DISMISSAL,

TERMINATION,
RETIREMENT AND
REINSTATEMENT
OF
EMPLOYEES
Dismissal of Employees
A dismissal is the
termination of an
individual's employment
by the employer.
Employees have a right
not to be unfairly
dismissed from
employment.
Fairness of a dismissal
There are a number of fair
reasons for dismissal, which
fall into several categories:

Conduct
Capability
Redundancy
Statute
Some other substantial reason.
In considering the fairness of a
dismissal a tribunal will ask
two questions:

Was the dismissal for a fair

reason?
If it was, was it procedurally
fair?
Before dismissing an
employee, employers need to
make sure that they have a
potentially fair reason. The five
potentially fair reasons for
dismissal are: capability or
qualifications; conduct;
redundancy; where continued
employment would contravene
the law; and “some other
substantial reason”.
 A. CAPABILITY OR
QUALIFICATIONS
Capability is defined in the
Employment Rights Act 1996
by reference to the skill,
aptitude, health or any other
physical or mental quality of
the employee.
It means that where an
employee is not able to do his
job for one of the reasons
listed below, provided that
procedure is followed
correctly, it will be fair to
dismiss.
There are two questions that
need to be addressed for a
capability dismissal to be in
order.

Does the employer honestly

believe this employee is
incompetent or unsuitable for
the job?
Are his grounds for that belief
reasonable?
An employer will have to
produce evidence of poor
performance and show that
this was the real reason for
dismissing the employee.
Three types of capability
Dismissal on grounds of
capability will be for one of
three reasons:

Lack of ability or skill

Lack of capability because of
ill health
Loss of or failure to achieve a
qualification.
Lack of ability or skill

This can be repeated minor

incompetencies or one serious
incompetence. Examples of
employees who have been held
to be lacking in capability
include:
A slow worker
An inflexible worker who was
not prepared to adapt to
change
A manager who, though
successful in profit terms,
failed to establish good
working relationships
An employee who failed to
reach the employer’s
standards.
EXAMPLE
M was a farm manager whose technical
qualifications and experience were not
questioned by his employer. He made a
number of small but persistent errors. He
was warned about this and there were
some initial improvements, but then
matters deteriorated again. The
employer concluded that he was not
capable of performing his duties. M was
dismissed and complained of unfair
dismissal.

The court found that he had been fairly

dismissed.
 Lack of capability because of
ill health
If an employee isn’t able to
perform his duties because of
his ill health, it will be fair to
dismiss provided that all the
procedures are exhausted. An
employer isn’t required to show
that the employee couldn’t
carry out all his duties, merely
that the ill health affects the
employee’s capability.
 Long-term absence procedures
The key steps in managing
long-term absence are listed
below.

The employer should maintain

regular and on-going
communication with the
employee.

The employer’s approach

should be sympathetic and
considered.
He should gather medical
advice to assess whether the
employee’s condition amounts
to a disability and also the
capability of the employee to
undertake their role going
forward.
Be specific about the
information required from the
medical report – for example
the nature of the illness, the
ability of the individual to
undertake their role, having
provided a detailed description
of responsibilities, the length
of time the illness is likely to
last, and any reasonable
adjustments that would ease
the situation.
A process of consultation and
discussion should take place
with the individual, subject to
any recommendation by the
doctor. If the cause of the
illness is work related, the root
cause should be investigated.
Employers should discuss
ways to reduce the influencing
factors, perhaps with
increased support, training or
reallocation of duties. Could
the employee return to work on
a staged basis or on a part-
time basis for a short period?
Record all steps and
agreements in writing to
confirm what is expected of
the employee and also what
steps the employer is going to
take, so there is no confusion
and all actions taken are seen
to be reasonable.
EXAMPLE

P suffered from severe depression. During

his absence his employer kept in close
contact with him, refused to accept his
resignation on one occasion and extended
his sickness benefit. When the decision to
dismiss was taken, the employer failed to
consult P, relying only on a medical report
that had been misconstrued. P
complained that he’d been unfairly
dismissed.

The court agreed. Even though the

procedure had been perfectly adequate at
earlier stages, when the decision to
dismiss was taken the employer failed to
consult P personally.

