Probationary employees and Due process in termination

by | Oct 4, 2016 | Corporate Law, Labor Law

What is a probationary employee?

A probationary employee is provided for in Article 281 of the Labor Code of the Philippines:

Art. 281. Probationary employment. Probationary employment shall not exceed six (6) months from the date the employee started working, unless it is covered by an apprenticeship agreement stipulating a longer period. The services of an employee who has been engaged on a probationary basis may be terminated for a just cause or when he fails to qualify as a regular employee in accordance with reasonable standards made known by the employer to the employee at the time of his engagement. An employee who is allowed to work after a probationary period shall be considered a regular employee.

Upon engagement of an employee, you should explain his probationary status to him.

Probationary employment allows you to assess an employee’s fitness for a job

The Supreme Court has elaborated on what it means to be a probationary employee:

A probationary employee, as understood under Article 282 (now Article 281) of the Labor Code, is one who is on trial by an employer during which the employer determines whether or not he is qualified for permanent employment. A probationary appointment is made to afford the employer an opportunity to observe the fitness of a probationer while at work, and to ascertain whether he will become a proper and efficient employee. The word probationary, as used to describe the period of employment, implies the purpose of the term or period but not its length.

Being in the nature of a trial period the essence of a probationary period of employment fundamentally lies in the purpose or objective sought to be attained by both the employer and the employee during said period. The length of time is immaterial in determining the correlative rights of both in dealing with each other during said period. While the employer, as stated earlier, observes the fitness, propriety and efficiency of a probationer to ascertain whether he is qualified for permanent employment, the probationer, on the other, seeks to prove to the employer, that he has the qualifications to meet the reasonable standards for permanent employment.

It is well settled that the employer has the right or is at liberty to choose who will be hired and who will be denied employment. In that sense, it is within the exercise of the right to select his employees that the employer may set or fix a probationary period within which the latter may test and observe the conduct of the former before hiring him permanently.[1]

What is the correct legal procedure for terminating a probationary employee?

The scenario is of an employee who has not yet been regularized. If, before the end of the probationary period, the employer determines that the employee is not qualified for permanent employment, how is his employment terminated in accordance with legal due process?

As an HR, it is important to explain to your probationary employee what constitues quality work by which he can finally be regularized.

You need to discuss with a probationary employee how you will evalute his work for permanent employment.

The process actually begins early in the employment of the probationary employee. It begins with informing the new hire of the standards by which he is to be judged during the probationary period. The Supreme Court discusses this in Mercado vs. AMA Computer College-Paranaque City, Inc., G.R. No. 183572, April 13, 2010, 618 SCRA 218:

Labor, for its part, is given the protection during the probationary period of knowing the company standards the new hires have to meet during the probationary period, and to be judged on the basis of these standards, aside from the usual standards applicable to employees after they achieve permanent status. Under the terms of the Labor Code, these standards should be made known to the [employees] on probationary status at the start of their probationary period, or xxx during which the probationary standards are to be applied. Of critical importance in invoking a failure to meet the probationary standards, is that the [employer] should show as a matter of due process how these standards have been applied. This is effectively the second notice in a dismissal situation that the law requires as a due process guarantee supporting the security of tenure provision, and is in furtherance, too, of the basic rule in employee dismissal that the employer carries the burden of justifying a dismissal. These rules ensure compliance with the limited security of tenure guarantee the law extends to probationary employees.

Whereas a regular employee is typically entitled to the two-notice requirement[2] for his employment to be terminated due to just cause, the process is different in the case of a probationary employee dismissed because of his failure to qualify as a regular employee in accordance with reasonable standards made known to him at the time of engagement.

Since the probationary status of work is explained to the employee at the start of his employment, no hearing or notice is required for dismissal.

You can dismiss a probationary employee without notice or hearing because this is a trial period.

In the case of Philippine Daily Inquirer vs. Leon M. Magtibay, Jr., G.R. No. 164532, July 24, 2007, the Supreme Court ruled that such a dismissal

… does not require notice and hearing. Due process of law for this second ground consists of making the reasonable standards expected of the employee during his probationary period known to him at the time of his probationary employment. By the very nature of a probationary employment, the employee knows from the very start that he will be under close observation and his performance of his assigned duties and functions would be under continuous scrutiny by his superiors. It is in apprising him of the standards against which his performance shall be continuously assessed where due process regarding the second ground lies, and not in notice and hearing as in the case of the first ground.

Due process for a probationary employee consists in having informed him of the standards against which his performance will be continuously assessed during the probationary period.

Grade your probationary employee against the standards.

If the work of your probationary employee is found to be unsatisfactory, you’ll need to serve him a written notice.

