The two most commonly used grounds for termination of employee are the Authorized Causes under Article 283 and 284 of the Labor Code, and the Just Causes under Article 282. Below are the authorized causes for termination of employment.

Definition

As maybe broadly defined, authorized causes for dismissal of employee refer to those lawful grounds for termination which in general do not arise from fault or negligence of the employee. “Authorized causes” are distinguished from “just causes” under Article 282 in that the latter are always based on acts attributable to the employee’s own fault or negligence.

Authorized causes

The authorized causes for termination of employee are enumerated under Article 283 and 284 of the Labor Code, as follows:

  1. Installation of labor-saving devices. The installation of labor-saving devices contemplates the installation of machinery to effect economy and efficiency in the method of production[1].
  2. Redundancy. Redundancy 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 superfluous, and superfluity of a position or positions may be the outcome of a number of factors, such as over hiring of workers, decreased of volume business, or dropping of a particular product line or service activity previously manufactured or undertaken by the enterprise[2].
  3. Retrenchment to prevent losses. Retrenchment is an economic ground to reduce the number of employees. Retrenchment is the reduction of personnel for the purpose of cutting down on costs of operations in terms of salaries and wages resorted to by an employer because of losses in operation of a business occasioned by lack of work and considerable reduction in the volume of business[3]. It is sometimes also referred to as downsizing. It is aimed at saving a financially ailing business establishment from eventually collapsing.
  4. Closure or cessation of operation. The closure of a business establishment is a ground for the termination of the services of an employee unless the closing is for the purpose of circumventing pertinent provisions of the Labor Code.
  5. Disease. An employer may terminate the services of an employee who has been found to be suffering from any disease and whose continued employment is prohibited by law or is prejudicial to his health as well as the health of his co-employees.

It should be noted though that the above enumeration is not an exhaustive list of authorized causes of termination of employment. Valid application of union security clause, relocation of business, among others, may also considered authorized causes of termination.

Footnotes

  1. Edge Apparel, Inc. vs. NLRC, G.R. No. 121314, February 12, 1998.
  2. Tierra International Construction Corporation vs. NLRC, G.R. No. 88912, July 3, 1992.
  3. Alabang Country Club vs. NLRC, G.R. No. 157611, August 9, 2005.

Last Edited: Tuesday, April 24, 2012

Caveat: Subsequent court and administrative rulings, or changes to, or repeal of, laws, rules and regulations may have rendered the whole or part of this article inaccurate or obsolete.
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36 comments

  1. eden selebrado Comment:
    January 5th, 2011 at 11:20 am

    I got the meaning of authorized causes regarding separation pay.. thx..

    [Reply]

  2. eden selebrado Comment:
    January 5th, 2011 at 11:22 am

    thanx for the info..instead of buying codal latest edition now i can seach in the internet.

    [Reply]

  3. eden selebrado Comment:
    January 5th, 2011 at 11:23 am

    instead of buying CODAL Latest edition.. in just one click i got the full info regarding Workers Basic Right..

    [Reply]

  4. May I ask if there should be a 1 month notice before a termination would take effect? its for a termination due to disease, our employee had a stroke since December 2010 & until now he hasn’t reported due to physical effect.

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  5. in case,, d ako bigyan ng separation pay,, sa pagkakatanggal ko,, san po ako pwede magpunta. sinuspinde ako ng 15 days,, dahil nag absent ako ng walang dahilan,, pero ng pumasok na ko,, d na ako tinanggap.. tanggal na daw ako!!! d ko alam kung may makukuha pa ako!! kc ako lang mag isa ang tinanngal.. almost 2 years na me nagwowork sa company,, 200 per day lang sahod namin!!! cmula umpisa sa work 200 lang tlaga,, d na nadagdagan sa loob ng 2 taon.!1

    [Reply]

    GoPilipinas Reply:

    Sumunod ka kasi sa patakaran ng pinagtratrabahuhan mo. Aabsent ka ng walang dahilan tapos rereklamo ka na tinanggal ka. Siguro marami ka pang ibang ginagawang hindi tama kaya nung sinuspinde ka eh tinuloy na nila tanggalin ka. Asar na siguro sila sa iyo. Mga empleyado na tulad mo kaya talo ang Pilipinas ng mga ibang Asian countries pagdating sa productivity. Mga tamad na at maloloko marereklamo pa. San ka pupunta? Punta ka sa bundok tanim ka ng kamote.

