Service charges collected by hotels, restaurants and similar establishments shall now be distributed completely and equally among the covered employees excepting those who are managerial employees, instead of being distributed at 85% for all covered employees and 15% for management (Republic Act No 11360).
Gender-Based Sexual Harassment
There is now a crime of gender-based sexual harassment in the workplace, which includes:
The crime of gender-based sexual harassment may also be committed between peers, and upon a superior officer by a subordinate, upon a teacher by a student, or upon a trainer by a trainee.
The employer is duty-bound to create an independent internal mechanism or a committee on decorum and investigation, the head and majority composition of which shall be women. The said mechanism or committee shall investigate and decide on complaints of gender-based sexual harassment within ten days upon receipt thereof.
In addition to the liabilities for committing acts of gender-based sexual harassment, employers may also be held responsible for their failure (i) to carry out their duties relative to gender-based sexual harassment in the workplace, and (ii) to take action on reported acts of gender-based sexual harassment committed in the workplace (Republic Act No 11313).
Mental Health in the Workplace
Employers are specifically mandated to formulate a Mental Health Workplace Policy in their respective establishments.
An employee who has a mental health condition shall not be subjected to discrimination in hiring, promotion and/or other benefits of employment because of his or her condition, provided that such condition shall not interfere with the performance of his or her job or unduly affect his or her own safety or that of his or her co-employees, clients and the general public.
The fitness to work of employees found to have a mental health condition shall be determined by an occupational health (OH) physician, after appropriate medical evaluation, taking into account the clearance provided by a mental health professional.
An employee may resume work while undergoing treatment provided that an OH physician has certified that the said employee is fit to work and that his or her current treatment shall not cause unsafe conditions to himself or herself while at work or cause similar unsafe conditions for other employees.
An employee shall not be dismissed from employment on the basis of an actual, a perceived, or a suspected mental health condition unless the condition progresses to such severity that it affects his or her own safety or the safety of his or her co-employees and work performance and productivity upon the certification issued by a competent public health authority with expertise on mental health (Department of Labor and Employment [DOLE] Department Order No 208, Series of 2020).
Work Permits for Foreign Nationals
All foreign nationals who intend to perform services or render activities in the Philippines under an employer-employee relationship regardless of duration are required to secure an Alien Employment Permit (AEP) from the DOLE.
Only foreign nationals who intend to perform activities or render services in the Philippines outside of an employment arrangement may apply for and be granted a Special Work Permit (SWP).
The Provisional Work Permit, which is a permit that allows foreign nationals to engage in work pursuant to an employment agreement pending the issuance of their AEP or with a valid AEP but pending approval of their CA 631, Section 9 (g) work visa, shall now be valid only for a maximum period of six months. It has an initial duration of three months, extendible only once for the same period (Bureau of Immigration [BI] Operations Order No JHM-2019-008 and Joint Guidelines No 001-19).
Work Suspension During Natural or Man-Made Calamity
Employers shall, in the exercise of management prerogative, suspend work during a natural or man-made calamity to ensure the safety and health of their employees.
Employees who fail or refuse to work due to imminent danger resulting from a natural or man-made calamity must not be exposed or subjected to any administrative sanction (DOLE Labor Advisory No 1, Series of 2020).
COVID-19 Flexible Work Arrangements and Work from Home
Flexible work arrangements/alternative work schemes are recognised as better alternatives to the outright termination of employees or the total closure of business due to COVID-19. These temporary work arrangements include:
Employers implementing flexible work arrangements/alternative work schemes are required to consult with their employees prior to implementation and notify the DOLE Regional/Provincial/Field Office that has jurisdiction over the workplace by submitting a completed RKS Form 5 (2020) at the soonest possible time.
Establishments are, when feasible, highly encouraged to adopt work-from-home or implement telecommuting arrangements. Employees on a work-from-home or telecommuting arrangement shall be provided with adequate support to perform the assigned task or job (DOLE Labor Advisory Nos 9, 11, 17, and 17-A Series of 2020).
Deferment of or Exemption from Payment of Holiday Pay
Employers may defer the payment of holiday pay for the April, May, June, July and 31 August 2020 holidays until such time that the COVID-19 emergency situation has been abated and normal operations are back in place.
However, employers that implemented a total closure or cessation of operations during the community quarantine period would instead be exempted from paying the holiday pay for the said holidays (DOLE Labor Advisory Nos 13-A, 15, 20, 22, 25 and 27, Series of 2020).
Exclusion of Quarantine Period in Determining the Probationary Period of Employees
For purposes of determining the six-month probationary period of employees, the period during which the enhanced or general community quarantine is enforced where the establishment has temporarily ceased or closed operations and/or the worker was temporarily not required to report for work on account thereof shall be excluded (DOLE Labor Advisory Nos 14 and 14-A, Series of 2020).
COVID-19 Testing of Employees
Employers may conduct COVID-19 testing for their employees, subject to a COVID-19 policy to be agreed upon between the employer and its employees.
Employers are not mandated to conduct COVID-19 testing for asymptomatic employees who are returning to work. Employers are, however, required to conduct COVID-19 real-time Reverse Transcription Polymerase Chain Reaction (RT-PCR) testing for employees who are manifesting symptoms and those who are close contacts.
Employers shall be responsible for the testing kits to be used in testing employees (Department of Trade and Industry [DTI] and DOLE Interim Guidelines on Workplace Prevention and Control of COVID-19; DTI and DOLE Supplemental Guidelines on Workplace Prevention and Control of COVID-19).
Employer Liability for Medical Expenses
An employer is only legally obligated to shoulder the medical expenses relative to an employee becoming infected with COVID-19 if the said employee is not qualified to avail of the benefits provided by the Social Security System (SSS) and the Philippine Health Insurance Corporation (PhilHealth) due to the fault of the employer (DOLE Labor Advisory No 4, Series of 2020).
