In Philippine labor law, the security of tenure is a constitutionally guaranteed right. Article XIII, Section 3 of the 1987 Constitution ensures that workers shall be entitled to security of tenure, meaning a worker cannot be dismissed except for a just or authorized cause and only after due process. When an employer violates these requirements, the dismissal is deemed illegal, triggering specific legal remedies for the employee.

I. The Twin Requirements of a Valid Dismissal

To be considered lawful, a dismissal must satisfy two essential elements:

Substantive Due Process: The termination must be based on either a Just Cause (fault-based, e.g., serious misconduct, willful disobedience, gross neglect) or an Authorized Cause (business-based, e.g., redundancy, retrenchment, or closure of business).
Procedural Due Process: The employer must follow the "Twin-Notice Rule."

The Twin-Notice Rule

First Notice (Notice to Explain): A written notice specifying the grounds for termination and giving the employee a reasonable opportunity to explain their side (usually at least 5 calendar days).
Hearing/Conference: An opportunity for the employee to present evidence or rebut the accusations.
Second Notice (Notice of Decision): A written notice communicating the final decision to terminate, after considering the employee’s defense.

II. Primary Legal Remedies

When a dismissal is proven illegal (either because there was no valid cause or because the cause was not proven), the Labor Code provides for several specific reliefs.

1. Reinstatement

Reinstatement is the restoration of the employee to their former position without loss of seniority rights. It is the primary remedy intended to restore the status quo.

Actual Reinstatement: The employee returns to their physical workstation.
Payroll Reinstatement: If the employer refuses to take the employee back, they must at least be restored to the payroll while the case is being appealed.

2. Full Backwages

Backwages represent the compensation the employee lost due to the illegal dismissal.

This includes the basic salary, allowances, and other benefits (like 13th-month pay and service incentive leaves) computed from the time of the illegal dismissal up to the time of actual reinstatement.

3. Separation Pay (In Lieu of Reinstatement)

While reinstatement is the rule, Separation Pay may be awarded instead in the following cases:

Strained Relations: When the relationship between the employer and employee has deteriorated to the point where working together is no longer viable.
Abolition of Position: If the previous position no longer exists and there is no substantially equivalent position.
Employee's Preference: If the employee opts not to be reinstated.
Computation: Generally computed at one (1) month's pay for every year of service, a fraction of at least six months being considered as one whole year.

III. Remedies for Lack of Procedural Due Process

A dismissal can be for a valid cause (substantive) but still fail to follow the proper procedure (procedural). This is known in Philippine jurisprudence as the Agabon Doctrine.

If the dismissal is for a Just Cause but lacks Procedural Due Process:

The dismissal is upheld (the employee stays fired).
The employer is liable to pay Nominal Damages (usually around ₱30,000) as a penalty for the procedural lapse.

If the dismissal is for an Authorized Cause but lacks Procedural Due Process (Jaka Food Processing case):

The dismissal is upheld.
The employer is liable to pay Nominal Damages (usually around ₱50,000), as the standard for authorized causes is generally higher.

IV. Moral and Exemplary Damages

These are not automatically granted in every illegal dismissal case. They require proof of "bad faith."

Moral Damages: Awarded when the dismissal was attended by bad faith, fraud, or was oppressive to labor, or done in a manner contrary to morals, good customs, or public policy. It aims to compensate for mental anguish and besmirched reputation.
Exemplary Damages: Awarded if the dismissal was effected in a wanton, oppressive, or malevolent manner, intended to serve as a deterrent for the public good.

V. Attorney’s Fees

In cases of illegal dismissal where the employee is forced to litigate to protect their rights, the court may award attorney’s fees. Under the Labor Code, this is limited to 10% of the total monetary award (backwages, separation pay, etc.).

VI. Liability of Corporate Officers

Generally, a corporation has a separate juridical personality. However, corporate officers (Presidents, Managers, Directors) can be held solidarily liable (personally liable alongside the company) for the money claims of an illegally dismissed employee if it is proven that they acted with malice or bad faith in terminating the employee.

VII. Jurisdiction and Prescription

Where to file: A complaint for illegal dismissal is filed with the Regional Arbitration Branch of the National Labor Relations Commission (NLRC) having jurisdiction over the workplace.
Prescriptive Period: An action for illegal dismissal must be filed within four (4) years from the time of termination. Failure to file within this period bars the claim forever.