Summary
Highlights
Illegal dismissal occurs when an employee is terminated without complying with the due process requirements of the Labor Code of the Philippines. Due process in the Labor Code has two types: substantive due process, which refers to 'just causes' and 'authorized causes' for dismissal (Articles 297-299), and procedural due process, which is the correct procedure an employer must follow for dismissal (Article 292 (b)). All employees, from rank-and-file to managers, are entitled to due process.
Serious misconduct is a just cause for dismissal if the employee intentionally violated company rules on serious misconduct, was informed of these rules, the misconduct was grave and aggravated, related to their duties, and makes them unfit to remain in the company. Examples include fighting, using obscene language against a superior, falsifying time records, and immorality. If any of these elements are absent, the dismissal is considered illegal.
Insubordination is a just cause for dismissal if the employee intentionally disobeys a reasonable, lawful order made known to them, which pertains to their assigned duties. Examples include disobeying reassignment or transfer orders, not reporting for work, or failing to submit required reports. The absence of any of these elements deems the dismissal illegal.
Neglect of duty as a just cause requires the employee to have grossly and habitually neglected their duties, such as abandonment of employment or habitual absence/tardiness. Fraud or willful breach of trust requires an act, omission, or concealment in breach of legal duty, trust, or confidence, showing wrongful intention, causing harm to another, committed against the employer or their representative, and connected to the employee's duties. Examples of fraud include not reporting theft or using fake receipts. These grounds apply to all employees.
Loss of confidence is a dismissal ground primarily applicable to managerial employees or those in positions of trust (e.g., cashiers, property custodians). For dismissal, there must be an act, omission, or concealment by the employee that genuinely leads to the employer's loss of trust and confidence. This ground must not be a pretext for improper or unjustified causes. Examples include failure to account for company funds or sexual harassment.
Dismissal due to a crime or offense occurs if the employee commits a crime against the employer, their immediate family (spouse, ascendants, descendants, siblings, or relatives by affinity/consanguinity within specified degrees), or authorized representative. Analogous cases are acts or omissions similar to other just causes and must be voluntary and willful on the part of the employee. If the elements for these causes are not met, the dismissal is illegal.
For a proper dismissal, employers must issue two notices. First, a 'first written notice' or 'notice to explain' detailing the cause for dismissal and allowing the employee an opportunity to be heard (personally or with legal/union aid). Second, if the violation is proven, a 'second written notice' or 'notice of decision' confirming the dismissal. Failure to follow this two-notice rule results in illegal dismissal. This procedural due process is applicable to all employees.