In the Philippines, the security of tenure is a constitutionally guaranteed right. Under the Labor Code, no worker shall be dismissed except for a just or authorized cause and only after due process is observed. When an employer terminates an employee without notice or the required legal grounds, it constitutes Illegal Dismissal.
1. The Two Pillars of a Valid Dismissal
To be considered legal, a termination must satisfy two fundamental requirements:
- Substantive Due Process: The dismissal must be based on a Just Cause (fault-based, e.g., serious misconduct, insubordination, gross neglect) or an Authorized Cause (business-based, e.g., redundancy, retrenchment, closure).
- Procedural Due Process: The employer must follow the "Two-Notice Rule."
- First Notice: A written notice specifying the grounds for termination and giving the employee an opportunity to explain (usually within at least 5 calendar days).
- Hearing/Conference: A chance for the employee to present evidence or rebut the charges.
- Second Notice: A written notice of the final decision to dismiss.
2. Primary Legal Remedies
When an employee is illegally dismissed, the law provides specific reliefs intended to restore the worker to their status prior to the illegal act.
A. Reinstatement
The employee is entitled to return to their former position without loss of seniority rights. If the position no longer exists, they should be given a substantially equivalent position.
- Exception (Strained Relations): If the relationship between the employer and employee has been so severely damaged that reinstatement is no longer viable, the court may award Separation Pay in lieu of reinstatement.
B. Full Backwages
This is a form of compensation for the income lost from the time of illegal dismissal up to the time of actual reinstatement. It includes:
- Basic salary.
- 13th-month pay.
- Allowances and other benefits (e.g., leave credits) the employee would have earned.
C. Separation Pay
In lieu of reinstatement, separation pay is usually computed at one month’s salary for every year of service, with a fraction of at least six months being considered as one whole year.
3. Damages and Attorney's Fees
Beyond the basic labor awards, an illegally dismissed employee may be entitled to:
- Moral Damages: Awarded if the dismissal was attended by bad faith, fraud, or was oppressive to labor.
- Exemplary Damages: Awarded if the dismissal was done in a wanton, oppressive, or malevolent manner, to serve as a deterrent.
- Attorney’s Fees: Generally fixed at 10% of the total monetary award if the employee was forced to litigate to protect their rights.
4. The "Agabon" Doctrine: Dismissal with Just Cause but No Due Process
If an employer has a valid Just Cause to fire an employee (e.g., the employee stole) but failed to follow the Procedural Due Process (no two-notice rule), the dismissal is sustained, but the employer is liable for Nominal Damages.
- For Just Causes: Usually ₱30,000.
- For Authorized Causes: Usually ₱50,000.
5. Procedural Steps for Redress
| Step | Action |
|---|---|
| 1. Single Entry Approach (SEnA) | The first step is mandatory mediation-conciliation at the Department of Labor and Employment (DOLE) or the National Labor Relations Commission (NLRC). |
| 2. Formal Complaint | If mediation fails, the employee files a formal complaint for Illegal Dismissal before the Labor Arbiter. |
| 3. Position Papers | Both parties submit sworn statements and evidence. No trial-type hearing is strictly required unless necessary. |
| 4. Decision | The Labor Arbiter renders a decision. If favorable, the "Reinstatement Aspect" is immediately executory even pending appeal. |
| 5. Appeal | Decisions can be appealed to the NLRC Commission, then to the Court of Appeals via a Petition for Certiorari, and finally to the Supreme Court. |
6. 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 for a valid cause and that due process was observed. If the employer fails to prove this, the dismissal is automatically deemed illegal.