JUST CAUSE IN EMPLOYMENT TERMINATION

FRAUD OR WILLFUL BREACH OF TRUST: JUST CAUSE IN EMPLOYMENT TERMINATION

By Atty.Fred |

ref=  https://pnl-law.com/blog/fraud-or-willful-breach-of-trust-authorized-cause-in-employment-termination/

 Article 297(c) of the Labor Code provides that an employee may be dismissed for “fraud or willful breach by the employee of the trust reposed in him by his employer or duly authorized representative.” This particular provision speaks of two grounds: (a) fraud; and (b) loss of trust and confidence. The latter is discussed in a separate post. 

For fraud to be a valid ground for termination, the following must be present:

• 1. There must be an act, omission, or concealment;

• 2. The act, omission or concealment involves a breach of legal duty, trust or confidence justly reposed;

• 3. It must be committed against the employer or his/her representative; and

• 4. It must be in connection with the employee’s work.

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.

Employees in the Philippines enjoy security of tenure. Under the Labor Code, no employee may be terminated or dismissed, except for just or authorized causes. The employer has the burden of proving, among others, that the facts support the elements of the cause used by the company to justify the employment termination. Each ground has specific elements. It is important, therefore, for management, or at least the HR staff, to be familiar with these factors. 

 

Article 297(a) of the Labor Code covers two just causes: serious misconduct, and willful disobedience (the latter ground is discussed in a separate post). Misconduct, defined as the transgression of some established and definite rule or action, a forbidden act, a dereliction of duty, willful in character and implies wrongful intent and not mere error in judgment, is not enough to justify a termination. It has to be serious misconduct. A misconduct is considered serious when:

• 1. There must be misconduct;

• 2. The misconduct must be of such grave and aggravated character;

• 3. It must relate to the performance of the employee’s duties; and

• 4. There must be showing that the employee becomes unfit to continue working for the employer.
  

 

 

Just causes: * 1. Serious misconduct * 2. Willful disobedience or insubordination * 3. Gross and habitual neglect of duties * 4. Fraud or willful breach of trust * 5. Loss of trust and confidence * 6. Commission of a crime or offense * 7. Analogous causes

Authorized causes: * 1. Installation of labor-saving devices * 2. Redundancy * 3. Retrenchment or downsizing * 4. Closure or Cessation of Operation * 5. Disease  * Also: Due Process in termination cases

 

Termination of Employment

1. What is the right to security of tenure?

The right to security of tenure means that a regular employee shall remain employed unless his or her services are terminated for just or authorized cause and after observance of procedural due process.

2. May an employer dismiss an employee? What are the grounds?

Yes. An employer may dismiss an employee on the following just causes:

a) serious misconduct;

b) willful disobedience;

c) gross and habitual neglect of duty;

d) fraud or breach of trust;

e) commission of a crime or offense against the employer, his family or representative;

f) other similar causes.

3. Are there other grounds for terminating an employment? What are they?

Yes. The other grounds are authorized causes:

a) installation of labor-saving devices;

b) redundancy;

c) retrenchment to prevent losses;

d) closure and cessation of business; and

e) disease / illness.

4. Before terminating the services of an employee, what procedure should the employer observe?

An employer shall observe procedural due process before terminating one’s employment.

5. What are the components of procedural due process?

A. In a termination for just cause, due process involves the two-notice rule:

a) A notice of intent to dismiss specifying the ground for termination, and giving said employee reasonable opportunity within which to explain his or her side;

b) A hearing or conference where the employee is given opportunity to respond to the charge, present evidence or rebut the evidence presented against him or her;

c) A notice of dismissal indicating that upon due consideration of all the circumstances, grounds have been established to justify termination.

B. In a termination for an authorized cause, due process means a written notice of dismissal to the employee specifying the grounds at least 30 days before the date of termination. A copy of the notice shall also be furnished the Regional Office of the Department of Labor and Employment (DOLE) where the employer is located.

6. What is the sanction if the employer failed to observe procedural due process in cases of legal and authorized termination?

In cases of termination for just causes, the employee is entitled to payment of indemnity or nominal damages in a sum of not more than 30,000 pesos (Agabon vs. NLRC, 442 SCRA 573); in case of termination for authorized causes, 50,000 pesos (Jaka Food Processing vs. Darwin Pacot, 454 SCRA 119).

