Disclaimer: This article is provided for informational purposes only and does not constitute legal advice. If you require specific guidance on a particular situation, it is best to consult a qualified attorney.

Termination of Employment Due to Health Reasons Under Philippine Labor Law

In the Philippine setting, the Labor Code recognizes that under specific circumstances, an employer may validly terminate an employee due to health-related issues. This ground, traditionally found under Article 284 (now renumbered as Article 299) of the Labor Code, provides detailed rules and standards to protect both employers and employees and to ensure that termination on the basis of disease is fair, lawful, and conducted in accordance with due process.

This article outlines the key legal principles governing termination of employment due to health reasons, the procedural requirements, and the rights and entitlements of the affected employee.

1. Legal Basis

1.1. Labor Code of the Philippines

Under the Labor Code of the Philippines, one of the “authorized causes” for termination is the employee’s “disease” if it is of such nature or at such a stage that it cannot be cured within a period of six (6) months, even with proper medical treatment. The statutory provision (formerly Article 284, now renumbered as Article 299) states:

An employer may terminate an employment if the employee has been found to be suffering from any disease and whose continued employment is prohibited by law or is prejudicial to his health as well as to the health of his co-employees…

1.2. DOLE’s Omnibus Rules Implementing the Labor Code

The rules implementing the Labor Code also provide supplemental guidelines. It is generally required that the seriousness of the illness, or the resulting inability to work, be sufficiently proven by a medical certificate issued by a competent public health authority. The findings should clearly indicate that the nature and stage of the disease makes continued employment either:

Dangerous to the employee’s own health, or
Dangerous to the health of his or her co-workers, and
That no remedy or rehabilitation within six (6) months is expected to address the condition or make it safe for the employee to continue working.

2. Grounds and Requirements for Termination Due to Illness

2.1. The Disease Itself

The illness must be serious enough to interfere with the employee’s performance of his duties in a manner that is hazardous to him or to others.
If the illness can be managed or treated such that the employee may safely return to work, termination should not be exercised. The law favors the continuation of employment where it is still feasible and does not pose a significant risk to anyone’s health and safety.

2.2. Certification from a Competent Public Health Authority

A medical certificate from a competent public health authority (e.g., a government hospital, a public health officer, or a DOH-accredited facility/doctor) is typically required.
This certification must specify that the disease is of such nature or stage that continued employment is either prohibited by law or prejudicial to the health of the employee and/or the employee’s co-workers, and that there is no possibility of curing or remedying the condition within six (6) months.

2.3. “Reasonable Accommodation” Versus Immediate Termination

Reasonable accommodation refers to adjustments or modifications in the workplace (e.g., flexible schedules, modified duties, accessible facilities) to allow an employee with a disability or illness to continue working when feasible.
Employers are encouraged to explore possible accommodations, especially under the Magna Carta for Persons with Disability (Republic Act No. 7277), which aims to integrate persons with disabilities into society. However, when the specific disease threatens the safety of the workforce or the employee’s own health and cannot be remedied within six (6) months, the employer may lawfully proceed with termination.

3. Procedural Requirements

To ensure validity and to avoid claims of illegal dismissal, employers must observe the proper procedure, which generally includes:

Notice to the Employee.
- Although termination due to disease is an “authorized cause” (rather than a “just cause”), prudent practice dictates that the employee must be informed in writing of the employer’s intention to terminate their employment based on a medical certificate attesting to the gravity and incurability of the disease within six months.
Certificate from a Competent Public Health Authority.
- Prior to termination, the employer should obtain the required medical certification. This document often serves as the principal basis for the decision to terminate employment.
Notice to the Department of Labor and Employment (DOLE).
- Under Philippine regulations, employers must normally submit a report to DOLE whenever an employee is terminated for authorized causes (including disease). Although some authorized causes (like redundancy or closure) have stricter notice requirements (30 days prior to effectivity), best practice is to promptly inform DOLE of the termination for disease to ensure compliance.
Payment of Separation Pay.
- The Labor Code mandates payment of separation pay for terminations under authorized causes. Specifically, for termination due to disease, the law provides for at least one month’s salary or one-half month’s salary for every year of service, whichever is greater, unless a more favorable company policy or Collective Bargaining Agreement (CBA) grants a higher rate.
- A fraction of at least six (6) months is considered one (1) whole year in computing separation pay.

While due process requirements for authorized causes (including disease) are typically less stringent than for just causes (i.e., no need for a formal hearing or two-notice rule as in dismissal for misconduct), it is still considered prudent and in line with best practices to provide the employee with an opportunity to be heard and to contest or explain any medical findings that would lead to termination.

