Here’s a comprehensive, practitioner-friendly guide on termination due to habitual tardiness—with special attention to payroll deductions—in the Philippines. I’ll explain the legal bases, what “habitual” means in practice, proper disciplinary process (including the twin-notice rule), how deductions for late/undertime work, and practical HR checklists and templates.

Termination for Habitual Tardiness (PH): Everything You Need to Know

1) Legal bases at a glance

Just causes for termination. Under the Labor Code (Art. 297, formerly 282), an employer may dismiss for just causes such as gross and habitual neglect of duties and analogous causes. Courts have repeatedly treated habitual tardiness/undertime, when serious and repeatedly penalized under a valid company policy, as either:
- a form of gross and habitual neglect (failure to perform work on time is still failure to perform), or
- an analogous cause expressly defined in the company code of conduct.
Company rules matter. You need a clear, written attendance policy (e.g., number of lates that count as “habitual,” grace periods, how minutes are counted, progressive penalties). The policy must be reasonable and communicated to employees in advance (e.g., handbook acknowledgment).
Due process is mandatory. Even if tardiness is clearly habitual, dismissal still requires procedural due process: the twin-notice rule with a chance to be heard (see section 4).
Proportionality. Penalties must fit the offense. Courts weigh frequency, length of service, prior record, and whether the employee was warned/suspended before. Jumping straight to dismissal for a first or low-level offense is risky.

2) What counts as “habitual” tardiness?

There’s no single statutory number. In practice, “habitual” means repeated and regular enough to show pattern and neglect, usually over a defined rolling period. Good policies define this precisely, e.g.:

Example thresholds (illustrative only—set your own):
- 5 tardiness incidents in a month, or
- 8 in a quarter, or
- total late minutes exceeding a set cap (e.g., 240 minutes) in a quarter.

Key tips

Use objective timekeeping (biometrics, swipe logs, system timestamps).
Count both tardiness and undertime if policy says so.
Grace periods (e.g., 5 minutes) should be written; decide whether they are excused (no deduction/penalty) or merely ignored for discipline counting.

3) Payroll deductions for tardiness & undertime

A. General rule

The Constitution and Labor Code protect wages. Deductions are generally prohibited unless authorized by law, regulation, a CBA, or by the employee’s written consent for a lawful purpose.
However, “no work, no pay” is not a “deduction”—it’s simply non-payment for work not rendered. Paying monthly-rated employees doesn’t immunize against undertime reductions; if they arrived late or left early, the corresponding unworked minutes/hours may be unpaid if your policy says so and it is applied uniformly.

B. What’s typically allowed

Pro-rata non-payment for late/undertime minutes/hours actually not worked.
Statutory deductions: SSS, PhilHealth, Pag-IBIG, and withholding tax.
CBA-agreed or employee-consented deductions for lawful purposes (e.g., company loans), in writing.

C. What’s restricted or risky

Fines/penalties deducted from pay just because of tardiness (beyond withholding pay for time not worked) are risky unless:
- expressly allowed by law/regulation/CBA;
- clearly written, reasonable, and voluntarily agreed to (and even then, DOLE often scrutinizes “penal” deductions).
Automatic offsets (e.g., “use your overtime to cancel your tardiness”) are not automatic unless policy/CBA provides it.

D. Computation basics (practical formulas)

Daily-paid employees:
- Hourly rate = Daily rate ÷ 8
- Tardiness deduction = Hourly rate × (late minutes ÷ 60)
Monthly-paid employees: commonly:
- Daily rate = Monthly rate ÷ 26 (or company standard)
- Hourly rate = Daily rate ÷ 8
- Tardiness/undertime = Hourly rate × (late minutes ÷ 60) (Use your company’s documented conversion basis consistently; reflect it in the handbook/contract.)
13th-month pay: computed on basic salary actually received. If tardiness reduces basic salary (because of unpaid minutes), 13th-month pay may decrease accordingly.
Payslips should itemize all deductions and undertime/tardiness non-payments for transparency.

4) Due process checklist (twin-notice rule)

First Notice (Notice to Explain / NTE)
- State specific acts: dates, times, minutes late, policy violated.
- Cite previous warnings/suspensions.
- Give reasonable time to submit a written explanation (e.g., 5 calendar days).
Opportunity to be heard
- Provide a hearing or conference (especially if requested or credibility issues exist).
- Allow the employee to bring evidence or a representative.
Second Notice (Decision)
- Summarize facts, evidence, employee’s explanation, and policy basis.
- Explain why penalty = proportionate (consider length of service, prior record, mitigating circumstances like illness, transport strikes, force majeure).
- State effective date of penalty (suspension or dismissal).

If dismissal is substantively valid but procedurally defective, employers may be liable for nominal damages even if the dismissal stands. Conversely, if the cause is not sufficiently proven or the penalty is disproportionate, dismissal may be declared illegal with reinstatement (or separation pay in lieu) plus backwages, and possibly damages/attorney’s fees.

5) Progressive discipline that holds up

Courts expect progressive discipline for attendance offenses unless the conduct is egregious:

1st offense: Coaching or verbal warning
2nd: Written warning
3rd: Final warning or short suspension
4th+: Suspension; and if thresholds persist after prior penalties, dismissal may be justified

Document everything: time logs, counseling notes, warnings with employee acknowledgment (or witness notation if the employee refuses to sign), and records of each suspension served.