7. May an employee question the legality of his or her dismissal?

Yes. The legality of a dismissal may be questioned before the Labor Arbiter of a Regional Arbitration Branch of the National Labor Relations Commission (NLRC), through a complaint for illegal dismissal. In establishments with a collective bargaining agreement (CBA), the dismissal may be questioned through the grievance machinery established under the CBA. If the complaint is not resolved at this level, it may be submitted to voluntary arbitration.

8. In cases of illegal dismissal, who has the duty of proving that the dismissal is valid?

The employer.

9. Suppose the employer denies dismissing the employee, who has the duty to prove that the dismissal is without valid cause?

The employee must elaborate, support or substantiate his or her complaint that he or she was dismissed without valid cause (Ledesma, Jr. vs. NLRC, 537 SCRA 358, October 19, 2007).

10. On what grounds may an employee question his or her dismissal?

An employee may question his or her dismissal based on substantive or procedural grounds.

The substantive aspect pertains to the absence of a just or authorized cause supporting the dismissal.

The procedural aspect refers to the failure of the employer to give the employee the opportunity to explain his or her side.

11. What are the rights afforded to an unjustly dismissed employee?

An employee who is dismissed without just cause is entitled to any or all of the following:

a) reinstatement without loss of seniority rights;

b) in lieu of reinstatement, an employee may be given separation pay of one month pay for every year of service (Golden Ace Builders, et. al vs. Jose Talde, May 5, 2010, GR No. 187200);

c) full backwages, inclusive of allowances and other benefits or their monetary equivalent from the time compensation was withheld up to the time of reinstatement;

d) damages if the dismissal was done in bad faith (Aurora Land Project Corp. vs NLRC, 266 SCRA 48).

12. What is reinstatement?

Reinstatement means restoration of the employee to the position from which he or she has been unjustly removed.

Reinstatement without loss of seniority rights means that the employee, upon reinstatement, should be treated in matter involving seniority and continuity of employment as though he or she had not been dismissed from work.

When a Labor Arbiter rules for an illegal dismissal, reinstatement is immediately executory even pending appeal by the employer (Article 223 of the Labor Code, as amended).

13. In what forms may reinstatement pending appeal be effected?

Reinstatement pending appeal may be actual or by payroll, at the option of the employer.

14. What is meant by full backwages?

Full backwages refer to all compensations, including allowances and other benefits with monetary equivalent that should have been earned by the employee but was not collected by him or her because of unjust dismissal. It includes all the amounts he or she could have earned starting from the date of dismissal up to the time of reinstatement.

15. What is separation pay?

In termination for authorized causes, separation pay is the amount given to an employee terminated due to installation of labor-saving devices, redundancy, retrenchment, closure or cessation of business or incurable disease.

Separation pay may also be granted to an illegally dismissed employee in lieu of reinstatement.

16. How much is the separation pay?

In cases of installation of labor-saving devices or redundancy, the employee is entitled to receive the equivalent of one month pay or one month for every year of service, whichever is higher.

In cases of retrenchment, closure or cessation of business or incurable disease, the employee is entitled to receive the equivalent of one month pay or one-half month pay for every year of service, whichever is higher.

In case of separation pay in lieu of reinstatement, the employee is entitled to receive the equivalent of one month pay for every year of service.

17. Is proof of financial losses necessary to justify retrenchment?

Yes. Proof of actual or imminent financial losses that are substantive in character must be proven by the employer to justify retrenchment (Lopez Sugar Central vs. NLRC, 189 SCRA 179).

18. Are there other conditions before an employee may be dismissed on the ground of redundancy?

Yes. It must be shown that there is:

a) Good faith in abolishing redundant position; and

b) Fair and reasonable criteria in selecting employees to be dismissed, such as but not limited to less preferred status (e.g. temporary employee), efficiency and seniority (Asian Alcohol Corp. vs. NLRC, 305 SCRA 416);

c) A one-month prior notice is given to the employee and DOLE Regional Office as prescribed by law.

19. May the services of an employee be terminated due to disease?

Yes. The employer may terminate employment on ground of disease only upon the issuance of 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 a period of six months even with proper medical treatment.

