A clear, practical guide explaining how employee termination works in the Philippines—so you follow due process, avoid legal risk, and handle exits professionally.

Why This Matters

Employee termination is never easy.
In the Philippines—where labor laws strongly protect employees—it’s also a legal process, not just an HR decision.

One missed step can cost a company time, money, and reputation.
This guide gives you the essentials to handle terminations properly, confidently, and humanely—without confusion or guesswork.

What You Need to Know

1. Two Legal Grounds for Termination

Termination in the Philippines falls into two categories.

A. Just Causes (Employee Fault)

These apply when the employee is at fault, such as:

• Serious misconduct
  
  
• Willful disobedience
  
  
• Gross neglect of duties
  
  
• Fraud or breach of trust
  
  
• Criminal acts related to work
  
  

B. Authorized Causes (Business Reasons)

These are not the employee’s fault and include:

• Redundancy
  
  
• Retrenchment
  
  
• Company closure
  
  
• Long-term illness (not curable within six months)
  
  

Understanding the difference is critical—because the process and pay obligations change.

2. Due Process Is Mandatory (The Twin Notice Rule)

Termination must follow strict due process.

The required steps are:

1. Notice to Explain (NTE)
   A written notice stating the incident and grounds for termination.
   
   
2. Administrative Hearing
   The employee is given a fair chance to respond.
   
   
3. Final Notice of Termination
   The employer’s decision with clear justification.
   
   

Skipping even one step can make a termination illegal, even if the reason is valid.

3. Separation Pay: When It Applies

Separation pay depends on the cause:

• Just cause: No separation pay
  
  
• Authorized cause: ½ to 1 month per year of service
  
  
• Closure (not due to losses): 1 month per year of service
  
  
• Disease: ½ month per year of service
  
  

Accurate computation is essential to remain compliant and avoid disputes.

4. Documentation Protects Everyone

If it isn’t documented, it didn’t happen.

Employers should maintain:

• Performance records
  
  
• Attendance logs
  
  
• Written warnings
  
  
• Employment contracts
  
  
• Investigation notes
  
  
• Email and communication trails
  
  

Documentation isn’t about punishment—it ensures fairness, clarity, and legal protection for both parties.

Why This Matters for Employers

Mishandled termination can result in:

• Reinstatement orders
  
  
• Back wages
  
  
• Monetary damages
  
  
• Legal disputes
  
  
• Reputational harm
  
  

Termination doesn’t have to feel risky or hostile.
With the right process, it becomes a clean, lawful transition that protects the business and respects the employee.

With Montani, terminations are handled legally, carefully, and professionally—so you stay compliant while treating people fairly.