WM Computer Services Ltd v Passmore

[1986]
Loss of or failure to achieve a
qualification

Qualifications are defined as

‘any degree, diploma or other
academic, technical or
professional qualification
relevant to the position which
the employee held’.
A licence, permit or
authorisation doesn’t fall into
this category unless it is
substantially connected to the
aptitude or ability of the
employee to do the job.
Holding a driving licence will
be a qualification where it
relates to the aptitude or
ability to do a job which
necessitates driving.
EXAMPLE
M was recruited as a motor mechanic.
The job advertisement stated that
possession of a clear current driving
licence was essential, but M’s contract
made no mention of this. M was
disqualified from driving and dismissed by
his employer. He complained
unsuccessfully that he’d been unfairly
dismissed.

The court found that the possession of a

driving licence was clearly an essential
and continuing condition of his
employment so that when he was
dismissed it was a fair dismissal on
grounds of capability.
Establishing capability as the
reason for dismissal
In some cases, it may not be
clear whether capability was
the reason for dismissal, for
example, when the employee
has been dismissed for not
being able to do their job. If
this is because of
carelessness, negligence or
idleness this will usually be
dealt with as misconduct
rather than capability.
Identifying the reason for
dismissal
The burden of proof is on the
employer to establish that
capability was the reason for
the dismissal. They do not
have to prove that the
employee was incapable of
doing their job, just that they
honestly believed they could
not do it and had reasonable
grounds for that belief.
To discharge the burden of
proof, employers need
evidence both of the standards
that apply to the employee and
of the employee’s failure to
meet them.
B. CONDUCT DISMISSAL

Dismissal for a reason relating

to the conduct of an employee
may be fair, but it is vitally
important to follow the correct
procedure. If you fail to do this,
even dismissal for an
apparently glaring case of
misconduct could come
unstuck.
EXAMPLE
In a case of suspected theft where more
than one employee was under suspicion,
the employer investigated but the culprit
was unidentifiable. The Court of Appeal
found that where two employees are
suspected of misconduct and the
employer, despite investigation, cannot
discover which is to blame, it may be fair
to dismiss both employees on reasonable
suspicion short of actual belief.
Burden of proof
The civil burden of proof is the
balance of probabilities. This
means that on balance it’s
more likely than not that the
employee is guilty of the
misconduct. The employer
doesn’t have to have
conclusive direct proof of the
employee’s misconduct – only
a genuine, reasonable belief.
You have to be able to prove
the following.

That you have a workplace

standard.
That the employee knew the
standard.
That the employee has
breached the standard.
If one or more of these is
missing any dismissal is likely
to be unfair
The following are all examples of gross
misconduct:

Dishonesty, theft or fraud

Damage to organisation property
Incapacity for work due to being under
the influence of alcohol or illegal drugs
Physical assault, violent, abusive or
intimidating conduct
Gross insubordination
Failure to comply with relevant statutory
or regulatory requirements
Sexual, racial or other harassment
Unauthorised use or disclosure of
confidential information
Falsification of organisation records
Working for a competitor without
permission
Reckless or serious misuse of a work
vehicle
Rudeness to customers
The following are all examples of gross
misconduct:

Dishonesty, theft or fraud

Damage to organisation property
Incapacity for work due to being under
the influence of alcohol or illegal drugs
Physical assault, violent, abusive or
intimidating conduct
Gross insubordination
Failure to comply with relevant statutory
or regulatory requirements
Sexual, racial or other harassment
Unauthorised use or disclosure of
confidential information
Falsification of organisation records
Working for a competitor without
permission
Reckless or serious misuse of a work
vehicle
Rudeness to customers
Accepting a gift which could be construed
as a bribe
Breach of health and safety rules which
endangers the health and safety of others
in the opinion of the organisation
Refusing to allow a search to be carried
out in accordance with organisation rules
Failure to disclose correct information on
your application form
Conviction for any serious criminal offence
while an employee of the organisation
Downloading or sending inappropriate
material in contravention of the
organisation’s email and internet policy
Loading or downloading unauthorised
software, or any other action likely to
allow a virus on to the system; also,
unauthorised use of floppy disks or CD-
ROMs
Behaviour, whether inside or outside
work, which may bring the organisation
into disrepute
Redundancy
A redundancy occurs where a
dismissal is wholly or mainly
because the employer has
ceased to carry out his
business or intends to cease to
carry out his business, either
for the purposes for which the
employee is employed or in the
place where the employee was
employed.
Alternatively, a redundancy
may occur either where the
requirements of that business
for employees to carry out
work of a particular kind have
ceased or diminished or are
expected to do so or where the
requirements have ceased or
diminished in that place or are
expected to do so.

