In the Philippines, the right to security of tenure is a constitutionally protected mandate. It ensures that no employee shall be dismissed from employment except for a just or authorized cause and only after due process. When an employer fails to meet these standards, the termination is deemed an illegal dismissal.

I. The Two Pillars of a Valid Dismissal

For a termination to be legal, the employer must satisfy two essential requirements: Substantive Due Process and Procedural Due Process.

1. Substantive Due Process

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

A. Just Causes (Article 297 [282]) These are instances where the employee is at fault:

Serious Misconduct: Improper or wrong conduct that is serious in nature and connected to the employee's work.
Willful Disobedience: Refusal to follow reasonable and lawful orders of the employer.
Gross and Habitual Neglect of Duty: Repeated failure to perform duties.
Fraud or Willful Breach of Trust: Often applied to employees holding fiduciary positions (e.g., managers, cashiers).
Commission of a Crime: A crime committed against the employer, their family, or their representative.

B. Authorized Causes (Articles 298-299 [283-284]) These are business-related reasons not necessarily the fault of the employee:

Installation of Labor-saving Devices: Automation or mechanization.
Redundancy: When a position is superfluous to the business.
Retrenchment: Downsizing to prevent serious business losses.
Closure or Cessation of Operations: Unless the closure is for the purpose of circumventing the law.
Disease: When the employee’s continued employment is prohibited by law or prejudicial to their health or that of their co-employees.

2. Procedural Due Process

This refers to the "how" of the termination. The procedure differs depending on the cause.

For Just Causes (The Two-Notice Rule):
1. First Written Notice: Detailing the specific grounds for termination and giving the employee a reasonable opportunity to explain (at least 5 calendar days).
2. Hearing/Conference: An opportunity for the employee to present evidence or rebut the accusations.
3. Second Written Notice: The final notice of the decision to dismiss.
For Authorized Causes:
- A written notice must be served to both the Employee and the Department of Labor and Employment (DOLE) at least one month (30 days) before the intended date of termination.

II. What Constitutes Illegal Dismissal?

A dismissal is illegal if:

There is no just or authorized cause.
The cause is proven, but procedural due process was ignored (often resulting in "nominal damages").
The dismissal is a "Constructive Dismissal"—where the employer makes working conditions so unbearable, hostile, or demeaning (e.g., unnecessary demotion or transfer) that the employee is forced to resign.

III. Legal Remedies for the Terminated Employee

When an employee is illegally dismissed, the law provides specific reliefs to restore them to their previous state.

Remedy	Description
Reinstatement	The employee must be restored to their former position without loss of seniority rights. If the position no longer exists, an equivalent position must be provided.
Full Backwages	Payment of the wages the employee would have earned from the time of illegal dismissal up to the time of actual reinstatement. This includes 13th-month pay and other benefits.
Separation Pay	Awarded in lieu of reinstatement if: 1. Reinstatement is no longer feasible. 2. There is "strained relations" between the parties. 3. The position no longer exists.
Moral & Exemplary Damages	Awarded if the dismissal was attended by bad faith, fraud, or was done in a manner oppressive to labor.
Attorney’s Fees	Usually 10% of the total monetary award if the employee was forced to litigate to protect their rights.

IV. The Burden of Proof

In illegal dismissal cases, the burden of proof rests entirely 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 valid. If the employer fails to provide this, the dismissal is automatically deemed illegal.

V. Jurisdiction and Prescription

Where to file: Illegal dismissal cases are filed with the National Labor Relations Commission (NLRC) through the Labor Arbiter. Before a formal case is filed, parties usually undergo mandatory conciliation and mediation through the Single Entry Approach (SEnA).
Prescription Period: An action for illegal dismissal must be filed within four (4) years from the time the cause of action accrued (the date of dismissal). However, for claims involving money (unpaid wages), the period is usually three (3) years.

VI. The "Agabon" and "Serrano" Doctrines (Due Process Violations)

If an employer has a valid cause to fire someone but fails to follow procedural due process (e.g., failed to give the two notices), the dismissal is sustained, but the employer is liable to pay Nominal Damages.

If the cause is a Just Cause, the fine is generally ₱30,000.
If the cause is an Authorized Cause, the fine is generally ₱50,000.