Employer Liability for Cost of COVID-19 Prevention and Control Measures
Employers are legally obligated to shoulder the cost of COVID-19 prevention and control measures; eg, testing, disinfection facilities, hand sanitisers, personal protective equipment, signages, and proper orientation and training of workers (DOLE Labor Advisory No 18, Series of 2020).
Reduction of Wages and Wage-Related Benefits
An employer and an employee may enter into an agreement concerning the adjustment of wages and wage-related benefits. The adjustments shall not exceed six months or the period agreed upon in the applicable collective bargaining agreement (CBA), if any, and may be renewed as may be agreed upon by the parties (DOLE Labor Advisory No 17, Series of 2020).
Duties of Employers
Employers are duty-bound to:
No Blue-Collar/White-Collar Workers
Philippine laws do not define or describe blue-collar workers and white-collar workers. It is generally understood, however, that blue-collar workers are those who typically perform manual labour and are paid a daily wage, while white-collar workers are those who perform work in an office or administrative setting and are paid a monthly salary. Nonetheless, regardless of whether an individual is a blue-collar worker or a white-collar worker, as long as he or she is considered an employee, he or she shall be generally entitled to such rights and entitlements under Presidential Decree No 442, otherwise known as the Labor Code of the Philippines (the "Labor Code") and other labour laws.
Employees with Regular Status and Those Without
An employee’s status may either be regular (or with indefinite term) or non-regular. A probationary employee who hurdles the performance standards set for probation attains regular status and security of tenure, with an indefinite employment term. He may not be dismissed except for a just or an authorised cause. On the other hand, the following have definite or prescribed terms:
Types of Employment in the Philippines
Philippine laws and jurisprudence specifically recognise the following types of employment:
Regular Employment and Casual Employment
Article 295 of the Labor Code provides for two types of employment, depending on the nature of the work the employee has been engaged to perform vis-à-vis the usual trade or business of the employer.
On the one hand, an employee who has been engaged to perform activities that are usually necessary or desirable in the usual business or trade of the employer is considered as a regular employee. On the other hand, if the work the employee has been engaged to perform is not usually necessary or desirable in the usual business or trade of the employer, the employee is deemed to be a casual employee. However, a casual employee who has performed his or her work for at least one year, whether continuous or intermittent, is deemed to have attained regular employment but only with respect to the work he or she has been engaged to perform.
Normally, an employee who is engaged for regular employment is required to first undergo what is called probationary employment. This refers to an assessment period to determine whether the said employee is, in fact, fit for regular employment.
To provide probationary employees a fair chance in attaining regular employment, employers are legally mandated to inform their prospective probationary employees of the reasonable standards for regularisation at the time of engagement. Failure of an employer to do so shall mean that the employee shall instead be under regular employment from the outset.
Probationary employment may generally not exceed six months or 180 days. This period may, however, be extended by mutual agreement of the parties. An employee who is allowed to work beyond the period of his or her probationary employment shall already be considered to have attained regular employment by operation of law.
Project Employment and Seasonal Employment
Based on Article 295 of the Labor Code, an employee is deemed to be under project employment if he or she is assigned to carry out a specific project or undertaking, the duration or scope of which was specified at the time he or she was engaged for that project. On the other hand, an employee is deemed to be under seasonal employment when he or she is engaged to perform work that is seasonal in nature and his or her employment is for the duration of the said season.
Fixed-term employment refers to an employment with a definite period. This type of employment is not found in the Labor Code but is recognised by jurisprudence. While the Supreme Court has recognised the validity of fixed-term employment contracts, it has consistently held that this is the exception rather than the general rule.
To be valid, a fixed-term employment must meet the following criteria:
Requirements Concerning Employment Contracts
In the Philippines, employment contracts are not ordinarily classified as definite or indefinite. Instead, the type of employment contract follows the type of employment under which the employee is classified (ie, regular, casual, probationary, project, seasonal, or fixed-term).
Since employees generally enjoy security of tenure, employment contracts may only be terminated for just or authorised causes under the Labor Code, or, in the case of probationary employment, should the employee fail to meet the reasonable performance standards for his or her regularisation. The employment contracts for project, seasonal and fixed-term employees, on the other hand, may be terminated upon the completion of the project, the end of the season, or the expiry of the term, as the case may be.
Philippine laws do not require that the employment contract be written, although written agreements are preferred. There are, likewise, no formal requirements for an employment contract to be valid and enforceable. As a matter of fact, the employment status of an employee does not rely solely on the stipulations in a written employment contract, as the grant and enforcement of employee rights are highly favoured. In this regard, Article 295 of the Labor Code provides that an employment shall be deemed to be regular where the employee has been engaged to perform activities that are usually necessary or desirable in the usual business or trade of the employer, subject to the exceptions provided therein, “the provisions of written agreement to the contrary notwithstanding and regardless of the oral agreement of the parties.”
Further, the law does not prescribe particular details that must be included in employment contracts. However, the employment contracts covering project, seasonal, probationary, or fixed-term employment must contain the necessary details mentioned above.
Maximum Working Hours per Day/Week
Article 83 of the Labor Code provides that the normal hours of work of an employee must not exceed eight hours per day. Based on an ordinary working week of six days, an employee is thus understood to have a maximum of 48 hours of work per week. After every six consecutive normal workdays, employees are entitled to a rest period of not less than 24 consecutive hours, in accordance with Article 91 of the Labor Code.
Flexible Work Arrangements
Based on DOLE Advisory Nos 02-2009 and 04-2010, the adoption of flexible work arrangements must be anchored on a voluntary agreement between the employer and the employees and may only be temporary in nature.
