1 m8 Republic of the Philippi ye DEPARTMENT OF LABOR AND EMPLOYMENT f Intramuros, Manila ye DEPARTMENT ORDER NO. [47 Series of 2015, AMENDING THE IMPLEMENTING RULES AND REGULATIONS OF BOOK VI (OF THE LABOR CODE OF THE PHILIPPINES, AS AMENDED SECTION 1. Pursuant to Article 5 of the Labor Code of the Philippines, as amended, on the rule-making power of the Secretary of Labor and Employment, the following ‘Rules goveming the application of the just and authorized causes of termination of employment under Articles 297-299 of the Labor Code, as amended, are hereby issued as follows RULE LA APPLICATION OF JUST AND AUTHORIZED CAUSES OF TERMINATION Section 1. Guiding Principles. The workers’ ight to security of tenure is uaranteed under the Philippine Constitution and other laws and regulations. No ‘employee shall be terminated from work except for just or authorized cause and upon ‘observance of due process, Section 2. Coverage. This Rules shall apply to all parties of work arrangements where employer-employee relationship exits. It shall also apply to all Parties of legitimate contractinglsubcontracting arrangements with existing employer: employee relationships, Section 3. Employer-Employee Relationship. “o ascertain the existence of an omployer-employee relationship, the four-fold test shall apply, to wit’ (1) the selection and engagement of the employee; (2) the payment of wages; (3) the power of dismissal; and (4) the power to control the employees conduct, or the so-called “control test.” The so-called "contol test” is commonly regarded as the most crucial {and determinative indicator of the presence or absence of an employer-employee relationship. Under the control test, an emiployer-employee relationship exists where the persen for whom the services are performed reserves the right to control not only the end achieved, but also the manner and means used te achieve that end * Section 4. Definition of Torms. The following terms as used in this Rules, shall mean: (a) “Authorized Causes” refer to those instances enumerated under Aticles 298 [Ciosure of Establishment and Reduction of Personnel] and 299 [Disease as a Ground for Termination] of the Labor Code, as amended These are causes brought * bas. Maca, GR No. 195466, Jy 2,208,by the necessity and exigencies of business, changing economic conditions and lness of the employee? (0) “Just Causes” refer to those instances enumerated under Article 297 [Termination by Employer] ofthe Labor Code, as amended. These are causes directly atirbutable tothe fault or negligence of the ernployee.” (6) "Closure or Cessation of Business” refers to the complete or partial cessation ofthe operations andior shut-down ofthe establishment of the emplayer.* (4) "Commission of a Crime or Offense” relers to an offense by the employee against the person of hismer employer or any member of his/her family of hisiher duly authorized representative,” {€} “Contractor” refers to any person or entity, incuding cooperative, engaged legitimate contracting or subcontracting arrangement providing either services, skiled workers, temporary workers, or a combination of services to a principal under & Service Agreement. () "Contractor's Employee" refers to one employed by a contractor to perform or complete a job, work, or service pursuant to a Service Agreement with a principal It shall also refer to regular employees of the cortractor whose functions a Not dependent on the performance or completion of a specific job, work or service within a definite period of ime, ie, administrative stat, (9) "Employee" refers to any person in the empoy of an employer. It shal include any individual whose work has ceased as a result of or in connection with any Current labor dispute or because of any unfair labor practice” {(h) “Employer” refers to any person acting in the interest of an employer, direct or indirectly" It shall include corporation, partnership, sole proprietorship and cooperative. (0) "Fraud" refers to any act, omission, or concealment which involves a breach of legal duty, trust or confidence justly reposed, and is injurious to another > ® gency ofthe buses of the employer oper vin Costrction Crp, GR, No, 207253, August 24,2038, charang economic canton Caluco v.19 Papper Cement Carp, GR. No. 169090, February 1, 2005} an shes ofthe employee (eyes v RP Gurdans ect Agency ie, GR Ne. 380755 Apri 30, 2013, owe lsbor e.g Ein Court of Appeal No. 64582, March 28,207 188C08 independent Union Hon Tore, 21 SCRA G28 ‘Section 36) OOLE Department Order IBA Series of 2033. "tcl 219212) fhe abor Cade the Pipes, os amended. peice 219 [22 eof the abor Code ofthe Pspne, a5 ome ded * Phil eoucation Cox Union ofthe Phi Education Employees, G8. No. 13778, 29 Ap S60 Lepnts Comsldated Wiring, CA, R.NO.L-3S473, Aol 29, [96 2() "Gross Neglect’ refers to the absence of that dligence that