How to Terminate a High-Risk Employee in the Philippines

Start with the facts, not the legal label

Do not begin with a label such as serious misconduct, fraud or loss of trust and then try to fit the facts into it.

I suggest establishing the conduct first.

What happened, when and in relation to which duty, rule, instruction or obligation? Who personally observed it? What records already existed? What explanation did the employee give, and which facts remain disputed?

Article 297 of the Labor Code recognizes just causes including serious misconduct or willful disobedience, gross and habitual neglect, fraud or willful breach of trust, specified crimes or offenses, and analogous causes. Each ground has its own requirements.

Choose the ground by testing its requirements against that evidence.

Match the evidence to the legal ground

Serious misconduct illustrates the distinction.

The Supreme Court has explained that misconduct warranting dismissal must be grave rather than trivial, connected with the employee's work, and of a character showing that continued employment has become untenable under the governing standards. In the jurisprudence applying the doctrine, wrongful intent also matters.

An internal memorandum saying only that an executive acted improperly does not establish those requirements.

Identify the emails, approvals, transaction documents, access logs, policies, audit findings, expense records, customer communications and witnesses supporting the allegation.

Keep contradictory records too. Omitting evidence that does not support dismissal makes it harder to explain the decision credibly.

Handle loss of trust carefully

Loss of trust may be relevant to executives, managers, finance staff and other employees whose positions involve the required degree of confidence.

The job title or assertion of lost trust does not, by itself, establish a valid ground.

The Supreme Court has held that the employee must occupy a position of trust and confidence and that there must be an act providing a genuine basis for the loss of trust. Proof beyond reasonable doubt is not required in an employment case, but the employer still needs an evidentiary basis for concluding that the employee has become unworthy of the confidence required by the position.

Distinguish the conclusion from the facts supporting it.

Saying that the CEO no longer trusts an employee states the conclusion.

An allegation that the CFO approved undisclosed transactions outside her authority can be tested against the records, written policy and her explanation. Those are the matters the assessment needs to address.

Give a real opportunity to answer

Use the due-process steps to consider the employee’s response before deciding, rather than treating the notices as a formality.

Supreme Court jurisprudence applying King of Kings Transport requires the first written notice to identify the specific causes or grounds and give the employee a reasonable opportunity to explain. The Court has described that reasonable period as at least five calendar days from receipt. After the employer considers the employee's response and determines that termination is justified, a second written notice should communicate the decision and the grounds supporting it.

A formal hearing is not mechanically required in every case. The Supreme Court has recognized circumstances in which a hearing or conference becomes necessary, such as when the employee requests one in writing, substantial evidentiary disputes exist, company rules or practice require it, or similar circumstances justify one.

The employee must have a genuine opportunity to answer.

A notice to explain does not provide that opportunity if termination has already been predetermined and the response will not be considered.

Test consistency and proportionality

Before finalizing the decision, check how similar conduct was treated previously.

Consistency does not require identical treatment where responsibilities, history, authority or participation differ. But explain the basis for any material difference.

The penalty should also be tested against the actual offense. The Supreme Court has repeatedly distinguished grave misconduct from trivial or insufficient conduct and has rejected dismissal where the legal requisites of the asserted ground were not established.

For a senior employee, review the employment agreement, incentive plans, policies, delegated authority, corporate approvals, confidentiality duties, return of property and post-employment terms before the separation takes effect.

Write the decision for the future dispute

Write the decision so that a person unfamiliar with the investigation can understand it.

Identify the established facts, evidence, material defenses, reasons for accepting or rejecting them, applicable policy and legal ground, and basis for the sanction.

This also helps test the decision before it is implemented.

Management may identify an evidentiary gap that was not apparent from the initial allegation.

If litigation follows, the written reasons can be examined without having to reconstruct them from scattered emails.

The employer bears the burden of proving a valid dismissal. Preserve the records needed to support that burden before a complaint is filed.

For a senior or high-risk employee, assess the proposed decision against the complete record.

Be prepared to explain it after the employee’s defenses, witness accounts, emails, policies and inconsistencies have been examined.

Check the route and decision record

An executive title alone does not remove labor jurisdiction. Corporate-officer status and the nature of the dispute require examination. A disease termination needs the prescribed competent-public-health-authority certification; an authorized-cause decision requires its own notice and payment analysis.