One such flexible work arrangement is a compressed workweek (CWW). In a CWW, the normal workday is increased to more than eight hours but does not exceed twelve hours, without the corresponding overtime premium. The normal working week is then reduced to less than the usual number of workdays in a week, but the total number of working hours per week shall remain.
Other flexible work arrangements include:
There are no specific terms required for part-time contracts, except for the exact hours of work expected to be rendered in a day or during the working week. It must be emphasised, however, that employees who render part-time work are also entitled to the benefits mandated under the law, proportionate to the duration of the services rendered vis-à-vis those granted to regular employees.
Overtime Rules and Regulations
Under Article 87 of the Labor Code, work may be performed beyond eight hours a day, provided that the employee is paid for the overtime work. While employees may not generally be compelled to render overtime work, they may be required to render emergency overtime work under the circumstances provided in Article 89 of the Labor Code, which include when there is urgent work to be performed on machines, installations, or equipment, in order to avoid serious loss or damage to the employer or when the work is necessary to prevent loss or damage to perishable goods.
The rates of overtime pay vary depending on the day when the overtime work is performed, viz:
Memorandum Circular No 1, Series of 2004, issued by the DOLE, sets forth the rules to be followed for the payment of overtime premiums during a regular holiday, special day, or an employee’s rest day.
An employer is mandated to pay an employee a daily wage not less than the prevailing minimum wage rate in the region based on the most recent wage order promulgated by the Regional Tripartite Wages and Productivity Board (RTWPB). Employers who pay their employees below the minimum wage may be subject to punishment. In the capital Metro Manila region, the latest Wage Order (NCR No 22) prescribes a minimum daily wage of PHP537.00.
Thirteenth-month pay is an additional income given to rank-and-file employees who have worked for at least one month during the calendar year and is equivalent to 1/12th of the basic salary within a calendar year. While the employer is required to pay its qualified employees their 13th-month pay not later than the 24th day of December every year, the employer may opt to pay half of the 13th-month pay before the opening of the regular school year and the other half on or before the 24th day of December.
Bonuses are generally granted to an employee as an act of generosity on the part of the employer. As a rule, therefore, an employee cannot claim entitlement to his or her bonuses. However, when a bonus is stipulated in a contract or a CBA or is given unconditionally, it shall form part of an employee’s wage and must therefore be given to him or her as a matter of right.
Government Intervention in Compensation/Increases
Other than setting minimum wages per region, the government allows employers and employees to agree on compensation levels and other terms and conditions of employment. Where there are unions representing the employees in a specified bargaining unit, the government allows these unions to collectively bargain with the employer with respect to wages, hours of work, and all other terms and conditions of employment.
Service Incentive Leave
Under Article 95 of the Labor Code, an employee who has rendered at least one year of service is entitled to a Service Incentive Leave (SIL) of five days with pay, which may be used for vacation and sick leave purposes. The unused SIL is commutable to its money equivalent at the end of the year. Other than the five-day SIL, an employer is not obliged to provide other vacation leaves, whether paid or unpaid, of the same import.
Pursuant to Republic Act No 11210, or the Expanded Maternity Leave Law, all female employees are entitled to a maternity leave benefit of 105 days with full pay, with an option to extend for an additional 30 days but without pay, regardless of whether the birth of the child is via caesarean section or natural delivery. Female employees who qualify as a solo parent under Republic Act No 8972, or the Solo Parents’ Welfare Act, are entitled to an additional maternity benefit of 15 days. However, in the case of a miscarriage or an emergency termination of pregnancy, the maternity leave benefit shall only be 60 days with full pay.
A female employee entitled to maternity leave benefits may allocate up to seven days of the said benefits to the child’s father. In the case of death, absence or incapacity of the father, the allocation may be provided to an alternative caregiver, who may be a relative within the fourth degree of consanguinity or the current partner of the female employee sharing the same household.
Section 2 of Republic Act No 8187, or the Paternity Leave Act, provides that every married male employee is entitled to a paternity leave benefit of seven calendar days with full pay for the first four deliveries of his legitimate spouse with whom he is cohabiting.
Section 18 of the Solo Parents’ Welfare Act grants a special leave benefit of not more than seven working days every year to a solo parent who has rendered at least one year of service.
Leave for female victims of violence
Section 43 of Republic Act No 9262, or the Anti-Violence Against Women and Their Children Act, provides that a female employee who is a victim of the crime of violence against women and their children is entitled to a paid leave benefit of up to ten days per year, which shall be extendible when the need arises, as specified in the protection order.
Leave due to gynaecological surgery
Section 18 of Republic Act No 9710, or the Magna Carta of Women, grants a female employee who has rendered continuous aggregate service of at least six months for the last 12 months a special leave benefit of two months with full pay based on her gross monthly compensation following surgery caused by gynaecological disorders.
Limitations on Confidentiality, Non-disparagement Requirements
In accordance with the principle of autonomy of wills under contract law, there are no limitations as to confidentiality or non-disparagement clauses found in an employment contract. An employer may perpetually prohibit an employee from divulging confidential information that he or she received in the course of his or her employment. Similarly, an employer may prohibit an employee from taking any action that may impact its business or reputation. Confidentiality or non-disparagement clauses typically impose penalties for violating the same in the form of liquidated damages.
To the employer
An employee’s liability to his or her employer for loss or damage may be enforced through deposits and wage deductions, albeit at very stringent standards.
