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Authorized Causes

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Summary

  • Authorized causes are grounds for separation of employment of an employee.
  • Authorized causes cover all employees, regardless of rank or status.
  • There are standards for each just cause set or prescribed by Supreme Court Decisions or Jurisprudence.
  • Separation pay is due to employees who have be separated due to authorized causes, except for closing or cessation of business due to serious financial losses.
  • If there is no just cause in the termination of employment, the employer may be held liable for illegal dismissal.

Legal basis

The legal basis is the P.D. 442, otherwise known as the Labor Code, Supreme Court Decisions, and DOLE Regulations.

Concept

Authorized causes are grounds for separation of employment.

It is called authorized causes because the separation from employment is justified due to a legitimate business reason or a requirement by law or regulations.

In these situations, and in the exercise of its management prerogative, the employer is justified letting go of the employee who is not at fault and thus given a separation pay.

Coverage

Just causes cover all employees, regardless of rank or status.

Whether rank-and-file, supervisory, managerial in rank, an employee is covered by just causes.

Whether regular, probationary, casual, project, seasonal, or fixed-term, an employee is covered by just causes.

The authorized causes

A. The Labor Code provides for the following authorized causes:

1. Installation of labor-saving devices;

2. Redundancy;

3. Retrenchment;

4. Closing or cessation of business operations; and

5. Disease.

B. Supreme Court Decisions provide for the following authorized causes:

6. Reinstatement is no longer feasible to a former position or to a substantially equivalent position for reasons not attributable to the fault of the employer, as when the reinstatement ordered by a competent authority cannot be implemented due to closure or cessation of operations of the establishment/employer, or the position to which he or she is to be reinstated no longer exists and there is no substantially equivalent position in the establishment to which he or she can be assigned (Gaco v. NLRC, G.R. No. 104690, 23 February 1994); and

7. Strained relations;

C. DOLE Regulations provide for the following additional authorized causes:

8. Lack of service assignment of security guard for a continuous period of six (6) month (Department Order No. 150, series of 2016);

9. Lack of service assignment of security guard by reason of age (Ibid); and

10. Lack of re-assignment of deployed personnel after three (3) months (Department Order No. 174, series of 2017).

Standards for authorized causes

Standards have been set or prescribed for each authorized cause through Supreme Court Decisions and DOLE regulations, such as DOLE Department Order No. 147, series of 2015 (DOLE D.O. 147-15).

Separation pay

Employees who have been separated from employment are entitled to separation pay, except for closing or cessation of business due to serious financial losses.

For more detailed discussions, refer to Separation Pay.

Consequence if no authorized cause

If there is no authorized cause in the separation from employment of an employee, the employer may be held liable for illegal dismissal.

References

  • 1987 Constitution
  • Presidential Decree No. 442, a.k.a. Labor Code
  • DOLE Department Order No. 147, Series of 2015
  • Jurisprudence or Supreme Court Decisions
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