Illegal Dismissal Remedies (Philippines, Labor Code)
A complete, plain-English guide to what counts as illegal dismissal, how to win or defend a case, remedies and computations (reinstatement, separation pay, backwages, damages, interest, attorney’s fees), timelines, and procedural playbooks. Philippine context. Not legal advice.
1) What is “illegal dismissal”?
A dismissal is illegal when the employer fails to prove both:
- a valid ground (just or authorized cause), and
- due process (proper notices + chance to be heard).
Burden of proof is on the employer. Doubts are resolved in favor of labor.
Valid grounds (quick map)
- Just causes (employee fault; e.g., serious misconduct, willful disobedience, gross & habitual neglect, fraud/breach of trust, crime against employer/rep, other analogous causes).
- Authorized causes (business/health; e.g., redundancy, installation of labor-saving devices, retrenchment, closure, disease uncurable within 6 months).
Due process
Twin-notice rule (just causes):
- Notice to explain with specific charges + reasonable time to answer (generally ≥ 5 calendar days).
- Notice of decision stating the grounds and evidence. Plus: Opportunity to be heard (hearing/conference or written explanation).
Authorized causes: 30-day prior written notice to employee and to DOLE, plus payment of statutory separation pay.
Preventive suspension: allowed only if the employee’s continued presence poses a serious threat to life/property/operations; generally max 30 days (beyond that, with pay).
Special statuses
- Probationary: may be terminated for just cause or failure to meet reasonable standards that were communicated at hiring; due process still required.
- Fixed-term/project: valid if not used to circumvent security of tenure; sham terms risk illegal dismissal.
- Constructive dismissal: resignation forced by intolerable, unlawful, or demoting conditions = treated as illegal dismissal.
2) Remedies when dismissal is illegal
A) Reinstatement (primary relief)
- Without loss of seniority and other rights.
- Immediately executory even pending appeal (employer must physically reinstate or reinstate in payroll).
B) Full backwages
- From date of dismissal up to actual reinstatement.
- If reinstatement is no longer viable and the court/commission awards separation pay in lieu, backwages run up to finality of the decision ordering separation.
What’s included in backwages?
- Basic wage plus regular, fixed allowances and 13th-month that are part of the compensation package.
- No deduction for earnings elsewhere (full backwages doctrine).
- Overtime/commissions are included only if regular and determinable on the record.
C) Separation pay in lieu of reinstatement
- Granted when reinstatement is impracticable (strained relations, position abolished, closure, etc.).
- Typical measure (equitable): One (1) month pay per year of service (a fraction ≥ 6 months counts as 1).
- Note: This is in addition to backwages (you may receive both).
D) Damages
Moral & exemplary damages when employer acted in bad faith, was oppressive, or engaged in malice.
Nominal damages for procedural due process violations even if a valid substantive ground exists:
- Dismissal for just cause but no proper procedure → ₱30,000 nominal damages.
- Dismissal for authorized cause but no proper procedure → ₱50,000 nominal damages.
E) Attorney’s fees
- Commonly 10% of the monetary award when the employee was compelled to litigate to recover lawful wages/benefits.
F) Legal interest
- Monetary awards generally earn 6% per annum from finality of judgment until fully paid.
3) If the employer proves a valid ground but bungles procedure
- Dismissal stands (valid substantive ground), but employer pays nominal damages (see amounts above).
- For authorized causes, failure to give proper 30-day notices can nullify the dismissal; even when upheld, ₱50,000 nominal damages attach for procedural lapses.
4) Computation cheat-sheet (illustrative)
Backwages = (Monthly rate + fixed regular allowances) × number of months from dismissal to reinstatement/finality
- Pro-rated 13th-month on those months
- CBA/regular allowances proved on record Less only lawful deductions (statutory contributions/withholding as applicable).
Separation pay in lieu = 1 month pay × years of service (≥ 6 months = 1 year).
Legal interest = 6% from finality until paid.
Attorney’s fees = up to 10% of total monetary award (court/commission’s discretion).
Tip: Prepare a worksheet showing dates, monthly pay components, months counted, and the legal basis for each line (backwages vs. separation vs. damages).
5) Process & timelines
A) Before filing
- SEnA (Single-Entry Approach) with DOLE: mandatory conciliation-mediation (up to 30 days) to try settlement.
