Are Non-Compete Clauses Enforceable After Termination During Probation? (Philippines)

This article explains how Philippine law treats post-employment non-compete clauses when an employee is terminated during the probationary period. It’s general information, not legal advice.

1) The legal backdrop

Freedom to contract—but not to restrain trade.

Civil Code, Art. 1306 lets parties “establish such stipulations… as they may deem convenient,” so long as they’re not contrary to law, morals, good customs, public order, or public policy.
Post-employment restraints are scrutinized as “restraints of trade.” Courts will enforce them only if they’re reasonable and protect legitimate business interests (e.g., trade secrets, confidential know-how, client relationships), and are not oppressive to labor or harmful to competition.

Constitutional and labor policy.

The Constitution favors full employment and protection to labor, and prohibits involuntary servitude. Post-employment limits must not operate as a de facto work ban.
The Labor Code protects employees from unfair terms, including probationary employees, but it does not ban non-competes. Instead, it frames the context for reasonableness.

2) What “probationary” means—and why it matters

Probationary employment (Art. 296 [formerly 281]).

Default maximum is 6 months (unless a longer period is justified for apprenticeships/learners or by law).
The employer must communicate reasonable standards of regularization at the start.
Termination may be for just cause or failure to meet communicated standards.

Relevance to non-competes.

A probationer can validly sign a non-compete like any employee.
However, reasonableness is contextual: short tenure usually means limited exposure to protectable interests, which can narrow what an employer may reasonably restrain after termination.

If the probationary termination was unlawful.

When termination is later found illegal (e.g., standards weren’t communicated, or dismissal lacked cause), a court or labor tribunal may view post-employment restraints with heightened skepticism and can refuse to enforce a non-compete that would compound the unfairness.

3) The reasonableness test (how courts typically think)

Courts weigh several interlocking factors:

Legitimate interest.
- Protectable interests include trade secrets, confidential methods, pricing strategies, R&D pipelines, and substantial client relationships cultivated at the employer’s expense.
- Mere desire to suppress ordinary competition is not a protectable interest.
Scope (activity).
- The restriction should target competitive roles/activities that risk misuse of the employer’s proprietary information—not a blanket ban on working in a broad industry.
Territory.
- Geographic limits must reflect where the employer actually competes. Country-wide bans are harder to justify unless the business is truly national; global bans are rarely defensible for rank-and-file roles.
Duration.
- Philippine decisions generally uphold short, tailored periods (often 6–12–24 months, depending on the role and sensitivity of information). Longer terms require stronger justification.
Employee’s role and access.
- Seniority and exposure to sensitive assets matter. A junior probationer with minimal access supports narrow or no post-employment restraint; a probationary sales executive who already handled key accounts might justify a limited non-solicitation and a short non-compete.
Public interest / hardship.
- Clauses that make it impracticable to earn a living will likely be struck down. Blue-collar and early-career workers get special solicitude.
Consideration and fairness.
- Employment itself can be consideration, but independent consideration (e.g., training, bonuses, garden leave) strengthens enforceability—especially when tenure was brief.

4) Special angles for probationary terminations

A) Short tenure weakens breadth.

Where the employee served only weeks or a few months with limited exposure, courts are more likely to:
- enforce confidentiality;
- enforce targeted non-solicitation (specific clients handled);
- refuse or trim broad non-competes (wide industry bans, long durations, nationwide scope).

B) Employer-initiated separation vs. resignation.

If the employer abruptly ends probation (especially without cause), enforcing a broad non-compete looks inequitable; courts may limit or deny relief.
If the employee resigns to join a competitor after meaningful exposure to sensitive assets—even during probation—narrow restraints (short duration, defined competitors, specific products) are more defensible.

C) Garden leave helps.

Paying the employee during the restricted period (garden leave) significantly boosts reasonableness, though it’s uncommon locally. If the employer offers pay during the restriction, courts are more receptive even after a probationary termination.

5) What typically is vs is not enforceable after probationary termination

Often enforceable (if tailored):

Non-disclosure / confidentiality (no time limit for true trade secrets; a reasonable time for other confidential business information).
Non-solicitation of clients the employee actually dealt with for 6–12 months (maybe up to 24 months for senior, client-facing roles).
Non-raiding of employees for a modest period (6–12 months).

Harder to enforce (especially for short-tenured probationers):

Industry-wide non-compete with broad territory (e.g., nationwide) and long duration (e.g., 2+ years) where the employee lacked deep exposure.
Competitor bans that cover any role (including non-competitive or unrelated functions).
Restrictions triggered by employer fault (e.g., illegal dismissal).

