In the Philippines, security of tenure is a constitutionally protected right. An employer cannot dismiss an employee except for a just cause or an authorized cause as provided under the Labor Code and substantiated by due process. When health issues interfere with work performance, the law balances the employer’s right to productivity with the employee’s right to humane treatment and job security.
1. Termination Due to Disease (Authorized Cause)
Under Article 299 (formerly 284) of the Labor Code, an employer may terminate the services of an employee found to be suffering from any disease under specific conditions.
Legal Requirements for Valid Termination: For a dismissal due to disease to be legal, the following three elements must concur:
- The Disease is Prohibited by Law: The employee must be suffering from a disease that is prejudicial to their health or to the health of their co-employees.
- Medical Certification: There must be a certification issued by a competent public health authority (not just a private physician) stating that the disease is of such a nature or at such a stage that it cannot be cured within a period of six (6) months even with proper medical treatment.
- Payment of Separation Pay: The employee is entitled to separation pay equivalent to at least one (1) month’s salary or one-half (1/2) month’s salary for every year of service, whichever is higher. A fraction of at least six (6) months is considered one (1) whole year.
Note: If the disease can be cured within six months, the employer cannot terminate the employee; instead, the employee should be granted leave.
2. Excessive Absences and "Gross and Habitual Neglect"
When an employee is frequently absent due to health reasons but does not necessarily have a terminal or long-term "prohibited disease," the employer may look toward Article 297 (Just Causes).
Gross and Habitual Neglect of Duty: While illness is generally seen as involuntary, "excessive absences" can ripen into gross and habitual neglect of duty if:
- Habitual: The absences are repeated and frequent.
- Gross: The absences cause significant disruption to business operations or involve a flagrant disregard for company rules.
The "Sick Leave" Rule: Absences covered by legitimate sick leaves (supported by medical certificates) are generally protected. However, if an employee exhausts all leave credits and continues to be absent without authorization, or fails to follow the company’s notification procedures, they may be subject to disciplinary action—up to termination—not because they are sick, but because they failed to comply with administrative requirements.
3. Abandonment of Work vs. Medical Absence
Employers sometimes claim "Abandonment of Work" when an employee is absent for a long period due to health. To legally prove abandonment, the employer must show:
- The employee failed to report for work without a valid reason.
- There was a clear intent to sever the employer-employee relationship.
If an employee can prove they were genuinely ill (even if they failed to call in daily), the "intent to sever" is usually absent, making a dismissal for abandonment illegal.
4. Procedural Due Process
Even if a valid cause (disease or neglect) exists, the employer must follow the "Two-Notice Rule":
- First Written Notice:
- For Disease: Notice of the intention to terminate due to health, supported by the medical certificate.
- For Absences: A "Notice to Explain" (NTE) detailing the specific dates of absence and asking the employee to explain why they should not be disciplined.
- Administrative Hearing/Conference: The employee must be given an opportunity to present their side (or their medical records).
- Second Written Notice: A notice of the final decision to terminate or impose a lesser penalty.
5. Summary Table: Just Cause vs. Authorized Cause
| Feature | Just Cause (Neglect/Absences) | Authorized Cause (Disease) |
|---|---|---|
| Legal Basis | Article 297 (Gross/Habitual Neglect) | Article 299 (Disease) |
| Nature | Fault-based (Failure to follow rules) | Non-fault (Physical incapacity) |
| Requirement | Habitual absences without valid excuse | Certification from public health authority |
| Separation Pay | Not required (unless by CBA/Policy) | Mandatory (1/2 month per year) |
| Due Process | NTE, Hearing, Notice of Decision | Notice of Termination based on Med Cert |
6. Important Jurisprudence and Nuances
- Fit to Work: If an employee recovers and presents a "Fit to Work" certification before the 6-month period ends, the employer is generally mandated to reinstate them.
- The Burden of Proof: In termination cases, the burden of proof rests entirely on the employer. Failure to produce the required public health certification in disease cases often leads to a ruling of illegal dismissal.
- Total Disability: If the health condition constitutes "Permanent Total Disability" under Social Security (SSS) or Employee’s Compensation (EC) rules, the employee may be entitled to additional disability benefits outside of the Labor Code’s separation pay.