Short answer. Yes — installing a labour-saving machine is a lawful ground to end your employment, but only if the employer follows the rules. It must serve written notice on you and on the labour department at least one month before the effective date, and it must pay you separation pay.
What the law says
The employer may also terminate the employment of any employee due to the installation of labor-saving devices, redundancy, retrenchment to prevent losses or the closing or cessation of operation of the establishment or undertaking unless the closing is for the purpose of circumventing the provisions of this Title, by serving a written notice on the workers and the Ministry of Labor and Employment at least one (1) month before the intended date thereof.
Labor Code, Article 283 — Closure And Personnel Reduction. Read the full provision →
Automation is an authorised cause, not a just cause
The law splits lawful dismissals into two families. A just cause is something you did wrong — serious misconduct, for example. An authorised cause is a business decision that has nothing to do with your conduct, and automation sits squarely in that second family. Article 283 of the Labor Code, which appears as Article 298 in the renumbered text, allows an employer to terminate employment due to the installation of labor-saving devices. Because no fault is being alleged against you, there is no charge to answer and no administrative hearing on your conduct. What the law gives you instead is advance notice and money.
The one-month written notice is not optional
The employer must serve a written notice on the workers and the Ministry of Labor and Employment at least one (1) month before the intended date thereof. Two things follow. First, a verbal warning, a message on your last day, or a sudden padlock does not satisfy this — the notice must be written and it must actually reach you. Second, the copy filed with the labour department matters as much as yours; that filing is what lets the State check that the ground is real. Simply handing you an extra month's salary instead of giving the notice period is not what the article says.
What separation pay you should receive
Separation pay for automation is set at the higher of two measures: at least his one (1) month pay or to at least one (1) month pay for every year of service, whichever is higher. So an employee of eleven years receives eleven months' pay, while an employee of eight months still receives one month. A fraction of at least six (6) months shall be considered one (1) whole year, so seven years and seven months counts as eight. This is the more generous of the two rates in the article. Retrenchment to prevent losses, and closures not caused by serious business losses, carry only half a month's pay per year of service — which is why the label the employer chooses is worth reading closely.
When the machine is only a cover story
What the article does not do is let an employer dress up an ordinary dismissal as progress. The device must genuinely absorb the work. If the same tasks are simply passed to a newer or cheaper colleague, the ground is false and the dismissal is not lawful. The provision itself withholds protection where the step is taken for the purpose of circumventing the provisions of this Title. Nor does the ground let management pick freely among staff — who goes should follow from the work the machine replaced, not from who complained, organised or fell pregnant. If you suspect a pretext, keep the notice, your payslips and any job advertisement that appears afterwards, and take advice promptly, because the period for filing a labour complaint is limited.