In the Philippines, security of tenure is a constitutionally protected right. It ensures that no worker shall be dismissed from employment except for a just or authorized cause and only after due process is observed. When an employer terminates an employee without satisfying these requirements, the dismissal is considered illegal.

1. The Two Pillars of a Lawful Dismissal

To withstand legal scrutiny, a dismissal must satisfy two types of requirements: Substantive Due Process and Procedural Due Process. If either is missing, the employee may file a case for illegal dismissal with the National Labor Relations Commission (NLRC).

Substantive Due Process

This refers to the "why" of the termination. The Labor Code of the Philippines categorizes valid reasons into two:

A. Just Causes (Article 297) These are grounds attributable to the fault or negligence of the employee:

Serious Misconduct: Improper or wrong conduct that is serious in nature and connected to the employee’s work.
Willful Disobedience (Insubordination): Refusal to comply with reasonable and lawful orders of the employer.
Gross and Habitual Neglect of Duties: Repeated failure to perform tasks; however, a single act of "gross" neglect may suffice if it causes significant damage.
Fraud or Willful Breach of Trust: Often applied to employees in positions of trust and confidence (e.g., managers or cashiers).
Commission of a Crime: When the employee commits a crime against the employer, their family, or their representative.

B. Authorized Causes (Articles 298-299) These are grounds necessitated by business requirements or health, where the employee is not necessarily at fault:

Installation of Labor-saving Devices: Introduction of machinery that replaces manual labor.
Redundancy: When the employee’s services are in excess of what is reasonably demanded by the actual requirements of the enterprise.
Retrenchment: A cost-cutting measure to prevent serious business losses.
Closure or Cessation of Operation: Shutting down the business for legitimate reasons.
Disease: When the employee’s continued employment is prohibited by law or is prejudicial to their health or the health of co-employees.

2. Procedural Due Process

This refers to the "how" of the termination. Even if there is a valid reason, the dismissal is "procedurally infirm" if the proper steps are not followed.

For Just Causes (The Two-Notice Rule)

First Written Notice: Specifies the grounds for termination and gives the employee a reasonable opportunity (at least 5 calendar days) to explain their side.
Hearing or Conference: The employer must provide the employee a chance to defend themselves, often with the assistance of counsel if desired.
Second Written Notice: A notice of the decision to dismiss, indicating that all circumstances have been considered.

For Authorized Causes (The 30-Day Rule)

The employer must serve a written notice to both the Employee and the Department of Labor and Employment (DOLE) at least one month (30 days) before the intended date of termination.

3. Constructive Dismissal

Illegal dismissal is not always a direct "firing." Constructive Dismissal occurs when an employer creates an environment so hostile or unbearable that the employee is forced to resign.

Indications of Constructive Dismissal:

A demotion in rank or a significant diminution in pay.
A transfer to a location that is unreasonable or impossible for the employee.
Clear discrimination, insensibility, or disdain by the employer that makes continued employment impossible.

In these cases, the law treats the resignation as an involuntary act, allowing the employee to file for illegal dismissal.

4. Remedies for Illegal Dismissal

If the Labor Arbiter rules that an employee was illegally dismissed, the employee is generally entitled to:

Reinstatement: Returning to their former position without loss of seniority rights.
Full Backwages: Payment of the salary, allowances, and other benefits the employee should have received from the time of dismissal until actual reinstatement.
Separation Pay: If reinstatement is no longer viable (due to "strained relations"), the employee may receive one month's salary for every year of service.
Damages and Attorney’s Fees: Moral and exemplary damages may be awarded if the dismissal was done in a wanton or oppressive manner.

5. Burden of Proof

In illegal dismissal cases, the burden of proof rests on the employer. The employer must prove by substantial evidence (that amount of relevant evidence which a reasonable mind might accept as adequate to justify a conclusion) that the dismissal was for a valid cause and that due process was observed. If the employer fails to provide this evidence, the dismissal is automatically deemed illegal.