an ordinary prudent man would use in hisfher own afairs,® (&) “Habitual Neglect’ refers to repeated failure to perform one’s duties over a Period of time, depending upon the circumstances. ()) ‘insubordination’ refers tothe refusal to obey some order, which a superior {is entitled to give and have obeyed. Its a wilful or intentonal disregard of the lawful ‘and reasonable instructions of the employer. * (cm) “Installation of Labor-saving Devices" refers to the reduction of the number of workers in any workplace made necessary by the introduction of labor- saving machinery or devices,"® (0) “Loss of Confidence” refers to 2 condition arising trom fraud or wilful breach of trust by employee of the trust reposed in himiher by hisiher employer or histher duly authorized representative. There are two (2) classes of positions of trust The first class consists of managerial employees, or those vested with the power to lay down management policies; and the second class consists of cashiers, auditors, property custodians or those who, in the normal and routine exercise of their functions, regularly handle significant amounts of money or property.” (0) “Misconduct” refers to the transgression of some established and definite rule of action, a forbidden act, a dereliction of duty, wilful in character and implies ‘wrongful intent and not mere errr in judgment, ® (0) *Principal” refers to any employer, whether a person or entity including government agencies and government owned and controlled corporation, who/which Puts out or farms out a job, Service or work to a contractor (q) “Redundancy” refers to the condition when the services of an employee are in excess of what 1s reasonably demanded by the actual requirements of the enterprise or superfuous, © (9 “Retrenchment’ refers to the economic ground for dismissing employees ‘and is resorted to primarily to avoid or minimize business bsses,"” Section 5. Due Process of Termination of Employment. In all cases of termination of employment, the standards of due process laid down in Article 299 (b) 5 eyes vi, Mons Tea House, GA. 40853, Febery 27,2003, ‘sg Astcates Ine ¥ MURC, GR No 10839, March, 1296 ci Serie Commision Avandia, GR No 1995, Rr 7, 204 2 pipine sheet Metal Worker Union lt 83 Ps 33 sguera Vale Verde County Cb nad Enena Vala, 58, No 173012, tune 13,2032. * oeprtment of Lor Mansa scion #34302 ‘shite leone NLA, GA No. 82249, ebay 7, 1991 ata Gui ard Pac Company a ania, ne, AG PL, HL, GA, No 127516, May 2, 1989 3of the Labor Code, as amended, and settled jurisprudence on the matter, must be ‘observed as follows: ‘5.4 Termination of Employment Based on Just Causes. As defined in Article 297 of the Labor Code, as amended, the requirement of two written notices served on the employee shall observe the folowing: (@) The first written notice should contain: 1. The specific causes or grounds for termination as provided for under Ale 297 of the Labor Code, as amended, and company policies, i any; 2, Detailed narration of the facts and circumstances that wil serve as basis for the charge against the employee. A general description of the charge will nt sufi; and 3. A directive thatthe employee is given opportunity to submit a writen ‘explanation within a reasonable period, “Reasonable period’ should be construed as a period of at least fve (6) calendar days from receipt of the notice to give the employee an ‘opportunity to study the accusation, corsult or be represented by a lawyer or union officer, gather data and evidence, and decide on the defenses against the complaint."® (©) After serving the first notice, the employer should afford the employee ‘ample opportunity to be heard and to defend himselherself with the assistance of histher representative if heishe so desires, as provided in Article 299 (o) of the Labor Code, as amended, “Ample opportunity to be heard” means any mearingful opportunity (verbal or writen) given to the employee to answer the charges against him/her and submit evidence in support of hisiher defense, whether in a hearing, conference or some other fair, just and reasonable way. A formal hearirg or conference becomes ‘mandatory only when requested by the employee in writing or substantial evidentiary alisputes exist or a company rule or practice requires io” when similar crcumstances lusty it (6) After determining that termination of enployment is justified, the ‘employer shall serve the employee a written notice of termination indicating that: (1) all circumstances involving the charge against the employee have been considered; and (2) the grounds have been established to justfy the severance of their ‘employment The foregoing notices shall be served porsonally to the employee or to the employee's last known address, * Unever Rivera GR No. 20170, une 3, 213;Secton 12, O0IF Department Order 38-4, "peter. PIT, GR, No 