These work standards should be understood at the time of his engagement and then, if he fails to meet these standards, a written notice is served to the him by the employer within a reasonable time from the effective date of termination.[3]

In all cases of probationary employment, the employer shall make known to the employee the standards under which he will qualify as a regular employee at the time of his engagement. Where no standards are made known to the employee at that time, he shall be deemed a regular employee.[4]

Dismissal for poor work quality is accepted without the two rule notice if the employee is on probationary status.

The two notice rule doesn’t apply if a probationary employee is dismissed for poor work quality.

This was upheld in Abott Laboratories vs. Alcaraz, G.R. No. 192571, July 23, 2013:

A different procedure is applied when terminating a probationary employee; the usual two-notice rule does not govern. Section 2, Rule I, Book VI of the Implementing Rules of the Labor Code states that “if the termination is brought about by the x x x failure of an employee to meet the standards of the employer in case of probationary employment, it shall be sufficient that a written notice is served the employee, within a reasonable time from the effective date of termination.”

While affirming that the two-notice rule does not apply to probationary employees who are terminated for failure to meet the employer’s standards, Abott Laboratories also cautions employers to comply with their own internal procedure in evaluating the performance of a probationary employee. These policies are often found in the company handbooks and in office memoranda circulated to the employees. The reason is that company personnel policies create a contractual obligation on the part of both the employee and the employer to abide by the same.

Note that the reason for terminating a probationary employee seems to make a difference to the Court. The two-notice rule does not apply to probationary employees terminated because of failure to meet the reasonable standards made known to them at the time of engagement. However, it still appears to be a requirement for probationary employees terminated because of just cause.[5] It is thus important that the grounds for termination are made clear during the termination, and that documentation be meticulous throughout the process.

 

Atty. Francesco C. Britanico

[1] International Catholic Migration Commission v. NLRC, G.R. No. 72222, January 30, 1989, 169 SCRA 606.

[2] The first written notice should be served on the employee and contain the specific grounds for termination against him, along with a directive that the employee is given at least 5 days to submit his written explanation for why he should not be terminated. The employer should also set a conference or hearing in which the employee will be given the opportunity to explain and present evidence on his behalf.

If termination is found justified after these, the employer should serve a second written notice on employee which shows that all the circumstances involving the charge against have been considered and that the grounds have been established to justify the termination of employment.

[3] Philippine Daily Inquirer vs. Leon M. Magtibay, Jr., G.R. No. 164532, July 24, 2007

[4] Section 6(d) of the Implementing Rules of Book VI, Rule VIII-A of the Labor Code cited in Aliling vs. Feliciano, G.R. No. 185829, April 25, 2012

[5] Art. 282. Termination by employer. An employer may terminate an employment for any of the following [just] causes:

  1. Serious misconduct or willful disobedience by the employee of the lawful orders of his employer or representative in connection with his work;
  2. Gross and habitual neglect by the employee of his duties;
  3. Fraud or willful breach by the employee of the trust reposed in him by his employer or duly authorized representative;
  4. Commission of a crime or offense by the employee against the person of his employer or any immediate member of his family or his duly authorized representatives; and
  5. Other causes analogous to the foregoing.

cf Philippine Daily Inquirer vs. Magtibay, ibid, for termination of a probationary employee for just cause.

28 Comments

  1. jpirlandez

    Hi Sir,

    Please enlighten with the “Reasonable time” notice, If were going to serve notice for termination to a probationary employee.

    Thank you!

    Reply
    • Lawyers in the Philippines

      Alcira vs. NLRC, G.R. No. 149859. June 9, 2004, allowed the termination of an employee who was told on the last day of his probationary period not to come to work.

      On the other hand, the case of Canadian Opportunities Unlimited, Inc. vs. Dalangin, Jr., G.R. No. 172223, February 6, 2012, gives a somewhat different interpretation based on the Implementing Rules of the Labor Code.

      In that case, the reasonable time is read as time sufficient for the employee to defend himself. One day was found to be insufficient. >>

      Section 2, Rule I, Book VI of the Labor Codes Implementing Rules and Regulations provides:

      If the termination is brought about by the completion of a contract or phase thereof, or by failure of an employee to meet the standards of the employer in the case of probationary employment, it shall be sufficient that a written notice is served the employee within a reasonable time from the effective date of termination.

      The company contends that it complied with the above rule when it asked Dalangin, through Abads Memorandum dated October 26, 2001, to explain why he could not attend the seminar scheduled for October 27, 2001. When he failed to submit his explanation, the company, again through Abad, served him a notice the following day, October 27, 2001, terminating his employment. Dalangin takes strong exception to the companys submission. He insists that the company failed to comply with the rules as he was not afforded a reasonable time to defend himself before he was dismissed.