6) Evidence package for HR (what to keep)

Timekeeping reports (raw logs + summary tables) covering the whole evaluation period
Policy documents (attendance rules, conversion formulas, disciplinary matrix) with proof of receipt/acknowledgment
Prior NTEs, explanations, and decisions (warnings/suspensions)
Hearing minutes and any supporting documents (medical certificates, traffic advisories, etc.)
Payroll records showing consistent application of undertime non-payment and other deductions

7) Special situations

Flexi-time / Hybrid / WFH: Define core hours and how tardiness is measured (e.g., login time vs. first input on system). Align measures with output-based KPIs where appropriate.
Force majeure / public transport disruptions: Consider excusing or mitigating tardiness if the policy provides, or if equity strongly favors the employee (courts notice fairness).
Managerial vs. rank-and-file: Standards apply to both, but trust and responsibility considerations may justify stricter expectations for supervisors/managers—still, due process and proportionality apply.
Disability or pregnancy-related tardiness: Evaluate reasonable accommodation duties and avoid discriminatory enforcement.
Field personnel / mobile roles: Define reporting points (e.g., first client site, hub check-in) to anchor tardiness metrics.
Offsets and make-up time: Only if policy/CBA provides; apply uniformly.

8) Risks if the employer gets it wrong

Illegal dismissal: reinstatement (or separation pay in lieu) + backwages; possible moral/exemplary damages and attorney’s fees if in bad faith.
Wage claims: refund of unlawful deductions, wage differentials, penalties for violations of wage rules.
DOLE findings: compliance orders after inspection; may require policy revision, restitution, and administrative sanctions.

9) Practical HR templates (copy-paste ready)

A. Policy snippet — Attendance & Tardiness

Tardiness means reporting for work after the scheduled start time. A grace period of 5 minutes applies for payroll purposes but counts for discipline once the total late minutes in a day exceed 5. Habitual tardiness occurs when an employee incurs 5 or more tardiness incidents in any one calendar month or 8 or more in any rolling three-month period, or accumulates 240 late minutes in any rolling three-month period. Penalties (progressive): 1st—written warning; 2nd—final warning; 3rd—1-day suspension; 4th—3-day suspension; 5th—dismissal. Payroll: “No work, no pay.” Late/undertime minutes are unpaid using the Company’s published conversion formula. Fines or other wage deductions are not imposed, except those authorized by law, CBA, or written consent for a lawful purpose. Mitigating circumstances (e.g., medical emergencies, official business, force majeure) may be considered upon proof.

B. Notice to Explain (NTE)

Subject: Notice to Explain – Alleged Habitual Tardiness You are required to explain in writing within five (5) calendar days why no disciplinary action should be taken against you for alleged habitual tardiness in violation of Section __ of the Company Code. Records show you reported late on the following dates/times: [Table: Date | Scheduled Start | Actual In | Minutes Late] You may attach supporting documents. You are also invited to a conference on [date/time] to be heard.

C. Decision Notice (Dismissal)

After evaluation of the time records, your written explanation, and the conference on [date], Management finds you liable for habitual tardiness under Section __ of the Company Code, previously penalized by [warnings/suspensions with dates]. Despite these, you incurred further tardiness on [dates]. Considering the frequency, prior penalties, and your length of service/performance record, we find dismissal proportionate under just cause (gross and habitual neglect / analogous cause). Your employment is terminated effective [date]. Enclosed are your final pay details and clearance procedures.

10) Employer/Employee quick FAQs

Q: Can we deduct a fixed “fine” for each late arrival? A: Avoid fines. Stick to non-payment for unworked time and policy-based discipline. Fines are generally disfavored unless clearly lawful and consensual.

Q: Must we hold a hearing if the employee already submitted a written explanation? A: Provide a hearing or conference especially if requested or credibility is at issue. Written explanation alone may suffice in straightforward cases, but a brief conference is safer.

Q: The employee is monthly-paid—can we still reduce pay for late minutes? A: Yes, if your policy says so and you apply it uniformly. It’s non-payment for time not worked, not an unlawful deduction.

Q: Can great performance excuse habitual tardiness? A: Performance can mitigate but does not excuse persistent violations. Document the balancing.

Q: What are filing deadlines if a dispute arises? A: Illegal dismissal complaints: generally four (4) years. Money claims (e.g., wage refunds): three (3) years.

11) Step-by-step roadmap (employer)

Audit time logs for 6–12 months; compute late/undertime totals.
Check policy definitions & progressive penalties; update if needed and re-acknowledge.
Confirm consistency: were earlier offenses warned/penalized?
Issue NTE, attach table of incidents; give time to reply.
Hold conference, note minutes; evaluate mitigating proof.
Decide penalty per matrix; write a reasoned decision.
If dismissal: issue second notice with effective date; prepare final pay (including any prorated pay, 13th month, converted leaves per policy/law).
Archive the full file.

12) Step-by-step roadmap (employee)

Request your timekeeping and payroll records; verify counts and computation.
Submit explanation with proof of excusing events (medical, force majeure, official business).
Ask for a conference if facts are disputed.
Check policy: Is the definition of “habitual” clear? Were prior penalties actually served?
If dismissed, consider filing before the NLRC within the prescriptive periods above.

Bottom line

Habitual tardiness can justify termination in the Philippines only when:
1. the policy clearly defines it and was communicated,
2. the tardiness is proven and repeated,
3. progressive discipline and proportionality are observed, and
4. the twin-notice due process is strictly followed.
For payroll, non-payment for unworked late/undertime is generally fine; penal fines are not.
Careful documentation is what makes or breaks the case.

If you want, I can turn this into a printable policy + forms pack (policy page, NTE, hearing minutes template, decision notice, and a ready-to-use tardiness computation sheet).