Republic of the Philippines
HOUSE OF REPRESENTATIVES
Quezon City

Sixteenth Congress
Second Regular Session

HOUSE BILL NO.__ 5416

INTRODUCED BY: REP. FLORENCIO T. FLORES, JR., REP. KARLO ALEXEI B.
NOGRALES, AND REP. DEOGRACIAS B. RAMOS, JR.

EXPLANATORY NOTE

The Philippine Constitution recognizes the worker's right to security of tenure, which
guarantees that an employee cannot be terminated from work for causes other than tose
provided by the Labor Code and only after due process is accorded to the employee. This
recognition, however, equally acknowledges the principle that employers have the inherent ‘ight
to exercise management prerogative including the right to hire and to fire.

Termination of employees is an exercise of management prerogative but tempered by
the right of workers to security of tenure. Existing previsions of law allow termination of
employment only upon the existence of just or au horized causes and observance of procedura
due process. This framework created rigidity that have paralyzed both employers anc
employees in costly and long litigation process to determine the existence of the causes and
‘observance of due process. The average time to dispose a case from the time of filing up to the
Supreme Court is 8 years’. The main areas of contention are’ (1) the “analogous causes" in
paragraph (e) of Article 282 on just causes or termination by the employer. which is open to
varied and diverse interpretations for being over broad, and (2) validation of the invoked
authorized cause as provided in Article 283, including payment of separation pay

The direct cost of terminating an employee on the part of the employer is as high as 4.7
months wage of an employee (average) using the existing dismissal regulations e.g, separation
pay, notice. period of litigation as variables. On the part of the employee. the direct cost is
estimated at P100,500.00 on average using the cost of litigation and the cost of execution of
judgment as variables?

Based on record, the average time to dispose terminatior cases from filing to NLRC is 2 years; from NLRC to “io
‘of Appeals is 2 years; from Court of Appeals to Supreme Courtis 4 years,

variables used in the computation: Ordinary Attorney's fv > (Paper fees ~ P1,000.00; Appearance fees - P3,000 O¢
ger heaving: Acceptance fee - P60,000.00); Extraordine'y Attorney's fee (PL2,753.5 per case); Execution o'
ment (P4,000 per case travel expenses)



Hence, this bill proposes to amend paragraph (e) of Article 282 of the Labor Code by
replacing “analogous causes’ with “acts or omission specified in the company rules and
regulations or collective bargaining agreement’ to remove the ambiguity. Article 283 on
authorized causes of termination is also proposed to be simplified by: (1) providing at least one
month pay for every year of service; (2) submssion of proof of authorized cause: and (3)
providing that upfront payment of separation pay oars the filing of claims and complaints arising
from the separation.

Hence, the passage of this bill is earnestly sought.

KARLO ALEXEI B. NOGRALES
Representative
1"' District, Davao City

Reptesentative
2 District, Sorsogon


INT!

Republic of the Philippines
HOUSE OF REPRESENTATIVES
Quezon City

Sixteenth Congress
Second Regular Session

House sit No, _ 5416

UCED BY: REP. FLORENCIO T =LORES. JR., REP. KARLO ALEXEI E
NOGRALES, AND REP. DECGRACIAS B. RAMOS. JR.

An Act Defining the Causes of Termination of Employment of Workers Amending
for this Purpose Articles 282 and 283 of Presidential Degree No. 442. Otherwise

known as the Labor Code of the Philippines, as amended.

SECTION 1. Article 282 of PD 442, otherwise known as the Labor Code of the
Philippines, as amended, is hereby amended to read as follows

ARTICLE 282. JUST CAUSES OF TERMINATION. An employer may terminate
an employment for any of the following causes

1

eon

Serious misconduct or willful discbedience by the employee of the lawful
orders of his/HER employer or representative in connection with his/HER
work;

Gross and habitual neglect by the employee of his/HER duties:

Fraud or willful breach by the employee of the trust reposed in him/HER by
his/HER employer or duly authorized representative:

Commission of a crime or offense by the employee against the person of
his/HER employer or any immediate member of his/HER family or his/HER
duly authorized representatives: and

ACT OR OMMISSION EXPRESSLY SPECIFIED IN THE COMPANY RULES
AND REGULATIONS OR COLLECTIVE BARGAINING AGREEMENT

SECTION 2. Article 283 of PD 442, otherwise known as the Labor Code of the
Philippines. as amended, is hereby amended to read as follows:


ARTICLE 283. Closure of Establishment and Reduction of Personnel, The
employer may also terminate the einployment of any employee due to the
installation of labor-saving devices, redundancy, retrenchment to prevent losses
or the closing or cessation of operation of the establishment or undertaking
unless the closing is for the purpose 0 circumventing the provisions of this Title
by serving a written notice on the workers and the DEPARTMENT of Labor and
Employment at least one (1) month before the intended date thereof AND
PAYMENT OF SEPARATION PAY equivalent to at least his/HER one (1) month
pay or to at least one (1) month pay for every year of service, whichever is
higher, A fraction of at least six (6) months shall be considered one (1) whole
year.

THE EMPLOYER SHALL PAY ALL SEPARATION BENEFITS TO THE
EMPLOYEE FIFTEEN (15) DAYS BEFORE THE EFFECTIVITY OF “HE
SEPARATION OF EMPLOYEE, UPON RECEIPT OF SEPARATION PAY. AN
EMPLOYEE SHALL BE BARRED FROM FILING CLAIMS OR COMPLAINTS
ARISING THEREFROM.

SECTION 3. Article 283-A of the Labor Code. as amended, is hereby inserted to read
as.

ARTICLE 283-A. PROOF OF AUTHORIZED CAUSE. — IN CASE THE
TERMINATION IS BASED ON AUTHORIZED CAUSES, THE EMPLOYER
SHALL SUBMIT PROOF TO THE DEPARTMENT OF LABOR AND
EMPLOYMENT FOR VALIDATION. IN CASE OF LOSS OR MEASURES TO
PREVENT LOSSES, A CERTIFICATION ON ACTUAL OR POTENTIAL
LOSSES ISSUED BY THE SECURITIES AND EXCHANGE COMMISSION OR
THE BUREAU OF INTERNAL REVENUE SHALL BE SUFFICIENT.”

SECTION 4, Rules and Regulations, - The Secretary of Labor and Employment shall
promulgate the necessary implementing rules and regulations within one hunslred
and twenty (120) days from. the effectivity of this Act

SECTION 5. Repealing Clause. - All laws decrees. rules, and regulations or parts
thereof, which are contrary to or inconsistent with this Act are hereby repealed or
modified accordingly.

SECTION 6. Separability Provisions. - If any provision of this law or the application
thereof to any person or circumstance, is held invalid. the remainder of this law, or the
application of such provision or part to other persons of circumstances, shall not be
affected thereby

SECTION 7, Effectivity. - This Act shall take effect fifteen (15) days after its publication
in the Official Gazette or in at least two (2) newspapers of general circulation