Under Article 114 of the Labor Code, an employer may require its employees to make deposits from which deductions shall be made for the reimbursement of loss or damage to tools, materials, or equipment supplied by the employer only under the following circumstances:
In this regard, Article 115 of the Labor Code and DOLE Labor Advisory No 11, Series of 2014 provide that no deduction from the deposits of an employee for the actual amount of the loss or damage shall be made unless the employee has been heard thereon, and his responsibility has been clearly shown. In no case shall the deduction exceed 20% of the employee’s wages in a week.
To third persons
As regards an employee’s liability to third persons, Article 2180 of the Civil Code of the Philippines provides that employers shall be liable for the damages caused by their employees acting within the scope of their assigned tasks, even though the former are not engaged in any business or industry.
Non-compete clauses may be included in Philippine employment contracts, especially if substantial investment in the employees is involved. According to Philippine jurisprudence, while there is no hard and fast rule to determine the validity or enforceability of a non-compete clause, it may be stricken down when, based on the circumstances, the restriction is unreasonable so as to unduly restrain trade (ie, time, place, scope of trade), when it is contrary to the public welfare, and when the restriction is greater than is necessary to afford a fair and reasonable protection to the party in whose favour it is imposed.
Non-compete clauses may be enforced by filing a civil case with the regular courts of competent jurisdiction within ten years from the time the right of action accrues, as stated in Article 1144 of the Civil Code. The extent of the liability depends on the stipulation in the contract and/or the damages that may be proven arising from the breach. Typically, however, non-compete clauses include the imposition of a penalty in the form of liquidated damages pegged at a fixed amount in the event of violation thereof. While the employer may stipulate any amount, courts may still temper the same upon judicial review if the amount is found to be unconscionable or iniquitous in light of the circumstances.
Similar to non-compete clauses, non-solicitation clauses, whether with regard to employees or customers, may be enforced by filing a civil case with the regular courts within ten years from the time the right of action accrues. There are no set standards for the validity or enforceability of such clauses, except as to their reasonableness. The Civil Code allows the parties to a contract to agree on such terms as they may deem convenient, provided that they are not contrary to law, morals, good customs, public order, or public policy. Further, there are no substantial distinctions as to the enforceability or validity of non-solicitation clauses in reference to customers compared to those for employees.
Republic Act No 10173, otherwise known as the Data Privacy Act, and its Implementing Rules and Regulations generally apply to employment relationships. An employee may be considered as a data subject, whose personal, sensitive personal, or privileged information may be processed by his or her employer in accordance with and under the circumstances provided under Sections 12 and 13 of the Data Privacy Act.
Pursuant to Section 20 of the Data Privacy Act, employers, being personal information controllers of their employees’ personal information, are required to implement reasonable and appropriate organisational, physical and technical measures to protect the personal information in their custody. These measures must be comprehensive enough to protect the personal data from both natural dangers (eg, accidental loss or destruction) and human dangers (eg, unlawful access, fraudulent misuse, unlawful destruction, alteration and contamination).
Article 40 of the Labor Code provides that a non-resident alien may only be engaged to perform services in the Philippines under an employment arrangement if there is no person in the country who is competent, able and willing at the time of application to perform the services for which the said alien is desired.
Article 40 of the Labor Code also provides that any alien seeking admission to the Philippines for employment purposes and any domestic employer who desires to engage an alien for employment in the Philippines shall obtain an employment permit from the DOLE. According to DOLE Department Order No 186, Series of 2017, the permit required is otherwise known as the AEP, which is valid for one year, unless the employment contract or other modes of engagement provide otherwise, which in no case shall exceed three years.
On the other hand, under BI Operations Order No JHM-2019-008, a foreign national who intends to perform activities or render services in the Philippines outside of an employment arrangement must, instead of an AEP, secure an SWP from the BI. An SWP may be secured for an initial period of three months and is renewable for the same period thereafter.
The right to self-organisation guaranteed under the Philippine Constitution covers the right to form, join, or assist labour organisations or unions for the purpose of collective bargaining or for dealing with employers concerning terms and conditions of employment.
Jurisprudence provides that a union obtains the right to bargain collectively with the employer upon registration and after being recognised as the exclusive bargaining representative of a group of employees, otherwise known as a bargaining unit. On the other hand, dealing with the employer concerning terms and conditions of employment is a generic description for interacting with the employer concerning grievances, wages, working hours, and other terms and conditions of employment.
While the right to self-organisation, more often than not, connotes unionism, the said right may likewise pertain to other employee representative bodies. Workers may also form or join workers’ associations as well as labour management councils.
A workers' association refers to an organisation of workers formed for the mutual aid and protection of its members or for any legitimate purpose other than collective bargaining. The existence of an employer-employee relationship is not mandatory in the formation of a workers' association. What the law simply requires is that the members of the workers' association, at the very least, share the same interest.
A labour management council is a body composed of representatives from both the employer and the employees. The employees’ representatives shall be elected by at least a majority of all employees in the establishment. The purpose of a labour management council is to allow employees to participate in policy and decision-making processes of the establishment where they are employed in so far as said processes will directly affect their rights, benefits and welfare.
A CBA refers to the negotiated contract between the exclusive bargaining representative and the employer concerning terms and conditions of employment in a bargaining unit. Similar to ordinary contracts, the parties in a CBA may establish such stipulations, clauses, terms and conditions as they deem convenient, provided that these are not contrary to law, morals, good customs, public order, or public policy. A CBA serves as the law between the parties, and they are obliged to comply with its provisions.
Grounds for Termination of Employment
Instead of motivation, a just or authorised cause is necessary to terminate employment. Unlike in other countries that adopt an “at-will employment” arrangement, Philippine labour law reinforces an employee’s right to security of tenure, as guaranteed by the Philippine Constitution. Accordingly, before an employee could be meted the supreme penalty of termination from employment, his or her employer must first comply with both substantive and procedural due process.
