In the Philippines, labor law stipulates a minimum notice period for both employers and employees during employment termination.

Employer-Initiated Termination

Employer-initiated termination falls into two main categories: termination due to "just cause" and termination due to "authorized cause" as defined by Department of Labor and Employment (DOLE) Department Order No. 18-A.

Termination Due to Just Cause

Just cause refers to serious offenses committed by the employee that warrant dismissal. In such cases, the employer must follow due process, which includes providing written notices:

• Notice of Intent to Terminate: This notice explains the reason for dismissal and provides supporting evidence.
• Final Notice of Termination: Issued after at least five (5) days if the employee fails to justify their actions during a hearing opportunity.

While there's no mandatory notice period for just cause termination, the five-day window between the initial notice and the final termination notice provides a de facto minimum.

Termination Due to Authorized Cause

Authorized causes are business-related reasons for termination, such as redundancy, installation of labor-saving devices, or closure of the establishment. For these cases, the employer must provide a written notice to the employee at least 30 days before the termination date. Additionally, a copy of the notice must be furnished to the DOLE Regional Office.

Employers cannot circumvent the notice period by offering pay in lieu of notice for termination due to authorized cause. Employees are entitled to separation pay on top of the notice period.

Employee-Initiated Termination

Employees are required to give a written notice of at least 30 days before their desired resignation date. This allows the employer sufficient time to find a replacement and ensure a smooth handover of responsibilities.

Severance pay is a mandatory compensation for employees in the Philippines who are involuntarily terminated due to authorized causes.

Authorized Causes for Severance Pay

Employees are entitled to severance pay if the termination is due to the following reasons:

• Redundancy: The employee's role becomes unnecessary due to overstaffing.
• Installation of Labor-Saving Devices: The position is rendered obsolete due to automation or streamlining.
• Retrenchment: Downsizing to prevent losses (but not due to severe financial losses)
• Closure or Cessation of Operations: The company permanently ceases operations (excluding closure due to severe financial losses or reverses).
• Illness/Disease: The employee is terminated because they have a disease that makes continued employment dangerous for themselves or their coworkers.

Calculation of Severance Pay

The calculation of severance pay is based on both the reason for termination and the employee's length of service:

• Redundancy or Installation of Labor-Saving Devices: One month's pay (or an equivalent fraction) for every year of service.
• Retrenchment, Closure, or Cessation of Operations: At least one-half month's pay (or an equivalent fraction) for every year of service.
• Disease-Related Termination: At least one month's pay (or an equivalent fraction) for every year of service.

For example, an employee terminated due to redundancy after 5 years of service is entitled to 5 months of their regular salary as severance pay.

Important Notes

Severance pay is mandatory under Philippine law in cases of authorized termination. Employers cannot waive the right to severance pay even with contractual agreements. Severance pay is provided in addition to any unpaid wages and benefits the employee has accrued at the time of termination.

In the Philippines, employee termination is governed by strict regulations to protect workers' rights. The process varies depending on whether it's an employer-initiated termination or an employee resignation.

Employer-Initiated Termination

Employer-initiated termination falls into two main categories, each with distinct procedural requirements:

Termination for Just Cause

1. Establish Just Cause: The employer must identify a serious misconduct or breach of employment terms that falls under Article 296 of the Labor Code. Examples include gross negligence, serious insubordination, or fraud.
2. Two-Notice Rule:
   • The employer issues a Notice of Intent to Terminate, explaining the cause and providing evidence.
   • The employee must be given at least five days to respond in writing and a chance to explain themselves at a hearing.
3. Decision and Final Notice: If the employer remains unconvinced by the employee's explanation, it must issue a Final Notice of Termination stating the decision.

Termination for Authorized Cause

1. Determine Authorized Cause: Identify a valid reason as per Article 297 of the Labor Code (e.g., redundancy, retrenchment, disease).
2. Written Notice: Provide a written termination notice to the employee at least 30 days before the effective termination date. A copy of this notice must also be sent to the appropriate Department of Labor and Employment Regional Office.
3. Severance Pay: Calculate and provide applicable severance pay based on the reason for termination and length of service.

Employee-Initiated Termination (Resignation)

1. Written Notice: The employee is required to submit a formal written resignation letter to the employer at least 30 days before the intended departure date (Article 30 of the Labor Code).
2. Knowledge Transfer and Handover: The employee must responsibly transition their duties and knowledge to ensure a smooth handover of the position.
3. Final Pay and Clearance: The employer must provide a final paycheck, including all accrued wages and benefits, and issue a certificate of employment upon the completion of the clearance process.