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    Bally Reply:

    If you were suspended and terminated at the same time, it is not just. Suspension is already a penalty for negligence. If after suspension you did not committed another violation same as negligence, then it is not just for you to be terminated. You can report your employer and maybe sue them for termination without cause. As for your concern, if you were terminated due to negligence, you are not entitled for separation pay. Separation pay are given for termination such as retrenchment or retirement.

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  6. kapag napatunayan po ba na valid ang ginawang termination ng company sa isang employee, balewala na po ba ang complaint na underpayment of wages since employment?

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  7. kapag napatunayan po ba na valid ang ginawang termination ng company sa isang employee, balewala na po ba ang complaint na underpayment of wages?

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  8. elmer castillo Comment:
    February 11th, 2013 at 10:10 am

    Ako po ay nagtatrabaho sa JONAS ELECTRICAL CONTRACTOR, ako po ay nbigyan ng 30 days suspension ng kumpanya, at nagpasabi ang may ari na hintayin n lang ang separation pay….panu ko po malalaman ang tamang kwenta
    nahired po ako january 2004….up to present…..ngaung 2013 kya po ako nbigyan ng suspension kasi po pinapipirma ng temporary employment….di po ako pumirma…anu po kaya ang ang karapatan namin sa issueng ito bilang manggagawa nila? ksi po since 2002 hanggang 2009 wala po kming narecieve n 13th month at SL VL….

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  9. Hi, I am employed as a manager for over 9 years and I am suffering of severe heart ailment. I am now 43 years old. Our Company policy is 10 years we are entitled for early retirement. If I will claim for termination due to decease can I avail for it? and, can this be tax free?

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    xxx Reply:

    In my own opinion, i don’t think claiming a termination is valid. Termination must be coming from an employer and is not something that can be claimed by the employee. If the company decides to terminate you because of your disease (not decease), then you are entitled for the separation pay. And if you have not reached the retirement age stated in your companies guidelines , then you are not also eligible for the privilege even if you’ve rendered 9 years .

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  10. Hi, I am employed as a manager for over 9 years and I am suffering of severe heart ailment. I am now 43 years old. Our Company policy is 10 years we are entitled for early retirement. If I will claim for termination due to decease can I avail for it? and, can this be tax free?

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  11. the company (A) that i am presently working now was sold to a different company (B). i have been working to company (A) since may 10, 2010. and ever since they none of my sss, pagibig, philhealth contribution was paid by Company(A). ano ano po makukuha ko sa company? ngayon nabenta n nila s ibang company (B) and company na pinagtatrabahuan ko? pwede nyo po ba madetalye ang halaga at para saan yun? salary ko ay Php.500/day 6 days work po. at regular employee po ko s company(A).

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  12. I would like to ask a question on redundancy. I was told to transfer (to Cagayan de Oro from Makati) last June 7 as there was no assignment for me here. If I refused the transfer and they say there is no work elsewhere in the company for me, would this make me redundant ? I am one of many project engineers in the company. I do not wish to leave the company as I have already worked here for 17 years so I might go even though I do not want to. But my superior demanded I have to move right away and I wanted at least a few weeks to a month to tidy up my personal affairs here. Up to what is my right to ask in this case ?

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    PL Reply:

    Redundancy is a valid ground for termination of a service of an employee. U may opt not to accept the offer but be sure to know that it is true that redundancy really existed.

    This move of your employer must be coupled with good faith and there is fair and reasonable criteria like superiority, effienfy and your status too.