20. What is constructive dismissal?

Constructive dismissal refers to an involuntary resignation resorted to when continued employment becomes impossible, unreasonable or unlikely; when there is a demotion in rank or a diminution in pay; or when a clear discrimination, insensibility or disdain by an employer becomes unbearable to an employee or an unwarranted transfer or demotion of a employee, or other unjustified action prejudicial to the employee. The employer has to prove that such managerial actions do not constitute constructive dismissal (Blue Dairy Corp. vs. NLRC, 314 SCRA 401)

21. May an employee be placed on floating status?

Yes, provided it is permitted under circumstances for a period of not more than six (6) months. Beyond this period, floating status becomes constructive dismissal which entitles the employee to separation pay (Phil. Industrial Security Agency Corp. vs. Virgilio Dapiton and NLRC, 320 SCRA 124)

22. When an employee resigned voluntarily, is he or she entitled to separation pay?

No. An employee is not entitled to separation pay when he or she resigns voluntarily, unless it is a company practice or provided in the CBA (Hanford Philippines Inc. vs. Shirley Joseph, 454 SCRA 786, March 31, 2005).

23. Are quitclaims valid?

Yes, provided that these are voluntarily signed and the consideration is reasonable and is not against the law or public policy. (More Maritime Agencies vs. NLRC, 307 SCRA 189)

Quitclaims entered into by union officers and some members do not bind those who did not sign it (Liana’s Supermarket vs. NLRC, 257 SCRA 186).

 

===========

Ref:  https://blr.dole.gov.ph/2014/12/11/termination-of-employment/

 

The Labor Code of the Philippines- DOLE 2016 ed- Book 1, Book 6

Book One -PRE-EMPLOYMENT


ART. 12. Statement of Objectives. It is the policy of the State:
 a) To promote and maintain a state of full employment through improved manpower training, allocation and utilization;
b) To protect every citizen desiring to work locally or overseas by securing for him the best possible terms and conditions of employment;
 c) To facilitate a free choice of available employment by persons seeking work in conformity with the national interest;
d) To facilitate and regulate the movement of workers in conformity with the national interest;
e) To regulate the employment of aliens, including the establishment of a registration and/or work permit system;
 f) To strengthen the network of public employment offices and rationalize the participation of the private sector in the recruitment and placement of workers, locally and overseas, to serve national development objectives;
 g) To insure careful selection of Filipino workers for overseas employment in order to protect the good name of the Philippines abroad.

 Title I RECRUITMENT AND PLACEMENT OF WORKERS

 Chapter I GENERAL PROVISIONS
 ART. 13. Definitions.
(a) "Worker" means any member of the labor force, whether employed or unemployed.
 (b) "Recruitment and placement" refers to any act of canvassing, enlisting, contracting, transporting, utilizing, hiring or procuring workers, and includes referrals, contract services, promising or advertising for employment, locally or abroad, whether for profit or not: Provided, That any person or entity which, in any manner, offers or promises for a fee, employment to two or more persons shall be deemed engaged in recruitment and placement.
(c) "Private fee-charging employment agency" means any person or entity engaged in recruitment and placement of workers for a fee which is charged, directly or indirectly, from the workers or employers or both.
 (d) "License" means a document issued by the Department of Labor authorizing a person or entity to operate a private employment agency.
(e) "Private recruitment entity" means any person or association engaged in the recruitment and placement of workers, locally or overseas, without charging, directly or indirectly, any fee from the workers or employers.
(f) "Authority" means a document issued by the Department of Labor authorizing a person or association to engage in recruitment and placement activities as a private recruitment entity.
(g) "Seaman" means any person employed in a vessel engaged in maritime navigation.
(h) "Overseas employment" means employment of a worker outside the Philippines.
(i) "Emigrant" means any person, worker or otherwise, who emigrates to a foreign country by virtue of an immigrant visa or resident permit or its equivalent in the country of destination.

ART. 14. Employment Promotion. The Secretary of Labor shall have the power and authority:
 (a) To organize and establish new employment offices in addition to the existing employment offices under the Department of Labor as the need arises;
(b) To organize and establish a nationwide job clearance and information system to inform applicants registering with a particular employment office of job opportunities in other parts of the country as well as job opportunities abroad;
 (c) To develop and organize a program that will facilitate occupational, industrial and geographical mobility of labor and provide assistance in the relocation of workers from one area to another; and 15 (d) To require any person, establishment, organization or institution to submit such employment information as may be prescribed by the Secretary of Labor.

