Constructive Dismissal: Meaning

The words "constructive dismissal" do not appear in the Labor Code. The idea comes from Supreme Court rulings. In Lagamayo v. Cullinan Group (2021), the Court defined it as "quitting or cessation of work because continued employment is rendered impossible, unreasonable or unlikely; when there is a demotion in rank or a diminution of pay and other benefits."

It protects security of tenure: an employer cannot avoid the rules on dismissal by making the employee quit.

In Lagamayo, the Court asked "whether a reasonable person in the employee's position would have felt compelled to give up his [or her] employment under the circumstances." The question is judged on the facts of each case.

The burden is shared:

1. The employee first proves the fact of dismissal by substantial evidence.
2. The employer then shows that its act had valid or legitimate grounds, such as genuine business necessity, and was not a way to get rid of the employee.

• Transfers. In Telus International Philippines v. De Guzman (2019), the Court said a transfer is not constructive dismissal if the employer shows it is not unreasonable, inconvenient or prejudicial to the employee and involves no demotion in rank or cut in salary, privileges and other benefits. The transfer in that case failed the test. See Can your employer transfer you?
• Long suspensions. In Lagamayo, the Court said a mere extension of the 30-day preventive suspension is not constructive dismissal by itself. The prolonged suspension must be shown to be tainted with bad faith or malice.

Lagamayo also said that a just cause for dismissal under [Article 297 [282]](/law/labor-code/article-297) is "inherently incompatible" with constructive dismissal.

The same remedies as any illegally dismissed employee under [Article 294 [279]](/law/labor-code/article-294): reinstatement without loss of seniority rights and full backwages, inclusive of allowances and other benefits, from the time pay was withheld up to actual reinstatement. See Constructive dismissal: when quitting counts as being fired and Illegally dismissed: what can you get?

Made-up illustration: Nora is a branch supervisor in Iloilo City. After she questions an order from her manager, she is moved to a clerk position in a branch three hours away, at a lower salary, with no business reason given. She resigns a month later. A labor tribunal may find that a reasonable person in her place would have felt forced to leave, so her resignation may be treated as constructive dismissal.

A worker kept without any assignment for too long may face a similar question: see floating status.