If an employee is selected for

redundancy for unfair reasons,
an employer may be faced with
an unfair dismissal claim.
Selection for redundancy
Where a job disappears, or is
moved, causing a redundancy,
the employer must follow a
recognised procedure when
selecting who is to be made
redundant.
An employer must also follow a set
dismissal procedure before dismissing an
employee for redundancy. Special rules
apply where more than 20 employees are
being made redundant. Before carrying
out redundancies, an employer must
meet with and consult with employees in
a timely fashion. He must be able to
demonstrate that he has properly
explored all avenues to reduce the risk of
redundancy.
If an employee is selected for
redundancy for unfair reasons,
an employer may be faced with
an unfair dismissal claim.
Selection for redundancy
Where a job disappears, or is
moved, causing a redundancy,
the employer must follow a
recognised procedure when
selecting who is to be made
redundant.
EXAMPLE
In Halpin v Sandpiper Books Ltd, the
employer employed Mr Halpin as an
Administrator/Analyst in the London
office. The company started to sell books
in China and Mr Halpin moved to China in
a sales management role. The company
later outsourced the work to local book
agents in China and Mr Halpin’s role was
put at risk of redundancy. Following
extensive consultation, during which Mr
Halpin rejected an offer of alternative
part-time administrative work in the UK,
he was made redundant. He claimed
unfair dismissal.
The court found that Sandpiper had fairly
selected Mr Haplin for redundancy and a
fair procedure had been followed. Mr
Halpin appealed, arguing that other
employees with interchangeable skills
should have been included in the pool,
and that no reasonable employer would
have limited the pool to those workers
whose work had diminished. It was not
unfair for an employer to use a selection
pool of just one employee where it was
ceasing its operations in China and Mr
Halpin was the only employee who had
been sent to China. The EAT confirmed
that decisions as to redundancy pools are
matters for an employer to decide and a
tribunal should rarely interfere with them.
Statute
Dismissal by reason of
statutory ban is a potentially
fair reason for dismissal. The
dismissal comes about
because the employee cannot
continue to work in the
position which he held without
contravention, either on the
employee’s part or on that of
the employer, of a duty or
restriction imposed by the law.
For example, if you appoint a
person who is not an EU
citizen he must have a valid
visa in order to work. If the
visa expires and is nor
renewed in time or is refused,
you would have to dismiss to
ensure you don’t fall foul of the
law.
EXAMPLE
A’s duties were partly those of a
magistrates’ court clerk and partly
administrative. In 1976, new regulations
were issued and A became aware that
from 1980 he would be required by law to
hold a valid training certificate. This
involved passing some exams.

In 1976 he failed the exams. In 1977, he

did not re-sit because of a muddle about
dates. In 1978 he refused to re-sit; in 1979
he failed the exams, and in 1980 he
refused to re-sit again. Since he was no
longer qualified to sit as a court clerk, he
was dismissed. The tribunal found that
there were no alternative vacancies and A
could not be kept on solely for
administrative duties, so his dismissal was
fair.
Some other substantial reason (SOSR)
A dismissal for SOSR is a general catch-all
category. The statutory discipline and
dismissal procedures apply to an SOSR
dismissal.

The employer must show that the reason

for the dismissal is a fair one and that he
has acted reasonably in dismissing for that
reason. It is then up to the tribunal to
decide whether the employer acted fairly
in the circumstances. Below are some
examples.
Dismissal of a replacement for a woman
who has taken maternity leave. The
dismissal will normally be fair as long as
the employee

Was informed at the beginning of

employment that it would end when the
employee taking maternity leave came
back to work

Was given due notice when employment

came to an end

Was not dismissed for any other reason.

