PROBATIONARY EMPLOYMENT

Who is a probationary employee?

A probationary employee is one who, for a given period of time, is being observed and evaluated to
determine whether or not he is qualified for permanent employment. A probationary appointment
affords the employer an opportunity to observe the skill, competence and attitude of a probationer.
The word probationary•, as used to describe the period of employment, implies the purpose of the
term or period. While the employer observes the fitness, propriety and efficiency of a probationer to
ascertain whether he is qualified for permanent employment, the probationer at the same time, seeks
to prove to the employer that he has the qualifications to meet the reasonable standards for permanent
employment. (Escorpizo vs. University of Baguio Faculty Education Workers Union, G.R. No. 121962
[1999])

What is the governing law?

Probationary employment is governed by Article 281 of the Labor Code, which reads:

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.

What are the grounds for terminating a probationary employee?

Article 281 states that a probationary employee can be legally terminated: (1) for a just cause; or (2)
when the employee fails to qualify as a regular employee in accordance with the reasonable standards
made known to him by the employer at the start of the employment. The limitations in dismissing a
probationary employee are:

First, this power must be exercised in accordance with the specific requirements of the contract.

Second, the dissatisfaction on the part of the employer must be real and in good faith, not feigned so
as to circumvent the contract or the law;

Third, there must be no unlawful discrimination in the dismissal.

New Case

In the recent case of Dusit Hotel Nikko vs. Gatbonton (G.R. No. 161654, 5 May 2006), the Supreme
Court found that the employer failed to present proof that the employee was evaluated or that his
probationary employment was validly extended.

In this case, the employee was hired for a 3-month probationary period (the period provided by law is
six months, but this may be shortened or, in appropriate cases, extended by agreement between the
employer and the employee). For its defense, the employer claimed that the 3-month probationary
employment was extended for another 2 months because the employee was not yet ready for regular
employment. The employer presented, as proof, a Personnel Action Form containing the
recommendation.

However, the Supreme Court noted that the Personnel Action Form: (1) was prepared on only in the
fourth month, well after the 3-month period provided under the contract of employment; (2) the
recommended action was actually termination of probationary employment, and not extension of
probation period; (3) the action form did not contain the results of the respondent’s evaluation; (4) the
action form spoke of an attached memo that allegedly contains the recommendation for extension, but
the memo was not presented; (5) the action form did not bear the respondent’s signature.

Therefore, in the absence of any evaluation or valid extension, there is no basis to show if the
employee indeed failed to meet the standards of performance previously set.

Effect of validly terminating a probationary employment

At the expiration of the probationary period, the status of the employee becomes regular. Since the
employee in the Dusit Hotel Nikko case was not dismissed for a just or authorized cause, his dismissal
was illegal, and he is entitled to reinstatement without loss of seniority rights, and other privileges as
well as to full backwages, inclusive of allowances, and to other benefits or their monetary equivalent
computed from the time his compensation was withheld from him up to the time of his actual
reinstatement.

May a probationary employment be extended?

In Mariwasa Manufacturing, Inc. vs. Leogardo (G.R. No 74246, 26 January 1989), the Supreme Court
stated that the extension of the probationary period was ex gratia, an act of liberality on the part of the
employer affording the employee a second chance to make good after having initially failed to prove
his worth as an employee. Such an act cannot unjustly be turned against said employer’s account to
compel it to keep on its payroll one who could not perform according to its work standards. By
voluntarily agreeing to an extension of the probationary period, the employee in effect waived any
benefit attaching to the completion of said period if he still failed to make the grade during the period
of extension.

DUE PROCESS IN TERMINATION AND DISCIPLINARY

ACTIONS; MINIMUM PERIOD FOR REPLY TO SHOW-
CAUSE NOTICE

Practitioners in the field of labor or Human Resources (HR), as well as managers and executive
officers of companies, are aware that an employee may only be dismissed for cause. Disciplinary
actions, including dismissal from work, must comply with both substantive and procedural due process.
Substantive due process requires a valid cause for the dismissal. For procedural due process, outlined
below, an interesting question is this: is there a minimum period that must be given to the
employee to answer the show-cause notice?

