ATTY. RICARDO MANUEL H. CHANSenior Corporate Lawyer, Kittelson & Carpo

ricardo@kittelsoncarpo.com

New DOLE Rules on Employee Termination

• Long Title: DOLE Department Order No. 147-15, “AMENDING THE IMPLEMENTING RULES AND REGULATIONS OF BOOK VI OF THE LABOR CODE OF THE PHILIPPINES, AS AMENDED”

• Governs the application of the JUST and AUTHORIZED causes of termination of employment under Articles 297-299 of the Labor Code, as amended.

Introduction

• LABOR CODE RENUMBERING - DOLE Department Advisory No. 1 – 2015, promulgated on 21 July 2015 (http://www.dole.gov.ph/files/Department%20Advisory%20No_%2001-2015.pdf)

• New provision numbers:

Preliminary Matters

Preliminary Matters

TYPES OF EMPLOYMENTS:1. Regular Employment- an employee who has been engaged to perform activities

which are usually necessary or desirable in the usual business of the employer2. Probationary Employment - not really a type of employee; rather, pertains to the

period of time in which the employee is being observed and evaluated to determine fitness for regular employment

3. Project Employment – period of employment has been fixed for a specific undertaking, the completion of which has been determined at the time of the engagement of the employee.

4. Seasonal Employment – work to be performed only certain time of year and only for that duration

5. Term/Fixed Period Employment - commencement and termination dates of the employment relationship have been set before the employment relationship begins

6. Casual Employment - engaged to perform work that is merely incidental to7. the business of the employer, and such work is for a definite period (≤ One year)

made known to the employee at the time of his engagement

DO 147-15 – Rule I-A

Sec. 1 – Restatement of general principles on Security of TenureSec. 2 – Coverage – applies to work arrangements where EMPLOYER-

EMPLOYEE RELATIONSHIP EXISTSSec. 3. – Employer-Employee Relationship; Four Fold test:

1. Power to Hire2. Payment of wages3. Power to Fire4. Power of Conrol - person for whom the services are performed reserves the right to control not only the end achieved, but also the manner and means used to achieve that end.

Sec. 4 – Definition of Terms

DO 147-15 – Rule I-A

Sec. 5 – Due Process5.1 JUST CAUSESa) First Written Notice contains:1. SPECIFIC grounds, either based on Labor Code or company policies. 2. DETAILED NARRATION OF FACTS, general description insufficient 3. Directive that the employee is given the opportunity to submit a

WRITTEN EXPLANATION within a REASONABLE PERIOD ( at least FIVE CALENDAR days)

b) Ample opportunity to be heard – with assistance of representative if desired.- meaningful opportunity (written or verbal) to answer the charges, submit evidence. Formal hearing only mandatory when: 1) requested in writing, 2) substantial evidentiary disputes exist; 3) when company policy requires; or 4) when similar circumstances justify it.

c) Second Notice of Termination indicating that the charge has been considered and the grounds that were established to merit termination.

ALL NOTICES MUST BE SERVED PERSONALLY TO EMPLOYEE OR TO EMPLOYEE’S LAST KNOWN ADDRESS.

DO 147-15 – Rule I-A

Sec. 5 – Due Process (cont.)5.2 Standards on JUST CAUSESa) Serious Misconduct:

1. There must be misconduct;2. grave and aggravated character;3. relate to the performance of the employee's duties; and4. There must be showing that the employee becomes unfit to continue working for the employer.

b) Willful Disobedience or Insubordination1. There must be disobedience or insubordination;2. willful or intentional characterized by a wrongful and perverse attitude;3. The order violated must be reasonable, lawful, and made known to the employee; and4. pertains to the duties which he has been engaged to discharge.

DO 147-15 – Rule I-A

Sec. 5 – Due Process (cont.)5.2 Standards on JUST CAUSES (cont.)c) Gross and Habitual Neglect of Dutiesd) Fraud or Willful Breach of Trust

1. An act, omission, or concealment;2. Involving a breach of legal duty, trust, or confidence justly reposed;3. It must be committed against the employer or his/her representative; and4. It must be in connection with the employees' work.

e) Loss of Confidence1. An act, omission or concealment;2. Justifying the loss of trust and confidence of the employer to the employee;3. The employee concerned must be holding a position of trust and confidence;4. The loss of trust and confidence should not be simulated;5. It should not be used as a subterfuge for causes which are improper, illegal, or unjustified; and6. It must be genuine and not a mere afterthought to justify an earlier action taken in bad faith.

DO 147-15 – Rule I-A

Sec. 5 – Due Process (cont.)5.2 Standards on JUST CAUSES (cont.)f) Commission of a crime or offense -

1. act punishable by law; 2. committed against the person of employer, immediate member

of his family or duly authorized representative. g) Analogous Causes

1. An act, omission similar to just causes;2. Voluntary and/or willful on the part of the employees.

NO ACT OR OMMISSION SHALL BE CONSIDERED AS ANALOGOUS CAUSE UNLESS EXPRESSLY SPECIFIED IN THE COMPANY RULES AND REGULATIONS OR POLICIES. (NOTE: This does not seem to be covered by any jurisprudence)

DO 147-15 – Rule I-A

Sec. 5 – Due Process (cont.)5.3 AUTHORIZED CAUSES – deemed complied with upon service of:

1. written notice to the employee;2. written notice to the appropriate Regional Office of the DOLE (RKS Form 5)

At least Thirty (30) days before effectivity of the termination, specifying the ground or grounds for termination.