Substantive due process requires the termination to be based on a just or authorised cause. Just causes are causes attributable to the employee’s fault or negligence, while authorised causes are those attributable to a management decision to terminate an employee for business reasons or his or her affliction with a disease.
Just Causes for Termination
On the one hand, the just causes for termination are provided under Article 297  of the Labor Code:
Authorised Causes for Termination
On the other hand, the authorised causes for termination are provided under Articles 298  and 299  of the Labor Code:
Procedural Requirements for Termination
The procedural requirements for just causes are different from those for authorised causes, as will be explained in 7.2 Notice Periods/Severance. In sum, terminations due to just causes follow the two-notice rule (involving a notice to explain, an ensuing administrative investigation, and a notice of the employer’s decision). In terminations due to authorised causes, a 30-day advance notice is required to be served on the affected employees and the DOLE. Procedural requirements must be complied with before an employee can be dismissed for just or authorised cause(s). Failure to comply with the procedural requirements will not invalidate the dismissal, if based on sufficient substantive grounds, but will entitle the employee to an award of nominal damages.
In the Philippines, there is no threshold for a redundancy to be considered as a collective redundancy.
According to jurisprudence, redundancy generally exists where the services of an employee are in excess of what is reasonably demanded by the actual requirements of the enterprise. A position is redundant where it is superfluous, and superfluity of a position may be the outcome of a number of factors, such as over-hiring of workers, decreased volume of business and dropping of a particular product line or service activity previously manufactured or undertaken by the enterprise. Redundancy may also be validly resorted to as a cost-cutting measure and to streamline operations so as to make them more viable, because the employer has no legal obligation to keep on its payroll more employees than are necessary for the operation of its business.
In the event of redundancy, the affected employees are entitled to receive separation pay of at least one month's pay or one month's pay per year of service, whichever is higher. In addition, they are entitled to an advance notice of at least one month prior to the effective date of separation. Where there are employees similarly situated, the employer must have applied fair and reasonable selection criteria to determine who among the employees are to be made redundant.
Procedural Due Process
Just causes for termination
For termination due to just causes, procedural due process consists of the following.
Authorised causes for termination
For termination due to authorised causes, on the other hand, procedural due process consists of service of two separate written notices on both the affected employees and the appropriate Regional Office of the DOLE at least 30 days before the termination becomes effective, specifying the ground or grounds for termination.
In the case of termination due to disease, in addition to the service of the separate written notices on the affected employees and the DOLE, there should be a certification by a competent public health authority that the disease is of such nature or at such stage that it cannot be cured within six months even with proper medical treatment. It must be noted, however, that the Supreme Court has ruled in several cases that employees who are dismissed due to disease must have also been served the notices required for termination due to just causes as stated above.
In the case of termination for authorised causes, the affected employees are entitled to separation pay. The separation pay shall be in an amount equivalent to one month's pay or at least one month's pay for every year of service, whichever is higher, if the termination is due to the installation of labour-saving devices or redundancy, or one month's pay or at least half a month's pay for every year of service, whichever is higher, in cases of retrenchment to prevent losses, closures or cessation of operations of establishment or undertaking not due to serious business losses or financial reverses, and disease. A fraction of at least six months shall be considered as one whole year.
The payment of separation pay and the service of one month's notice are required by the law. There is no payment in lieu of notice allowed.
On the other hand, separation pay is not required for termination due to just causes or resignations, although the two notices mentioned above are indispensable for purposes of complying with procedural due process.
External Advice or Clearance
No other external advice or authorisation is required to carry out terminations for just or authorised causes. Similarly, no prior clearance is required from the DOLE before any termination may be effected.
Philippine laws do not allow summary dismissal regardless of the nature or gravity of the just cause. The requirements of procedural due process must always be observed in terminations for just causes. However, the law allows an employer to place an employee on preventative suspension for a maximum period of 30 days, if the employer finds the employee to be a serious threat to the life or property of the employer or his representatives, or of his co-employees.
The procedural requirements for dismissal due to just causes are discussed in 7.2 Notice Periods/Severance.
Should an employee be summarily dismissed – ie, the requirements of procedural due process are not observed – the dismissal per se is not invalid should the same be based on sufficient grounds. However, this may entitle the employee to an award of nominal damages.
In the Philippines, termination agreements are permissible but imply a voluntary resignation on the part of the employee. In this regard, while there is nothing to prohibit the employer and employee from agreeing upon the conditions of an employee’s resignation, the employer must ensure that such an agreement may be proven as having been freely and voluntarily entered into by the parties. This is because once an employee questions the validity of such termination agreements before the labour courts, the same may be construed as a forced resignation and, consequently, constructive dismissal.
Constructive dismissal exists where there is cessation of work because continued employment is rendered impossible, unreasonable or unlikely, as an offer involving a demotion in rank or a diminution in pay and other benefits. Constructive dismissal may, likewise, exist if an act of clear discrimination, insensibility or disdain by an employer becomes so unbearable on the part of the employee that it could foreclose any choice by him except to forgo his continued employment. Once found to have been constructively dismissed, an employee will be adjudged to be entitled to reinstatement, back wages and even moral or exemplary damages.
Releases and Quitclaims
There are no statutory requirements for releases. While law and jurisprudence look with disfavour upon releases and quitclaims by employees who are merely pressured into signing them, a legitimate waiver representing a voluntary settlement of an employee’s claim should be respected by the courts as an agreement between the parties. Jurisprudence provides the following requisites for a valid (release waiver and) quitclaim:
Protection for Certain Categories of Employees
No particular category of employees is immune from termination from employment if, based on the circumstances, their acts warrant the imposition of the supreme penalty of dismissal. To impose upon an employer the retention of an employee when the latter does not deserve the same is to violate the employer’s management rights or prerogative.
