Illegal dismissal (also called illegal termination or unlawful dismissal) remains one of the most common labor complaints in the Philippines. Under the Labor Code (Presidential Decree No. 442, as amended) and its implementing rules, every employee enjoys security of tenure. Any dismissal that violates this right gives rise to a cause of action for illegal dismissal.

This article covers everything an employee (or employer) needs to know: grounds for valid dismissal, what makes a dismissal illegal, procedure for filing, remedies, prescription period, jurisprudence highlights, and practical tips.

1. Constitutional and Statutory Basis

Article XIII, Section 3 of the 1987 Constitution: “security of tenure”
Article 294 (formerly Art. 279) of the Labor Code: “An employee who is unjustly dismissed from work shall be entitled to reinstatement without loss of seniority rights and other privileges and to his full backwages, inclusive of allowances, and to his other benefits or their monetary equivalent computed from the time his compensation was withheld from him up to the time of his actual reinstatement.”

2. Two Kinds of Valid Dismissal

Philippine law recognizes only two broad categories for terminating an employee:

A. Just Causes (Art. 297, formerly Art. 282) – no separation pay required

Serious misconduct or willful disobedience
Gross and habitual neglect of duties
Fraud or willful breach of trust (loss of confidence)
Commission of a crime or offense against the employer or his family
Analogous causes

B. Authorized Causes (Art. 298, formerly Art. 283) – separation pay required

Installation of labor-saving devices (automation)
Redundancy
Retrenchment to prevent losses
Closures or cessation of operation not due to serious business losses
Disease (if medically certified as incurable within 6 months and continued employment is prejudicial to the employee’s health or to co-employees)

Any dismissal that does not fall under these two categories is presumed illegal.

3. Twin Notice and Hearing Rule (Procedural Due Process)

Even if there is a just or authorized cause, the dismissal is still illegal if the employer fails to observe procedural due process:

For Just Causes:

First written notice (notice of charge) – specifying the acts/omissions and the specific just cause invoked
Ample opportunity to be heard (written explanation + formal hearing/meeting if requested)
Second written notice (notice of termination) – stating that after due consideration, the decision is termination, and indicating the specific ground/s proven

For Authorized Causes:

Written notice to the employee at least 30 days before effectivity
Written notice to DOLE at least 30 days before effectivity
Payment of separation pay (except in closure due to serious losses)
Proof of the authorized cause (audited financial statements for retrenchment/redundancy, medical certificate for disease, etc.)

Failure in either substantive or procedural due process renders the dismissal illegal.

4. When Is Dismissal Considered Illegal?

Common scenarios:

No valid just or authorized cause
Non-compliance with twin-notice rule
Constructive dismissal (making working conditions intolerable so the employee is forced to resign)
Retaliatory dismissal (union activities, pregnancy, filing of complaints, whistleblowing)
Dismissal based on prohibited grounds (discrimination on account of age, gender, civil status, disability, religion, ethnicity, etc.)
Floating status exceeding 6 months (for project/seasonal employees)
Termination without due process even if cause exists

5. Where to File the Complaint

Illegal dismissal is a mandatory money claim cognizable by the National Labor Relations Commission (NLRC).

Steps:

Go to the nearest NLRC Regional Arbitration Branch (RAB) that has jurisdiction over the workplace.
File a verified Complaint for Illegal Dismissal (use the latest NLRC forms (downloadable from nlrc.dole.gov.ph).
Pay the filing fee (P150–P1,000 depending on claimed amount; indigents are exempt).
Attach supporting documents (employment contract, payslips, ID, notices received, resignation letter if forced, etc.).

No lawyer is required at the RAB level, but having one is highly recommended.

6. Prescription Period

4 years from the time the cause of action accrued (date of dismissal) – Republic Act No. 10151 (2011) removed illegal dismissal from the 3-year prescriptive period and placed it under the 4-year rule for “injury to the rights of the plaintiff” (Civil Code).

7. Mandatory Conciliation-Mediation (Single-Entry Approach or SEnA)

Before the case goes to the Labor Arbiter:

All labor complaints (except certain cases) first undergo 30-day mandatory conciliation under SEnA (RA 10396).
Request for Assistance (RfA) is filed with the DOLE Regional Office or the NLRC RAB.
If settlement fails, the case is endorsed to the Labor Arbiter for formal hearing.

8. Remedies If You Win

The Labor Arbiters and the NLRC apply the “full relief” principle:

Primary remedies:

Reinstatement (actual or payroll) without loss of seniority rights, OR
Separation pay in lieu of reinstatement (1 month per year of service) if reinstatement is no longer viable (strained relations doctrine)

Plus:

Full backwages from date of dismissal until finality of decision (inclusive of allowances and benefits, or their monetary equivalent)
13th-month pay, SIL conversion, bonuses, etc., if part of regular compensation
Moral and exemplary damages (if dismissal was attended by bad faith)
Attorney’s fees of 10% of total monetary award (Art. 111, Labor Code)

9. Execution of Judgment

NLRC judgments are immediately executory even pending appeal (Art. 223, Labor Code). The employer must post a cash or surety bond if it wants to stay execution pending appeal.

10. Appeals Process

From Labor Arbiter → NLRC (within 10 calendar days)
From NLRC → Court of Appeals via Rule 65 (certiorari, 60 days)
From CA → Supreme Court (Rule 45, 15 days)

11. Landmark Supreme Court Doctrines

King of Kings Transport v. Mamac (2007) – clarified procedural due process requirements
Agabon v. NLRC (2004) – if just cause exists but due process not observed, dismissal is valid but employer pays nominal damages (P30,000–P50,000)
Serrano v. Gallant Maritime (2009) – strained relations doctrine cannot be used to defeat reinstatement if dismissal is illegal
Pepsi-Cola v. Molon (2012) – backwages continue until actual reinstatement or finality
Bani Rural Bank v. De Guzman (2013) – separation pay in lieu of reinstatement = 1 month per year of service
Genuino v. Citibank (2006) – illegal dismissal cases prescribe in 4 years

12. Practical Tips for Employees

Never sign anything you do not understand (quitclaims, waivers, resignation letters).
Keep copies of all documents.
File within 4 years.
Document everything (text messages, emails, memos, attendance logs).
If forced to resign, write “under protest” on the resignation letter and file the case immediately.

13. Practical Tips for Employers

Always issue written notices and dated notices.
Conduct a formal hearing and keep minutes.
Pay separation pay on the same day you serve the termination letter (authorized causes).
Use registered mail or personal service with acknowledgment receipt.

Illegal dismissal cases are heavily employee-friendly in Philippine labor law. The burden of proof lies with the employer to prove that the dismissal was for a valid or authorized cause and that due process was observed. Employees who believe they have been illegally dismissed should act quickly and consult a labor lawyer or the Public Attorney’s Office (PAO) if they cannot afford one.

This framework has remained largely stable as of December 2025, with only minor procedural tweaks from DOLE and NLRC issuances.