5.4 STANDARDS ON AUTHORIZED CAUSESa) Installation of Labor-Saving Devices

1. There must be introduction of machinery, equipment or other devices;2. In good faith ;3. The purpose must be valid such as to save on cost, enhance efficiency and other

justifiable economic reasons;4. There is no other option available to the employer than the introduction of

machinery, equipment or device and the consequent termination of employment of those affected thereby; and

5. There must be fair and reasonable criteria in selecting employees to be terminated.

DO 147-15 – Rule I-A

Sec. 5 – Due Process (cont.)5.4 STANDARDS ON AUTHORIZED CAUSES (cont.)a) Redundancy

1. There must be superfluous positions or services of employees;2. The positions are in excess of what is reasonably demanded by the

actual requirements of the enterprise to operate in an economical and efficient manner;

3. There must be good faith in abolishing redundant positions;4. There must be fair and reasonable criteria in selecting the employeesto be terminated; and5. There must be an adequate proof of redundancy such as but not

limited to the new staffing pattern, feasibility studies/proposal, on the viability of the newly created positions, job description and the approval by the management of the restructuring.

DO 147-15 – Rule I-A

Sec. 5 – Due Process (cont.)5.4 STANDARDS ON AUTHORIZED CAUSES (cont.)b) Retrenchment or Downsizing

1. Reasonably necessary and likely to prevent business losses;2. The losses, if already incurred, are not merely de minimis, but

substantial, serious, actual and real, or if only expected, are reasonably imminent;

3. Losses must be proved by sufficient and convincing evidence;4. The retrenchment must be in good faith for the advancement of its

interest and not to defeat or circumvent the employees' right to security of tenure; and

5. There must be fair and reasonable criteria in ascertaining who would be dismissed and who would be retained among the employees, such as status, efficiency, seniority, physical fitness, age, and financial hardship for certain workers.

DO 147-15 – Rule I-A

Sec. 5 – Due Process (cont.)5.4 STANDARDS ON AUTHORIZED CAUSES (cont.)c) Closure or Cessation of Operation

1. There must be a decision to close or cease operation of the enterprise by the management;

2. The decision was made in good faith; and3. There is no other option available to the employer except to close or cease

operations.d) Disease

1. The employee must be suffering from any disease;2. The continued employment of the employee is prohibited by law or prejudicial to

his/her health as well as to the health of his/her coemployees; and3. There must be certification by a competent public health authority that the

disease is incurable within a period of six (6) months even with proper medical treatment.

LIFO Rule – applies to labor saving devices, redundancy and retrenchment, except if employee volunteers.

DO 147-15 – Rule I-A

Sec. 5 – Due Process (cont.)5.5 Separation PayINSTALLATION OF LABOR-SAVING DEVICES or REDUNDANCY – one (1)

month pay or at least one (1) month pay for every year of service, whichever is higher, a fraction of six (6) months service is considered as one (1) whole year

DISEASE, RETRENCHMENT or CLOSURE NOT DUE TO BUSINESS LOSSES - one (1) month pay or at least one-half (1/2) month pay for every year of service, whichever is higher, a fraction of six (6) months service is considered as one (1) whole year

CLOSURE DUE TO SERIOUS LOSSES or JUST CAUSES – no separation pay.

DO 147-15 – Rule I-A

Sec. 6 – Other Causes of Termination

a) Reasonable or lawful grounds as stated in company policies;b) Dangerous drugs use – RA 9165; DOLE DO No. 53-2003;c) HIV/Hepa B – no termination based on actual, perceived or

suspected infectiond) Tuberculosis – no discrimination so long as they are certified as

medically fit and shall be restored to work as soon as illness is controlled.

e) Sexual harassment = Serious misconduct.Sec. 7 – CBA can list grounds for terminationSec. 8 – Mandatory Conciliation-Mediation on Termination Disputes – adds another layer of procedures, the Single Entry Approach (SEnA) before proceedings with Labor Arbiter.

DO 147-15 – Rule I-A

Sec. 9 – Settlement Agreements reached before Desk Officers are final and binding.

Sec. 10 – No SEnA = no filing of cases of illegal dismissal before Labor Arbiter

Sec. 11 – Non-compliance of settlement agreements can be enforced by the NLRC or the parties can disregard the settlement agreement and file appropriate case before the appropriate forum.

Thank you for your attention.Any Questions?

Kittelson & Carpo Consulting21B Rufino Pacific Tower

6784 Ayala Ave., Makati City(02)224-1833 | info@kittelsoncarpo.com

New DOLE Rules onEmployee Termination Ricardo Chan

28 October 2015Cardno Emerging Markets, Paseo de Roxas, Makati