 Employment law in the
Philippines is governed by the
Labor Code of the Philippines
and covers the following key
aspects:
labor standards (prescribes the
conditions of employment that
both employers and employees
have to abide by, such as types
of employment, working hours,
minimum wage, mandatory
benefits, holidays, rest days,
and employment rights)
human resources development
(stipulates provisions on local
and overseas employment as
well as employment of foreign
nationals)
labor relations (concerned with
employer-employee
relationship on termination of
employment and the rights and
duties of both parties in union
formation, collective
bargaining, and labor strikes)
Labor Standards in the
Philippines
I. Types of Employment
There are five types of
employment in the Philippines,
mostly determined by the
nature of activities that
employees perform. The
employer is required to
establish the terms and
conditions of the employment
contract, which is subject to
limitations under the Labor
Code.
Regular/Permanent
Employment
Regular or Permanent
Employment is when an
employee performs activities
that are necessary or desirable
to the business/trade of the
employer. Regular employees
enjoy the benefit of tenure and
cannot be terminated for
causes other than those
provided by law and only after
due process.
Most companies in the
Philippines require their new
employees to undergo
probationary employment for a
maximum of six (6) months to
evaluate their skills and
performance and determine if
they are able to meet the
reasonable standards to
become permanent employees.
Casual Employment
Casual Employment is when an
employee performs work that
is usually not necessary or
primarily related to the
employer’s business/trade. The
period of employment must be
made clear to the employee at
the time they started rendering
service.
However, employees that have
rendered service for at least
one (1) year in the same
company, whether continuous
or not, shall be considered
regular employees with
respect to the activities they
perform and will continue
rendering service while such
activities exist in the company.
Term/Fixed-Term Employment
Term or Fixed-Term Employment is a type
of employment that is not determined by
the activities that employees are required
to perform but by the commencement
and termination of the employment
contract. A fixed-term employee can only
render services within the set period of
time stipulated in the employment
contract and the employer must
terminate his/her employment after such
period expires.
Fixed-term employment in the
Philippines is highly regulated
and subject to the following
guidelines:
be voluntarily agreed upon by
the parties without coercion or
improper pressure to the
employee
employer and employee dealt
with each other on more or
less equal terms with no
dominance exercised by the
former over the latter
Project Employment
Project Employment is when an
employee is hired for a specific
project and the duration of
employment is defined by the
scope of work and/or length of the
project. A project employee can
acquire the status of a permanent
employee if they are continuously
rehired to undertake other
projects for the company or the
tasks they perform are necessary
and indispensable to the usual
operations of the company.
Seasonal Employment
Seasonal Employment is
defined when an employment
contract is only for a certain
time or season of the year.
This is common practice in
service industries, such as
Retail, Food and Beverage, and
Hospitality to increase
manpower and cover labor
demand during peak seasons.
II. Minimum Wages
Minimum wage rates in the
Philippines vary per region and
are prescribed by the Regional
Tripartite Wages and
Productivity Board (RTWPB).
Under the most recent wage
order for the National Capital
Region (i.e., Metro Manila), the
minimum gross rate is Php
500.00 per day.
III. Mandatory Employee
Benefits
Under the Labor Code,
employees in the private
sector are granted six (6) basic
mandatory benefits, which are
as follows:
Social Security System (SSS) –
the social insurance program
for employees in the private
sector, which provides these
employees and their families
protection from disability,
illness, old age, and death
Philippine National Health
Corporation (PhilHealth) – the
health insurance program,
which provides private
employees with a practical
means of paying for adequate
medical care
Home Development Mutual
Fund (Pag-IBIG Fund) – the
housing loan program, which
offers flexible housing loans to
private employees
13th Month Pay – a mandatory
salary bonus equivalent to an
employee’s one (1) month
salary, which must be given
not later than December 24
every year
Service Incentive Leave –
employees who have rendered
at least one (1) year of service
is entitled to a yearly service
incentive of five (5) days with
pay
Meal and Rest Periods – a meal
period of not less than one (1)
hour and rest periods of short
duration in the morning and
afternoon that should be
included in the hours worked
IV.Working Hours
Normal Work Hours
An employee’s normal hours at
work must not exceed eight (8)
hours a day. Working hours
shall include:
the whole duration when an
employee is required to be on
duty and/or to be at a
prescribed workplace;
the whole duration when an
employee is permitted to work;
and
rest periods of short duration
during working hours.
Night Shift Differential Pay
An employee performing work
between 10:00 PM and 6:00 AM
must be paid a night shift
premium of not less than 10%
of their regular wage for each
hour of work performed.
Overtime Work
Work performed beyond the
normal working hours must be
paid an additional
compensation equivalent to an
employee’s regular wage plus
at least 25% thereof.
Undertime Not Offset by
Overtime
Undertime work on a normal
work day shall not be offset by
overtime work on any other
work day. Philippine labor laws
discourage the offset because
the hourly rate of overtime is
higher than the hours missed
when an employee works for
less than 8 hours.
V. Other Mandatory Rights and
Benefits
Right to Weekly Rest Days
Employees have a right to a
weekly rest period of not less
than 24 consecutive hours
after every 6 consecutive
normal work days
Right to Holiday Pay
An employee shall be paid his
regular daily wage during
regular holidays, except in
retail and service
establishments regularly
employing less than 10
workers. The employee may be
required to work on a holiday
but shall be paid a
compensation equivalent to
twice their regular rate.
Right to Separation Pay
Employees dismissed from
work due to business closure,
reduction of costs or other
reasons that are beyond their
control should be granted
separation pay equivalent to
one (1) month salary or at least
one (1) month salary for every
year of service in the company.
Service Charges
All service charges collected
by hotels, restaurants, and
similar establishments shall be
distributed at the rate of 85%
for all covered employees and
15% for management. The
share of the employees shall
be equally distributed among
them.
Human Resources
Development in the Philippines
I. Local Employment

