by：Chikashi Kaneko, Jun Asahara
In the Philippines, employers are not required to provide separation pay or equivalent monetary compensation to employees who are dismissed for just causes under the Labor Code. This is because dismissal on just grounds is attributed to the employee’s own fault.
Article 297 of the Labor Code lists the following just causes for termination:
- Serious misconduct or willful disobedience
- Gross and habitual neglect of duties
- Fraud or breach of trust
- Commission of a crime against the employer or their family
- Other analogous causes
However, even when an employee is dismissed for just cause, courts have in some cases ordered the employer to pay a sum equivalent to separation pay (typically calculated as 15 days’ pay per year of service). This is grounded in social justice and equity. One such case is presented below:
Case Study
INTERNATIONAL SCHOOL MANILA vs. EVANGELINE SANTOS, et al.
G.R. No. 167286, February 5, 2014
Ms. Evangeline Santos, a Spanish teacher at International School Manila, returned to work after an extended leave. At the time, only one Spanish class was available, so she was also assigned four Filipino language classes, which had previously been handled by another teacher who had resigned.
As Ms. Santos had no prior experience teaching Filipino, her classes were monitored and she was offered guidance by her supervisors. Despite this support, her teaching performance fell significantly below the school’s standards.
The school implemented a year-long performance improvement plan. However, her teaching quality and attitude showed minimal improvement. After several more chances to improve, the school eventually made the decision to dismiss her.
In response, Ms. Santos argued that assigning her to teach a subject outside her area of expertise was inappropriate. She filed a complaint for illegal dismissal. Although the court upheld the school’s right to dismiss her for gross inefficiency, it recognized her more than 25 years of service and, on the basis of social justice, ordered the school to pay:
– ₱756,536.55 as separation pay (equivalent to 25 years of service)
– ₱1,152,817.60 as back wages in lieu of reinstatement
Key Takeaway:
Even when termination for gross inefficiency is valid, courts may still award monetary compensation in recognition of long service and in the interest of social justice.
Contrast Case
MANILA WATER COMPANY vs. CARLITO DEL ROSARIO
G.R. No. 188747, January 29, 2014
In this case, a senior technician was found to have removed water meters from the company warehouse and sold them for personal gain. This was deemed serious misconduct under item 1 of Article 297.
Despite having over 20 years of service, the court did not grant any compensation, as the offense involved fraud and criminal intent.
Summary:
– Social justice considerations can influence labor arbitration rulings, especially when the employee has long service.
– However, in cases involving serious misconduct or criminal acts, no monetary relief is granted regardless of length of service.
– Employers should carefully assess the risks—particularly financial—when considering dismissal of long-serving employees, as these individuals are often more aggressive in contesting disciplinary actions.
