Executive summary

A dismissal is illegal when (1) the employer fails to prove a lawful cause (just or authorized), and/or (2) fails to observe due process. The employer bears the burden to show substantial evidence of cause and procedural compliance. The standard remedies are reinstatement without loss of seniority rights and full backwages, allowances, and benefits from dismissal until actual reinstatement (or finality of judgment if reinstatement is not feasible), or separation pay in lieu of reinstatement when reinstatement is no longer viable, plus damages and attorney’s fees in proper cases. A preventive suspension beyond 30 days requires pay. Complaints generally pass through SEnA (conciliation) then the NLRC/Labor Arbiter; illegal dismissal actions prescribe in four (4) years, while money claims prescribe in three (3) years.

1) What makes a dismissal lawful?

A. Substantive due process — there must be a lawful cause

Just causes (employee fault) — e.g., serious misconduct, willful disobedience, gross and habitual neglect, fraud or breach of trust, commission of a crime against employer/employer’s family, and analogous causes.
Authorized causes (business/health reasons) — e.g., redundancy, retrenchment to prevent losses, closure/cessation, installation of labor-saving devices, or disease not curable within six months (with proper certification).

Key rule: The employer must prove the cause with substantial evidence (relevant evidence a reasonable mind might accept). Mere allegations, unproven reports, or suspicion are insufficient.

B. Procedural due process — the how of dismissal

Just causes:
- First written notice (Notice to Explain) detailing facts, rule violated, and reasonable period to answer (best practice: ≥ 5 calendar days from receipt).
- Opportunity to be heard (written explanation and/or conference/clarificatory hearing).
- Second written notice informing the employee of the decision and reasons.
Authorized causes:
- Thirty (30) days’ prior written notice to the employee and to DOLE, stating the authorized cause; pay separation pay where the law requires.
Preventive suspension: Allowed only if the employee’s continued presence poses a serious and imminent threat to people or company property; max 30 days. If the investigation needs more time, the employee must be paid during the extension.

Effect of procedural lapse:

If no lawful cause is proven → illegal dismissal.
If lawful cause exists but due process was not observed → dismissal valid as to cause, but employer may be liable for nominal damages for the procedural defect.

2) Special employment situations

Probationary employees: May be dismissed for just cause or for failure to meet reasonable standards communicated at hiring. If standards were not communicated, termination on that ground is unlawful.
Fixed-term and project employees: Engagement ends on term/project completion if bona fide; dismissals before completion still require lawful cause and due process.
Managerial/confidential employees: May be dismissed for loss of trust upon clearly established facts; label alone doesn’t relax proof.
OFWs with fixed-term contracts: If illegally dismissed, the rule is salaries for the unexpired portion of the contract, plus other monetary awards as allowed by law and contract.

3) What counts as constructive dismissal?

When the employer’s acts make continued employment impossible, unreasonable, or unlikely—e.g., demotion, substantial pay cuts, harassment, sudden adverse reassignment without legitimate business reason, or intolerable conditions—the employee’s resignation is treated as a discharge, triggering the same remedies as illegal dismissal.

4) Where and how to file

A. SEnA (Single-Entry Approach) – conciliation/mediation

File a Request for Assistance at the DOLE field/regional office where the workplace is located.
Short timeframes; many cases settle here.

B. Labor Arbiter (NLRC) – illegal dismissal case proper

File a Verified Complaint for illegal dismissal and money claims.
Burden of proof lies with the employer.
Reinstatement orders are immediately executory, even pending appeal; the employer may opt for payroll reinstatement (pay wages without actual return to work) until final resolution.
Appeal: Employer must file within the reglementary period and post the required bond for monetary awards.

Prescription:

Illegal dismissal action: 4 years (injury to rights).
Money claims: 3 years from accrual.

5) Remedies & monetary awards

A. Primary remedies

Reinstatement to the same or equivalent position without loss of seniority rights; and
Full backwages, allowances, and benefits from date of dismissal up to actual reinstatement.

If reinstatement is no longer feasible (e.g., strained relations, position abolished, closure), courts award separation pay in lieu of reinstatement, plus backwages up to the finality of the decision.

B. Separation pay (guiding formulations)

In lieu of reinstatement (as a remedy for illegal dismissal): Jurisprudence-based, commonly one (1) month pay per year of service (or similar equitable measure), counting a fraction of at least six months as one whole year.
For authorized causes (lawful dismissals): Statutory formulas differ (e.g., redundancy or installation of labor-saving devices typically 1 month per year; retrenchment/closure typically ½ month per year; disease ½ month per year, subject to medical certification). These are not illegal-dismissal remedies but included here for context.

C. Damages

Nominal damages for procedural lapses where cause exists.
Moral and exemplary damages upon proof of bad faith, malice, or oppressive conduct.
Attorney’s fees (often 10% of recoverable amounts) when the employee was compelled to litigate to recover wages/benefits.

