Disciplinary Action

In the world of private sector employment, it does happen that a few employees underperform and/or commit violations. The employer is allowed by law to impose disciplinary actions against these erring employees to correct unlikable behavior. As a result, sanctions or penalties may be imposed ranging from verbal warning, written reprimand, suspension without pay, and ultimately to dismissal from employment. This is the concept of disciplinary action.

1. Right of the employer to discipline

It is the right of the employer to discipline erring employees in order for them to deliver better work performance or to comply with Company rules, regulations, and policies.  As an organization, a Company needs its people to be doing their duties and responsibilities to meet goals and objectives, ensure productivity and efficient workflow, and contribute to the success and accomplishments of the establishment. Accordingly, while the Labor Law seeks to protect employees, it will not do so if the continued employment will be seriously prejudicial to the employer.

“The law is fair and just to both labor and management. Thus, while the Constitution accords an employee security or tenure, it abhors oppression to an employer who cannot be compelled to retain an employee whose continued employment would be patently inimical to its interest.” (Rayes-Rayel v. Philippine Luen Thai Holdings, G.R. No. 174893, 11 July 2012)

2. Business judgment rule; Non-interference by courts

Disciplining is thus a very important right and prerogative of the employer. In Supreme Court decisions (a.k.a. jurisprudence) involving labor cases, it is repeatedly held that courts are discouraged from interfering with the employer’s exercise of its management prerogatives so long as labor laws are observed. This follows the business judgment rule wherein employers are given sufficient discretion to know what regulations work for their companies as long as they are justified.

The Supreme Court knows that “there are various laws imposing all kinds of burdens and obligations upon the employer in relation to his employees, and yet as a rule this Court has always upheld the employer’s prerogative to regulate all aspects of employment relating to the employees’ work assignment, the working methods and the place and manner of work. Indeed, labor laws discourage interference with an employer’s judgment in the conduct of his business.”(Peckson v. Robinsons Supermarket Corporation, G.R. No. 198534, 03 July 2013)

For example, in one case, a smoking incident led to the dismissal of an employee. If this were to happen in other establishments, this could have resulted in an illegal dismissal case – even if stated in the Company Policies. However, the circumstances were unique. The employer operated a painting shop for vehicles wherein various highly flammable substances were lying around in the garage. Meanwhile, the employee was a painter who had been notified of the rule against smoking stated in the Company Policy. When the case was decided, the Supreme Court ruled that the dismissal was valid. The employer was justified in having such a rule against smoking given the nature of its business and the grave consequences should an explosion or fire result if this rule was not followed. (Northern Motors, Inc. v. Alcantara, G.R. No. L-10022, 31 January 1958, En Banc; See Chapter on Willful Disobedience for discussions)

3. Penalty must be commensurate with the offense

It should be mentioned as early as now that jurisprudence emphasizes a very important rule when it comes to disciplinary actions: the penalty must be commensurate to the offense. Otherwise stated, minor violations should merit a lesser penalty compared to more serious ones.

Dismissal is the ultimate penalty that the employer may impose as a result of disciplinary action. Thus, the offense committed by the employee should be severe so as to justify termination as a penalty. In the words of the Supreme Court: “it is cruel and unjust to impose the drastic penalty of dismissal if not commensurate to the gravity of the misdeed.” (Supreme Steel Pipe v. Bardaje, G.R. No. 170811, 24 April 2007)



Cavite Apparel, Incorporated v. Marquez

G.R. No. 172044, 06 February 2013

[Background: The employee was dismissed for 4 absences and non-submission of a medical certificate in violation of the company policies.]

[Resolution] [The employee] might have been guilty of violating company rules on leaves of absence and employee discipline, still we find the penalty of dismissal imposed on her unjustified under the circumstances. As earlier mentioned, [the employee] had been in [the employer’s] employ for six years, with no derogatory record other than the four absences without official leave in question, not to mention that she had already been penalized for the first three absences, the most serious penalty being a six-day suspension for her third absence on April 27, 2000.

While previous infractions may be used to support an employee’s dismissal from work in connection with a subsequent similar offense, we cautioned employers in an earlier case that although they enjoy a wide latitude of discretion in the formulation of work-related policies, rules and regulations, their directives and the implementation of their policies must be fair and reasonable; at the very least, penalties must be commensurate to the offense involved and to the degree of the infraction.

As we earlier expressed, we do not consider the employee’s dismissal to be commensurate to the four absences she incurred for her six years of service with the company, even granting that she failed to submit on time a medical certificate for her May 8, 2000 absence. We note that she again did not report for work on May 15 to 27, 2000 due to illness. When she reported back for work, she submitted the necessary medical certificates. The reason for her absence on May 8, 2000 – due to illness and not for her personal convenience – all the more rendered her dismissal unreasonable as it is clearly disproportionate to the infraction she committed.


Via several labor cases, the Supreme Court repeatedly emphasizes the grave consequences that the employee may suffer not only to him – but also to his family – once he/she is dismissed from work, particularly for minimum wage earners.

Where a penalty less punitive would suffice, whatever missteps may be committed by labor ought not to be visited with a consequence so severe. It is not only because of the laws concern for the workingman. There is, in addition, his family to consider. Unemployment brings untold hardships and sorrows on those dependent on the wage-earner. The misery and pain attendant on the loss of jobs then could be avoided if there be acceptance of the view that under all circumstances of this case, [the employees] should not be deprived of their means of livelihood. Nor is this to condone what had been done by them. (Almira v. Goodrich Philippines, No. L-34974, 25 July 1974)

Going back to the case involving the smoking incident, it is ordinarily a minor violation and should not necessarily result in imposing dismissal. Consequently, the penalty is often a verbal warning or written reprimand. However, due to the nature of business of the establishment, the employer was justified in imposing such a rule against smoking and a violation thereof could result in a dismissal. Again, the employer was justified. Without such justification, other employers would not be able to successfully defend itself against a similar illegal dismissal case.

Further, length of service should also be taken into consideration in imposing a penalty, especially if it is dismissal. In one case, the employee – a Senior Financial Accountant – was dismissed after she submitted fraudulent items of expense which was a violation that carries the penalty of dismissal, viz:



Coca-Cola Export Corporation v. Gacayan

G.R. No. 149433, 15 December 2010

In the instant case, [the employer] alleged that under its rules and regulations, [the employee’s] submission of fraudulent items of expense is punishable by dismissal. However, [the employer’s] rules cannot preclude the State from inquiring whether the strict and rigid application or interpretation thereof would be harsh to the employee. Even when an employee is found to have transgressed the employer’s rules, in the actual imposition of penalties upon the erring employee, due consideration must still be given to his length of service and the number of violations committed during his employ. [The employee] had no previous record in her 9½ years of service; this would have been her first offense. [The employee] had also been a recipient of various commendations attesting to her competence and diligence in the performance of her duties, not only from [the employer], but also from [the employer’s] counterparts in Poland and Thailand. [The employee] also countered that she acted in good faith and with no wrongful intent when she submitted the receipts in support of her claim for reimbursement of meal allowance. According to [the employee], only the dates or items were altered on the receipts. She did not claim more than what was allowed as meal expense for the days that she rendered overtime work. She believed that the submission of receipts was simply for records-keeping, since she actually rendered overtime work on the dates that she claimed for meal allowance. All told, this Court holds that the penalty of dismissal imposed on the employees is unduly oppressive and disproportionate to the infraction which she committed. A lighter penalty would have been more just.”


In addition, and as noted above, other considerations factor in as well whether the penalty of dismissal would be the appropriate penalty. In the above case, the employee received various commendations, acted in good faith, and it was her first violation after several years of service.

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