Fraud or Willful Breach of Trust: Just Cause in Employment Termination

Article 297(c) of the Labor Code provides that an employee may be dismissed for “fraud or willful breach by the employee of the trust reposed in him by his employer or duly authorized representative.” This particular provision speaks of two grounds: (a) fraud; and (b) loss of trust and confidence. The latter is discussed in a separate post. 

Fraud or Willful Breach of Trust Just Cause Termination Philippines

For fraud to be a valid ground for termination, the following must be present:

  • 1. 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. It must be committed against the employer or his/her representative; and
  • 4. It must be in connection with the employee’s work.

In order to constitute a just cause for dismissal, the act complained of must be “work-related” such as would show the employee concerned to be unfit to continue working for the employer.

Employees in the Philippines enjoy security of tenure. Under the Labor Code, no employee may be terminated or dismissed, except for just or authorized causes. The employer has the burden of proving, among others, that the facts support the elements of the cause used by the company to justify the employment termination. Each ground has specific elements. It is important, therefore, for management, or at least the HR staff, to be familiar with these factors. 

Just causes:
* 1. Serious misconduct
* 2. Willful disobedience or insubordination
* 3. Gross and habitual neglect of duties
* 4. Fraud or willful breach of trust
* 5. Loss of trust and confidence
* 6. Commission of a crime or offense
* 7. Analogous causes 
Authorized causes:
* 1. Installation of labor-saving devices
* 2. Redundancy
* 3. Retrenchment or downsizing
* 4. Closure or Cessation of Operation
* 5. Disease 

* Also: Due Process in termination cases

[Sources: D.O. 147-15; Jerusalem vs. Hock, G.R. No. 169564, 6 April 2011]


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