Termination of Employment

A weak economy sees the emergence of more small and medium enterprises and the closure or re-engineering of large companies. To stay afloat, a business establishment usually resorts to cutting costs, including that of manpower.
Termination of employment by retrenchment is usually to prevent serious business losses. Existing labor laws require the employer to give a 30-day notice to the employee regarding management’s decision to terminate the employment. The employer should also submit an Employment Termination Report at least 30 days before the intended date of termination at the Department of Labor and Employment. Click here to get the required form.  Upon the expiry of the 30-day notice, the employer then becomes liable to pay the terminated employee his separation pay, computed at a minimum of a half-month’s salary for every year of service. Those employed for less than a year with the company shall be entitled to the equivalent of one month’s salary.
If you are an employer, business owner, HR manager, specialist or company executive, learn more about termination of employment here.


Termination of Employment — 2 Comments

  1. HI Atty Florido,

    This is a very informative site and a great help to HR practioneer like me.

    I would like to consult an issue re: Disease as grounds for Termination of Employment.

    We have an employee who suffered from stroke last Y2010 and was not able to fully recover. What procedure should we (HR) do to be able to legally dismiss/remove him in the company roaster? Is he entiled to separation pay (tenure – 3 years)?

    Please help 🙂 thank you!

    • Michelle: First, you have to ensure that the nature of his sickness is one where his continued employment is prohibited by law, prejudicial to his health and to the health of his co-employees.
      Second, issue him a notice requiring him to submit to a medical and physical examination with a competent doctor (one who specializes in his sickness) and submit a certification showing the degree or stage of his disease, and a statement whether it may or may not be cured through 6 months of medical treatment.
      If the medical certificate shows that his condition cannot be cured through 6 months of treatment, then you can proceed with sending him a termination notice citing disease as the ground with 30-days notice. You will also have to report to DOLE the termination at least thirty days before the intended date of termination.

      Finally, you will have to pay the employee separation equivalent to half-month’s salary for every year of service, where a fraction of at least 6 months is considered a year of service.

      For humanitarian reasons, if the employee offers to resign in order to save face, allow him to do so but please provide him with separation pay in the same computation I just mentioned. I hope this helps.