We recently received a query as to how many days should be given to the employee to answer the
show-cause notice. We find this query “interesting” because there is no provision in the Labor Code,
or its Implementing Rules and Regulations, which spells out a specific period. What’s more interesting,
however, is that the Supreme Court has construed this period to mean five (5) days from receipt of
the show cause notice. The procedural requirements, as summarized by the Supreme Court, are:

(A) The first written notice to be served on the employees should contain the specific causes or
grounds for termination against them, and a directive that the employees are given the opportunity to
submit their written explanation within a reasonable period. “Reasonable opportunity” under the
Omnibus Rules means every kind of assistance that management must accord to the employees to
enable them to prepare adequately for their defense. This should be construed as a period of at least
five (5) calendar days from receipt of the notice to give the employees an opportunity to study the
accusation against them, consult a union official or lawyer, gather data and evidence, and decide on
the defenses they will raise against the complaint. Moreover, in order to enable the employees to
intelligently prepare their explanation and defenses, the notice should contain a detailed narration of
the facts and circumstances that will serve as basis for the charge against the employees. A general
description of the charge will not suffice. Lastly, the notice should specifically mention which company
rules, if any, are violated and/or which among the grounds under Art. 282 is being charged against the
employees.

(B) After serving the first notice, the employers should schedule and conduct a hearing or
conference wherein the employees will be given the opportunity to: (1) explain and clarify their
defenses to the charge against them; (2) present evidence in support of their defenses; and (3) rebut
the evidence presented against them by the management. During the hearing or conference, the
employees are given the chance to defend themselves personally, with the assistance of a
representative or counsel of their choice. Moreover, this conference or hearing could be used by the
parties as an opportunity to come to an amicable settlement.

(C) After determining that termination of employment is justified, the employers shall serve the
employees a written notice of termination indicating that: (1) all circumstances involving the charge
against the employees have been considered; and (2) grounds have been established to justify the
severance of their employment.

Who is a probationary employee?

A probationary employee is one who, for a given period of time, is being observed and evaluated to
determine whether or not he is qualified for permanent employment. A probationary appointment
affords the employer an opportunity to observe the skill, competence and attitude of a probationer.
The word “probationary―, as used to describe the period of employment, implies the purpose
of the term or period. While the employer observes the fitness, propriety and efficiency of a probationer
to ascertain whether he is qualified for permanent employment, the probationer at the same time,
seeks to prove to the employer that he has the qualifications to meet the reasonable standards for
permanent employment. (Escorpizo vs. University of Baguio Faculty Education Workers Union, 1999)

What is the governing law?

Probationary employment is governed by Article 281 of the Labor Code, which reads:

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.
What are the grounds for terminating a probationary employee?

Article 281 states that a probationary employee can be legally terminated: (1) for a just cause; or (2)
when the employee fails to qualify as a regular employee in accordance with the reasonable standards
made known to him by the employer at the start of the employment. The limitations in dismissing a
probationary employee are:

First, this power must be exercised in accordance with the specific requirements of the contract.
Second, the dissatisfaction on the part of the employer must be real and in good faith, not feigned so
as to circumvent the contract or the law;
Third, there must be no unlawful discrimination in the dismissal.

In the recent case of Dusit Hotel Nikko vs. Gatbonton (G.R. No. 161654, 5 May 2006), the Supreme
Court found that the employer failed to present proof that the employee was evaluated or that his
probationary employment was validly extended.

In this case, the employee was hired for a 3-month probationary period (the period provided by law is
six months, but this may be shortened or, in appropriate cases, extended by agreement between the
employer and the employee). For its defense, the employer claimed that the 3-month probationary
employment was extended for another 2 months because the employee was not yet ready for regular
employment. The employer presented, as proof, a Personnel Action Form containing the
recommendation.

However, the Supreme Court noted that the Personnel Action Form: (1) was prepared on only in the
fourth month, well after the 3-month period provided under the contract of employment; (2) the
recommended action was actually termination of probationary employment, and not extension of
probation period; (3) the action form did not contain the results of the respondent’s evaluation; (4)
the action form spoke of an attached memo that allegedly contains the recommendation for extension,
but the memo was not presented; (5) the action form did not bear the respondent’s signature.

Therefore, in the absence of any evaluation or valid extension, there is no basis to show if the
employee indeed failed to meet the standards of performance previously set.

Effect of validly terminating a probationary employment:

At the expiration of the probationary period, the status of the employee becomes regular. Since the
employee in the Dusit Hotel Nikko case was not dismissed for a just or authorized cause, his dismissal
was illegal, and he is entitled to reinstatement without loss of seniority rights, and other privileges as
well as to full backwages, inclusive of allowances, and to other benefits or their monetary equivalent
computed from the time his compensation was withheld from him up to the time of his actual
reinstatement.