152088, Api, 2008 Seton 12, DOLE parent Order 18.8,6.2 Standards on Just Causes. An employer may terminate an employee for any ofthe following grounds: (2) Serious Misconduct. To. be a valid ground fr termination, the following must be present.” ‘There must be misconduct: ‘The misconduct must be of such grave and aggravated character; It must relate to the performance of the employee's duties; and ‘There must be showing that the employee becomes unfit to continue ‘working forthe employer. (©) Willful Disobedience or insubordination, - To be a valid ground for termination, the following must be present" 41. There must be disobedience or insubordination; 2. The sisobedience or insubordination must be wilful or intentional characterized by a wrongful and perverse atitud 3, The cider violated must be reasonable, avvful, and made known to the employee; and ‘4. The order must pertain to the duties whish he has been engaged to discharge. (©) Gross and Habitual Neglect of Duties. - To be a valid ground for termination, the following must be present?” 41. There must be neglect of duty; and 2. The negligence must be both gross and tabitual in character. (a) Fraud or Wilful Breach of Trust - To be a valid ground for termination, the folowing must be present” ® Fgh within company premises (Techno Gat PhilppinesCaprain v. NIAC ané Dens Ara, ‘GA no 187605, apr 13,2010, uttoing obser, inti a lense words aga perio lAstobus Workers Union, et av. MLRG, eat, GR. No. 1178, ly 1, 1996, Tobreaton of te records (Manuel Fae v rete Systems nds, ne: GR No. 42007, are 26,200), a sig employe’ property equipment and personnel nthe persona busines of the cron ence S305, new MIRG GA No 13000 August 2,196) * elusal to waster [Sentinel Seurty Agency Ine. NLR, GR. No, 222468, September 3,128) ane ets te report to new work aspen (Westin Phsppine Paral. NRE G He [22621 Moy 3, 1999, abivsltartines,abenteam an abandonment labore a1 NLRC GR. No 11098, eptember 31095), * Ved supervisor Inlting ard rong 2 boot {Top Form Me Co, ne. MRC, GR. 65706, December 1, 1992] haul absence of managerial empoyee (Prins MR, GR No. 1007, ‘Ao 24,298), faure of cashier to scout for the serage of ompany fee (San Miguel Car URC GA No, 86268), tne 2, 982) eompcy in the attempt tocover Up ite ape of the companys tol leon: (Cc Tallways Opertion Employees and Workers Union v NIAC, GA. Hes, TELE, ‘uly 3, 3852 steaing company property Zambaunga Water Dstt arom, 149 CRA 42) ed sng dole or eitious requstln sips inorder to witha crpany materia PLDT MA. 129 SCRA 163. 541. There must be an act, omission, or concealment; 2. The act, omission or concealment involves a breach of legal duty, trust, or confidence justly reposed: 3, Itmust be committed against the employer or histher representative; and 4, Itmust be in connection with the employees’ work (€) _Losg of Confidence -To be a valid ground for termination, the following must be present: 41. There must be an act, omission or concealment; 2. The act, omission or concealment jusifies the loss of trust and confidence of the employer to the employee; 3. The employee concemed must be holcing a position of trust and confidence: 44. The loss of rust and confidence should nat be simulated: 5. It should not be used as a subterfuge for causes which are improper, ilegal, or unjustited; ana 6. It must be genuine and not a mere afte thought to justify an earlier ‘action taken in bad faith, (Commission of a Crime or Offense - To be a valid ground for termination, the folowing must be present:® 41. There must be an act or omission punishablelprohibited by law: and 2 The act or omission was committed by the emplayee against the person of employer. any immediate member of hisiher family, oF histher duly authorized representative, (@)__ Analogous Causes - To be valid ground for termination, the following must be present 1. There must be act or omission similar to those specified just causes; and 2. The act or omission must be voluntary ardor wilful on the part ofthe ‘employees, No act or omission shall be considered as analogous cause unless expressly specified in the company rules and regulations or policies. 