    AND if these things were met and u do not wish to be transferred to other area then your employer for sure will terminate you and you will receive termination fee in accordance with the law

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  13. I would like to ask a question on redundancy. I was told to transfer to Cagayan de Oro from Makati as there was no assignment for me here. If I refused the transfer and they say there is no work elsewhere in the company for me, would this make me redundant ? I am one of many project engineers in the company. I do not wish to leave the company as I have already worked here for 17 years so I might go even though I do not want to. But my superior demanded I have to move right away and I wanted at least a few weeks to a month to tidy up my personal affairs here. Up to what is my right to ask in this case ?

    [Reply]

    admin Reply:

    Transfer of employee is a management prerogative. Unless the transfer is done with malice, e.g., intended only to force the employee to give up his job, there’s really nothing much the employee can do. The best thing you can do is talk to your boss to give you more time to sort out your personal affairs.

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    Andrew Reply:

    Sir, thank you for the reply. Can you help me by citing examples of “Done with Malice”? I would like to check because of the following points:
    1) Aside from the location, the job is lower than my current or last role
    2) Since there are many of us, is there no legal provision in the Philippines for me to say that if there should be redundancy, the new hires should be the first go? Or this is management prerogative here?
    3) I ask my boss if he can instead assign one of the new and younger engineers there and I take their place. The reply was that no one wants to go. Given this, is there legal basis for management prerogative to threaten me with redundancy at my ago and time with the company?
    Again thank you very much

    [Reply]

    farzman Reply:

    sir para hong may case kayo ng illegal dismissal.. please go to dole for assistance

  14. Sir, thank you for the reply. Can you help me by citing examples of “Done with Malice”? I would like to check because of the following points:
    1) Aside from the location, the job is lower than my current or last role
    2) Since there are many of us, is there no legal provision in the Philippines for me to say that if there should be redundancy, the new hires should be the first go? Or this is management prerogative here?
    3) I ask my boss if he can instead assign one of the new and younger engineers there and I take their place. The reply was that no one wants to go. Given this, is there legal basis for management prerogative to threaten me with redundancy at my ago and time with the company?
    Again thank you

    [Reply]

  15. Sir, thank you for the reply. Can you help me by citing examples of “Done with Malice”? I would like to check because of the following points:
    1) Aside from the location, the job is lower than my current or last role
    2) Since there are many of us, is there no legal provision in the Philippines for me to say that if there should be redundancy, the new hires should be the first go? Or this is management prerogative here?
    3) I ask my boss if he can instead assign one of the new and younger engineers there and I take their place. The reply was that no one wants to go. Given this, is there legal basis for management prerogative to threaten me with redundancy at my ago and time with the company?
    Again thank you very much

    [Reply]

  16. My husband has been working for a multi-national for 4 yrs. holding a high executive position. He has been advised by his boss that due to the current global re-organization of the company, he (the boss) does not find my husband “fit” for the position. It is not a redundancy case as they are now hiring someone to take my husband’s place. My husband has been performing very well since he joined the company which can be proven thru the rapid growth in the area he is handling. In fact, they have asked him to stay longer thrice, as they could not fill the position. The company will be giving him 6mos separation pay , pro-rated 13th, 14th month pay etc. The company requires him to sign an agreement that he agrees that he is voluntarily resigning and that he agrees that he is no longer “fit” for the position. I find it too vague and unfair as the agreement also states that he cannot work for a competing company or its subsidiaries for 2 yrs, nor hold the same position in another company. He is also banned for working again in the same company in any country as if he committed a crime. Can we file a case against them, or demand for a bigger separation pay as they are limiting the chances of my husband to find another job? I dont think 6 mos cover is reasonable. Thank you

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  17. Same here with my company. Don’t know if this is illegal or not but for me, it is unethical.

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  18. I just want to ask a question here. Yung asawa ko po ay nagwowork s SHINKOZAN first 5 months contractual po siya tapos na probitionary ng 6 na buwan hindi ba parang tagal ng probi niya? tapos end of contract na siya ngayon. sept 10, 2013. Hinde daw siya mareregular kasi buntis daw siya? Valid reason po ba yun. ?

