Authorized Causes

Summary

▪ Authorized causes are grounds for separating an employee through no fault of theirs.

▪ There are standards for each authorized cause set or prescribed by Jurisprudence or Supreme Court Decisions, as well as DOLE regulations.

▪ Separation pay is due to employees who have be separated due to authorized causes, except for closing or cessation of business due to serious financial losses.

1. Concept

Authorized causes are grounds for separation of employment.

It is called authorized causes because the employer is authorized to separate employees from their employment due to a legitimate business reason or a requirement by law or regulations.

In these situations, and in the exercise of its management prerogative, the employer is justified letting go of the employee who is not at fault and thus given a separation pay.

2. Coverage

Authorized causes cover all employees, regardless of rank or status, whether rank-and-file, supervisory, managerial in rank, as well as whether regular, probationary, casual, project, seasonal, or fixed-term.

3. The authorized causes

a. Labor Code

The Labor Code provides for the following authorized causes:

1) Installation of labor-saving devices;

2) Redundancy;

3) Retrenchment;

4) Closing or cessation of business operations;

5) Disease; and

6) Permanent lay-off (after 6-month work suspension).

b. Jurisprudence or Supreme Court Decisions

Jurisprudence or Supreme Court Decisions provide for the following authorized causes:

1) Reinstatement is no longer feasible to a former position or to a substantially equivalent position for reasons not attributable to the fault of the employer, as when the reinstatement ordered by a competent authority cannot be implemented due to closure or cessation of operations of the establishment/employer, or the position to which he or she is to be reinstated no longer exists and there is no substantially equivalent position in the establishment to which he or she can be assigned (Gaco v. NLRC, G.R. No. 104690, 23 February 1994); and

2) Strained relations.

c. DOLE Regulations

DOLE Regulations provide for the following additional authorized causes:

1) Lack of service assignment of security guard for a continuous period of six (6) month (Department Order No. 150, series of 2016);

2) Lack of service assignment of security guard by reason of age (Ibid); and,

3) Lack of re-assignment of deployed personnel after three (3) months (Department Order No. 174, series of 2017).

4. Standards for authorized causes

Standards have been set or prescribed for each authorized cause through Supreme Court Decisions and DOLE regulations, such as DOLE Department Order No. 147, series of 2015 (DOLE D.O. 147-15).

5. Separation pay

Employees who have been separated from employment are entitled to separation pay, except for closing or cessation of business due to serious financial losses.

For more detailed discussions, refer to Separation Pay.

6. Consequence if no authorized cause

a. Reinstated

b. Full backwages

If the employee’s separation is without cause, instead of being given separation pay, he should be reinstated. In either case, whether he is reinstated or only granted separation pay, he should be paid full backwages if he has been laid off without written notice at least 30 days in advance. (Serrano v. NLRC, G.R. No. 117040, 27 January 2000)

References

1987 Philippine Constitution

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

Book VI, Omnibus Rules Implementing the Labor Code

DOLE Department Order No. 147, Series of 2015

/Updated: January 4, 2023

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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