Illegal dismissal and damages

There is an article (“The Termination“) in the July 2007 issue of Entrepreneur Philippines that discusses certain reminders for the management in terminating employees. The article got my attention because, among other things, it mentions that non-compliance with the due process requirements in terminating an employee renders the dismissal illegal. I got in touch with the author because, as far as I know, this is no longer true today.

I previously wrote that a violation of the twin-notice requirement, which is an aspect of due process, does NOT render the dismissal illegal or ineffectual:

There are two basic issues in the foregoing scenario. The first issue relates to the employer’s violation of statutory due process, which is the subject of flip-flopping Supreme Court decisions. In the Serrano case (2000), the Supreme Court ruled that where the employer had a valid reason to dismiss an employee but did not follow the twin requirements of due process, i.e., notice and hearing, the dismissal is ineffectual and the employer must pay full backwages from the time of termination until it is judicially declared that the dismissal was for a just or authorized cause. Fortunately, this is no longer the controlling doctrine. On 17 November 2004, the Supreme Court promulgated its decision in Agabon reversing this rule. Now, 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. This is a reversion to the pre-Serrano doctrine enunciated in the Wenphil case. Indeed, it is only fair that when the dismissal is for cause, the failure to comply with the twin-notice rule should not invalidate the dismissal.

The Supreme Court stated the rationale for this change of rule, and I must say I agree with it. According to the Court, declaring a termination as illegal on the mere ground that there’s no compliance with due process requirements . . .

“. . . would encourage frivolous suits, where even the most notorious violators of company policy are rewarded by invoking due process. This also creates absurd situations where there is a just or authorized cause for dismissal but a procedural infirmity invalidates the termination. Let us take for example a case where the employee is caught stealing or threatens the lives of his co-employees or has become a criminal, who has fled and cannot be found, or where serious business losses demand that operations be ceased in less than a month. Invalidating the dismissal would not serve public interest. It could also discourage investments that can generate employment in the local economy.”