    [Reply]

  19. Hi,I’m from the Philippines. I was issued an NTE by my employer because they found a discrepancy in the information I provided after a third party conducted a background check w/ my previous employer. According to the letter, my previous company said that I was terminated from work.I told my current employer that I left my previous company due to personal/family reasons.
    I was not aware that I was terminated from my last work. I never received any notice of termination. Besides, I submitted a resignation letter to my previous supervisor. What happened was I was not able to render 30 days of work due to my personal and family issues but I was able to inform my previous supervisor.
    I was able to process clearance w/ out any hassle.
    What should I do? I have a scheduled hearing on Dec 12 for the same reason. Can I request for an extension?
    Thanks in advance.

    [Reply]

  20. mam ako poh ay isang conductor ng bus company ako ngkakakaso poh sanhi poh ng kapabayaan at habang iniimbistigahan poh ang aking kaso ay hindi na po ako pinapapasok nagugutom na poh ang aking pamilya ano poh ang nararapat kong gawin mam

    [Reply]

    admin Reply:

    30 days ang maximum na preventive suspension ayon sa batas.

    [Reply]

  21. Sir ask ko lang po kung may laban po ba ako sa korean manager na bigla ako sinabihan na stop working na daw ako kasi ang dahilan nya di daw kami cimpatible sa trabaho..april 22,2014 ako nagsimula taz may 03,2014 basta na lang po sinabi na till dat day na lang daw ako magtrabaho. Wala pi cya na valid reason na masabi sa akin….nag resign na ako sa dati ko trabaho taz ganito lang nila bigla sasabihin sa akin na wag na ko papasok. Wala nman ako makitang ground sa pagpapatigil nya sa akin sa trabaho..admin mgr ina applyan ko pero sa operation nya ako binato pero hindi ako nagteklamo at pilit ko inaayos un trabahaho ko.may mga kaso na rin sa kanila sa ganitonh systema nila sa emplyedo.actually kaayos lang nila dun sa tatlo na nagreklamo sa kumpany sa DOLE. Unprofessional masyado ginawa ng general manager nmin.di na inisip may pamilya ako na may pangangailan din..kpag po ba nag complain ako sa DOLE may laban po kayo ako ganun ang kumpanya ay di sumusunod sa labor code ntin .salmat

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  22. hi po, kung pina lay off po,ung employee dahil sya palage ang pinagduduhan ng kanyang mga kasamang saleslady at maneger dahil na short ung store. pwedi bang mag file ng kaso ung cashier na pina layoff?may contrata naman syang pinermahan na hanggang 4 months lng ung duty nya..at isa pa,ayaw na ng kanyang mga kasama na mag duty pa eto.pwedi ba syang mag file ng kaso kasi na galit ung cashier na pina off?na galit po sya eh..salamat

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  23. Jay Garcia Comment:
    June 6th, 2014 at 10:47 pm

    kapag po ba hindi pumasok ng Holiday kaso na agad
    kasi nakikiusap daw ang kumpanya na pumasok hindi parin po pumasok wala naman po pinapirmahan na confirmation na mag ovetime during holiday kaya hindi po pumasok kaso kinasuhan po ng Kumpanya ang mabigat ay termination kasi kaso daw yun.! makatarungan po ba yun? sana may tumulong sa amin kasi 24 po katao ang tinanggal dahil hindi nagsipasok ng Holiday at gusto pang isunod lahat ng hindi pumasok nung Holiday (Araw ng kagitingan)maraming salamat po sana may makatulong samin.