Local employees in the

Philippines are primarily
classified into three
categories:

managerial
supervisory
rank-and-file
Managerial Employees

Managerial employees,
commonly known as managers,
are those vested with power by
the Labor Code to lay down
and execute management
policies and/or hire, transfer,
suspend, lay-off, recall,
discharge, assign or discipline
employees that are under their
supervision. They are allowed
to regularly exercise discretion
and independent judgment over
their staff.
Managers are not allowed to
devote more than 20% of their
working hours to activities not
directly or closely related to
the following:

regularly and directly assist a

proprietor or managerial
employee on performing
managerial duties;
execute, under general
supervision, specialized work
that require special training,
experience or knowledge; or
execute, under general
supervision, special
assignments and tasks.
Unlike rank-and-file employees,
they are not entitled to
overtime, night shift
differential, and holiday pays.
They are also not entitled to
receive 13th month pay. But in
accepted practice, most
companies in the Philippines
grant managers with an
equivalent of the 13th month
pay.
Supervisory Employees
Supervisory employees,
commonly known as
supervisors, are employees
who are generally considered
as members of the managerial
staff because they are granted
the authority to recommend
managerial actions, provided
that the exercise of such is not
merely routine or clerical in
nature but requires the use of
independent judgment.
Rank-and-File Employees
Rank-and-file employees are
those who do not occupy high-
level positions in a company.
They are entitled to most, if
not all, of the mandatory
employee benefits provided by
the Labor Code, from night
shift differential and overtime
pay to work leaves and
organization of labor unions.
II. Overseas Employment
As a general rule, Philippine
citizens can only apply for
overseas employment through
a licensed Private Employment
Agency (PEA) – a recruitment
agency duly authorized by the
Philippine government to
perform recruitment and
overseas placement activities
in the Philippines.
III. Employment of Foreign
Nationals
Local employers can engage
foreigners to perform work for
them in the Philippines. There is
no general limit to the number of
foreigners an employer may hire
but such employer must prove
through a certification called Alien
Employment Permit (AEP) that
there is no person in the
Philippines who is competent,
able, and willing to perform the
services that foreigners are called
to perform.
Labor Relations in the Philippines
I. Types of Employment
Termination
There are two types of termination
in the Philippines: termination by
employer and voluntary
resignation or termination by
employee. Termination of
employment in the Philippines can
be a complex process for
employers since the Labor Code is
construed in favor of employees.
Termination by Employer
An employer can terminate an
employee based on a just or
authorized cause. A just cause
is based on acts attributable to
an employee’s own wrongful
actions or negligence while an
authorized cause refers to
lawful grounds for termination
which do not arise from fault or
negligence of the employee.
An employee can be terminated
for the following just causes:

serious misconduct or willful

disobedience of the lawful orders
of the employer;
gross and habitual neglect of work
duties;
fraud or willful breach of the trust
given by the employer;
execution of a crime or offense
against the employer, his/her
family or representative; or
other related causes.
Similarly, an employee can also be
terminated for authorized causes,
such as the following:

installation of labor-saving
devices;
redundancy;
retrenchment (reduction of costs)
to prevent losses;
closure of business or operations;
or
disease/illness (that is of such a
nature and at such a stage that it
can no longer be cured within a
period of six [6] months even with
medical attention).
Voluntary Resignation
An employee may file a
voluntary resignation without
just cause or with just cause.

