Amendment on Termination Pay and Employment Rules

Republic Act No. 1787 amends Sections 1 and 2 of Republic Act No. 1052.
Republic Act No. 1787 governs termination of employment in establishments or enterprises covered by Section 1 and Section 2 of Republic Act No. 1052 as amended.

Republic Act No. 1787 sets enforceable rules on when employment may be terminated without a definite period and establishes notice-based protection against arbitrary termination.
Republic Act No. 1787 defines just causes that permit termination without the notice requirements and notice-based compensation.
Republic Act No. 1787 prohibits contract terms that reduce statutory protections on termination and reinstatement after military or civic obligations.

Section 1 applies to cases of employment “without a definite period” in a “commercial, industrial, or agricultural establishment or enterprise.”
Section 2 applies to employment that is affected by certain suspensions of business or by fulfillment of a military or civic obligation prescribed by law.

Section 1 allows the employer or the employee to terminate at any time with just cause for employment without a definite period.
Section 1 allows termination without just cause only through written notice served as follows:
- The employee must serve written notice on the employer at least one month in advance.
- The employer must serve written notice to the employee at least one month in advance or one-half month for every year of service, whichever is longer, with a fraction of at least six months considered as one whole year.
Section 1 imposes employer damages liability when the employer terminates without just cause without the required notice.
Section 1 imposes employer compensation liability when the employer terminates without just cause without the required notice:
- The employer must pay compensation from the date of termination in an amount equivalent to the employee’s salaries or wage corresponding to the required period of notice.

Section 1 lists just causes for terminating an employment without a definite period, grouped into causes “by the employer” and causes “by the employee.”
Employer-side just causes under Section 1 are:
- Closing or cessation of operation of the establishment or enterprise, unless the closing is for the purpose of defeating the intention of the law.
- Serious misconduct or wilful disobedience by the employee of the employer’s or representative’s orders in connection with the work.
- Gross and habitual neglect by the employee of duties.
- Fraud or wilfull breach by the employee of the trust reposed by the employer or representative.
- Commission of a crime or offense by the employee against the person of the employer or any immediate member of the employer’s family, or representative.
- Other causes analogous to any of the foregoing.
Employee-side just causes under Section 1 are:
- Serious insult by the employer or representative on the honor or person of the employee.
- Inhuman and unbearable treatment accorded by the employer or representative of the employee.
- Commission of a crime or offense by the employer or representative against the person of the employee or any of the immediate members of the employee’s family.
- Other causes analogous to any of the foregoing.

Section 2 provides that employment does not terminate when either:
- There is a suspension for a period not exceeding six months of the operation of a business or enterprise not attributable to the fault of the employer; or
- The employee fulfills a military or civic obligation or privilege prescribed by law.
Section 2 imposes on the employer a duty to return the employee to the former job when the employee leaves employment to fulfill a military or civic obligation.
Section 2 requires the employee to indicate the desire to return within a reasonable time not to exceed sixty days from relief from the civic or military obligation.
Section 2 makes the employer liable for damages if the employer fails to comply with the duty to return the employee to the former job.

Section 2 declares that any contract or agreement contrary to Section 1 is null and void.
Section 2 authorizes employers and employees (or their representatives) to enter into a collective bargaining agreement with terms more liberal than those provided for in the Act in favor of the employees.