The Labor Code of the Philippines has
established the authorized causes of termination that permits the employer
to dismiss the employee on grounds that do not necessarily arise from the employee’s
fault or negligence.
1. Installation
of Labor-Saving Devices
The installation of labor-saving devices is an authorized
cause of termination as it results in lesser manpower requirement for company
operations. However, to effect the termination of employment, the employer must
prove that there is an introduction of such labor-saving devices; the
introduction is for an economic reason; and the employer must adopt fair and
reasonable criteria in selecting the employees to be terminated.
2. Redundancy
Redundancy is a situation whereby the number of employees is
in excess than what is reasonably required by the company’s operations.
Therefore the employer has no obligation to keep the excess number of employees
on the payroll.
3. Retrenchment
to prevent Losses
Retrenchment is an economic ground to reduce the number of
employees due to serious business losses or economic difficulties. The employer
is required to provide proof of such economic difficulties for retrenchment to
be a valid cause of termination.
4. Closure
or cessation of Operation
The continuation of the business is the employer’s
prerogative. Therefore, the employer may, in good faith, choose to cease the
company operations. In the event that the cessation of the establishment or
undertaking is due to serious financial losses, the employer may not be
obligated to pay separation pay.
5. Disease/Illness
An employer may terminate the services of an employee who has
been found suffering from an disease that cannot be cured within a period of 6
months even with proper medical treatment certified by a competent public
health authority and his continued employment is prohibited by law or
prejudicial to his health or to the health of his co-employees.