L/VL, SIL, LWOP, and SSS sickness benefits; consider temporary reassignment.
Only when incapacity cannot be cured within six months (per public health certification) may you invoke the authorized cause of disease.

Special situations

Pregnancy & related conditions: Never a ground for termination. Manage as temporary incapacity with statutory maternity benefits and reasonable accommodations.
Occupational injury/illness: Manage through Employee’s Compensation (EC) and OSH; termination for disease still requires the public health certificate and proper benefits.
Mental health conditions: Evaluate functional impact and safety; apply the same six-month/certification rule; avoid stereotyping.
Infectious diseases: Follow DOH/OSH guidance on transmissibility and duty fitness; status alone is not enough—assess actual risk and curability/treatment timeline.

Separation pay: examples

Example A: 3 years, 7 months of service; last basic pay ₱25,000.
- Years counted: 4 (≥6 months round up).
- 1/2 month × 4 = 2 months ⇒ ₱50,000 vs. one month ₱25,000 ⇒ Pay ₱50,000 (plus final pay items).
Example B: 8 months of service; last basic pay ₱20,000.
- Years counted: 1 (≥6 months).
- 1/2 month × 1 = 0.5 month vs. one month ⇒ Pay ₱20,000 (whichever is higher).

Evidence pack (what a strong employer file looks like)

Job description highlighting essential functions and safety-critical tasks.
Accommodation log (options considered, outcomes, dates).
Public health authority certification (clear statements on risk and non-curability within six months).
DOLE notices (proof of service/filing).
Separation pay computation & proof of payment.
Confidentiality controls (who accessed medical records and why).

Common pitfalls that make cases lose

No public health certification or a vague note from a private doctor.
Skipping the 30-day dual notice (employee + DOLE).
Calling it “inefficiency” or “poor performance.” Medical inability is not a just cause.
Status-based decisions (e.g., diagnosis alone) without a job-related risk analysis.
Ignoring accommodation possibilities or failing to document the interactive process.
Short-changing separation pay or delaying final pay/COE.
Improper disclosure of sensitive medical data (privacy violations).

Employee remedies (if you’re the affected worker)

Question the certification: Obtain your own medical opinion; if prognosis shows likely fitness within six months, the authorized cause fails.
Illegal dismissal claim: If elements/procedure are missing, seek reinstatement (if fit) or separation pay in lieu, plus backwages and damages where appropriate.
Statutory benefits: Claim SSS sickness/disability and EC (work-related cases), independent of the employment dispute.
Data privacy complaint if health data were mishandled.

Templates (short, adaptable)

A) Notice of Proposed Termination (Authorized Cause: Disease)

We write to inform you that, based on the attached certification by [Public Health Office/Physician] dated [date], your medical condition cannot be cured within six (6) months, and continued employment would be prejudicial to health. In accordance with the Labor Code on authorized cause—disease, the Company intends to terminate your employment effective [date ≥30 days]. You will receive separation pay of [amount] (the higher of one month pay or one-half month per year of service), plus all final pay entitlements. This notice is simultaneously being filed with DOLE. Please contact HR to discuss benefits and transition assistance.

B) Medical Certification Request (to Public Health Authority)

We request your evaluation of [Employee, position] relative to the essential functions attached. Please advise whether continued employment is prohibited by law or prejudicial to health, and whether the condition can be cured within six (6) months with proper treatment.

C) Accommodation Assessment Memo (internal)

Summary of essential duties; restrictions from treating physician; accommodations considered (light duty, reassignment, schedule, devices); feasibility and safety analysis; outcome and rationale.

FAQs

Is a company doctor’s “unfit to work” note enough to terminate? No. You need a competent public health authority certification that also addresses six-month non-curability and health risk.

Do we still owe separation pay if the condition was not work-related? Yes. Work-relation affects EC/insurance, not the Labor Code duty to pay separation pay for authorized cause.

Can we keep someone on indefinite sick leave to avoid separation pay? No. You must choose a lawful path: either manage temporary incapacity (≤6 months), or—if criteria are met—invoke disease with proper certification and pay the due separation pay.

What if the employee recovers sooner than expected? If employment has not yet ended, revisit accommodations or reinstate to suitable work. If already terminated lawfully, you may re-hire under a new contract (no automatic right).

Bottom line

Termination for “medical incompetence” in the Philippines is not a fault-based dismissal. It is a narrow authorized cause that demands: (1) a public health certification on non-curability within six months and health risk, (2) 30-day dual notice (employee + DOLE), and (3) separation pay (whichever is higher: 1 month or 1/2 month per year). Surround those steps with a good-faith accommodation process, privacy-safe handling of medical data, and clean documentation—or expect the action to be set aside as illegal dismissal.