Implications for Employee Representatives
Officers of a union that has been certified as the exclusive bargaining representative are not particularly immune from dismissal and/or disciplinary action. However, if found to be unjustified under the circumstances, the dismissal of a union officer may be considered as union-busting. This, in turn, may be considered as an unfair labour practice, which is a ground for strike and even criminal prosecution.
An employee may file a wrongful dismissal claim before the National Labor Relations Commission (NLRC) if his or her dismissal was not due to either a just or authorised cause, or the dismissal is otherwise contrary to law.
If a wrongful dismissal claim is found to be meritorious, by virtue of Article 294 of the Labor Code, the employee may be awarded with reinstatement without loss of seniority rights and other privileges, or payment of separation pay in lieu thereof, plus full back wages, inclusive of allowances, and other benefits or their monetary equivalent.
Grounds for a Claim of Discrimination
Pursuant to the state’s policy under Article 3 of the Labor Code, all employers are enjoined to prevent discrimination in the workplace on account of sex, race or creed. Providing lesser compensation to a particular employee as against another for work of equal value or favouring one employee over another with respect to promotion, training opportunities, study and scholarship grants solely on account of a difference in sex, race, or creed are examples of such acts of discrimination.
The following provisions and statutes likewise aim to curb discrimination in the workplace:
Burden of Proof in Discrimination Cases
There are no laws, rules or regulations that categorically establish the burden of proof in discrimination cases. Thus, the general rule that “the party who alleges a fact has the burden of proving it” should be followed. However, if the discrimination issue is raised in a case for illegal dismissal, it would be incumbent upon the employer to prove by substantial evidence that the dismissal was based on valid grounds, in accordance with Articles 297 and 298 of the Labor Code.
Penalties and Relief in Discrimination Cases
Discrimination against women
Under Article 303 of the Labor Code, employers who are found to have wilfully discriminated against women may be penalised with a fine ranging from PHP1,000.00 to PHP10,000.00, or imprisonment for between three months and three years, or both, at the discretion of the court.
Discrimination against disabled persons
Section 46 of the Magna Carta for Disabled Persons, on the other hand, provides that “any person who violates any provision of [the Magna Carta of Disabled Persons] shall suffer the following penalties: for the first violation, a fine of not less than [PHP50,000.00] but not exceeding [PHP100,000.00], or imprisonment of not less than six months but not more than two years, or both, at the discretion of the court; and for any subsequent violation, a fine of not less than [PHP100,000.00] but not exceeding [PHP200,000.00], or imprisonment for less than two years but not more than six years, or both, at the discretion of the court.”
Discrimination on account of age
The Anti-Age Discrimination in Employment Act penalises any violation of the said law with a fine of PHP50,000.00 to PHP500,000.00, or imprisonment for three months to two years, or both, at the discretion of the court.
Discrimination against persons with mental health conditions
Section 44 of the Mental Health Act provides that any person who discriminates against a person with a mental health condition shall be punished by imprisonment for not less than six months, but not more than two years, or a fine of not less than PHP10,000.00, but not more than PHP200,000.00, or both, at the discretion of the court.
Aliens, corporations, trusts, and other entities
Common to the above statutes are provisions stating that any alien found guilty may be summarily deported after serving his sentence. Likewise, if the offence is committed by a corporation, trust, firm, partnership, association or any other entity, the penalty is imposed upon the guilty officers of such corporation and/or entity.
Separate action for damages
Apart from the penal statutes, an aggrieved employee may likewise file an action for damages in a separate action before the regular courts.
Specialised Employment Forums
Disputes between employees and their employers involving labour standards benefits (eg, normal hours of work, meal periods, night shift differential, overtime premium pay, weekly rest period, holiday pay and service incentive leave) are cognisable by the DOLE Regional Offices.
On the other hand, the Labor Arbiters of the NLRC shall have original and exclusive jurisdiction to appear and decide the following cases:
Decisions of the Labor Arbiters may be appealed to the NLRC within ten days from receipt upon the posting of a bond equivalent to the amount of the judgment award in favour of the employee. In the event of a judgment of illegal dismissal, the Labor Code mandates either actual or payroll reinstatement pending appeal. Decisions of the NLRC may, in turn, be reviewed on certiorari proceedings by the Court of Appeals and, eventually, in the proper case by the Supreme Court.
Employment Class-Action Claims
Since a particular employment is treated differently from another despite a common cause of action, each and every employee must be considered as an individual litigant when filing claims, thus negating the possibility of a class-action suit.
Parenthetically, one employee may have a different set of entitlements and/or accountabilities from another or may have particularities in the case that would aggravate or mitigate the employer’s liability to him, if any. Thus, the disposal of a class-action suit with a blanket and identical relief for all employees of an employer may not be available in labour cases.
Appearance/Representation before the Labour Arbiter and the NLRC
Section 6 of Rule III of the 2011 NLRC Rules of Procedure, as amended, provides that a lawyer appearing for a party is presumed to be properly authorised for that purpose.
On the other hand, a non-lawyer may appear in any of the proceedings before the Labor Arbiter or the NLRC only under the following conditions:
Voluntary arbitration is possible, especially in a unionised setting, pursuant to the provisions of a CBA, which should provide for a grievance machinery and a voluntary arbitration procedure.
The resort to grievance machinery and voluntary arbitration is mandated in cases where the dispute involves the interpretation, implementation or enforcement of a CBA. Under Article 274 of the Labor Code, the parties to the CBA may resort to voluntary arbitration by DOLE-accredited arbitrators if no settlement is achieved through a grievance machinery system provided for in the CBA. These voluntary arbitrators have original and exclusive jurisdiction over cases relating to the interpretation or implementation of CBAs, or the enforcement of an employer’s personnel policies. Under Article 275 of the Labor Code, the parties may vest upon the voluntary arbitrators the jurisdiction to hear and decide all other labour disputes, including unfair labour practices and bargaining deadlocks.