ART. 15. Bureau of Employment Services.
 (a) The Bureau of Employment Services shall be primarily responsible for developing and monitoring a comprehensive employment program. It shall have the power and duty:12 1. To formulate and develop plans and programs to implement the employment promotion objectives of this Title; 2. To establish and maintain a registration and/or licensing system to regulate private sector participation in the recruitment and placement of workers, locally and overseas, and to secure the best possible terms and conditions of employment for Filipino contract workers and compliance therewith under such rules and regulations as may be issued by the Minister of Labor; 3. To formulate and develop employment programs designed to benefit disadvantaged groups and communities; 4. To establish and maintain a registration and/or work permit system to regulate the employment of aliens; 5. To develop a labor market information system in aid of proper manpower and development planning; 6. To develop a responsive vocational guidance and testing system in aid of proper human resources allocation; and 7. To maintain a central registry of skills, except seamen. (b) The regional offices of the Ministry of Labor shall have the original and exclusive jurisdiction over all matters or cases involving employer-employee relations including money claims, arising out of or by virtue of any law or contracts involving Filipino workers for overseas employment except seamen: Provided, That the Bureau of Employment Services may, in the case of the National Capital Region, exercise such power, whenever the Minister of Labor deems it appropriate. The decisions of the regional offices of the Bureau of Employment Services, if so authorized by the Minister of Labor as provided in this Article, shall be appealable to the National Labor Relations Commission upon the same grounds provided in Article 22313 hereof. The decisions of the National Labor Relations Commission shall be final and unappealable.14 (c) The Minister of Labor shall have the power to impose and collect fees based on rates recommended by the Bureau of Employment Services. Such fees shall be deposited in the National Treasury as a special account of the General Fund, for the promotion of the objectives of the Bureau of Employment Services, subject to the provisions of Section 40 of Presidential Decree No. 1177.1

 ART. 16. Private Recruitment. Except as provided in Chapter II of this Title, no person or entity other than the public employment offices, shall engage in the recruitment and placement of workers.

 ART. 17. Overseas Employment Development Board. 16 An Overseas Employment Development Board is hereby created to undertake, in cooperation with relevant entities and agencies, a systematic program for overseas employment of Filipino workers in excess of domestic needs and to protect their rights to fair and equitable employment practices. It shall have the power and duty:

 1. To promote the overseas employment of Filipino workers through a comprehensive market promotion and development program;

 2. To secure the best possible terms and conditions of employment of Filipino contract workers on a government-to-government basis and to ensure compliance therewith; 3. To recruit and place workers for overseas employment on a government-togovernment arrangement and in such other sectors as policy may dictate; and 4. To act as secretariat for the Board of Trustees of the Welfare and Training Fund for Overseas Workers.

ART. 18. Ban on Direct-Hiring. No employer may hire a Filipino worker for overseas employment except through the Boards and entities authorized by the Secretary of Labor. Direct-hiring by members of the diplomatic corps, international organizations and such other employers as may be allowed by the Secretary of Labor is exempted from this provision.

ART. 19. Office of Emigrant Affairs. 18 (a) Pursuant to the national policy to maintain close ties with Filipino migrant communities and promote their welfare as well as establish a data bank in aid of national manpower policy formulation, an Office of Emigrant Affairs is hereby created in the Department of Labor. The Office shall be a unit at the Office of the Secretary and shall initially be manned and operated by such personnel and through such funding as are available within the Department and its attached agencies. Thereafter, its appropriation shall be made part of the regular General Appropriations Decree. (b) The office shall, among others, promote the well-being of emigrants and maintain their close link to the homeland by: 1) serving as a liaison with migrant communities; 2) provision of welfare and cultural services; 3) promote and facilitate re-integration of migrants into the national mainstream; 4) promote economic; political and cultural ties with the communities; and 5) generally to undertake such activities as may be appropriate to enhance such cooperative links

ART. 20. National Seamen Board.19 (a) A National Seamen Board is hereby created which shall develop and maintain a comprehensive program for Filipino seamen employed overseas. It shall have the power and duty: 1. To provide free placement services for seamen; 2. To regulate and supervise the activities of agents or representatives of shipping companies in the hiring of seamen for overseas employment and secure the best possible terms of employment for contract seamen workers and secure compliance therewith; 3. To maintain a complete registry of all Filipino seamen. (b) The Board shall have original and exclusive jurisdiction over all matters or cases including money claims, involving employer-employee relations, arising out of or by virtue of any law or contracts involving Filipino seamen for overseas employment. The decisions of the Board shall be appealable to the National Labor Relations Commission upon the same grounds provided in Article 22320 hereof. The decisions of the National Labor Relations Commission shall be final and unappealable.

