Termination for Authorized CauseAtty Elvin
The post below is based on the book Guide to Valid Dismissal of Employees (pp. 25-27).
Just cause pertains to a situation where the employee is at fault. It does not mean however, that termination can only be undertaken when there is commission of an offense by the employee.
The employer may exercise his prerogative to terminate as well when the business situation requires. For example, if there is excess in position he may implement redundancy. If there are losses he may resort to retrenchment. Further, if he wants to take advantage of modern technology he may replace his workers with machines or known as installation of labor saving device. If he encounters serious losses he may close his business or cease doing business for whatever reason, subject to payment of separation pay.
Thus, other than just cause, the employer may also terminate for authorized cause. More specifically, the term “authorized causes” for termination pertains to redundancy, retrenchment, closure due to business losses among others, found in Article 283 and disease in Article 284 of the Labor Code. To reiterate, on these grounds, the employee has not done anything wrong which would cause his termination but it is due to business condition the reason the employer wants to terminate him.
Thus, Article 283 provides that:
Art. 283. Closure of establishment and reduction of personnel. The employer may also terminate the employment of any employee due to the installation of labor-saving devices, redundancy, retrenchment to prevent losses or the closing or cessation of operation of the establishment or undertaking unless the closing is for the purpose of circumventing the provisions of this Title, by serving a written notice on the workers and the Ministry of Labor and Employment at least one (1) month before the intended date thereof. In case of termination due to the installation of labor-saving devices or redundancy, the worker affected thereby shall be entitled to a separation pay equivalent to at least his one (1) month pay or to at least one (1) month pay for every year of service, whichever is higher. In case of retrenchment to prevent losses and in cases of closures or cessation of operations of establishment or undertaking not due to serious business losses or financial reverses, the separation pay shall be equivalent to one (1) month pay or at least one-half (1/2) month pay for every year of service, whichever is higher. A fraction of at least six (6) months shall be considered one (1) whole year.
The just or authorized cause must accompany a decision to dismiss an employee. Absence of any of said grounds will render the dismissal illegal even if there are notices and hearing. This will be discussed in detail in the succeeding chapters.