Pre-dispute arbitration agreements are enforceable. These agreements are usually embodied in CBAs, wherein the parties may agree to resort to voluntary arbitration in the event that settlement through the grievance machinery process is futile. These provisions in the CBA may be enforced.
In labour cases, attorney's fees partake of the nature of an extraordinary award granted to the employee as an indemnity for damages. Philippine jurisprudence provides that attorney's fees may be recovered in labour cases involving the following:
Based on Article 111 of the Labor Code, the maximum amount of attorney’s fees the employee may recover is set at 10% of the monetary award.
Special Issues in Philippine Employment Law
Temporary lay-off or forced leave
An employer in the Philippines has the management prerogative to place an employee on unpaid temporary lay-off or forced leave in accordance with the requirements set by law and related jurisprudence. Such an arrangement must therefore be made on valid and justifiable grounds, and legitimate business reasons, and not for the purpose of defeating or circumventing the rights of the employee. Likewise, it may not be for a period exceeding six months, based, by analogy, on Article 301  of the Labor Code.
The Department of Labor and Employment (DOLE) has, in its earlier issuances, encouraged employers to place an employee on leave without pay as a flexible work arrangement only if there is an agreement with such affected employee.
On 4 March 2020, recognising the urgent need for alternative work arrangements due to the global outbreak of COVID-19, the DOLE issued Labor Advisory No 9, Series of 2020 (“LA 9-20”), and recognised, among others, forced leave as an option in response to the pandemic. Under LA 9-20, as reiterated in DOLE Labor Advisory No 17, Series of 2020, employers who are encountering financial difficulty due to COVID-19 may implement forced leave in their respective establishments, among other alternative work schemes, even without the agreement/consent of the affected employees. Due to the immediacy that is required in the implementation of such work schemes, LA 9-20 only requires the employer to meet two specific formal requirements, which are to:
It bears emphasis, however, that due to the compulsory nature of forced leave and its impact on the affected employees, employers who are intending to avail of this option must still be prepared to prove that it is made in good faith and that it has legitimate business rationale in implementing the arrangement, similar to situations involving bona fide suspension of business operations under Article 301  of the Labor Code. In addition, an employer would also have to show that it employed fair and reasonable criteria in determining who among its employees will be affected, and that employees who are similarly situated are treated in the same fashion.
Employees’ right to refuse unsafe work
The right of employees not to report for work in the case of hazardous or unsafe workplaces due to accidents, or natural or man-made calamities is a contentious issue.
On 17 August 2018, in line with the state’s policy to guarantee a safe workplace for all employees by affording them full protection against all hazards in their work environment, President Rodrigo Roa Duterte signed into law Republic Act No 11058 (“RA 11058”), otherwise known as An Act Strengthening Compliance with Occupational Safety and Health Standards and Providing Penalties for Violations Thereof. To implement various provisions of RA 11058, the DOLE issued Department Order No 198, Series of 2018 (“DO 198-18”) on 6 December 2018.
These issuances grant employees the right not to report for work without threat or reprisal from the employer if, as determined by the DOLE, an imminent danger exists in the workplace, as in the case of an accident, fire or earthquake, and the employer has not undertaken corrective actions. DO 198-18 allows employees to directly notify or report to the DOLE if an imminent danger exists in the workplace. Upon confirmation by the DOLE of the existence of an imminent danger, it shall issue a Work Stoppage Order, which allows employees not to report for work until the lifting thereof.
If the work stoppage is due to an imminent danger where the employer is at fault, the employer is bound to pay the affected employees their wages during the covered period. Significantly, the employer is presumed at fault if the Work Stoppage Order was issued secondary to an imminent danger situation that would endanger the lives of employees. Admittedly, the contentious issue in this case would be whether or not the employer is at fault.
On 13 January 2020, the DOLE issued Labor Advisory No 1, Series of 2020, in furtherance of RA 11058 and DO 198-18. Pursuant to the said Labor Advisory, an employee may refuse to report for work without being exposed or subject to any administrative sanction if there exists an imminent danger resulting from a natural or man-made calamity. Under such circumstances, the employee shall be on “no work, no pay”, unless he or she agrees to utilise his or her accrued leave credits.
Common to the foregoing issuances is that employees may base their refusal to report for work on the ground of “imminent danger” in the workplace. This has been defined under RA 11058 as “a situation caused by a condition or practice in any place of employment that could reasonably be expected to lead to death or serious physical harm.” Then again, however, the issue may also be whether the employer is at fault in bringing this about or whether it has taken all the mandatory health and safety measures required by regulations to ensure a safe working environment.
An employer may insist that the mere existence of the COVID-19 pandemic should not amount to an imminent danger in the workplace, which will grant the employees the right not to report for work. This is especially true if the employer can prove that it has provided the necessary precautionary and safety measures to protect its employees upon reporting for work and that it has faithfully complied with the occupational safety and health standards and the minimum requirements set by the different government agencies for a safe working environment during the COVID-19 pandemic. Notably, these include:
Disease as an authorised cause for dismissal
There is no termination “at-will” in the Philippines. An employer may dismiss an employee either for a just cause attributable to the fault of the employee or for an authorised cause resulting from a management decision or the affliction with a disease of an employee.
