Illegally Dismissed: What Can You Get? Backwages and Reinstatement

The rule on security of tenure is Article 294 of the Labor Code (Article 279 before the 2015 renumbering). The Supreme Court quoted it in Keng Hua Paper Products v. Ainza (2023) and C.P. Reyes Hospital v. Barbosa (2024). In simple words:

• An employer may dismiss a regular employee only for a just cause or an authorized cause allowed by the Code.
• An employee who is unjustly dismissed is entitled to reinstatement without loss of seniority rights and other privileges.
• The employee also gets full [backwages](/law/glossary/backwages), inclusive of allowances, and other benefits or their money value, computed from the time the pay was withheld up to actual reinstatement.

A dismissal is illegal when there is no valid cause. For the list of valid causes, see What are the valid reasons to fire an employee? The employer has to prove the cause. In Aldovino v. Gold and Green Manpower (2019), the Court said: "Failure to discharge this burden means that the dismissal is illegal."

That is a different situation. Since Agabon v. NLRC (2004), a dismissal for a valid cause stays valid even if the employer skipped the notice and hearing steps. The employee does not get reinstatement or backwages, but the employer pays nominal damages for the violation. See Fired without notice? and the case explainer Agabon v. NLRC.

Sometimes reinstatement is not practical. The company may have shut down a line, relations may have turned bitter, or years may have passed. Then the labor tribunals and courts award separation pay in lieu of reinstatement.

In Keng Hua (2023), workers at a paper plant in Malabon were laid off after Typhoon Ondoy in 2009 and never recalled. The company did not prove the losses it claimed, so the Court found the workers illegally dismissed. Because the company said it could no longer manufacture and more than a decade had passed, the Court awarded separation pay instead of reinstatement. It explained the two rules:

• Backwages normally run until reinstatement. When separation pay is ordered instead, backwages run from the dismissal until the decision ordering separation pay becomes final.
• Separation pay in lieu of reinstatement is one month salary for every year of service.

Do not confuse this with the separation pay for authorized causes such as redundancy or closure, which has its own rates. The separation pay calculator covers those authorized-cause rates.

As a general rule, no. In Bustamante v. NLRC (1996), the Supreme Court held that backwages "should not, as a general rule, be diminished or reduced by the earnings derived by him elsewhere during the period of his illegal dismissal". A worker who takes another job while the case is pending does not lose part of the award because of that new income.

Yes. In C.P. Reyes Hospital v. Barbosa (2024), the Court said illegally dismissed probationary employees, like regular employees, get backwages up to actual reinstatement, or up to the finality of the decision if reinstatement is not feasible. It departed from an older ruling, Robinsons Galleria v. Ranchez, that stopped backwages at the end of the probation period. See Can a probationary employee be terminated?

• Legal interest. In Keng Hua and C.P. Reyes, the Court ordered 6% interest per year on the money awards, from the finality of the decision until full payment.
• Moral and exemplary damages. These are not automatic. In Aldovino, the Court explained that moral damages are recoverable when the dismissal is attended by bad faith or fraud, is oppressive to labor, or is done in a manner contrary to good morals, good customs or public policy. Exemplary damages are recoverable when the dismissal was done in a wanton, oppressive or malevolent manner. In that case the workers got both.
• Attorney's fees. These may also be awarded. In Aldovino they were 10% of the award, under Article 2208 of the Civil Code, and in Keng Hua the Court kept a 10% award because the workers were compelled to litigate.

The amounts in each case depend on the facts and on the tribunal. There is no fixed price list.

These are made-up examples to show how the rules work. They are not advice for any real case.

Nestor is a regular factory worker in Valenzuela. One day his supervisor tells him, "Huwag ka nang pumasok," with no notice and no reason. He files a complaint. If the labor tribunal finds illegal dismissal, he can be ordered reinstated with full backwages from the day his pay stopped.

While the case is pending, Nestor takes a job at another factory. Under Bustamante, his backwages are not reduced by what he earns there.

Lorna earned ₱20,000 a month at a call center when she was illegally dismissed. By the time the case ends, relations with her employer have broken down, and the tribunal awards separation pay instead of reinstatement. In Keng Hua, this separation pay was counted from the first day of work up to the finality of the decision. If that gives Lorna 8 years of service, that part of the award would be 8 × ₱20,000 = ₱160,000, on top of her backwages up to finality. This is only an illustration: the actual figures depend on the decision.

• Keep every paper: your contract, payslips, ID, any memo or message about your dismissal.
• Write down what happened and when, and who was there.
• Read any quitclaim or "resignation" paper carefully before signing. In Aldovino, the Court said blanket waivers that free employers from liability on their employees' claims are ineffective.
• Check the deadlines and the steps in How to file a labor complaint.

For the other rules on resignation, dismissal and leaves, see Employee rights in the Philippines.

Illegal dismissal cases turn on evidence and deadlines, so talk to a lawyer early, especially if your employer offers a settlement or a quitclaim, or if large amounts are at stake. If you cannot afford a lawyer, see Free legal help in the Philippines for the Public Attorney's Office (PAO) and other options.