Managing Employee Exits
Even if your business is small, your employees are entitled to security of tenure throughout their employment and may not be dismissed or be subject to disciplinary action without just cause. This rule applies even to probationary employees, whose fitness to become regular employees is still being determined. Managing employee exits is important as disgruntled employees can diminish your company’s reputation and goodwill.
Your employees may voluntarily resign or terminate their employment from your company for any reason. They do this by serving a written notice of their intent to resign at least one month in advance. If no such notice was given to you, you may hold the resigning employee liable for damages.
According to the Labor Code of the Philippines, your employee may not give you notice in the following instances:
- serious insult by the employer or his representative on the honor and person of the employee
- inhuman or unbearable treatment of employee by employer or his representative
- 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
- other analogous causes
You are not allowed to terminate the services of your employees except for just cause. Just causes under the Labor Code are as follows:
- Serious misconduct or willful disobedience by the employee of lawful orders of his employer or representative in connection with his work;
- Gross and habitual neglect of duties
- Fraud or willful breach of trust reposed in him by employer
- Commission of a crime or offense against employer, any immediate family member or duly authorized representative
- Other analogous causes
You also need to accord your employees due process when dismissing them for just cause. You need first to establish just cause by conducting an investigation or hearing. Prior to the hearing, you must give your employee a written notice specifying the grounds for his possible termination and giving her/him reasonable opportunity to explain her/his side. At the hearing or conference, your employee may be assisted by counsel, and should be allowed to present evidence and rebut evidence against her/him. After hearing and due consideration of the issues raised, you need to send your employee another written notice stating the basis for her/his termination. If you do not follow this process, you may be held liable for illegal dismissal even though the termination was found to have been just.
You may also terminate the services of your employees, in the following instances:
- Closure of establishment and reduction of personnel
- Installation of labor saving devices
- Retrenchment to prevent losses
- Closing or cessation of operation of the establishment or undertaking unless the closing is for the purpose of circumventing
When you terminate employees on any of the above grounds, you need to serve notice to the Department of Labor and Employment (DOLE) through the regional office having jurisdiction over the place of your business at least one (1) month before the intended date by providing them with a letter of intent to terminate and a list of the terminated employees, date of hire, and their positions in the firm. You should also give your employees at least one (1) month written notice of such intent to terminate.