B) Case proper
- Complaint (NLRC Labor Arbiter) for illegal dismissal + money claims.
- Mandatory conference; position papers with affidavits & evidence.
- Decision (Labor Arbiter).
- Appeal to NLRC (usually 10 calendar days; employer must post a bond equal to the monetary award to perfect appeal).
- Rule 65 petition to Court of Appeals (via certiorari) on questions of grave abuse of discretion; then SC review (discretionary).
C) Reinstatement pending appeal
- Immediate; if not physically reinstated, the employer must pay payroll reinstatement from the Arbiter’s decision until reversal (if any).
6) Evidence that wins illegal dismissal cases
- Employment proof: contract/appointment, IDs, payslips, SSS/PhilHealth/Pag-IBIG records.
- Dismissal proof: termination memo, texts/emails, chat directives, timekeeping lockouts, payroll stoppage.
- Due process gaps: lack of first/second notice, inadequate time to answer, absence of hearing.
- For constructive dismissal: demotion/pay cuts, harassment, impossible targets, transfer without legitimate reason—with dates & documents.
- For authorized causes: employer’s redundancy/retrenchment papers must be real (business records, new org charts, selection criteria, DOLE notices). Absence/shallowness favors the employee.
7) Common employer pitfalls (and employee counters)
- Vague charge sheets (“loss of trust” with no facts) → violates twin-notice specificity.
- Rushed timelines (<5 data-preserve-html-node="true" days to answer) → unreasonable.
- No hearing/meeting when substantial facts are disputed.
- Back-dated notices or post-hoc memos after dismissal.
- Authorized causes without proof (no feasibility studies, no selection criteria; no DOLE notice).
- Probationary standards not communicated at hiring → termination invalid.
8) Special situations
- Abandonment: requires (1) failure to report for work and (2) clear intention to sever ties; employer should show return-to-work directives ignored by the employee. Mere absence is not abandonment.
- Union/CBAs: follow CBA grievance steps; illegal dismissal still justiciable at NLRC if unresolved.
- Quitclaims: valid only if voluntary, with reasonable consideration, and the employee understood the release. A quitclaim does not bar an illegal dismissal case if vitiated or grossly unfair.
- Health-based termination: requires competent medical certification that illness is not curable within 6 months and that continued employment is prejudicial.
- Constructive dismissal & “floating status”: extended no-work/no-pay or prolonged detail without basis can ripen into constructive dismissal.
9) Prescriptive periods
- Illegal dismissal (as injury to rights): generally 4 years from the act of dismissal (or from constructive dismissal).
- Money claims (wage/benefit differentials, 13th-month, SIL, etc.): 3 years from accrual.
- File early—prescription rules can cut parts of your claim even if the dismissal case itself is timely.
10) Practical playbooks
For employees (fast track)
- Gather contracts, payslips, memos, emails, chat logs, CCTV/attendance, witness statements.
- Write a short chronology (dates, events, people).
- SEnA filing: propose reinstatement or separation pay + backwages.
- If no settlement, NLRC complaint; press for reinstatement pending appeal after Arbiter win.
For employers (compliance shield)
- Use clear charge sheets, give ≥5 days to answer, hold hearing when facts are disputed, issue a reasoned decision.
- For authorized causes, serve 30-day notices to employee & DOLE, pay statutory separation pay, and document business basis.
- For probationary status, give written standards at hiring and evaluate against them.
11) Quick decision tree
- No valid ground or no due process → Illegal dismissal → Reinstatement + full backwages; if reinstatement impracticable → Separation pay in lieu + backwages; add damages/fees/interest as warranted.
- Valid ground but procedural lapse → Dismissal stands + nominal damages (₱30k/₱50k).
- Authorized cause with complete notices and pay → Valid; otherwise risk illegality or damages.
12) What I can draft for you (on the spot)
- Complaint-Affidavit (illegal dismissal + money claims) with evidence index.
- Computation sheet (backwages, separation in lieu, 13th-month, interest, attorney’s fees).
- Employer due-process pack (NTEX template, hearing notice, decision memo) to prevent future cases.
If you share the dates of hiring/dismissal, pay, notices received, and what happened, I’ll produce a tailored computation + pleadings outline you can use immediately.