5.3 Termination of Employment Based on Authorized Causes. As defined in Articles 298 and 299 of the Labor Code, a8 amended, the requirements of due process shail be deemed complied with upon service of a written notice to the employee and the appropriate Regional Office of the Department of Labor and enna Gy Restaurant Corp NLRC, 227 SCRA 43; Mids Tout. MLAG, GR. NO. 11639, ay 29, 3980) leg dering emsloyr’s pred, vttion of company rls and regulations, eankenness, oss neeney MF Wolgo ler Tank rch NLRC S17 SeN S132), 6Employment (DOLE) at least thity days (30) before the effectivity of the termination, specifying the ground or grounds for termination 5.4 Standards on Authorized Causes. An employer may termi te an ‘employee for any ofthe following grounds: ©) Installation of Labor-saving. Devices. - To be a valid ground for termination, the following must be present 0) be present?” © 1. There must be introduction of machinery, equipment or other devices; 2. The introduction must be done in good fath; 3. The purpose for such introduction must be valid such as to save on ‘cost, enhance efficiency and other justifiaole economic reasons; 4. There sno other option available 2 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 critera in selecting employees to be terminate Redundancy. - To be a valid ground for termination, the following must 41. There must be superfluous positions or services of employees: 2 The positions or services are in excess of what is reasonably demanded by the actual requirements of the enterprise to operate in an economical and efficient manner, ‘There must be good faith in abolishing redundant pesitions; There must be fair and reasonable criteria in selecting the employees {0 be terminated; and 5. There must be an adequate proof of redundancy such as but not limited to the new stafing patter, feasiilty studies/proposal, on the Viability of the newly created positions, job description and the approval by the management ofthe restructuring. Retrenchment or Downsizing. - To be a valit ground for termination, the following must be present: 4. The retrenchment must be reasonably necessary and Ikely to Prevent business losses; * putomatian (Phippine Sheet Metal Worker Union 8 i 43), 2 Rerganiation (Oo Pilppnes eet NAC etal] and dplaton of work (Wise Fe Co, Ingo Mie supa). ‘WasanAchel Corporation. NLR, GR. No. 12308, March 25,199. 2% Genera Ming Copoaton ota. oj, No. 181738 % Abiton of departments or poston ina company [San MiuelCoportienv. NLRC, GR. No 99266, Maren, 999,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. The expected or aciual losses must be proved by eulficent 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 securly of tenure: and 5. There must be fai and reasonable criteria in ascertaining who would be dismissed and who would be retaired among the employees, such as status, efficiency, senioriy, physical fitness, age, and financial hardship for certain workers. (9) Closure or Cessation of Operation. - To be a valid ground for termination, the following must be present: 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; ane 3. There is no other option available to the employer except to close or ccoase operations, (0) Disease. - To be a valid ground for termination, the following must be present: 41. The empioyee must be suffering from any disease: 2. The continued employment of the employee is prohibited by law or Prejudicial to hisiher health as well as Io the health of his/her co- ‘employees; and 3. There must be certfication by a competent public health authority that the disease is incurable within a period of six (6) months even with proper medical treatment, In cases of installation of labor-saving devices, recundaney and retrenchment, the “Last.in, Firs-Out Rule" shall apply except when an employee volunteers fo be separated from employment. 6.5 Payment of Separation Pay. Separation pay shall be paid by the employer to an employee terminated due to instalation of labor-saving devices, redundancy, Tetrenchment, ciosure or cessation of operations not due fo serious business losses oF financial reverses, and disoase. aba NAG, GR No. 85286, Agus 28, 1992 Cental Azuara dela Caro v NLRC GR. No 4o0082, December 2,195 elation of busines (henner Dco Pit Terie Corporation v. NLRC, [GR No 122876, Februry 47,200) sen good fat Lucena factor Ine MLR GR No, 740, Noverber 1, 1986, Second hin, Mint Reslton, When there are two enployes ocupyng the ame pale in the company affected by the etenchment progam, the lat one employed wil neceearay be the fst to eo Moye Farms _Empoyees Orgbnzation NAC, GR. No 106256, December 25,136) 8‘An employee terminated due to installation of labor-saving devices or ‘edundancy shail be paid by the employer a separation psy equivalent to atleast one @) 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 ‘An employee terminated due to retrenchment shall be paid by the employer a ‘separation pay equivalent o 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. An employee terminated due to closure or cessation of business operation not ‘due to serious business losses shall be paid by the employer @ separation pay ‘equivalent to 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. Where closure is due to serious business osses or financial reverses, 1 separation pay is required, ‘An employee terminated due to disease shall be paid by the employer a separation pay equivalent to at least one (1) month salary or one-half (1/2) month salary for every year of sorvico, whichever Is higher, a fraction of six (6) months service is considered as one (1) whole year ‘An employee whose employment is terminated by reason of just causes is not entitled to separation pay except as expressly provided for in the company policy or Collective Bargaining Agreement (CBA), Section 6. Other Causes of Termination. In addition to Section 4, the employer may also terminate an employee based on reasonable and lawful grounds specified under its company polices. ‘An employee found positive for use of dangerous drugs shall be dealt with ‘administratively which shall be a ground for suspension or termination, * ‘An employee shall not be terminated from work based on actual, perceived of suspected HIV status.”