Just Causes for Dismissal in Philippine Labor Law: Legal Standards, Case Doctrines, and Practical Insights

In the Philippines, every employee enjoys the constitutional right to security of tenure. This means an employee cannot be terminated without a valid reason and due process. However, this protection is not absolute. The law recognizes that employers may lawfully terminate employment for a just cause, provided the dismissal is not arbitrary or motivated by bad faith.

Understanding what constitutes a just cause and how it differs from illegal dismissal is essential for both employers and employees. This article discusses the legal framework, Supreme Court rulings, and practical insights that define just causes for dismissal under Philippine labor law.

What Is a Just Cause for Dismissal?

Under Article 297 [formerly Article 282] of the Labor Code of the Philippines, an employer may terminate an employee for any of the following just causes:

“An employer may terminate an employment for any of the following just causes:
(a) Serious misconduct or willful disobedience by the employee of the lawful orders of his employer or representative in connection with his work;
(b) Gross and habitual neglect by the employee of his duties;
(c) Fraud or willful breach by the employee of the trust reposed in him by his employer or duly authorized representative;
(d) Commission of a crime or offense by the employee against the person of his employer or any immediate member of his family or his duly authorized representative; and
(e) Other causes analogous to the foregoing.”

These grounds are exclusive and must be strictly construed, given the law’s mandate to protect workers against illegal dismissal.

1. Serious Misconduct or Willful Disobedience

Misconduct must be serious, related to work, and must show that the employee is unfit to remain employed.

In Rivera v. Genesis Transport Service, Inc., G.R. No. 215568 (2015), the Supreme Court explained that, “Misconduct is defined as the '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.' For serious misconduct to justify dismissal, the following requisites must be present: (a) it must be serious; (b) it must relate to the performance of the employee's duties; and (c) it must show that the employee has become unfit to continue working for the employer.”

Without these elements, termination may be considered illegal dismissal.

2. Gross and Habitual Neglect of Duties

Neglect of duty justifies dismissal for just cause only if it is both gross (showing a want of care) and habitual (repeated over time).

In Rouche v. French Chamber of Commerce in the Philippines-Le Club, G.R. No. 238581 (2022), the Court ruled that, "Gross and habitual neglect of duty is a just cause for dismissal under the Labor Code. '[T]o be a ground for dismissal . . [it] must be both gross and habitual. Gross negligence implies want of care in the performance of one's duties. Habitual neglect imparts repeated failure to perform one's duties for a period of time, depending on the circumstances.'"

An isolated act of negligence generally does not warrant termination, and dismissal based on such may amount to illegal dismissal.

3. Fraud or Willful Breach of Trust

This ground applies mainly to employees holding positions of trust and confidence.

In Universal Robina Corporation v. Maglalang, G.R. No. 255864 (2022), the Court emphasized that, "The employee concerned must be holding a position of trust and confidence; and there must be an act that would justify the loss of trust and confidence. And in order to constitute a just cause for dismissal, the act complained of must be work-related such as would show the employee concerned to be unfit to continue working for the employer."

Dismissal based only on suspicion or unverified allegations of fraud is illegal dismissal.

4. Commission of a Crime or Offense

An employee’s commission of a crime or offense against the employer or his family is a just cause for termination. However, such act must be proven by substantial evidence. Unsupported accusations are not enough and can render the dismissal illegal.

5. Other Causes Analogous to the Foregoing

This category covers acts similar in nature to the other just causes. The employer carries the burden of proof to show that the cause is truly analogous and justifies termination. Failure to do so can lead to a finding of illegal dismissal.

Procedural Due Process: The Twin-Notice Rule

Even when a just cause exists, employers must still comply with procedural due process.

In Stradcom Corporation v. Orpilla, G.R. No. 206800 (2018), the Supreme Court clarified that, "On the matter of procedural due process, it is well-settled that the employer must furnish the employee with two written notices before termination of employment can be legally effected. The first apprises the employee of the particular acts or omissions for which dismissal is sought. The second informs the employee of the employer's decision to dismiss him."

Non-compliance with due process does not automatically make the dismissal illegal, but employers may be held liable for nominal damages.

Practical Insights

1. Burden of Proof – The employer must prove that the dismissal was for a just cause. Mere allegations are not enough, so employer's need to make sure that they document each offense carefully.

2. The Rule on Proportionality – The penalty of dismissal must fit the gravity of the offense. Employees cannot be dismissed for offenses which a reasonable person might consider light or less serious. Dismissal is the considered the ultimate penalty and should be avoided whenever possible.

3. Procedural Due Process – Employees should be given a fair opportunity to explain and defend themselves during internal investigations. Without an opportunity to be heard, the dismissal might be considered procedurally defective.

Conclusion

Just cause provides a lawful basis to end employment, balancing the employer’s management prerogative and the employee’s right to security of tenure. However, dismissals without a valid reason or due process constitute illegal dismissal, which may result in reinstatement, backwages, and damages.

As the Supreme Court often reminds, fairness must govern both discipline and dismissal. Employers should act within the bounds of law, and employees should be aware of their rights and responsibilities under Philippine labor law.

This article offers a general overview of just causes for dismissal. In our upcoming blog posts, we’ll take a deeper look at each ground — including serious misconduct, gross neglect, fraud or breach of trust, and other just causes — with detailed case law discussions, practical examples, and recent Supreme Court rulings.

Stay tuned for the next installments to better understand how the law distinguishes between just cause terminations and illegal dismissal.

Disclaimer: This article was prepared with the assistance of artificial intelligence and may contain errors. It is intended solely for educational and informational purposes. It does not constitute legal advice, nor does it create an attorney-client relationship. Readers should note that the applicable laws and jurisprudence may vary depending on the specific facts of each case.

For advice regarding your particular circumstances, please consult our qualified legal professionals at Sun Law Office.