ART. 21. Foreign Service Role and Participation.21 To provide ample protection to Filipino workers abroad, the labor attachés, the labor reporting officers duly designated by the Secretary of Labor and the Philippine diplomatic or consular officials concerned shall, even without prior instruction or advice from the home office, exercise the power and duty: (a) To provide all Filipino workers within their jurisdiction assistance on all matters arising out of employment; (b) To insure that Filipino workers are not exploited or discriminated against; (c) To verify and certify as requisite to authentication that the terms and conditions of employment in contracts involving Filipino workers are in accordance with the Labor Code and rules and regulations of the Overseas Employment Development Board and National Seamen Board;

(d) To make continuing studies or researches and recommendations on the various aspects of the employment market within their jurisdiction; (e) To gather and analyze information on the employment situation and its probable trends, and to make such information available; and (f) To perform such other duties as may be required of them from time to time.

ART. 22. Mandatory Remittance of Foreign Exchange Earnings. 22 It shall be mandatory for all Filipino workers abroad to remit a portion of their foreign exchange earnings to their families, dependents, and/or beneficiaries in the country in accordance with rules and regulations prescribed by the Secretary of Labor.

ART. 23. Composition of the Boards.23 (a) The OEDB shall be composed of the Secretary of Labor and Employment as Chairman, the Undersecretary of Labor as Vice-Chairman, and a representative each of the Department of Foreign Affairs, the Department of National Defense, the Central Bank, the Department of Education, Culture and Sports, the National Manpower and Youth Council, the Bureau of the Executive Director of the OEDB as members. (b) The National Seamen Board shall be composed of the Secretary of Labor and Employment as Chairman, the Undersecretary of Labor as Vice-Chairman, the Commandant of the Philippine Coast Guard, and a representative each of the Department of Foreign Affairs, the Department of Education, Culture and Sports, the Central Bank, the Maritime Industry Authority, the Bureau of Employment Services, a national shipping association and the Executive Director of the NSB as members. The members of the Boards shall receive allowances to be determined by the Board which shall not be more than P2,000.00 per month. (c) The Boards shall be attached to the Department of Labor for policy and program coordination. They shall each be assisted by a Secretariat headed by an Executive Director who shall be a Filipino citizen with sufficient experience in manpower administration, including overseas employment activities. The Executive Director shall be appointed by the President of the Philippines upon the
recommendation of the Secretary of Labor and shall receive an annual salary as fixed by law. The Secretary of Labor shall appoint the other members of the Secretariat. (d) The Auditor General shall appoint his representative to the Boards to audit their respective accounts in accordance with auditing laws and pertinent rules and regulations.

ART. 24. Boards to Issue Rules and Collect Fees. 24 The Boards shall issue appropriate rules and regulations to carry out their functions. They shall have the power to impose and collect fees from employers concerned, which shall be deposited in the respective accounts of said Boards and be used by them exclusively to promote their objectives.

--

Chapter II REGULATION OF RECRUITMENT AND PLACEMENT ACTIVITIES

ART. 25. Private Sector Participation in the Recruitment and Placement of Workers.25 Pursuant to national development objectives and in order to harness and maximize the use of private sector resources and initiative in the development and implementation of a comprehensive employment program, the private employment sector shall participate in the recruitment and placement of workers, locally and overseas, under such guidelines, rules and regulations as may be issued by the Secretary of Labor. ART. 26. Travel Agencies Prohibited to Recruit. 26 Travel agencies and sales agencies of airline companies are prohibited from engaging in the business of recruitment and placement of workers for overseas employment whether for profit or not. ART. 27. Citizenship Requirement.27 Only Filipino citizens or corporations, partnerships or entities at least seventy-five percent (75%) of the authorized and voting capital stock of which is owned and controlled by Filipino citizens shall be permitted to participate in the recruitment and placement of workers, locally or overseas.

ART. 28. Capitalization.28 All applicants for authority to hire or renewal of license to recruit are required to have such substantial capitalization as determined by the Secretary of Labor.

ART. 29. Non-transferability of License or Authority. 29 No license or authority shall be used directly or indirectly by any person other than the one in whose favor it was issued or at any place other than that stated in the license or authority be transferred, conveyed or assigned to any other person or entity. Any transfer of business address, appointment or designation of any agent or representative including the establishment of additional offices anywhere shall be subject to the prior approval of the Department of Labor.

ART. 30. Registration Fees.30 The Secretary of Labor shall promulgate a schedule of fees for the registration of all applicants for license or authority.