      The records support Dalangins contention. The notice served on him did not give him a reasonable time, from the effective date of his separation, as required by the rules. He was dismissed on the very day the notice was given to him, or, on October 27, 2001. Although we cannot invalidate his dismissal in light of the valid cause for his separation, the companys non-compliance with the notice requirement entitles Dalangin to indemnity, in the form of nominal damages in an amount subject to our discretion. Under the circumstances, we consider appropriate an award of nominal damages of P10,000.00 to Dalangin.

      But there is a 2015 ruling which appears to give the prevailing rule. Enchanted Kingdom, Inc. vs. Verzo, G.R. No. 209559, December 9, 2015, is a case where the probationary employee was terminated on the 180th day.

      Emphasizing that notice and hearing are not required in case a probationary employee is not retained for failure to comply with the reasonable standards set by his employer, the Supreme Court outright said:

      Whether or not Verzo was afforded the opportunity to explain his side is of no consequence.

      Reply
      • jpirlandez

        It is reasonable to give the employee at least 15 days, upon serving the notice for non regularization?

      • Lawyers in the Philippines

        The later case allowed termination of a probationary employee at the very last day of the probationary period.

  2. Anna Jane

    Hi, i started with the company jan 15 2018. My 180th day or 6 month is July 13. They gave me my evaluation exactly on my 180th day, and told me I am not regularized. I asked them how the scoring was done because it was not explained to me that it is how the scoring was based. I told them I have some disputes and questions about it, and that i need to ask my supervisor for the stats so i can double check. They said that i already have to sign it because it will lapsed. I said, i dont care..because they should have told me at least a few days before their decision or before letting me sign it, so i know if the scores given were right or if there is discrepancy. Unfortunately, my supervisor went home already so there’s nobody to ask, and HR doesnt have access to our stats. So i did not sign it. Do i have a big chance on disputing this? And why on the first place did they wait until my last day of my 6th month before telling me of my eval for regularization?

    Reply
    • Lawyers in the Philippines

      It may be helpful to first check whether the counting of the six month period is accurate. An employee becomes regularized 180 days from the day when probationary employment began. This is a computation mistake which companies sometimes commit.

      In any case, you can ask for a conciliation meeting at the Department of Labor to bring these up.

      Reply
  3. Anonymous

    Hi,

    If you have been terminated during your probationary period. What would be the process of your last pay? Would that be still the same usual process as a resigned employee? or should that be given in your last day with them as terminated employee?

    Thank you.

    Reply
    • Lawyers in the Philippines

      Processes differ between companies, but you’d expect it to be as with a terminated employee.

      Reply
  4. Jay

    Hi i have an employee that is not yet evaluated but he’s more than 6 months already, he shoudl evaluated bu the last manager that i replace with. he now on 9th months now and in my 3 months of stay i saw a big attitude issues on him. by law he’s already a regular employee. Question if want terminate him what are the step i need to do aside from failing him in evaluation. is it still legal to terminate him by evaluation at he’s 9th month?please advice. Thanks

    Reply
    • Lawyers in the Philippines

      He is a regular employee at this point. His employment can only be terminated under the just or authorized causes allowed by the Labor Code.

      Reply
  5. cb0212

    Hi i am already 7 months in this company, the last contract i signed was when i am starting saying that iam in a probationary period. But until now i havent signed any contract… and there is a co worker of mine that is hitting on me saying that i will never be regularized because of her issues with me… shes using this evaluation she made of my performance to justify. Is it right or it can be right?

    Reply
    • Lawyers in the Philippines

      Employees are regularized automatically after the six month period. This is not something which is up to the employer’s discretion if the probationary period has already lapsed.

      Reply
  6. Game Support Lead

    We have probationary period employee, unfortunately we are not satisfied with his poor performance as he had some absences or suddenly missing during critical days of our operation due to his personal reasons. As such we gave him a notice of termination that his last day will be on this coming weekend as we are not satisfied and not confident that he can perform his responsibilities. We would like to ask if it’s legal to end his probationary period even though it still in his 4th -5th month of his probationary period?

    Reply
    • Lawyers in the Philippines

      It is legal to end employment earlier in the probationary period. A probationary employee is employed on trial by an employer. The employer determines whether or not he is qualified for permanent employment. A probationary appointment gives the employer an opportunity to observe the fitness of a probationer while at work, and to ascertain whether he would be a proper and efficient employee. The Supreme Court has sustained a dismissal only one month into the probationary period provided that there is basis for the employer’s assessment. [Canadian Opportunities Unlimited, Inc. vs. Dalangin, 2012]

      Reply
      • GS Lead

        Thank you so much for the info Lawyers in the Philippines

      • GS Lead

        Btw Sir/Ma’am. One more question here. Do we still need to prepare a written warning, memo, or notice to explain regarding his poor performance before delivering to him the notice of early termination of his/her probationary contract with the company? Is it required? Thank you again for your response and additional info.

