Reinstated Employee After a Criminal Case Is Dismissed:
How to Treat and Compute “Length of Service” under Philippine Labor Law
1. Why the topic matters
When an employee is criminally charged and, because of that charge, is dismissed or forced to go on an extended absence, only to be absolved later on (case dismissed, withdrawn, or the worker is acquitted), the inevitable HR question is:
“From which date do we count his/her length of service once the person is brought back?”
Length of service is the critical metric for backwages, seniority ranking, retirement, service-incentive leave, 13ᵗʰ-month pay proration, redundancy selection, and separation pay computing. Getting it wrong invites both costly money claims and exposure to an illegal dismissal suit.
2. Core legal framework
| Key Source | Relevance | Take-away |
|---|---|---|
| Art. 294 (formerly 279) Labor Code | Security of tenure; reinstatement and full backwages if dismissal is found illegal | Reinstatement must restore the employee to the status he enjoyed before dismissal. |
| Art. 297 (formerly 282) | Enumerates just causes for dismissal | Mere filing of a criminal case is not one of the just causes; conviction of a crime involving moral turpitude is. |
| Art. 305 (formerly 288) | Suspensions & culpability | Employer may place an employee on preventive suspension (not dismissal) pending an investigation for up to 30 days. |
| Rule I, §20, DOLE D.O. 147-15 | Guides employers on due-process standards | No dismissal may be based solely on an untried criminal accusation. |
| Constitution, Art. III, §14(2) | Right to be presumed innocent | Reinforces the doctrine that an acquittal wipes out the basis for a dismissal built purely on the accusation. |
3. Leading Supreme Court doctrine
| Case | G.R. No. | Ruling on continuity of service |
|---|---|---|
| Metro Transit Org. v. CA | 108813 (6 Jun 1994) | When the only basis of dismissal is a criminal case that ends in exoneration, reinstatement must treat the gap as if no break occurred; seniority and leave credits accrue. |
| Airborne Security v. CA | 116904 (29 May 1997) | Period between dismissal and actual reinstatement counts for backwages and for computing benefits (retirement/separation) once reinstatement is ordered. |
| Coca-Cola Bottlers v. Del Villar | 151893 (24 Jan 2011) | Even payroll-reinstated employees accrue length of service “for all employment purposes”; actual return to work is not required for continuity to attach. |
| People’s Broadcasting (Bombo Radyo) v. DOLE | 179652 (6 Mar 2012) | Reinforced that monetary benefits depending on tenure must be re-computed by including the interregnum. |
| St. Michael’s Institute v. Villar | 139464 (23 Oct 2001) | Preventive suspension pending trial does not sever employment; service remains continuous unless a final conviction supervenes. |
Rule distilled: Once the criminal complaint is resolved in the employee’s favor and reinstatement is ordered or voluntarily granted, the entire period from the date of dismissal/suspension up to actual reinstatement is tacked on to the employee’s length of service, exactly as though he never left.
4. Practical computation guide
Identify the critical dates
Date Description A. Start of employment Hiring date B. Dismissal/forced leave Day the employee stopped working/was stricken from rolls C. Outcome day Date the criminal case was dismissed or acquittal was promulgated D. Return-to-work notice Employer’s/DOLE’s NLRC order date E. Actual return Day the employee physically (or via payroll reinstatement) resumed status Length of service for various purposes
Purpose Period counted as service Backwages B → E (full, less earnings elsewhere only if proved) Seniority ranking, leave accrual, salary step Start of employment (A) → present, treating B → E as no-break Retirement (Art. 302 & RA 7641) Same continuous period; age and 5-yr × rule considers the whole span Separation pay after later redundancy/closure Compute years of service including B → E 13ᵗʰ-month pay, COLA differentials Re-run payroll to credit the months in B → E Preventive suspension caveat If the employer opted for preventive suspension (max 30 days) instead of dismissal, wages for those 30 days may be legally unpaid (unless company policy says otherwise), but the time still counts toward tenure.
5. Situational applications
| Scenario | HR/LR treatment |
|---|---|
| Acquittal on the merits | Reinstate; add gap to service; pay full backwages. |
| Case dismissed for insufficiency of evidence | Same as acquittal—no distinction. |
| Case dismissed conditionally (e.g., provisional dismissal) | Employer may place the worker on leave of absence until final disposition, but credit service once case is finally dropped. |
| Employer proactively re-hires before judgment | Length of service runs continuously; but backwages only up to actual re-hire date. |
| Subsequent conviction after reinstatement | Employer may now dismiss for just cause; tenure stops on conviction day; sums already paid are not clawed back. |
6. Tax and payroll housekeeping
- Backwages are tax-exempt to the extent they represent compensation for lost earnings due to illegal dismissal (BIR RMC No. 78-2012).
- Re-computed 13ᵗʰ-month differentials retain exemption up to the yearly cap.
- SSS, PhilHealth, Pag-IBIG contributions for the gap months must be remitted retroactively with employer paying the entire share plus penalties (but in practice SSS waives surcharges once an NLRC order is shown).
7. Checklist for employers
- Issue a reinstatement memo expressly stating that seniority and benefits “shall be considered uninterrupted.”
- Reconstruct payroll for the gap period; set aside backwages provision.
- Update 201 file: remove the dismissal notation; re-tag status as “regular employee.”
- Process statutory and company plan contributions retroactively.
- Orient line managers to avoid discrimination or retaliatory acts—otherwise, a separate constructive-dismissal complaint may follow.
8. Key take-aways for employees
- An unbroken record matters more than the cash; it affects promotions, future separation computations, and retirement.
- Keep copies of the reinstatement order and acquittal to counter any future claim that your service was broken.
- If the employer refuses to credit the gap, file an NLRC money claim—prescriptive period is three (3) years for money claims counted from when each benefit should have been paid.
9. Bottom-line rule of thumb
“Reinstatement wipes the slate clean.” Once the criminal charge collapses, the law reconstructs the employment timeline as if the dismissal never happened—all years, months, and days in limbo are stapled back into the employee’s length of service.
This doctrine keeps faith with the constitutional presumption of innocence and the Labor Code’s policy of protecting labor, making sure that an unfounded criminal allegation does not permanently scar an employee’s work life.