ART. 31. Bonds. All applicants for license or authority shall post such cash and surety bonds as determined by the Secretary of Labor to guarantee compliance with prescribed recruitment procedures, rules and regulations, and terms and conditions of employment as may be appropriate.

ART. 32. Fees to be Paid by Workers.31 Any person applying with a private fee-charging employment agency for employment assistance shall not be charged any fee until he has obtained employment through its efforts or has actually commenced employment. Such fee shall be always covered with the appropriate receipt clearly showing the amount paid. The Secretary of Labor shall promulgate a schedule of allowable fees.

ART. 33. Reports on Employment Status.32 Whenever the public interest requires, the Secretary of Labor may direct all persons or entities within the coverage of this Title to submit a report on the status of employment, including job vacancies, details of job requisitions, separation from jobs, wages, other terms and conditions and other employment data.

ART. 34. Prohibited Practices.33 It shall be unlawful for any individual, entity, licensee, or holder of authority:

 (a) To charge or accept, directly or indirectly, any amount greater than that specified in the schedule of allowable fees prescribed by the Secretary of Labor, or to make a worker pay any amount greater than that actually received by him as a loan or advance; (b) To furnish or publish any false notice or information or document in relation to recruitment or employment; (c) To give any false notice, testimony, information or document or commit any act of misrepresentation for the purpose of securing a license or authority under this Code; (d) To induce or attempt to induce a worker already employed to quit his employment in order to offer him to another unless the transfer is designed to liberate the worker from oppressive terms and conditions of employment; (e) To influence or to attempt to influence any person or entity not to employ any worker who has not applied for employment through his agency; (f) To engage in the recruitment or placement of workers in jobs harmful to public health or morality or to the dignity of the Republic of the Philippines; (g) To obstruct or attempt to obstruct inspection by the Secretary of Labor or by his duly authorized representatives; (h) To fail to file reports on the status of employment, placement vacancies, remittance of foreign exchange earnings, separation from jobs, departures and such other matters or information as may be required by the Secretary of Labor; (i) To substitute or alter employment contracts approved and verified by the Department of Labor from the time of actual signing thereof by the parties up to and including the periods of expiration of the same without the approval of the Secretary of Labor; (j) To become an officer or member of the Board of any corporation engaged in travel agency or to be engaged directly or indirectly in the management of a travel agency; and (k) To withhold or deny travel documents from applicant workers before departure for monetary or financial considerations other than those authorized under this Code and its implementing rules and regulations

ART. 35. Suspension and/or Cancellation of License or Authority. 34 The Minister of Labor shall have the power to suspend or cancel any license or authority to recruit employees for overseas employment for violation of rules and regulations issued by the Ministry of Labor, the Overseas Employment Development Board, or for violation of the provisions of this and other applicable laws, General Orders and Letters of Instructions

Chapter III MISCELLANEOUS PROVISIONS

ART. 36. Regulatory Power. 36 The Secretary of Labor shall have the power to restrict and regulate the recruitment and placement activities of all agencies within the coverage of this Title and is hereby authorized to issue orders and promulgate rules and regulations to carry out the objectives and implement the provisions of this Title.
ART. 37. Visitorial Power.37 The Secretary of Labor or his duly authorized representatives may, at any time, inspect the premises, books of accounts and records of any person or entity covered by this Title, require it to submit reports regularly on prescribed forms, and act on violation of any provisions of this Title.
ART. 38. Illegal Recruitment.38 (a) Any recruitment activities, including the prohibited practices enumerated under Article 34 of this Code, to be undertaken by non-licensees or non-holders of authority, shall be deemed illegal and punishable under

Article 39 of this Code. The Department of Labor and Employment or any law enforcement officer may initiate complaints under this Article. (b) Illegal recruitment when committed by a syndicate or in large scale shall be considered an offense involving economic sabotage and shall be penalized in accordance with Article 39 hereof. Illegal recruitment is deemed committed by a syndicate if carried out by a group of three (3) or more persons conspiring and/or confederating with one another in carrying out any unlawful or illegal transaction, enterprise or scheme defined under the first paragraph hereof. Illegal recruitment is deemed committed in large scale if committed against three (3) or more persons individually or as a group. 

