Consequences of illegal dismissal

Consequences of illegal dismissal

1. Concept

The following are the possible consequences for illegal dismissal:

1) Full Backwages

2) Reinstatement (or separation pay in lieu of reinstatement)

3) Moral Damages

4) Exemplary Damages

5) Nominal Damages

6) 10% Attorney’s Fees

7) Solidary Liability for Corporate Officers

Of all the possible labor complaints, illegal dismissal carries the heaviest penalty and the most potential for liability as shown above. Many companies have ended up paying huge amounts to settle a monetary award for illegal dismissal. Some end up closing their businesses when their assets are insufficient to settle the judgment.

2. Full backwages

An illegally dismissed employee is entitled to full backwages to recover lost income.

The Labor Code provides:

“Art. 294. [279] Security of Tenure. – In cases of regular employment, the employer shall not terminate the services of an employee except for a just cause or when authorized by this Title [Title I: Termination of Employment]. An employee who is unjustly dismissed from work shall be entitled to reinstatement without loss of seniority rights and other privileges and to his full backwages, inclusive of allowances, and to his other benefits or their monetary equivalent computed from the time his compensation was withheld from him up to the time of his actual reinstatement.” (Emphasis supplied.)

As may be observed, full backwages run like a taxi meter until the finality ...


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