4. Rights and Entitlements of the Employee

Even if an employer lawfully terminates an employee based on a valid medical certification, the employee retains certain statutory rights:

Separation Pay.
- The law expressly confers the right to separation pay to any employee terminated for an authorized cause, including disease. The minimum standard is the higher of one-month pay or one-half month’s pay per year of service.
Other Benefits.
- The employee may still be entitled to any accrued benefits such as unused leave credits (if convertible to cash), 13th month pay prorated up to the last day of work, or other benefits due under existing company policy or CBA.
Unemployment Insurance or SSS Sickness Benefit (If Qualified).
- Employees covered by the Social Security System (SSS) and the Employees’ Compensation Commission (ECC) may be entitled to sickness or disability benefits, depending on the nature and severity of the illness, as well as their contributions and compliance with the claims process.
Challenging the Decision.
- The employee may file a complaint for illegal dismissal if they believe the termination was invalid (e.g., if the alleged disease was not proven, the process was not followed, or no valid medical certificate was presented). The employer would then be required to justify its decision before the labor tribunals.

5. Practical Considerations and Common Issues

5.1. Timing and Evidence

Employers should ensure that the basis for termination is contemporaneous and well-documented, supported by a legitimate and current medical finding. A mere suspicion or outdated certificate will not suffice.

5.2. Temporary Versus Permanent Disability

If an employee’s illness or disability is only temporary, or if medical findings suggest that the condition might improve sufficiently to allow a return to work (with or without accommodations), dismissal might be premature or illegal. For instance, if the condition can be addressed or controlled within six (6) months, the employee should typically be allowed to continue or to resume work upon clearance from a competent health authority.

5.3. Interaction with the Magna Carta for Persons with Disability

Should the employee’s illness result in a disability recognized under RA 7277, the employer may have the obligation to pursue reasonable accommodations to retain the employee. The threshold, however, is practicality and safety: if no reasonable accommodation would make continued employment safe for the employee or others, termination may still be justified.

5.4. Reinstatement If Condition Improves

If, after termination, an employee recovers or obtains a new medical opinion challenging the basis for termination, they may explore legal remedies to question the termination. However, once an authorized-cause dismissal is validly carried out and separation pay is given, the law generally does not obligate the employer to automatically reinstate a previously dismissed employee if the cause for the separation was legitimate at the time.

5.5. Misuse of the Ground

There have been instances where unscrupulous employers attempt to use “disease” as a pretext for terminating an employee for unrelated reasons. Such actions, if proven, can result in an illegal dismissal finding. Termination on this ground requires strong medical proof that is consistent, clear, and comes from a credible public health authority.

6. Jurisprudential Guidance

Over the years, the Supreme Court has reiterated that the termination of employment due to illness must strictly conform to the requirements outlined in the Labor Code and its implementing rules. Key points highlighted in Philippine jurisprudence include:

Strict Construction in Favor of Labor.
- Laws involving termination are generally construed in favor of employees. The employer bears the burden of proof to show compliance with legal and procedural requirements.
Good Faith of the Employer.
- Employers must demonstrate that the action was taken in good faith, with no ulterior motive, and only after obtaining a competent medical opinion.
Requirement of Prior Certification.
- A valid medical certificate from a competent public health authority is crucial. Without this document, termination on the ground of illness is highly vulnerable to challenge.
Obligation to Pay Separation Pay.
- Separation pay for termination due to disease is non-negotiable, unless the employee voluntarily waives it (which should be in an agreement that is not contrary to law and made with full understanding of the consequences).

7. Best Practices for Employers

Obtain Updated, Detailed Medical Opinions.
- Engage the services of reputable medical professionals or institutions to ensure findings are accurate and objective.
Document All Correspondence.
- Keep all notices, reports, and medical certificates on file to protect against potential legal disputes.
Observe Compassion and Fairness.
- Wherever possible, explore alternatives such as job reassignments, leave without pay, flexible schedules, or short-term disability benefits if the condition can improve. Termination should be a last resort.
Consult with DOLE or Legal Professionals.
- Given the complexities of labor law, prior consultation helps ensure that an employer’s actions meet both the substantive and procedural requirements of the law.

8. Conclusion

Termination of employment due to health reasons in the Philippines is governed by a clear but carefully policed framework under the Labor Code. Employers may lawfully terminate an employee who is suffering from a disease that is detrimental to themselves or others, provided that:

A valid medical certificate from a competent public health authority attests that the disease cannot be cured within six (6) months;
The procedural requirements—primarily the notice to the employee, the DOLE report, and proper documentation—are observed; and
Separation pay mandated by law is duly provided.

The law strikes a balance between safeguarding the workforce (including the affected employee) from serious medical risks and ensuring that dismissal on this ground is fair, well-founded, and accompanied by financial support in the form of separation pay. Employers are reminded to approach the situation with compassion and prudence, and employees should be aware of their rights and remedies under Philippine labor laws.

Disclaimer: This article is intended for informational purposes only and does not substitute for individualized legal counsel. For specific concerns or questions, consult a licensed attorney or contact the Department of Labor and Employment (DOLE) directly.