c) The Secretary of Labor and Employment or his duly authorized representatives shall have the power to cause the arrest and detention of such nonlicensee or non-holder of authority if after investigation it is determined that his activities constitute a danger to national security and public order or will lead to further exploitation of job-seekers. The Secretary shall order the search of the office or premises and seizure of documents, paraphernalia, properties and other implements used in illegal recruitment activities and the closure of companies, establishments and entities found to be engaged in the recruitment of workers for overseas employment, without having been licensed or authorized to do so.39 ART. 39. Penalties.40 (a) The penalty of life imprisonment and a fine of One Hundred Thousand Pesos (P100,000.00) shall be imposed if illegal recruitment constitutes economic sabotage as defined herein; (b) Any licensee or holder of authority found violating or causing another to violate any provision of this Title or its implementing rules and regulations shall, upon conviction thereof, suffer the penalty of imprisonment of not less than two years nor more than five years or a fine of not less than P10,000 nor more than P50,000, or both such imprisonment and fine, at the discretion of the court; (c) Any person who is neither a licensee nor a holder of authority under this Title found violating any provision thereof or its implementing rules and regulations shall, upon conviction thereof, suffer the penalty of imprisonment of not less than four years nor more than eight years or a fine of not less than P20,000 nor more than P100,000 or both such imprisonment and fine, at the discretion of the court; (d) If the offender is a corporation, partnership, association or entity, the penalty shall be imposed upon the officer or officers of the corporation, partnership, association or entity responsible for violation; and if such officer is an alien, he shall, in addition to the penalties herein prescribed, be deported without further proceedings; (e) In every case, conviction shall cause and carry the automatic revocation of the license or authority and all the permits and privileges granted to such person or entity under this Title, and the forfeiture of the cash and surety bonds in favor of the Overseas Employment Development Board or the National Seamen Board,41 as the case may be, both of which are authorized to use the same exclusively to promote their objectives.

Title II EMPLOYMENT OF NON-RESIDENT ALIENS

 ART. 40. Employment Permit of Non-resident Aliens. 42 Any alien seeking admission to the Philippines for employment purposes and any domestic or foreign employer who desires to engage an alien for employment in the Philippines shall obtain an employment permit from the Department of Labor. The employment permit may be issued to a non-resident alien or to the applicant employer after a determination of the non-availability of a person in the Philippines who is competent, able and willing at the time of application to perform the services for which the alien is desired. For an enterprise registered in preferred areas of investments, said employment permit may be issued upon recommendation of the government agency charged with the supervision of said registered enterprise.
ART. 41. Prohibition Against Transfer of Employment. (a) After the issuance of an employment permit, the alien shall not transfer to another job or change his employer without prior approval of the Secretary of Labor. (b) Any non-resident alien who shall take up employment in violation of the provision of this Title and its implementing rules and regulations shall be punished in accordance with the provisions of Articles 289 and 29043 of the Labor Code. In addition, the alien worker shall be subject to deportation after service of his sentence.

ART. 42. Submission of List. Any employer employing non-resident foreign nationals on the effective date of this Code shall submit a list of such nationals to the Secretary of Labor within thirty (30) days after such date indicating their names, citizenship, foreign and local addresses, nature of employment and status of stay in the country. The Secretary of Labor shall then determine if they are entitled to an employment permit.  

====

Book Six POST-EMPLOYMENT
 

Title I 

TERMINATION OF EMPLOYMENT

ART. 293. [278] Coverage. The provisions of this Title shall apply to all
establishments or undertakings, whether for profit or not.

ART. 294. [279] Security of Tenure.227 In cases of regular employment, the
employer shall not terminate the services of an employee except for a just cause or
when authorized by this Title. An employee who is unjustly dismissed from work shall
be entitled to reinstatement without loss of seniority rights and other privileges and
to his full backwages, inclusive of allowances, and to his other benefits or their
monetary equivalent computed from the time his compensation was withheld from
him up to the time of his actual reinstatement.

ART. 295. [280] Regular and Casual Employment. The provisions of written
agreement to the contrary notwithstanding and regardless of the oral agreement of
the parties, an employment shall be deemed to be regular where the employee has
been engaged to perform activities which are usually necessary or desirable in the
usual business or trade of the employer, except where the employment has been
fixed for a specific project or undertaking the completion or termination of which has
been determined at the time of the engagement of the employee or where the work
or service to be performed is seasonal in nature and the employment is for the
duration of the season.

An employment shall be deemed to be casual if it is not covered by the
preceding paragraph: Provided, That any employee who has rendered at least one
year of service, whether such service is continuous or broken, shall be considered a
regular employee with respect to the activity in which he is employed and his
employment shall continue while such activity exists.
 

