There is an important middle ground between a valid dismissal and an illegal one. When an employer has a valid just or authorized cause to dismiss but fails to observe the required due process (the twin-notice rule for just causes, or the notice to the employee and DOLE for authorized causes), the dismissal is not rendered illegal, and the employee is not entitled to reinstatement or back wages. Instead, the employer is ordered to pay nominal damages as a sanction for the procedural lapse — a fixed sum recognizing the violation of the right to due process. Courts have set indicative amounts, generally higher for a procedural violation in an authorized-cause dismissal than in a just-cause dismissal, though the exact amount is within the court's discretion. The rule balances the employer's right to dismiss for cause against the employee's right to due process.
What if an employer had a good reason to fire someone but botched the procedure? The dismissal is not illegal — but it is not free either. The employer owes nominal damages.
The Middle Ground
Dismissals fall into more than two boxes. Besides a fully valid dismissal and an outright illegal one, there is a third category:
- A valid cause exists (a genuine just or authorized cause); but
- The employer failed to observe due process.
The Consequence: Not Illegal, but Penalized
In this situation:
- The dismissal is upheld — it is not illegal because a valid cause existed;
- The employee is not entitled to reinstatement or back wages; but
- The employer must pay nominal damages as a sanction for violating the employee's right to due process.
What Due Process Was Skipped
- For just causes — the twin-notice rule (first notice of the charges and chance to explain; second notice of the decision); and
- For authorized causes — the written notice to the employee and the DOLE at least one month before.
Failing either triggers nominal damages.
How Much?
Courts have set indicative amounts for nominal damages, generally higher for a procedural lapse in an authorized-cause dismissal than in a just-cause dismissal — because in authorized-cause cases the dismissal is not the employee's fault. The exact amount is within the court's discretion, considering the circumstances.
Why the Rule Exists
The rule balances two things: the employer's right to dismiss for a valid cause, and the employee's right to due process. It does not let the employer ignore procedure for free, but it also does not convert a substantively justified dismissal into an illegal one merely because of a procedural slip.
Practical Takeaways
- A valid cause but no due process = a dismissal that is upheld but with nominal damages owed;
- The employee gets no reinstatement or back wages in this scenario, only nominal damages;
- Amounts are higher for authorized-cause procedural lapses — and employers should always follow the notice rules to avoid the penalty.
Frequently Asked Questions
What happens if an employer has a valid cause but skips due process? The dismissal is not illegal, so there is no reinstatement or back wages, but the employer is ordered to pay nominal damages as a sanction for violating the employee's right to due process.
Is the employee reinstated in this situation? No. Because a valid cause existed, the dismissal is upheld. The employee is not entitled to reinstatement or back wages, only to nominal damages for the procedural defect.
How much are the nominal damages? Courts set indicative amounts, generally higher for a procedural lapse in an authorized-cause dismissal than in a just-cause one, but the exact amount is within the court's discretion.
Why is the amount higher for authorized-cause dismissals? Because in authorized-cause dismissals, the termination is not the employee's fault (it is due to business or health reasons), so a heavier sanction attaches to the failure to observe the required procedure.
This commentary is for general informational purposes only and does not constitute legal advice. For guidance specific to your situation, please consult a licensed attorney.
If you have questions about your rights or options under Philippine law, our firm is available to assist. You may reach us via Viber or WhatsApp, call us at 0995 433 5550, or send an email to vivasnobles@gmail.com. We look forward to hearing from you.