The next logical step for a successful Filipino entrepreneur is to expand the operations of an existing business or venture into related or new businesses. This expansion, of course, needs additional manpower. More manpower means an increased exposure to human resources (HR) or labor concerns. There are previous articles on HR or labor matters, but, just like the Contract Series, let's have a fixed series on HR and labor concerns.

An employment may cease or terminate on any of the following grounds: 

2. Expiration of contract. Employment with a definite period, like contractual or project employment, terminates upon expiration of the period provided in the contract or the completion of the particular project or undertaking for which the employee was hired.

3. Failure to qualify. This relates to a probationary employee, or one who is on trial by an employer during which the employer determines whether or not he is qualified for permanent employment. There is already a discussion on probationary employment in this site.

4. Termination for Just cause. An employee may be terminated for cause, such as, but not limited to the following:

a. Serious misconduct or willful disobedience by the employee of the lawful orders of the employer or any of its authorized representative in connection with his work.

b. Gross and habitual neglect by the employee.

c. Fraud or willful breach by the employee of the trust reposed in him by the employer or any of its authorized representatives.

d. Commission of a crime or offense by the employee against the person of the employer or any immediate member of his family or his duly authorized representative.

e. Other causes analogous to the foregoing.

5. Termination for Authorized cause. The services of an employee may be terminated due to the installation of labor-saving devices, redundancy, and retrenchment to prevent losses or the closing or cessation of operation of the establishment. A written notice will be given to the employees at least one (1) month before the intended date thereof. In case of termination due to the installation of labor-saving devices or redundancy, the employee shall be entitled to a separation pay equivalent to at least one (1) month pay or to at least one (1) month pay for every year of service, whichever is higher. In case of retrenchment to prevent business losses, or cessation of operation not due to business losses, the separation pay shall be equivalent to one (1) month’s salary or at least ½ month pay for every year of service, whichever is higher.

An employee may also be terminated when he/she is found to be suffering from a disease and whose continued employment is prohibited by law or is prejudicial to his health, as well as to the health of his co-employees. An employee who is terminated for this reason shall be granted a separation pay equivalent to one (1) month’s salary or ½ month salary for each year service, whichever is greater.

6. Termination for violations of the company's Code of Conduct. The penalties in the company's Code of Conduct may be imposed for violations of the Code of Conduct.  This is also covered under "serious misconduct or willful disobedience by the employee of the lawful orders of the employer or any of its authorized representative in connection with his work."

Due process must be observed in the termination of employees. There are two aspects of due process, the substantive and the procedural. Substantive due process simply means that termination must be based on the causes enumerated above. Procedural due process, on the other hand, generally requires the following:

(i) A written notice served on the employee specifying the ground or grounds for termination, and giving said employee reasonable opportunity within which to explain his side. This is also known as the "Show Cause" notice.

(ii) A hearing or conference during which the employee concerned, with the assistance of counsel if he so desires is given opportunity to respond to the charge, present his evidence, or rebut the evidence presented against him.

(iii) A written notice of termination served on the employee, indicating that upon due consideration of all the circumstances, grounds have been established to justify his termination.

The current rule is where the dismissal is for a just cause, the lack of due process should not nullify the dismissal, or render it illegal, or ineffectual. However, the employer is liable for damages, the amount of which is subject to the discretion of the court, for violating the employee’s right to due process.