Illegal Dismissal in the Philippines: Know Your Rights as an Employee
What is Illegal Dismissal?
Illegal dismissal (also called wrongful termination or unlawful dismissal) is the termination of an employee's employment without just or authorized cause, or without compliance with the procedural due process requirements under Philippine labor law. Under the Labor Code of the Philippines, an employer cannot terminate an employee's services except for causes expressly provided by law and only after following the proper procedure.
The term "illegal dismissal" covers two distinct violations: (1) dismissal without a valid legal ground (lack of substantive due process), and (2) dismissal without the proper notice-and-hearing procedure (lack of procedural due process). Either violation gives the employee the right to file a case before the National Labor Relations Commission (NLRC).
Losing your job is difficult enough. Losing it unlawfully is worse. In the Philippines, the Labor Code provides strong protections against arbitrary termination — and employees who are illegally dismissed are entitled to significant remedies. Here is what you need to know.
What Makes a Dismissal Illegal?
Under Philippine labor law, a valid dismissal requires compliance with two standards:
- Substantive Due Process — There must be a just cause (Article 297) or authorized cause (Articles 298-299) for the termination.
- Procedural Due Process — The employer must follow the proper notice-and-hearing procedure.
A dismissal is illegal if it lacks either. Even if there is a valid cause, failure to follow proper procedure makes the dismissal defective (nominal damages only, under the Agabon doctrine).
Just Causes vs. Authorized Causes
Just causes under Article 297 include serious misconduct, gross and habitual neglect of duties, fraud or breach of trust, and commission of a crime against the employer or co-workers.
Authorized causes under Articles 298-299 include redundancy, retrenchment to prevent losses, and closure of business. For these, the employer must give a 30-day written notice to both the employee and the DOLE, and pay separation pay.
The Twin Notice Rule
Before dismissing an employee for just cause, the employer must: (1) issue a Show-Cause Memo giving the employee at least 5 calendar days to respond; (2) conduct a hearing or conference; and (3) issue a Notice of Decision informing the employee of the dismissal.
Remedies for Illegal Dismissal
An illegally dismissed employee is entitled to: reinstatement without loss of seniority rights; full backwages from dismissal until actual reinstatement; separation pay in lieu of reinstatement (one month's pay per year of service if reinstatement is no longer viable); moral and exemplary damages if the dismissal was attended by bad faith; and attorney's fees of 10% of the total award.
Where to File
Illegal dismissal cases are filed before the National Labor Relations Commission (NLRC) through the Labor Arbiter. The prescriptive period is 4 years from the date of dismissal. Our CPA-Lawyers handle both employee-side and employer-side labor cases. Book a consultation today.