* ‘An employee shall not be terminated on basis of adual, perceived or suspected Hopattis B status” {An employee who has or had Tuberculosis shall rot be discriminated against Helshe shail be ented to work for as long as they are certfied by the company’s accredited health provider as medically fit and shall be restored to work as soon as histher ness is controlied.*" “* DOLE Department Advisory No. §, Sees of 2010 Parti C3. par. pou Department Orde No.5, Serie of 208,Sexual harassment" is considered a serious misconduct. It is reprehensible ‘enough but more s0 when inficted by those with moral ascendancy over their victim, Section 7. Causes of Termination Under the Collective Bargaining ‘Agreement (CBA). An employee may also be terminaied based on the grounds provided for under the CBA. Section 8. Mandatory Conciliation-Mediation on Termination Disputes. Al sisputes arising out of termination of employment shat be subject to mandatory conelition-mediation pursuant to Republic Act No. 10396 and its Implementing Rules ‘and Regulations, Request for assistance involving issues arising out of termination of ‘employment based on just or authorized cause shall be lodged before the Single Entry Assistance Desk Officers (SEADOs) at the Regional/ProvincialFled Offices of DOLE or its attached agencies In the region pursuant to the Implementing Rules and Regulations of Republic Act No, 10396, In case of settlement, the Desk Oificer shall reduce the agreement into wring, have the partes understand the contents therefor, sign the same in hishher presence, and attest the document to be the true and voluntary act cl the partes For organized establishment, all disputes shall undergo grievance machinery under the CBA. In case of failure to reach an agreemert, the parties may refer the ‘same to conciiation-mediation under the Single Entry Approach (SEnA) or agree to ‘submit itfor voluntary arbiation in accordance with Articles 274 and 275 of the Labor Code, as amended Section 9. Settlement Agroement. Any settlement agreement reached by the Parties before the Desk Officer shall be final and binding, In case of failure to reach an agreement during the concilation-mediation Period, the request shall be referred to compulsory arbiration, or f both parties $0 agree, o voluntary arbitration Section 10. Condition Precedent to Compulsory Arbitration, No Labor Abiter shall take cognizance of the complaint for illegal dismissal unless there Is @ referral from the Desk Officer pursuant lo the Implementing Rules and Regulations of Republic Act No. 10396, Section 11. Non-compliance with Settlement Agreement; Execution. In ccase of non-compliance by the employer or employee, the terms of the settlement agreement may be enforced by requesting the Desk Offeer to refer the same to the proper Ragional Arbitration Branch (RAB) of the National Labor Relations Commission (NLRC) for enforcement of the agreement pursuant to Rul V, Section 1 () of the 2005 Revised NLRC Rules, as amended, The same shall bs docketed by the RAB as arbitration case for enforcement of the settiement agreement. The employee or ° Fong te anes, messanog the sour and caresng the nape (bres ¥: NLRC, National Sel Compe al, GA No 129737, May 2, 1298), 10employer may also disregard the settement agreement and file an appropriate case before the appropriate forum, SECTION 2. Repealing Clause. Section 2(4), Secon 7, Section 8, Section 9, Section 10 and Section 11 of Rule 1, Book VI of the Implementing Rules and Regulations of the Labor Code of the Philippines, as amended, are hereby repealed, Al other rules and regulations issued by the Secretary of Labor and Employment inconsistent with the provision of this Rules are hereby superseded, SECTION 3. Soparability Clause. if any provision or portion of this Rules is declared void or unconstitutional, the remaining portions or provisions hereof shall ‘continue to be valid and effective. SECTION 4, Effectivity. This Order shall be effectve fifteen (15) days after ‘completion of its publication in at least two (2) newspapers of general circulation, Manila, Phiippines, o% September 2016. ROSALINDA DiNAPiEis.2aLDOZ ‘Secretary sn i a