    [Reply]

  24. rosean paringit Comment:
    November 8th, 2014 at 07:54 pm

    hi po ako po ay nag wwork sa isang company for 2 weeks pa lng po then all of the sudden pinag last day na ako nung time na kinausap ako kase dw di ko dw kaya ung work ko paano po un pwede po ako mag reklamo?under agency po ako.pina rreport na po sa agency.di man lng ako binigyan ng time pra makahanap ng iba bigla na lng ako sinabihan na last day ko na.salamat po

    [Reply]

  25. mary joy embiado Comment:
    November 9th, 2014 at 03:33 pm

    Sir, tanong lang po ako . Ang partner ko po kasi ay isang jeepney driver at tatlong taon na pi cia nagdadrive ng jeep ng amo nya . Bali nagbaboundary lng po cia. May right po ba syang magreklamo dahil sa loob ng tatlong taon di po cia hinuhulugan ng sss at ibang pang benepiso. At ngayon lng tinerminate po cia ng amo nya, sabi daw po maghanap na lng po cia ng ibang mapagmamanehuan jeepney. Pwede daw po ba syang magreklamo sa labor nito. Thank po, need advice po.

    [Reply]

  26. Winniger Inocentes Comment:
    August 2nd, 2015 at 01:18 am

    Ako poh ay nagtatarabaho sa supermarket sa Hindi sinasadyang pangyayari ay may nang away sakin sa locker pinag tanggal ko lng poh ang sarili ko,,nag statement p Nga poh ako sa guard kc wla nmn poh ako kasalanan bila n lng poh kmi kina usap ng head team leader nmin sa selling area daba poh bwal un ksi may mga customer Hindi nmn poh kmi pinag Harap sa opisina, magalit ung head team liner nmin at bila n lng poh kmi piña uwe tama poh ba un at Kung Hindi p ko magtatanong sa duty ko don Hindi ko p malalaman n tanggal n po pla ko sa trabaho,,sa tingin ko poh Hindi makatarungan ung pag tanggal sakin kc porket Naiinip ung t,l nmin tanggalalin agad ako. Mula nag umpisa ko sa trabaho wla poh ako violation n ginagawa at Hindi poh ako na absent o na late dahil lng poh don tinggal ako..tanggin ko matanggap ako Kung sinabi sakin ang dahilan ng akin pag tanggal sa trabaho wla nmn poh ganun nangyari eh, bigla lng poh kmi piña uwe at automatic n raw poh nun tanggal,,,…sna poh ay magtulungan nio ko ksi hanggng neon d ko poh naisip n dahil lng don mawawalan ako ng trabaho,,Hindi man lng kmi kinausap ng mga officer ng waltermart supermarket ng dasma…

    [Reply]

    Winniger Inocentes Reply:

    July 5poh ng Nayarit un naka contrata p poh ako hanggng August, 26 2015,,, dapat po nasa process ang pag tanggal nia sa mga employado…Hindi un gingamit nila ung position nila kpag gusto nila mag tanggal,,…dahil sa mataas yung position nila kpag naiinis sila sa empleyado agad nila tatanggalin tama poh b un,,,lahat nmn poh ginwa ko sa trabaho ko. Lahat ng jtod nila sinususunod ko…dapat nasa process sila ng pag tanggall sa trabaho

    [Reply]

  27. Good day!

    I just want to have clarifications para sa situation ko.
    I have a part-time job (online english tutor) and magtithree months na sana ako ngayong Nov.24 dun.. I was given a second and final memo for my excessive absences. I have excessive absences because I have lots of out of town travels sa morning work ko, but I was able to pass leave of absence sa part time job employer ko. Then just this Nov.65 I was told na hanggang Nov.13 na lang daw ako and magpasa na lang daw ako ng resignation letter for formality. Pwede ba ko makakuha ng 13th month pay and separation pay? kasi company initiated naman ung end ng contract ko.

    [Reply]

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  1. […] is another authorized cause for termination of employment under Article 283 of the Labor Code. (See Authorized Causes for Dismissal of Employee.) Closure of business is the reversal of fortune of the employer whereby there is a complete […]

  2. […] Regional Office of DOLE at least 30 days before the effectivity of the termination. (Read Authorized Causes for Dismissal of Employee.) Criteria in Selection of Employee to be Dismissed. In the selection of the employee to be […]