The just causes for filing a

resignation are as follows:

serious insult to the honor and

person of the employee;
inhuman and unbearable
treatment given by the
employer;
crime committed against the
employee or his/her family; or
other related causes.
If the resignation is without
just cause, the employee must
give a one (1) month advance
written notice for resignation
(referred to as a resignation
letter) to the employer to
enable them to look for a
replacement and prevent work
delay. Failure to file a
resignation letter can make the
employee incur liability for
damages.
II. Illegal Dismissal
Employees can file a complaint
for illegal dismissal before the
National Labor Relations
Commission (NLRC) if the
cause for their termination
does not fall under the
conditions stipulated by the
Labor Code.
The most common type of
illegal dismissal in the
Philippines is constructive
dismissal, a dismissal in
disguise where an employee is
forced to resign with the use of
threats, intimidation, coercion,
manipulation or penalty for an
offense.
In cases of illegal dismissal,
the employer has the duty of
proving the dismissal is valid.
Employees are allowed to
question their dismissal from
work based on two grounds:
substantive – absence of a just or
authorized cause supporting the
dismissal

procedural – failure of the employer to

give the employee the opportunity to
explain their side
If an employer fails to observe
procedural due process in cases of
legal and authorized termination, they
are required to pay the employee
indemnity or nominal damages in a
sum of not more than 30,000 pesos (for
just causes) and not more than 50,000
pesos (for authorized causes).
Employees who are unjustly dismissed are
entitled to any or all of the following:

reinstatement without loss of seniority

rights
separation pay equivalent to one (1)
month salary for every year of service if
reinstatement cannot be provided
full backwages, inclusive of allowances
and other benefits of their monetary
equivalent from the time compensation
was withheld up to the time of
reinstatement
payment of damages and/or attorney’s
fees (if the dismissal was done in bad
faith)
III. Labor Unions and Strikes
Right to Organize Labor Unions
The Philippine Constitution provides
employees in rank-and-file and
supervisory positions the right to
organize, join, and assist labor unions for
the main purpose of establishing a
collective bargaining agreement (CBA)
with their employer. Managerial
employees, on the other hand, are not
entitled to demand a CBA but are given
the option to form associations for mutual
aid and protection in the workplace.
Notice and Severance
Notice Requirement
Under the Labor Code,
employers are required to give
a written contract termination
notice explaining the causes
for termination of employment.
Labour Code further requires
the employer to give worker an
ample opportunity to be heard
and to defend himself with the
assistance of a representative.
In the Philippines, the
employee has "the right to
security of tenure". This means
that an employee can only be
dismissed for a just cause or
an authorized cause and after
the observance of the
procedure laid down by the
law.
There is no notice period prior
to a dismissal for a just cause.
The employer is only required
to give a 30-day notice to the
employee in the event of
termination for business
reasons or disease related
reasons. Authorized dismissals
also require a 30-day notice to
the Department of Labour and
Employment (DOLE).
Workers can also terminate an
employment contract by
serving a 30-day notice. A
worker is allowed to terminate
employment relationship
without serving any notice in
the following cases:
I. Serious insult by the employer or his
representative on the honor and person
of the employee;

ii. Inhuman and unbearable

treatment accorded the employee by the
employer or his representative;

iii. Commission of a crime or

offense by the employer or his
representative against the person of the
employee or any of the immediate
members of his family; and

iv. Other causes analogous to any

of the foregoing.
Severance Pay
Where the employment has
been terminated for a just
cause, no severance pay is
awarded to the employee.
However, where the employee
is dismissed for an authorized
cause (economic reasons or
disease), the worker is granted
severance pay.
Workers are entitled to receive
a separation pay of at least
half month for every year of
service. A fraction of at least 6
months is considered one year.
The above referred separation
pay is due if the contract was
terminated on the following
grounds:
a) Retrenchment, i.e., reduction of
personnel to prevent losses;

b) Closure or cessation of operations of

an establishment (not due serious losses
or financial reverses);

c) Where an employee is suffering from

a disease not curable within 6 months and
his continued employment is prejudicial to
his or his co-workers’ health
In any of the above cases, separation pay
cannot be less than one-month pay.

