Termination of employment

THE RULES and regulations on termination of employment were revised recently by the Department of Labor and Employment (DOLE).

Through Department Order No. 147-15, dated Sept. 7, 2015, DOLE spelled out the elements that constitute just or authorized causes in letting go of employees, and the manner it should be done by the employer.

Just causes are causes directly attributable to the fault or negligence of the employee, while authorized causes arise from the “necessity and exigencies of business, changing economic conditions and illness of the employee.”

Departing from the former practice when just causes for termination were determined in a subjective manner, the order enumerates the criteria to be followed if any of these grounds is invoked by an employer.

For example, if the ground for dismissal is serious misconduct, the act should be a “transgression of some established and definite rule of action, a forbidden act, a dereliction of duty, willful in character and implies wrongful intent and not mere error in judgment.”

In addition, the misconduct must be related to the employee’s duties and that, as a result of such act, he has become unfit to continue working with the employer.

Breach of trust

It is noteworthy that DOLE addressed the issue of “loss of confidence” which is a pain in the neck for employees who hold positions higher than rank-and-file but do not perform managerial duties and responsibilities in the real sense of the word.

No longer can this cause be loosely interpreted depending on the intention or disposition of the employer.

For purposes of this cause, there are two classes of trust. The first refers to managerial employees or those vested with the power to lay down management policies.

These are employees who can effect organizational changes, hire or fire subordinates, or implement policies to accomplish the employer’s objectives.

The second consists of cashiers, auditors, property custodians or those who, in the normal and routine exercise of their functions, regularly handle significant amounts of money or property.

The distinction is meaningful because it clearly identifies the employees on whom loss of confidence can be used as a ground for termination.

Depending on the class to which the employee falls, the loss of confidence should arise from fraud or willful breach of trust by the employee of the trust reposed on him by his employer or the latter’s duly authorized representative.

It is not meant to be a one-size-fits-all cause that can be applied to all employees without distinction on their standing in the work hierarchy.

Authorized

For authorized causes, the employer is required to inform DOLE and the employee that, for example, his position has become redundant at least 30 days before the intended date of termination.

Redundancy must be done in good faith. There should be adequate proof of redundancy, such as, “new staffing pattern, feasibility/studies/proposals, on the viability of the newly created positions, job description and the approval by the management of the restructuring.”

When the cause cited, in addition to redundancy, is installation of labor-saving devices and retrenchment, the “Last-In, First-Out” rule shall be applied, unless an employee voluntarily asks to be separated.

Although disease is an authorized ground for termination of employment, the order excludes from the authorization actual, perceived or suspected HIV or Hepatitis B status.

Since the prohibition refers only to termination, it is not clear though if the employer can order the employee to go on leave or suspend his employment until his HIV or Hepatitis B condition is cured. This has to be clarified.

Noticeably, while the order leans in favor of employees in termination cases, it comes hard on employees found positive for use of dangerous drugs or guilty of sexual harassment. Their employment can be soundly terminated for these reasons.

Procedure

When the termination of employment is based on just causes, DOLE requires the service of two written notices to the employee.

The first notice should specify the ground for termination and its attending circumstances, and an instruction to the employee to give his written explanation within a reasonable period.

Reasonable period should be at least five calendar days from receipt of the notice to enable the employee the “opportunity to study the accusation, consult or be represented by a lawyer or union officer, gather data and evidence, and decide on the defenses against the complaint.”

The employee can decide how he wants to present his side—submit a written explanation or ask to be personally heard.

Under the order, it is mandatory for the employer to conduct a formal hearing or conference only if (a) the employee requests it in writing; (b) substantial evidentiary disputes exist (meaning, there are conflicting pieces of evidence); (c) the company’s rules or practice requires it; and (d) when similar circumstances justify it.

The order, however, does not prescribe the ground rules or procedures in the conduct of the formal hearing or conference.

It is sufficient the employee is given ample opportunity to explain his side without going through the processes that attend court proceedings.

If, in spite of the employee’s explanation, the employer believes there is sufficient ground to terminate his employment, the employer should send a second notice—the formal advice of termination.

This notice should contain the following information: (a) all circumstances involving the charge against the employee have been considered; and (b) the grounds have been established to justify the severance of his employment.

Failure to comply with these rules could hurt the employer’s pocket.

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