This article explains, in practical and legal terms, how illegal dismissal works in the Philippines—what makes a dismissal valid, what due-process steps employers must follow, what you can claim if the dismissal was illegal, and how to pursue your case.
1) Security of tenure: the starting point
Employees in the Philippines enjoy security of tenure. You may be dismissed only for a legally recognized ground and after due process. The employer bears the burden of proof to show both (a) a valid ground and (b) observance of proper procedure. Doubts are resolved in favor of labor, but claims must still be supported by evidence.
2) When is a dismissal lawful?
A dismissal is lawful only if both substantive and procedural requirements are met.
A. Substantive (legal grounds)
Just causes (generally attributable to the employee’s fault)
- Serious misconduct (e.g., theft, harassment, fighting)
- Willful disobedience of lawful orders related to work
- Gross and habitual neglect of duties
- Fraud or willful breach of trust (loss of confidence)
- Commission of a crime/offense against the employer or representatives
- Other analogous causes (e.g., grossly immoral conduct affecting work)
Authorized causes (business/health reasons; not the employee’s fault)
- Installation of labor-saving devices
- Redundancy (position is superfluous)
- Retrenchment to prevent losses
- Closure or cessation of business (whether total or partial; if due to serious losses, different pay rules apply)
- Disease: Employee has an illness not curable within 6 months and continued employment is prohibited by competent medical authority
Probationary employment Dismissal may be valid if based on:
- Any just cause above; or
- Failure to meet reasonable standards made known at the start of employment. Absent proof that standards were clearly communicated upon hiring, dismissal is generally illegal.
Fixed-term, project, or seasonal employment
- Termination upon expiry of the fixed term, completion of the project, or end of the season is generally valid—if the arrangement was legitimate (not used to evade security of tenure) and documented.
B. Procedural due process
For just causes (the “two-notice rule” + hearing):
- First notice (charge sheet): specific acts, factual details, and rule violated; reasonable time to explain (typically 5 calendar days).
- Meaningful opportunity to be heard: written explanation and/or conference or hearing where the employee can respond and present evidence, with counsel if desired.
- Second notice (decision): findings of fact, legal basis, and the penalty imposed.
For authorized causes:
- Thirty (30) days’ prior written notice to both the employee and the DOLE (Regional Office), stating the ground and effective date.
- For redundancy/retrenchment, employers must also show good-faith business judgment and fair, reasonable criteria for selecting who is affected (e.g., seniority, efficiency).
Preventive suspension (not a penalty): allowed during investigation for up to 30 days if the employee’s continued presence poses a serious and imminent threat to life/property or to the investigation. If extended, the employer should pay wages during the extension.
3) What makes a dismissal illegal?
A dismissal is illegal if:
- No valid ground exists; or
- The procedure was not followed; and
- (For just causes) even if the ground exists but due process was not observed, the dismissal may be ineffectual as to procedure—typically resulting in nominal damages (not reinstatement) if the just cause is proven. If no just cause is proven, it is illegal dismissal with full remedies.
Constructive dismissal occurs when the employer makes working conditions so difficult or humiliating that a reasonable employee would resign (e.g., demotion with pay cut, harassment, prolonged illegal suspension, unreasonable transfer). Resignation under such conditions is treated as dismissal.
4) Immediate checklist if you were fired
- Ask for: a written Notice of Decision (second notice) and prior charge notice (if any).
- Save evidence: contracts, payslips, emails, chats, memos, CCTV references, HR tickets, policy manuals, performance reviews.
- Record dates: receipt of notices, dates of meetings, last day worked, length of service, salary and allowances.
- Get medical/legal documents: if “disease” is claimed, check if there’s a competent medical certificate specifying unfitness within 6 months.
- Do not sign anything (e.g., quitclaim/waiver) unless you fully understand it. You can contest or rescind an unconscionable quitclaim later.
5) What can you claim if the dismissal was illegal?