D. Legal interest

Monetary awards generally earn legal interest from the date specified by jurisprudence (commonly 6% per annum) until full satisfaction.

6) Sample computations (illustrative)

Facts:

Monthly basic pay: ₱30,000; fixed allowances: ₱5,000.
Dismissed: 1 March 2024; Decision with separation in lieu becomes final: 1 December 2025.
No reinstatement due to strained relations.

Backwages:

From 1 Mar 2024 to 1 Dec 2025 ≈ 21 months.
Backwages = (₱30,000 + ₱5,000) × 21 = ₱735,000 (plus 13th-month proportion, differentials, and other regular benefits proven).

Separation pay in lieu:

Tenure: 7 years, 4 months → count as 7.5 years (if the tribunal so rules; conservative approach uses 7 years).
Separation pay (equitable): 1 month per year × ₱30,000 (or total monthly pay if the award so states) × 7 (or 7.5) = ₱210,000–₱225,000 (illustrative only).

Attorney’s fees (10%) may be added on recoverable amounts; legal interest may be computed by the arbiter/court.

(Actual figures vary with evidence, benefits, and tribunal rulings.)

7) Defenses employers raise—and how employees respond

Employer stance	Response pointers
“There was cause.”	Demand substantial evidence (documents, logs, witness statements). Hearsay or bare claims won’t do.
“We followed due process.”	Check notice contents, service/receipt dates, opportunity to be heard, and decision notice. Formal defects matter.
“Resignation was voluntary.”	Show coercion, intimidation, or circumstances proving constructive dismissal; compare dates and communications.
“Employee was probationary; standards not met.”	Were standards reasonable and clearly communicated at hiring? Was the evaluation documented and good faith?
“Project/Fixed-term ended.”	Prove genuineness of project/term and that termination coincided with legitimate project completion/term expiry.

8) Quitclaims, settlements, and tax

Quitclaims are valid only if voluntary, informed, and for reasonable consideration; courts set aside quitclaims obtained through fraud, coercion, or gross disparity.
Settlements at SEnA/NLRC are encouraged; ensure the agreement is in writing, with clear net amounts and release clauses vetted by the conciliator/arbiter.
Tax and contributions: Employers must issue BIR Form 2316 upon separation; backwages and benefits may have withholding implications as applicable.

9) Practical playbook for employees

Preserve evidence: contracts, handbooks, emails, chat threads, memos, performance reviews, time records, payslips.
Timeline: write a dated chronology (notices received, meetings, suspension dates, dismissal date).
Medical/trauma notes: for moral damages, document stress/injury (consultation receipts, reports).
File SEnA promptly; if unresolved, NLRC complaint (illegal dismissal + money claims).
Seek payroll reinstatement after a favorable LA decision; it is immediately executory.
Compute claims (backwages, benefits, interest); bring a worksheet.
Stay professional; avoid social-media disclosures that can backfire.

10) Quick reference: Checklist of red flags indicating illegality

No first notice or notice lacked specific facts/rule.
No real chance to respond (24-hour rush, denial of documents, refusal to schedule clarificatory meeting).
Second notice absent or conclusory (“services no longer needed”).
Authorized cause cited without 30-day dual notice to employee and DOLE, or without valid separation pay.
Preventive suspension used as penalty, exceeded 30 days without pay.
Sudden demotion/pay cut/reassignment with no bona fide business reason → constructive dismissal.
Standards for probationary employees not communicated at hiring.

11) One-page employee checklist (printable)

☐ Contracts, handbook, policy extracts saved
☐ Copies of all notices (with envelopes/email headers)
☐ Timeline & witness list
☐ SEnA filed (keep reference no.)
☐ NLRC complaint with annexes & computation
☐ Claim reinstatement + backwages (or separation pay in lieu)
☐ Claim damages & attorney’s fees where warranted
☐ Track appeal and payroll reinstatement compliance

Key takeaways

Employer bears the burden to prove lawful cause and due process; absence of either usually means illegal dismissal.
Core remedies: reinstatement and full backwages; if reinstatement is impractical, separation pay in lieu plus backwages.
Procedural missteps cost employers: even with cause, nominal damages attach; without cause, dismissal fails outright.
File swiftly: SEnA then NLRC; remember 4-year prescription for illegal dismissal and 3-year limit for money claims.
Constructive dismissal is actionable; document hostile conditions and abrupt adverse changes.
Quitclaims aren’t bulletproof; courts protect employees from coercive or grossly unfair settlements.

This guide provides general Philippine labor-law information on illegal dismissal. For nuanced situations (union leadership, corporate officers, large-scale redundancies, or cross-border employment), seek tailored legal advice and preserve all evidence from day one.