▪ Reinstatement is due to an illegally dismissed employee.

▪ Separation pay in lieu of reinstatement is an alternative remedy when reinstatement is no longer feasible.

1. Concept

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. (Article 294, P.D. 442, Labor Code)

Reinstatement restores the employee who was unjustly dismissed to the position from which he was removed, that is, to his status quo ante dismissal.  (Rodriguez v. Sintron Systems, Inc., G.R. No. 240254, 24 July 2019)

a. Separation pay in lieu of reinstatement

Separation pay is warranted when the cause for termination is not attributable to the employee’s fault, such as those in authorized causes, as well as in cases of illegal dismissal where reinstatement is no longer feasible. (Claudia’s Kitchen, Inc. v. Tanguin, G.R. No. 221096, 28 June 2017)

The payment of separation pay replaces the legal consequences of reinstatement to an employee who was illegally dismissed. (Ibid.)

2. Strained relations

The doctrine of strained relations only arises when there is an order for reinstatement that is no longer feasible. It cannot be invoked by the employer to prevent the employee’s return to work nor by the employee to justify payment of separation pay. (Ibid.)

Under the doctrine of strained relations, such payment of separation pay is considered an acceptable alternative to reinstatement when the latter option is no longer desirable or viable. On the one hand it liberates the employee from what could be a highly oppressive work environment. On the other hand, it releases the employer from the grossly unpalatable obligation of maintaining in its employ a worker it could no longer trust. (Ibid.)

a. Trust and confidence

Strained relationship may be invoked only against employees whose positions demand trust and confidence, or whose differences with their employer are of such nature or degree as to preclude reinstatement. (Dimabayao v. National Labor Relations Commission, G.R. No. 122178, 25 February 1999)

Every labor dispute almost always results in “strained relations,” and the phrase cannot be given an overarching interpretation, otherwise, an unjustly dismissed employee can never be reinstated. (Advan Motor, Inc. v. Veneracion, G.R. No. 190944, 13 December 2017)

Besides, the doctrine of strained relations cannot be applied indiscriminately since every labor dispute almost invariably results in “strained relations;” otherwise, reinstatement can never be possible simply because some hostility is engendered between the parties as a result of their disagreement. That is human nature. Strained relations must be demonstrated as a fact. The doctrine should not be used recklessly or loosely applied, nor be based on impression alone. (Rodriguez v. Sintron Systems, Inc., supra.)



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

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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