Early Termination of Fixed Term Employment Contract by Employer Philippines

Early Termination of Fixed Term Employment Contract by Employer in the Philippines: What You Need to Know

Employment contracts are a crucial part of any business operation, as they provide clarity on the terms and conditions of employment. In the Philippines, employers have the right to terminate a fixed term employment contract before its expiration date under certain circumstances.

If you are an employer who is considering terminating an employee’s fixed term contract early, it’s essential to understand the legal requirements and risks involved. In this article, we’ll discuss the basics of early termination of fixed term employment contracts in the Philippines.

What is a Fixed Term Employment Contract?

A fixed term employment contract is an agreement between an employer and employee for a specific period. It has a definite start and end date, and the employment relationship automatically terminates at the end of the term.

Fixed term employment contracts are commonly used for project-based or seasonal work, temporary staffing arrangements, or when employers need to fill a position for a specific period.

Can an Employer Terminate a Fixed Term Employment Contract Early?

Yes, an employer can terminate a fixed term employment contract before its expiration date, but they must have a valid reason to do so.

Under Article 1191 of the Philippine Civil Code, a party may rescind a contract if the other party fails to comply with its obligations. This is known as a breach of contract. An employer may terminate a fixed term employment contract if the employee violates the terms and conditions of the agreement.

For example, if the employee fails to perform their duties, commits a serious offense, or engages in misconduct, the employer may terminate the employment contract before its expiration date.

It’s important to note that termination must be done in accordance with due process to avoid any legal issues. This means that the employer must give the employee a notice of termination and a chance to explain their side before the termination takes effect.

If the employer terminates the employee without a valid reason or due process, the employee may file a complaint for illegal dismissal.

What are the Risks of Terminating a Fixed Term Employment Contract Early?

Terminating a fixed term employment contract early may have legal and financial consequences for the employer. If the termination is found to be illegal, the employer may be ordered to pay back wages, reinstatement, and other damages.

Moreover, if the employee has a valid reason for filing a complaint for illegal dismissal, the employer may face legal sanctions, including fines and imprisonment.

Conclusion

Employers in the Philippines have the right to terminate a fixed term employment contract early, but they must have a valid reason for doing so. If you are an employer who is considering early termination of a fixed term contract, it’s crucial to follow due process and ensure that you have a valid reason to avoid costly legal issues.

As a professional, I also recommend that you seek legal advice to ensure that you comply with all legal requirements and protect your business interests.