6) Drafting and review checklist (Philippine context)

If you’re an employer:

Define the legitimate interest (trade secrets, specific clients, pipelines). Put it in the contract recitals.
Match the scope to the risk: list named competitors or product lines rather than “any business similar to.”
Keep time short: start at 6–12 months; justify any longer period with facts (role, project life cycles).
Limit geography to where you actually operate.
Prefer non-solicitation over non-compete for most probationers.
Offer consideration: training certificates, sign-on/retention bonus, or garden leave for the restraint period.
State severability: if part is void, the rest survives; allow blue-penciling (judicial narrowing) without re-writing the bargain.
Pair with solid confidentiality provisions and IP ownership clauses.
Communicate probation standards clearly on Day 1 to avoid illegal dismissal claims that undermine enforcement.

If you’re an employee:

Scrutinize: Which competitors? Which roles? Which products? How long?
Ask to convert a broad non-compete into a non-solicitation + confidentiality.
If you were terminated early, negotiate release/waiver of the restraint or garden-leave pay during the restricted period.
Keep proof of what you did/didn’t access (no major clients, no repositories)—that matters in court.

7) Enforcement, forums, and remedies

A) Where to bring disputes

Illegal dismissal / labor standards → typically NLRC/DOLE.
Pure contract enforcement of a post-employment restraint (e.g., injunction against joining a competitor, damages for breach) often proceeds in the regular courts (RTC) because the employment relationship has ended and the relief is largely injunctive or contractual. That said, forum questions can get fact-specific; parallel proceedings do occur (e.g., NLRC for dismissal and RTC for injunction).

B) Employer’s typical remedies

Interim relief: TRO/preliminary injunction to stop competitive acts;
Damages: liquidated damages if stipulated (must be reasonable, else subject to equitable reduction), plus actual damages upon proof;
Return/Destruction of confidential materials;
Rescission is uncommon post-employment, but specific performance of negative covenants (not to compete/solicit) is possible when reasonable.

C) Defenses employees commonly raise

Clause is overbroad (activity/territory/time).
No legitimate interest or insufficient exposure during probation.
Public policy (undue restraint on livelihood).
Illegal dismissal or employer breach first (clean-hands doctrine).
Lack of consideration or unconscionability (especially when tenure was brief and clause is sweeping).
No actual misappropriation (for confidentiality-anchored restraints).

8) Model clause ideas (for learning purposes)

Option A – Non-solicitation (probationary context) For 12 months after separation for any reason, the Employee shall not solicit business from, or attempt to induce any Client with whom the Employee had material contact in the 12 months before separation, in connection with the products/services the Employee handled for the Employer. “Client” means only those identified in Schedule 1 or listed in the Employer’s CRM as accounts assigned to the Employee.

Option B – Narrow non-compete (use sparingly) For 6 months after separation, the Employee shall not perform [Role/Function] for the following named competitors in the [specified region/market] with respect to [Product Line/Project]. This clause does not bar employment in non-competitive roles (e.g., compliance, general admin) or in unrelated divisions.

Boilerplate: include confidentiality, IP assignment, return of property, reasonable liquidated damages, severability/blue-pencil, and garden-leave (if offered).

9) Practical scenarios

Probationary developer terminated at Month 3; minimal access.
- Likely confidentiality enforceable, non-solicitation maybe unnecessary, non-compete likely unreasonable unless the person actually touched sensitive architecture and the clause is very narrow and short.
Probationary key-account associate who managed Fortune-500 prospect pipeline; resigns to join named rival.
- Non-solicitation for handled accounts for 12 months is plausibly enforceable. A 6-month non-compete limited to the rival and the same product line may be reasonable.
Probationer illegally dismissed (standards not communicated).
- Courts may award labor remedies and be reluctant to enforce broad post-employment restraints; a confidentiality-only outcome is more likely.

10) Quick answers to common questions

Are non-competes automatically void in the Philippines? No. They’re enforceable if reasonable and tied to legitimate interests.
Does probationary status invalidate a non-compete? No, but it usually shrinks the enforceable scope because exposure and seniority are limited.
What duration is “safe”? There’s no magic number; 6–12 months is common for employees, with 24 months reserved for higher-risk roles and usually paired with narrower scope and/or consideration.
What if I’m terminated without cause during probation? You can challenge the dismissal at the NLRC; meanwhile, a broad non-compete is less likely to be enforced, though confidentiality still applies.
Can a court rewrite an overbroad clause? Courts may blue-pencil (strike or narrow) if the contract allows and the remainder is reasonable; they won’t craft a brand-new bargain.

11) Action tips

Employers

Prefer non-solicitation + confidentiality for probationers; reserve non-compete for truly sensitive roles, keep it short/narrow, consider garden leave.

Employees

Before signing, push for named competitors, specific roles, short duration, and clear carve-outs for livelihood. If terminated early, seek a written waiver or paid cooling-off to avoid disputes.

Key takeaway

A non-compete can be enforceable in the Philippines even after termination during probation, but only if it’s narrow, time-bound, and justified by real protectable interests. In most probationary cases, confidentiality and targeted non-solicitation are the enforceable core; broad industry bans—especially following employer-initiated early termination—are likely to fail.