Basics in Writing a Notice to Explain

Photo from Unsplash | Glenn Carstens-Peters

This article was originally published on June 14, 2018 and has been updated to reflect recent legal developments.

The following post does not create a lawyer-client relationship between Alburo Alburo and Associates Law Offices (or any of its lawyers) and the reader. It is still best for you to engage the services of a lawyer or you may directly contact and consult Alburo Alburo and Associates Law Offices to address your specific legal concerns, if there is any.

Also, the matters contained in the following were written in accordance with the law, rules, and jurisprudence prevailing at the time of writing and posting, and do not include any future developments on the subject matter under discussion.

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AT A GLANCE:

In the workplace, a Notice to Explain (NTE) is a critical document that forms part of due process requirements for employee termination. It ensures that employees are given the opportunity to respond to charges against them before any disciplinary action, including dismissal, is taken.

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In determining whether an employee’s dismissal had been legal, the inquiry focuses on whether the dismissal violated his right to substantial and procedural due process. An employee’s right not to be dismissed without just or authorized cause as provided by law, is covered by his right to substantial due process. Compliance with procedure provided in the Labor Code, on the other hand, constitutes the procedural due process right of an employee. (Brown Madonna Press, Inc. v. Casas, G.R. No. 200898, June 15, 2015)

 

Further, in Citigroup Business Process Solutions Pte. Ltd. v. Corpuz, G.R. Nos. 208738-39, June 05, 2024, the Supreme Court held that in termination cases, the burden of proof rests upon the employer to show that the dismissal is for a just and valid cause. Failure to do so would necessarily mean that the dismissal was illegal. For this purpose, the employer must present substantial evidence to prove the legality of the employee’s dismissal. However, for a dismissal from employment to be valid, both the substantial and procedural due process requirements must be satisfactorily complied with. Thus, the cause of the dismissal must not only have basis under the law, but also the two-notice requirement of due process must be observed. Failure to observe substantial due process renders the dis  issal illegal and entitles the employee to reinstatement without loss of seniority rights and other privileges, full backwages inclusive of allowances, and other benefits or their monetary equivalent.

 

The Twin Notice Rule

For an employee’s dismissal to be legal, the Supreme Court ruled in St. Luke’s Medical Center, Inc. v. Notario, G.R. No. 152166, October 20, 2010 that the employee must be furnished two written notices: the first notice apprises the employee of the particular acts or omissions for which his dismissal is sought, and the second is a subsequent notice, which informs the employee of the employer’s decision to dismiss him. 

 

Similarly, in Musahamat Workers Labor Union-1-ALU v. Musahamat Farms, Inc. Farm 1, G.R. No. 240184, July 06, 2002, the Supreme Court held that as for the notice requirement, the employer must furnish the employee with two written notices before the termination of employment can be effected: (1) the first apprises the employee of the particular acts or omissions for which his/her dismissal is sought; and (2) the second informs the employee of the employer’s decision to dismiss him/her. As for the requirement of a hearing, this is complied with as long as there was an opportunity to be heard, and not necessarily that an actual hearing was conducted.

 

Key Elements of a Notice to Explain (NTE)

When preparing a Notice to Explain, employers must ensure that the document is comprehensive and clearly written. The NTE must comply with the requirements outlined in Department Order No. 147-15, Section 5.1, which governs termination of employment based on just causes under Article 297 of the Labor Code, as amended, as follows:

 

5.1 Termination of Employment Based on Just Causes. As defined in Article 297 of the Labor Code, as amended, the requirement of two written notices served on the employee shall observe the following:

 

1. The first written notice should contain:
   1. The specific causes or grounds for termination as provided for under Article 297 of the Labor Code, as amended, and company policies, if any;   
   2. Detailed narration of the facts and circumstances that will serve as basis for the charge against the employee. A general description of the charge will not suffice; and
   3. A directive that the employee is given the opportunity to submit a written explanation within a reasonable period.

 

“Reasonable period” should be construed as a period of at least five (5) calendar days from receipt of the notice to give the employee an opportunity to study the accusation, consult or be represented by a lawyer or union officer, gather data and evidence, and decide on the defenses against the complaint.

 

Given the legal consequences of an insufficient NTE, it is imperative that the document be prepared correctly. A defect in the NTE may spell the difference between a valid termination and illegal dismissal, which could expose the employer to significant liability.

 

In Integrated Supervisors Union-Apsoteu-TUCP v. Lapanday Foods Corp., G.R. No. 243864, June 26, 2023, the Supreme Court emphasized that the first written notice must specify the grounds for an employee’s termination to give the employee a reasonable opportunity to prepare adequately for his/her defense.

 

Grounds for the Disciplinary Action

Under Department Order No. 147-15 Section 5.1(a)(1), the first written notice or the NTE must state the specific causes or grounds for termination as provided for under Article 297 of the Labor Code, as amended, and company policies, if any. 

 

This is important because one cannot expect the employee to be able to defend himself if he is not informed of the acts he allegedly committed that constitute the offense leveled against him. Failure to clearly state the grounds effectively deprives the employee of the right to be heard and opens the disciplinary action to legal challenge, even if the employee is in fact guilty.

 

How the offense was committed

Department Order No. 147-15 Section 5.1(a)(2) requires the NTE to contain a detailed narration of the facts and circumstances that will serve as basis for the charge against the employee. 

 

It is provided for under the Department Order as well that a general description of the charge will not suffice. The offense or violation committed, whether under the company’s Code of Conduct, employment contract, or the Labor Code, has to be stated in the NTE. This is to inform the employee of what particular offenses he is being charged with. Even though an employee may be dismissed for just cause under the Labor Code, it is necessary that he be apprised that the acts or omissions attributed to him indeed constitute an offense that warrants disciplinary action.

 

Opportunity to Explain

Under Department Order No. 147-15 Section 5.1(a)(3) states that the NTE must contain a directive that the employee is given opportunity to submit a written explanation within a reasonable period.

 

Penalty for the offense being charged

Although the Department Order has not mandated the specific penalties for the offenses being charged against the employee, to be sure, it is also proper to include in the NTE the penalties, if possible.

 

It would be fair for the employee to be informed of the possible penalty for the offense being charged. This is especially true when the employee is facing a possible dismissal as a result, because he deserves to know that he stands to lose his job—and his livelihood—in the event he is found guilty. The NTE should therefore state the imposable or potential penalty, as provided under the company’s Code of Conduct, to ensure transparency and fairness.

Related Article: How to Dismiss an Erring Employee the Right Way

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Alburo Alburo and Associates Law Offices specializes in business law and labor law consulting. For inquiries regarding legal services, you may reach us at info@alburolaw.com, or dial us at (02)7745-4391/ 09175772207/ 09778050020.

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