Core remedies
- Reinstatement to the same or substantially equivalent position without loss of seniority rights, and
- Full backwages from the date of dismissal up to actual reinstatement, including basic pay, allowances, and 13th-month pay that would have accrued.
If reinstatement is no longer viable (strained relations, position abolished, closed shop, etc.), the usual substitute is:
- Separation pay in lieu of reinstatement (often computed as one month pay per year of service, pro-rated for at least 6 months = 1 year, unless a different rate is directed), plus backwages up to finality of the decision.
Interest and fees
- Legal interest (currently 6% per annum) typically applies from the time the monetary award becomes due until fully paid.
- Attorney’s fees may be awarded (commonly 10% of the total monetary award) when you were compelled to litigate to recover lawful benefits.
- Moral/exemplary damages may be awarded if bad faith, malice, or oppressive conduct is proven.
Note: Backwages are not capped by the 3-year money-claim limit; they run from dismissal until reinstatement (or finality in case of separation pay). Separate money claims (e.g., unpaid allowances, overtime) are generally subject to 3 years’ prescription from accrual.
6) Separation pay when termination is authorized (not illegal)
If the employer proves an authorized cause and proper procedure, the employee is entitled to separation pay (not backwages), typically:
| Authorized cause | Minimum separation pay |
|---|---|
| Redundancy or Installation of labor-saving devices | At least 1 month pay per year of service, or at least 1 month pay, whichever is higher |
| Retrenchment to prevent losses or Closure/Cessation not due to serious losses | At least 1/2 month pay per year of service, or at least 1 month pay, whichever is higher |
| Disease (uncurable within 6 months; properly certified) | At least 1/2 month pay per year of service, or at least 1 month pay, whichever is higher |
Service of at least 6 months counts as 1 full year for purposes of computing per-year separation pay.
If the employer fails procedural requirements (e.g., no 30-day DOLE/employee notice) but the authorized cause is real, courts often award nominal damages for the due-process lapse.
7) Special situations
- Probationary employees: You can still be illegally dismissed if standards were not communicated at hiring, or if the alleged failure to meet standards is unproven, or if due process is ignored.
- Managerial and fiduciary employees: Can be dismissed for loss of trust and confidence, but the employer must establish a basis founded on clearly identified acts—not mere accusation.
- Fixed-term employment: Valid if freely agreed and not used to circumvent security of tenure. If the supposed “fixed term” is a sham or repeatedly renewed to avoid regularization, you may be deemed a regular employee.
- Project/Seasonal workers: Dismissal before project completion or season end needs a just cause and due process; otherwise illegal.
- Union officers/members: Dismissal for lawful union activities or filing complaints constitutes unfair labor practice (with separate penalties and remedies).
8) Quitclaims, NDAs, and “full and final settlement”
Quitclaims are looked upon with caution. They may be invalidated if:
- There was coercion, deceit, or misrepresentation;
- Consideration is unconscionably low compared with your lawful entitlements; or
- You did not fully understand what you signed.
Even a facially valid quitclaim does not bar claims for entitlements not included or computed incorrectly.
9) How to pursue your case (process & timelines)
A. Mandatory conciliation: SEnA (DOLE)
- Before filing at the NLRC, most labor disputes (including illegal dismissal) go through Single-Entry Approach (SEnA) at the DOLE Regional Office for conciliation-mediation.
- If unresolved, you receive a Referral to file a case with the proper forum (typically the NLRC Labor Arbiter).
B. File an illegal dismissal case with the NLRC (Labor Arbiter)
Where: NLRC Regional Arbitration Branch where you last worked or where the employer operates.
When: File within 4 years from dismissal (illegal dismissal is generally treated as an injury to rights). Money claims must be filed within 3 years from accrual.
What to file: Verified complaint stating facts and claims (backwages, reinstatement/separation pay, damages, attorney’s fees).
