Philippines: AI and Job Security in the Philippines: Do’s, Don’ts, and Red Flags Employers Should Keep in Mind

Authors: Rashel Ann C. Pomoy, Lawrence Ivan Manalo, and Celina Eunice Cheyenne D. Abueg

The adoption of artificial intelligence (“AI”) in the workplace is no longer a distant prospect; it is already underway. AI has demonstrated its capacity to improve efficiency and enhance productivity across industries, sectors, and professions. At the same time, it has introduced challenges and risks, including novel legal and practical issues affecting both employers and employees.

According to the International Labour Organization (“ILO”), among the ASEAN nations, the Philippines faces the highest level of jobs at risk due to AI. To date, however, there is no Philippine case law directly addressing the termination of employees due to the introduction of AI tools and systems in the workplace, nor is there a comprehensive law or executive issuance specifying employer obligations in such scenarios.

Against this backdrop, this article sets out practical Do’s, Don’ts, and Red Flags that employers should keep in mind when rolling out AI tools in the workplace, to help them embrace innovation while minimizing legal risk.

 

Do: Exercise Good Faith in the Adoption of AI in the Workplace

Generally, employers may adopt AI tools they consider useful or beneficial in the workplace, as this falls within their inherent management prerogative to regulate, according to their own discretion and judgment, all aspects of employment. However, this prerogative is not absolute, particularly when decisions may adversely affect employees’ rights.

Employers should therefore introduce AI tools in the workplace in good faith, ensuring that such technology is used to augment productivity rather than arbitrarily displace employees. Good faith in the integration of AI systems into company operations helps demonstrate that the initiative is a legitimate effort to enhance business efficiency, rather than a means to circumvent employees’ rights, including their security of tenure.

 

Don’t: Automatically Declare Positions Redundant Because of AI

The adoption of AI tools in the workplace may reduce the need for certain employee functions, as some tasks previously performed by employees may now be performed more efficiently through AI tools or systems. Consequently, some positions may indeed become redundant, prompting employers to consider workforce reduction.

However, the introduction of AI in the workplace does not, by itself, automatically justify dismissals. While AI continues to transform the workplace, the legal standards for termination by reason of redundancy remain unchanged—for now.

Jurisprudence requires employers to prove, among others, adequate proof of redundancy, good faith in abolishing the redundant positions, and the existence of fair and reasonable criteria in selecting employees who will be dismissed due to redundancy.

Thus, even if AI renders certain roles or functions superfluous, employers should exercise caution in declaring positions redundant and must still strictly follow the requirements of law before effecting any dismissals.

 

Do: Prepare Evidence That Justifies the Introduction of AI in the Workplace

Before introducing AI tools or systems, employers should, as a best practice, analyse and document the business rationale for doing so. This includes assessing which tasks or processes are highly repetitive, time-consuming, or prone to error, and determining whether AI can meaningfully improve efficiency, productivity, or service quality. By grounding the decision to introduce AI in clear, data-driven evidence, employers demonstrate that the technology is being adopted as a legitimate business tool, thereby reducing potential legal risk under Philippine labour law, including claims that any subsequent dismissals are merely meant to circumvent employees’ right to security of tenure.

From a legal standpoint, proper documentation becomes essential if an employee who is terminated following the adoption of AI tools challenges the termination. In such a scenario, the burden of proof rests on the employer to establish the validity of the dismissal. Accordingly, it is prudent for employers to prepare evidence showing that the use and adoption of AI tools in the workplace was necessary and justified, and that any resulting workforce reduction was tied to legitimate operational needs. In the absence of such evidence, terminations may appear arbitrary or tainted by bad faith, significantly increasing the employer’s exposure to claims for damages, back wages, attorney’s fees, and other monetary awards.

 

Don’t: Skip Procedural Due Process

Employers must never skip procedural due process when they are compelled to terminate employment, even in the context of AI‑driven workforce changes. While this may seem elementary, especially for experienced HR professionals and labour law practitioners, it remains a common pitfall.

Procedural lapses, such as failing to serve proper notices to employees or the Department of Labour and Employment (DOLE), or neglecting to document the rationale for termination, can expose employers to legal challenges, regardless of whether the underlying cause for termination is arguably valid. In AI‑related scenarios, where the legal framework is still developing, adherence to procedural safeguards is more important than ever.

 

Red Flag: Deliberately Ignoring Potential for Complementarity with AI

The introduction of AI in the workplace does not automatically lead to, or necessitate, termination of employment. In fact, an International Monetary Fund study has found that some roles highly exposed to AI also demonstrate high complementarity (e.g., managers, Firstline supervisors), meaning that AI can augment and enhance human work rather than replace it.

Labour courts have consistently emphasized that termination of employment should generally be considered a measure of last resort, not the default response to technological change. In the Philippines, authorized cause terminations, including redundancies, must be implemented as a last‑resort measure. Taking this into consideration, employers are urged, whenever practicable, to assess how AI can complement their existing workforce structure, as outright terminations may expose them to illegal dismissal claims.

 

Red Flag: Introduction of AI Without Proper Upskilling, Training, or Support

The introduction of AI into the workplace becomes a red flag when employers require employees to keep up with new systems without providing adequate tools, training, or upskilling opportunities. Expecting employees to perform alongside AI tools they are unfamiliar with, and then evaluating their work against automated benchmarks, creates a fundamentally unfair situation.

In this scenario, while the employer appears to be simply implementing technological upgrades, the practical effect is that employees are penalized or forced out for failure to meet performance standards set without proper support. By failing to provide training, transition assistance, or upskilling, the employer may create conditions that are arguably intolerable by design rather than by circumstance. Employers who neglect preparation and support when rolling out AI not only risk diminishing employee morale and productivity but also may expose themselves to claims for constructive dismissal.

 

Balancing Innovation and Employee Protection

As artificial intelligence continues to transform the workplace, employers across industries worldwide must learn to strike a delicate balance. While some jobs are not easily replaceable by AI, many routine and repetitive tasks are increasingly susceptible to automation. Employers must embrace innovation while remaining mindful of the do’s, the don’ts, and the red flags associated with the adoption of AI in the workplace.

Ultimately, AI should serve as a tool to enhance productivity and drive business growth—not as a trigger for unnecessary legal and labour disputes.