Authorized Cause Procedure

Summary

▪ Authorized cause procedure refers to the steps or process of implementing due process in relation to separation from employment.

▪ There are 3 steps in an authorized cause procedure.

▪ Step 1 is the issuance of 30-dav advance notice to DOLE.

▪ Step 2 is the issuance of 30-dav advance notice to the employee.

▪ Step 3 is the payment of separation pay.

1. Concept

Authorized cause procedure refers to the steps or process of implementing due process in relation to separation from employment.

2. Procedure

The following are the steps:

Step 1: Issuance of 30-day advance notice to DOLE

Step 2: Issuance of 30-day advance notice to employee

Step 3: Payment of Separation Pay (subject to an exception)

a. Step 1: Issuance of 30-day advance notice to DOLE

The employer is required to issue a 30-day advance notice to the DOLE Regional Office which has jurisdiction over the establishment. This is usually accomplished through the RKS Form 5.

This advanced notice is designed to give the concerned office an opportunity to confirm/verify the existence of authorized causes by means of either calling for a hearing/conference or an inspection.

b. Step 2: Issuance of 30-day advance notice to employee

The employer is required to issue a 30-day advance notice to the employee informing the latter of the circumstances in relation to his/her being separated from employment due to an authorized cause.

The advanced notice is designed to give the employee the opportunity to start looking for his/her next gainful employment. This is without prejudice to him/her completing the 30-day period for transition and turn-over.

1) Purpose of notice

This procedure enables an employee to contest the reality or good faith character of the asserted ground for the termination of his services before the DOLE. (Magnolia Products Corporation v. NLRC, supra.)

c. Step 3: Payment of Separation Pay (subject to an exception)

The affected employee is entitled to separation pay. This may be given together with his/her final pay or within a reasonable period of time, subject to completion of clearance, turn-over, and other exit documents or procedures.

The separation pay varies depending on the authorized cause.

For more detailed discussions, refer to Separation Pay.

3. Documentation and proof of service

All notices mentioned herein should be properly documented on how it was served.

The notices should be served personally, whenever practicable. This act of service may be proven through a receiving copy or an affidavit of service, in case the employee unjustifiably refuses to sign a receiving copy.

If personal service is not available such as the employee being absent, the notice may be sent to his last known address through mail. This act of service may be proven through the official receipt of the mailing or an affidavit of service on the mailing.

4. Consequence for non-compliance of procedure

a. Dismissal is ineffectual

If an employee is laid off for any of the causes in Arts. 283-284, i.e., installation of a labor-saving device, but the employer did not give him and the DOLE a 30-day written notice of termination in advance, then the termination of his employment should be considered ineffectual and he should be paid backwages. However, the termination of his employment should not be considered void but he should simply be paid separation pay as provided in Art. 283 in addition to backwages. (Serrano v. NLRC, G.R. No. 117040, 27 January 2000)

The purpose for requiring a 30-day written notice before an employee is laid off is not to afford him an opportunity to be heard on any charge against him, for there is none. The purpose rather is to give him time to prepare for the eventual loss of his job and the DOLE an opportunity to determine whether economic causes do exist justifying the termination of his employment. (Ibid.)

With respect to Art. 283 of the Labor Code, the employer’s failure to comply with the notice requirement does not constitute a denial of due process but a mere failure to observe a procedure for the termination of employment which makes the termination of employment merely ineffectual. It is similar to the failure to observe the provisions of Art. 1592, in relation to Art. 1191, of the Civil Code34 in rescinding a contract for the sale of immovable property. Under these provisions, while the power of a party to rescind a contract is implied in reciprocal obligations, nonetheless, in cases involving the sale of immovable property, the vendor cannot exercise this power even though the vendee defaults in the payment of the price, except by bringing an action in court or giving notice of rescission by means of a notarial demand.35 Consequently, a notice of rescission given in the letter of an attorney has no legal effect, and the vendee can make payment even after the due date since no valid notice of rescission has been given. (Ibid.)

a. Nominal damages

“Failure to comply strictly with the requirements-of procedural due process for dismissing an employee will not render such dismissal ineffectual if it is based on a just or an authorized cause. The employer, however, must be held liable for nominal damages for non-compliance with the requirements of procedural due process.” (Santos v. Integrated Pharmaceutical, Inc., G.R. No. 204620, 11 July 2016)

Nominal damages are awarded to the employee in recognition of his/her right to procedural due process which was violated by the employer.

b. Separation pay

If in proceedings for reinstatement under Art. 283, it is shown that the termination of employment was due to an authorized cause, then the employee concerned should not be ordered reinstated even though there is failure to comply with the 30-day notice requirement. Instead, he must be granted separation pay in accordance with Art. 283. (Serrano v. NLRC, G.R. No. 117040, 27 January 2000)

Art. 283. In case of termination due to the installation of labor-saving devices or redundancy, the worker affected thereby shall be entitled to a separation pay equivalent to at least his one (1) month pay or to at least one month for every year of service, whichever is higher. In case of retrenchment to prevent losses and in cases of closures or cessation of operations of establishment or undertaking not due to serious business losses or financial reverses, the separation pay shall be equivalent to one (1) month pay or at least one-half (1/2) month pay for every year of service, whichever is higher. A fraction of at least six months shall be considered one (1) whole year. (Labor Code)

References

1987 Philippine Constitution

Presidential Decree No. 442, a.k.a. Labor Code of the Philippines

DOLE Department Order No. 147, Series of 2015

▪ Jurisprudence or Supreme Court Decisions (as cited above)

Disclaimer: All information is for educational and general information only. These should not be taken as professional legal advice or opinion. Please consult a competent lawyer to address your specific concerns. Any statements or opinions of the author are solely his own and do not reflect that of any organization he may be connected.

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