      • Lawyers in the Philippines

        The law does not strictly require this, but it is often prudent to do so in order to document the bases for termination.

  7. GS Lead

    Is it legal to terminate / early end the probationary employment of an employee with the company due to 1). Unsatisfactory performance 2). Loss of confidence because of the aforementioned reasons? On the other hand, even he failed to meet our requirement,he is still entitled to be paid for his work done on the period of September 16-29, 2018.

    Reply
    • Lawyers in the Philippines

      Yes. See above comment. It is best that these assessments are documented beforehand, but the company has broad management prerogatives in this regard, especially during the probationary period.

      The employee is entitled to be paid for the work he has done.

      Reply
      • GS Lead

        This is my first time to learn these things as junior manager. One last question (promise), what will be the charges or cases that can sue or file by a probationary employee against to our company if the company forgot to prepare or don’t have warning letter / NTE before issuing a termination notice?

        Again, I appreciate your time for answering my questions on this matter. This information is very helpful for my new career. Thank you Lawyers In The Philippines!

      • Lawyers in the Philippines

        Sent you an email.

  8. Iris

    Hi, I am under an engineering company (new job). During my first day, my supervisor told me that all employees are project based and when the project is done then our contract will end up also. My question is, does a project based employee has the right to avail the benefits such leave, SL and others?

    Reply
  9. Grace YP

    Goo day Sir/Ma’am. We have a probationary employee who we are about terminate because he is not wiling to take a shift schedule of work (As DRiver) his reason is because it is ruining his daily schedule.
    Would this be enough grounds for us to end his probationary employment?
    Please enlighten. Thank you

    Reply
    • Lawyers in the Philippines

      The Supreme Court has consistently recognized and upheld the prerogative of management to transfer an employee from one office to another within the business establishment, provided there is no demotion in rank or a diminution of salary, benefits and other privileges. As a rule, the Court will not interfere with an employer’s prerogative to regulate all aspects of employment which include among others, work assignment, working methods and place and manner of work. Labor laws discourage interference with an employers judgment in the conduct of his business.

      On the specific question of shift schedules, the case of Castillo vs. NLRC, G.R. No. 104319. June 17, 1999 may be referred to:

      “The employer has the prerogative of making transfers and reassignment of employees to meet the requirements of the business. Thus, where the rotation of employees from the day shift to the night shift was a standard operating procedure of management, an employee who had been on the day shift for some time may be transferred to the night shift.”

      Reply
  10. Sheryl

    I been working for 6years under agency and been probitionary last may 28 2018 but during this period my boss always saying he will terminate me insulting me in front of other employee.and then last october they give me the evaluation form which is i expected “bagsak”not passed the company qualification.i ask if i still have the right to fight or rather quiet..

    Reply
  11. Anne

    Can you please help enlighten?
    Same question as the above: “what will be the charges or cases that can sue or file by a probationary employee against to our company if the company forgot to prepare or don’t have warning letter / NTE before issuing a termination notice?”
    Probitionary employees wa terminated because of poor performance (sales and attendance kpi).

    Reply
    • Lawyers in the Philippines

      Procedural requirements for the dismissal of probationary employees are as above. It is still wise to appraise them of their performance but the two notice rule does not apply.

      Reply
  12. Serena

    Hi,
    Apparently, I was hired as a probationary employee per my contract. However, I was not briefed of the qualities or standards to be a regular employee from the time of my initial engagement, furthermore, I was not evaluated of my performance until my employer served my termination letter. In my termination letter, it states two things: 1. I failed to meet the standards to be a regular employee 2. Loss of Trust and confidence. (I hold a managerial position). For the first one, I argued that Month over month, I receive recognition as Top Manager consistently besting other seasoned managers. I asked them what standards did I fail, also considering I was not given a copy of their Employee Handbook / Company Policies or Company code of conduct, however, no answers were provided by HR nor my immediate superior and kept saying that it’s just the prerogative of the company. For the 2nd reason, there were allegations of fraud and disclosing some confidential information that they charged me. I asked for a hearing and be given due process to defend my side regarding this unfounded accusations. They told me, the twin notice is just applicable for regular employees, hence my Termination Letter was given to me and I was separated the same day. This happened within the 6 month probationary period.

    Questions: 1. Given the fact i was not informed of the standards to be a regular employee and I was never evaluated of my work, am I already considered as a regular employee? 2. Can this be considered as Illegal dismissal? Saying, without admitting, I am still a probationary employee, they charged me of Loss of Trust and Confidence, which is a just cause for termination, is a probationary employee not entitled of notice and hearing?

    Thanks in advance for answering my questions.

    Reply

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