Workers are entitled to receive a

separation pay equivalent to one month
pay for every year of service. A fraction of
at least 6 months is considered one year.
The above referred separation pay is due
if the contract was terminated on the
following grounds:
a) Installation of labour saving devices
by the employer;

b) Redundancy, where the position of

employee is found to be excessive or
unnecessary in the operation of the
enterprise;

c) Where reinstatement (as ordered by

the competent authority) of worker to a
former position is not possible due to
closure or cessation of enterprise
operations or obsolescence of worker’s
position or lack of any other equivalent
position to which worker can be assigned
Rights of employees
The Bureau of Working Conditions, a staff
department of the Department of Labor
and Employment, compiled a list of Basic
Rights that every worker is entitled to.
These rights ensure the safety and health
of all workers.

1. EQUAL WORK OPPORTUNITIES FOR ALL

The State shall protect labor, promote full
employment, provide equal work
opportunity regardless of gender, race, or
creed; and regulate relations between
employees and employers.

2. SECURITY OF TENURE
Every employee shall be assured security
of tenure. No employee can be dismissed
from work except for a just or authorized
cause, and only after due process.
3. WORK DAYS AND WORK HOURS
An employee must be paid their wages for
all hours worked. If their work hours fall
between 10:00 p.m. and 6:00 a.m., they
are entitled to night shift pay in addition
to their pay for regular work hours. If they
work over eight hours a day, they are
entitled to overtime pay.

4. WEEKLY REST DAY

A day-off of 24 consecutive hours after six
(6) days of work should be scheduled by
the employer upon consultation with the
workers.
5. WAGE AND WAGE-RELATED BENEFITS
Wage is the amount paid to an employee
in exchange for to the service that they
rendered to their employer. Wage may be
fixed for a given period.

6. PAYMENT OF WAGES
Wages should be paid directly to the
employee in cash, legal tender, or through
a bank.

Wages shall be given not less than once

every two weeks or twice within a month
at intervals not exceeding 16 days.
7. FEMALE EMPLOYEES
Women are prohibited from engaging in
night work unless the work is allowed by
the following rules: industrial
undertakings from 10 p.m. to 6 a.m.,
commercial/non-industrial undertakings
from 12 m.n. to 6 a.m., or agricultural
takings at night provided that she has had
nine consecutive hours of rest.

Welfare facilities, such as separate

dressing rooms and lavatories, must be
installed at the workplace.
8. EMPLOYMENT OF CHILDREN
The minimum employment age is 15 years
of age. Any worker below 15 years of age
should be directly under the sole
responsibility of parents or guardians
provided that work does not interfere
with the child’s schooling or development.

The minimum age of employment is 18

years for hazardous jobs, and 15 years for
non-hazardous jobs
9. SAFE WORKING
CONDITIONS
Employers must provide
workers with every kind of on-
the-job protection against
injury, sickness or death
through safe and healthful
working conditions.
10. RIGHTS TO SELF-
ORGANIZATION AND
COLLECTIVE BARGAINING
Every worker has the right to
self-organization, i.e., to form
or to join any legitimate
workers’ union, free from
interference of their employer
or the government. All workers
may join a union for the
purpose of collective
bargaining and is eligible for
union membership on the first
day of their employment.
Collective bargaining is a
process between two parties,
namely the employer and the
union, where the terms and
conditions of employment are
fixed and agreed upon. In
collective bargaining, the two
parties also decide upon a
method for resolving
grievances. Collective
bargaining results in a contract
called a Collective Bargaining
Agreement (CBA).
REINSTATEMENT OF AN EMPLOYEE

Reinstatement is the practice of re-

installing an employee to his or her
position as it existed prior to termination,
or to the fullest extent possible, which
may include the preservation of their pre-
existing seniority, pension and other
benefits.
BOOK SIX
POST EMPLOYMENT
Title I