ART. 296. [281] Probationary Employment. Probationary employment shall
not exceed six (6) months from the date the employee started working, unless it is
covered by an apprenticeship agreement stipulating a longer period. The services of
an employee who has been engaged on a probationary basis may be terminated for
a just cause or when he fails to qualify as a regular employee in accordance with
reasonable standards made known by the employer to the employee at the time of
his engagement. An employee who is allowed to work after a probationary period
shall be considered a regular employee.
 

ART. 297. [282] Termination by Employer. An employer may terminate an
employment for any of the following causes:
(a) Serious misconduct or willful disobedience by the employee of the lawful
orders of his employer or representative in connection with his work;
227 As amended by Sec. 34 of R.A. No. 6715 (1989).
127
(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
representatives; and
(e) Other causes analogous to the foregoing.
 

ART. 298. [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.
 

ART. 299. [284] Disease as Ground for Termination. 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 to the health of his co-employees: Provided, That he is paid
separation pay equivalent to at least one (1) month salary or to one-half (1/2) month
salary for every year of service, whichever is greater, a fraction of at least six (6)
months being considered as one (1) whole year.
 

ART. 300. [285] Termination by Employee. (a) An employee may terminate
without just cause the employee-employer relationship by serving a written notice
on the employer at least one (1) month in advance. The employer upon whom no
such notice was served may hold the employee liable for damages.
(b) An employee may put an end to the relationship without serving any notice
on the employer for any of the following just causes:
1. Serious insult by the employer or his representative on the honor and person
of the employee;

2. Inhuman and unbearable treatment accorded the employee by the employer
or his representative;
3. Commission of a crime or offense by the employer or his representative
against the person of the employee or any of the immediate members of his family;
and
4. Other causes analogous to any of the foregoing.
 

ART. 301. [286] When Employment not Deemed Terminated. The bona fide
suspension of the operation of a business or undertaking for a period not exceeding
six (6) months, or the fulfillment by the employee of a military or civic duty shall not
terminate employment. In all such cases, the employer shall reinstate the employee
to his former position without loss of seniority rights if he indicates his desire to
resume his work not later than one (1) month from the resumption of operations of
his employer or from his relief from the military or civic duty.

Title II RETIREMENT FROM THE SERVICE
 

ART. 302. [287] Retirement.228 Any employee may be retired upon reaching
the retirement age established in the collective bargaining agreement or other
applicable employment contract.
 

In case of retirement, the employee shall be entitled to receive such retirement
benefits as he may have earned under existing laws and any collective bargaining
agreement and other agreements: Provided, however,
retirement benefits under any collective bargaining and other agreements shall not
be less than those provided therein.
 

In the absence of a retirement plan or agreement providing for retirement
benefits of employees in the establishment, an employee upon reaching the age of
sixty (60) years or more, but not beyond sixty-five (65) years which is hereby declared
the compulsory retirement age, who has served at least five (5) years in the said
establishment, may retire and shall be entitled to retirement pay equivalent to at
least one-half (1/2) month salary for every year of service, a fraction of at least six (6)
months being considered as one whole year.
 

Unless the parties provide for broader inclusions, the term one-half (1/2) month
salary shall mean fifteen (15) days plus one-twelfth (1/12) of the 13th month pay and
the cash equivalent of not more than five (5) days of service incentive leaves.
228 As amended by R.A. No. 7641
further amended by R.A. No. 8558 (1998), which reduced the retirement age of underground mine workers from sixty (60) to fifty (50).

 

An underground mining employee upon reaching the age of fifty (50) years or
more, but not beyond sixty (60) years which is hereby declared the compulsory
retirement age for underground mine workers, who has served at least five (5) years
as underground mine worker, may retire and shall be entitled to all the retirement
benefits provided for in this Article.
 

Retail, service and agricultural establishments or operations employing not more
than ten (10) employees or workers are exempted from the coverage of this
provision.
 

Violation of this provision is hereby declared unlawful and subject to the penal
provisions under Article 288 of this Code.
Nothing in this Article shall deprive any employee of benefits to which he may
be entitled under existing laws or company policies or practices.

===
Reference:
-This Handbook is published by the DEPARTMENT OF LABOR AND EMPLOYMENT DOLE Building, Muralla cor. Gen. Luna Sts., Intramuros, Manila 1002 DOLE Hotline: (+63 2) 527-8000 Web Site: www.dole.gov.ph