As regards the dismissal of an employee based on the authorised cause of affliction with a disease, the law and regulations provide the following requirements:
With respect to COVID-19, an employer might ask whether an employee who has tested positive for infection may be dismissed from employment. Arguably, the answer may be in the negative. This pandemic spreads not only in the workplace but also throughout the community. More importantly, the affliction with COVID-19 may be treated in a period of very much less than six months. And, upon testing negative after treatment, the previously infected employee may be considered to be no longer harmful to the rest of his or her co-employees.
Age discrimination vis-à-vis retirement
Republic Act No 10911, or the “Anti-age Discrimination in Employment Act”, prohibits an employer from imposing early retirement on the basis of an employee’s age. However, this is not absolute, as the Act also provides for certain exceptions, such as when the intent is to observe the terms of a bona fide employee retirement or a voluntary early retirement plan in accordance with the Labor Code and other related laws.
Under Article 302 of the Labor Code, the mandatory age of retirement under the Labor Code is 65 years and the optional age of retirement (at the election of the employee) is 60 years.
Republic Act No 4917 (RA 4917) recognised the existence of reasonable private benefit plans, which are pension, gratuity, stock bonus or profit-sharing plans maintained by an employer for the benefit of some or all of its employees wherein contributions are made by the employer or the employee or both. The Act provides that retirement benefits received by employees under such private benefit plan shall be exempt from all taxes and shall not be liable for attachment, garnishment, levy or seizure by or under any legal or equitable process, except to pay a debt of such employee with regard to the private benefit plan or one that arises from his criminal liability, provided that the retiring employee has been in the service of the employer for at least ten years and is not less than 50 years of age at the time of his retirement.
Pursuant to the RA 4917, many Philippine companies have implemented retirement plans registered with the Bureau of Internal Revenue (BIR), which typically provide heightened retirement benefits but impose a mandatory retirement age less than that stated in the Labor Code (ie, 65 years). Nonetheless, given the seemingly beneficial character of retirement plans, membership therein is either unilaterally imposed by employers or readily incorporated into employment contracts. On this score, jurisprudence provides that employers and employees may agree to fix the retirement age for the latter, and to embody their agreement in written contracts or policies. Thus, retirement plans allowing employers to retire employees who have not yet reached the compulsory retirement age are not per se repugnant to the constitutional guaranty of security of tenure, provided that the retirement benefits are not lower than those prescribed by law.
In a 2018 case, however, the Supreme Court held that an employee in the private sector who did not expressly agree to the terms of an early retirement plan cannot be separated from the service before he reaches the age of 65 years. The employer who retires the employee prematurely is guilty of illegal dismissal, and is liable to pay his back wages and to reinstate him without loss of seniority and other benefits, unless the employee has meanwhile reached the mandatory retirement age under the Labor Code.
It thus appears that the bone of contention is what constitutes “express consent”. Notably, the employee in the said 2018 case had been retired by the employer at the age of 60 years pursuant to his supposed membership under a retirement plan, which membership was indicated in his letter of appointment, although he was provided with a copy of the retirement plan only long after he was employed. To this, the Supreme Court held that the mere mention of the retirement plan in the letter of appointment did not sufficiently inform the employee of the contents or details of the retirement programme. To construe from the employee's acceptance of his appointment that he had acquiesced to be retired earlier than the compulsory age of 65 years was unwarranted, as, says the Supreme Court, retirement should be the result of the bilateral act of both the employer and the employee.
Jurisprudence has established that membership under a retirement plan, much less the imposition of a lowered retirement age, cannot be unilaterally enforced by the employer. The requirement for express consent therefore applies when the terms and conditions of a retirement plan are not known to employees who are deemed members thereof at the discretion of the employer. Conversely, it does not contemplate such plan that is registered with the BIR as a reasonable private benefit plan and that is referred to in a contract or policy whereby employees are normally and regularly informed of their participation in the plan so as to make them cognisant of their rights.
Mandatory workplace policies
Over the years, the Philippine Legislature has come up with a list of legally mandated workplace policies that are monitored by the DOLE. Specifically, the following policies seek to promote the health, safety and welfare of employees:
The Joint Interim Guidelines arose during the COVID-19 pandemic to address health and safety concerns attendant to the resumption of operations and physically reporting at the work premises. This issuance prescribes mandatory workplace requirements that employers must comply with to (i) increase physical and mental resilience, (ii) reduce transmission of COVID-19 prior to entering the workplace and while inside the workplace, (iii) minimise contact rate, and (iv) reduce the risk of infection.
On the other hand, the following are mandatory policies that aim to maintain security, discipline and order at the workplace:
The foregoing policies are labour standards that are assessed by the DOLE during labour inspections. Generally, compliance with labour laws and issuances, such as the implementation of the mandatory workplace policies listed above, is necessary for the issuance, renewal and cancellation of licences, certificates of registrations, and/or permits by various government agencies and the relevant local government units. On this score, DOLE Department Order No 183, Series of 2017, or the Revised Rules on the Administration and Enforcement of Labor Laws, prescribes the guidelines on the conduct of labour inspections that may be carried out routinely or upon the complaint of an aggrieved employee.
With the community quarantine imposed by the national government in light of the COVID-19 pandemic, labour inspections have been suspended, although complaints or requests for inspections are still being accepted. However, once a labour inspection is conducted by the DOLE, non-compliance with labour standards and occupational safety and health standards shall be indicated in a Notice of Results. The employer will then be given time to correct the violations or submit the necessary documents. Should the actions or manifestations for compliance be found insufficient so as to negate the findings in the Notice of Results, the DOLE may conduct mandatory conferences and require the employer to submit a position paper for its resolution. Apart from the imposition of adverse judgment awards or administrative fines, the legal consequence of having pending cases with the DOLE may eventually lead to work stoppage, revocation of licences to operate and shutdown of operations.