TERMINATION OF EMPLOYMENT

ART. 278. Coverage. - The provisions of

this Title shall apply to all establishments
or undertakings, whether for profit or not.
ART. 279. Security of tenure. - In cases of
regular employment, the employer shall
not terminate the services of an employee
except for a just cause or when authorized
by this Title. An employee who is unjustly
dismissed from work shall be entitled to
reinstatement without loss of seniority
rights and other privileges and to his full
backwages, inclusive of allowances, and to
his other benefits or their monetary
equivalent computed from the time his
compensation was withheld from him up
to the time of his actual reinstatement.
(As amended by Section 34, Republic Act
No. 6715, March 21, 1989).
While reinstatement can
alleviate psychological pain
and restore economic benefits
to victims of wrongful
dismissal, its usage is entirely
at the discretion of the
adjudicator, and is generally
deemed to be inappropriate in
the following circumstances:
The break-down of personal relationships
between complainant and organization;
The lack of trust which must exist when
the complainant used to occupy a position
of power;
Contributory fault on the part of the
complainant justifying a lesser sanction;
An attitude on the part of the complainant
leading to the belief that reinstatement
would bring no improvement;
The complainant’s physical inability to
start work again immediately;
The job no longer exists;
Subsequent events, such as bankruptcy or
layoffs, rendering reinstatement
impossible.
Re-Employment

What is this?
This refers to the restoration of a former
employee to their previous position after
unfair or unlawful dismissal, demotion or
transfer. Unlike reinstatement, re-
employment usually means a loss of
earnings and accrued entitlements for the
period between the original dismissal and
the date an employee was re-employed.
Is there anything to prevent an employer
from re-employing an employee?
There is nothing to prevent the re-
employment of an employee although a
number of issues need to be taken into
account. The main considerations relate to
the continuity of an employee’s
entitlement, particularly in the case of
long service leave. A modern award may
reinstate an employee’s personal/carer’s
leave balance upon re-employment.
What if an employee was made
redundant and subsequently re-
employed?
Many employers have a policy of
prohibiting the re-employment of a
former employee whose job was
previously made redundant by the same
employer, or a subsidiary of the same
employer. Such a policy is usually
introduced as a consequence of taxation
law, not employment law. While there is
no requirement under employment law to
repay redundancy pay if an employee is
subsequently re-engaged by the same
employer, the treatment of the
redundancy pay for tax purposes may be
different depending on the circumstances
associated with the original redundancy.
RETIREMENT

"Art. 287. Retirement. - Any

employee may be retired upon
reaching the retirement age
established in the collective
bargaining agreement or other
applicable employment
contract.
"In case of retirement, the
employee shall be entitled to
receive such retirement
benefits as he may have
earned under existing laws and
any collective bargaining
agreement and other
agreements: Provided,
however, That an employee's
retirement benefits under any
collective bargaining and other
agreements shall not be less
than those provided herein.
"In the absence of a retirement plan or
agreement providing for retirement
benefits of employees in the
establishment, an employee upon
reaching the age of sixty (60) years or
more, but not beyond sixty-five (65) years
which is hereby declared the compulsory
retirement age, who has served at least
five (5) years in the said establishment,
may retire and shall be entitled to
retirement pay equivalent to at least one-
half (1/2) month salary for every year of
service, a fraction of at least six (6)
months being considered as one whole
year.
"Unless the parties provide for
broader inclusions, the term
one-half (1/2) month salary
shall mean fifteen (15) days
plus one-twelfth (1/12) of the
13th month pay and the cash
equivalent of not more than
five (5) days of service
incentive leaves.
"Retail, service and agricultural
establishments or operations employing
not more than (10) employees or workers
are exempted from the coverage of this
provision.

"Violation of this provision is hereby

declared unlawful and subject to the
penal provisions provided under Article
288 of this Code."
Sec. 2. Nothing in this Act shall deprive
any employee of benefits to which he may
be entitled under existing laws or
company policies or practices.

Sec. 3. This Act shall take effect fifteen

(15) days after its complete publication in
the Official Gazette or in at least two (2)
national newspapers of general
circulation, whichever comes earlier.
The case study

SME Pty Ltd is a small private company

that manufactures motor vehicle parts in
Victoria. It was founded by John and Jack.

Jane is employed by the company as its

CEO. She was initially appointed under a
one page appointment letter in early 2003
when business was good. Her position is
ongoing and she is paid an annual salary
of $300,000.
John and Jack have focussed
on other business interests and
retain limited involvement in
the business day to day. John,
Jack and Jane each own a
33.3% interest in the company.
In light of the economic downturn, John
and Jack have decided to initiate a change
in strategic direction. They are also
unhappy with aspects of Jane's
management and have decided that the
time has come for them to part ways.

Jane believes the business can be turned

around if she is given a chance and has
made it clear that she won't agree to go
without a fight.