Termination of an Employee Without a Written Employment Contract

(Philippine Legal Perspective, updated May 2025)

Key take-away:
In Philippine labor law, an employment contract need not be in writing for a valid employer–employee relationship to exist. Termination, however, is always a legal act—never a mere managerial prerogative. Even when the parties never reduced their agreement to paper, employers must still (1) anchor dismissal on a legally recognized cause and (2) comply with constitutionally required due process.

1. Sources of Law

Instrument	Salient provisions relevant to unwritten contracts
Labor Code of the Philippines (Pres. Decree 442, as renumbered by D.O. -, 2017)	• Art. 294-299 (formerly 282-287): Just and authorized causes for termination • Art. 300: Employee’s right to challenge dismissal • Art. 301-302: Burden of proof & monetary awards
1987 Constitution	Art. XIII §3: Full protection to labor; security of tenure
Civil Code	Art. 1315: Contracts perfected by mere consent; form generally not essential unless the law so requires (labor law does not).
Implementing Rules of Book V (DOLE)	Rule I, §1(d): Written contract is not indispensable for employer-employee relationship.
Department Orders / Advisories	D.O. 174-17 (contracting), Labor Advisory 06-20 (final pay release), etc.
Supreme Court jurisprudence	e.g., Universal Robina Sugar Milling v. Jardin, G.R. No. 190384, Aug 17 2022; International Resources v. CA, G.R. No. 100098, Jan 27 1994; Malaya Shipping v. CA, G.R. No. L-52968, May 23 1988; many others (see § 8).

2. Are Oral Employment Contracts Valid?

Perfection by Consent. Under Art. 1315 of the Civil Code, a contract exists once the parties agree on object and cause, even orally.
Labor Policy. The Labor Code neither prescribes a special form nor voids an oral hiring.
Practical Effects.
- Employees become probationary by default (Art. 296) unless the employer proves otherwise.
- After six (6) months of continuous work, the employee automatically attains regular status—written contract or none (Reno Foods v. Nagkahiusang Mamumuo, G.R. No. 164501, March 15 2010).
Proof Issues. The party asserting a claim (usually the employer when denial of employment arises, or the employee when asserting tenure) bears the burden of evidence. Pay slips, ID cards, SSS contributions, e-mails, CCTV logs, or witness testimony may prove the relationship.

3. Termination Requirements (Substantive + Procedural)

3.1 Substantive Ground

The cause must fall under either just causes (Art. 297) or authorized causes (Art. 298-299):

Type	Illustrative grounds	Notes
Just causes (employee fault)	Serious misconduct, willful disobedience, gross & habitual neglect, fraud, crime, analogous causes	No separation pay (unless bargained)
Authorized causes (business or health)	Installation of labor-saving devices, redundancy, retrenchment to prevent losses, closure/cessation, disease	Statutory separation pay (½ or 1 month per year of service)

3.2 Procedural Due Process (the “twin-notice” rule)

First notice: Specific acts/omissions charged + directive to submit written explanation (given reasonable 5-day period).
Opportunity to be heard: Written explanation, hearing or conference if requested/necessary (Perez v. PT&T, G.R. No. 152048, April 7 2009).
Second notice: Decision stating factual & legal basis.
Authorized-cause terminations: 30-day advance written notice to (a) the worker and (b) DOLE Regional Office.

Failure to observe due process makes the dismissal illegal even if a valid ground exists; the employer becomes liable for nominal damages (₱30,000 for just-cause, ₱50,000 for authorized-cause dismissals per Jaka Food Processing v. Pacot, G.R. No. 151378, March 10 2005).

4. Special Situations

Scenario	Rule
Probationary employees w/o contract	If the employer never communicated reasonable standards in writing on or before hiring, the worker is deemed regular; termination during probation then requires just/authorized cause.
Project / seasonal / fixed-term work but no written agreement	Doctrine of parol evidence favors employee: courts presume regular employment; employer must prove project specifications & employee’s knowledge thereof (D.M. Consunji v. Jamin, G.R. No. 192514, April 18 2012).
Contractors & sub-contractors	Even if the agency issued no contract, the worker may still be considered the principal’s employee if (a) labor-only contracting exists or (b) D.O. 174 tests are unmet.
Domestic workers (Batas Kasambahay)	Oral hiring allowed, but RA 10361 sec. 7 requires a Kasambahay Information Sheet; dismissal must follow the “just/authorized cause” framework in sec. 33.

5. Remedies for the Employee

Illegal dismissal complaint before the NLRC/DOLE Single-Entry Approach within 4 years.
Possible awards:
- Reinstatement without loss of seniority rights or separation pay in lieu;
- Full back-wages from dismissal to reinstatement/finality;
- Damages and attorney’s fees if bad faith shown.

6. Employer Compliance Checklist (Even Without a Written Contract)

Keep soft/hard records: application forms, IDs, biometrics, payroll, SSS/PhilHealth/Pag-IBIG remittances.
Define performance standards in memos, e-mails, orientation decks.
Issue a job offer or at least an employment memorandum—not legally required but best practice.
Follow the twin-notice procedure to the letter; document each step.
File DOLE RKS Form 5 (termination report) for authorized-cause dismissals within 30 days.

7. Employee Self-Help Tips

Preserve copies (photos/scans) of payslips, chat messages, company ID.
Ask HR to issue a written clarification of your employment status.
If dismissed verbally, write a contemporaneous account (date, time, immediate witness).
Seek conciliation at the NCMB SEnA desk within 30 days to toll prescription.

8. Leading Supreme Court Cases (Chronological)

Case	G.R. No. / Date	Key doctrine on unwritten contracts
Malaya Shipping Lines v. CA	L-52968 / May 23 1988	Existence of employer-employee relationship cannot be negated solely for lack of written contract.
International Resources v. CA	100098 / Jan 27 1994	Oral engagement + control test ⇒ regular employment.
Aliling v. Feliciano	185829 / April 25 2012	Absence of probationary agreement converts employee into regular status.
D.M. Consunji v. Jamin	192514 / April 18 2012	Employer bears burden to prove project employment via contracts; absence favors regular status.
Jaka Food Processing v. Pacot	151378 / Mar 10 2005	Nominal damages for violation of procedural due process.
Universal Robina Sugar Milling v. Jardin	190384 / Aug 17 2022	Affirms automatic regularization after 6 months without written probationary contract.

(Decisions after August 2022 maintain the same principles; none has overturned the precedents above as of May 1 2025.)

9. Frequently Asked Questions

Q	A
Can an employer fire an orally hired worker “effective today” because there was never a written contract?	No. Security of tenure attaches the moment the employment relationship begins, regardless of form.
Is separation pay required if the employee was dismissed for serious misconduct but had no written contract?	No separation pay for just-cause dismissals; the lack of written contract is irrelevant.
Does the employer still need to give government-mandated benefits (SSS, 13ᵗʰ-month, etc.)?	Yes. Statutory benefits flow from the relationship, not from the written contract.

10. Conclusion

The absence of a written employment contract neither deprives the worker of rights nor relieves the employer of obligations. Philippine law recognizes the reality of informal hiring, yet insists on substantive grounds and procedural due process for any dismissal. Employers who rely on the mistaken belief that “no paper means no liability” expose themselves to costly illegal-dismissal awards. Conversely, employees should remember that evidence—not mere allegation—wins cases; meticulous documentation pays off.

This article is for educational purposes and is not a substitute for tailored legal advice. For specific situations, consult a Philippine labor-law practitioner or the nearest DOLE field office.