Proceedings:
- Mandatory conference (settlement/clarification)
- Position papers with evidence (affidavits, payroll, emails, notices)
- Submission for decision
Reinstatement orders by the Labor Arbiter are immediately executory even pending appeal; employers may opt for payroll reinstatement (pay wages without actual return to work) while the case is on appeal.
C. Appeals
- To the NLRC: Either party may appeal the Labor Arbiter’s decision within 10 calendar days from receipt (bond required for employer appealing monetary awards).
- To the Court of Appeals: Via Rule 65 petition for certiorari (to correct grave abuse of discretion) within 60 days from receipt of the NLRC decision.
- To the Supreme Court: Via Rule 45 (questions of law), generally within 15 days from receipt of the CA decision.
10) Evidence tips for employees
- Document your work history: employment contract, job description, performance appraisals, KPI dashboards.
- Keep copies of all notices (or screenshots proving none were served) and records of meetings.
- Corroborate with coworker affidavits if available.
- Show damages: attempts to mitigate (job applications), emotional distress (if claiming moral damages), financial impact (loan defaults).
- Be consistent: your written explanation, grievance emails, and complaint narrative should align on dates, acts, and people involved.
11) Practical defenses employers raise (and how they’re tested)
- Abandonment: Employer must prove a clear intention to sever the relationship (e.g., repeated absences and overt acts showing intent not to return). Mere absence is not enough—especially if you filed a complaint or sent return-to-work communications.
- Voluntary resignation: Employer must show resignation was clear, voluntary, and informed (e.g., a resignation letter not obtained under duress). If you immediately filed a case or protest, that undermines “voluntary” resignation.
- Loss of trust: Must be anchored on specific acts, not mere suspicion—particularly for rank-and-file.
12) Quick reference: What to expect in outcomes
| Scenario | Typical outcome |
|---|---|
| No just/authorized cause + due process lacking or present | Illegal dismissal → Reinstatement or separation pay in lieu + full backwages; damages/fees as warranted |
| Just cause proven but due process defective | Dismissal stands; nominal damages for procedural lapse |
| Authorized cause proven + proper procedure | Separation pay per law; no backwages |
| Authorized cause proven but notice defective | Separation pay + nominal damages |
| Constructive dismissal proven | Treated as illegal dismissal (as above) |
13) FAQs
Q: How are backwages computed? From date of dismissal up to actual reinstatement (or up to finality of judgment if separation pay is ordered), including regular allowances and 13th-month pay that would have accrued.
Q: Can I work elsewhere while my case is pending? Yes. Mitigation of damages is not required to claim backwages; employment elsewhere does not reduce backwages.
Q: What if the company closed? If closure is bona fide and not to defeat a judgment, reinstatement may be impossible; typical relief becomes separation pay in lieu of reinstatement plus other monetary awards as applicable. If closure was a sham, remedies align with illegal dismissal.
Q: How long will the case take? Timelines vary by docket load and appeals; prepare for months to years. Preserve evidence and keep your contact details current with the tribunal.
Q: Should I accept a settlement? That depends on your goals, risk tolerance, and evidence strength. Settlements commonly consider backwages exposure, separation pay, and litigation time.
14) Action plan you can follow today
- Gather and organize all employment documents and communications.
- Write a timeline of key events with dates, names, and attachments.
- Compute preliminary claims (months since dismissal × monthly pay; include fixed allowances).
- Pursue SEnA at the DOLE Regional Office; if unresolved, file at the NLRC within the prescriptive periods.
- Avoid signing quitclaims without independent advice.
- Consider legal counsel to refine evidence, strategy, and valuation.
Closing note
Illegal dismissal cases turn on proof and procedure. Even when a ground seems plausible, failure to observe due process can significantly affect outcomes. Conversely, strong documentation of your performance and the employer’s lapses often decides the case. If you were fired without just cause—or without proper procedure—you have robust remedies under Philippine labor law.