In most cases, no. An employer cannot simply erase a worker’s regular status, issue a new “probationary contract,” and regain the easier right to terminate the employee for failing a probationary evaluation. Once regular employment has been acquired, the employee is protected by security of tenure and may be dismissed only for a lawful cause and through the proper procedure.

An employer may transfer employees, reorganize operations, evaluate performance, or impose a valid disciplinary penalty. But those management powers cannot be used to circumvent regular employment, reduce an employee’s status without sufficient basis, or disguise an illegal dismissal.

Why a Regular Employee Cannot Normally Be Returned to Probationary Status

Probationary employment is a trial period at the beginning of employment. Its purpose is to give the employer a reasonable opportunity to determine whether a newly engaged employee is suitable for regular employment.

Article 296 of the Labor Code of the Philippines provides that probationary employment generally cannot exceed six months from the date the employee started working. The employer must also communicate the reasonable standards for regularization at the time of engagement. An employee allowed to work after the probationary period becomes regular. (Supreme Court E-Library)

Once the employee is already regular, the employer has already had the legally recognized opportunity to test the employee’s fitness for continued employment. A second probationary period imposed years or months later would ordinarily defeat the purpose and limit established by Article 296.

The Supreme Court has also repeatedly explained that employment status is determined by law, not merely by the label chosen by the employer or written in a contract. In Paragele v. GMA Network, Inc., the Court stated that the classification of an employee is determined by law regardless of a contract describing the employment differently. (Lawphil)

This means a document stating, “You are now probationary,” does not automatically make the reclassification valid.

The Employee’s Right to Security of Tenure

Article XIII, Section 3 of the 1987 Philippine Constitution guarantees workers the right to security of tenure. Article 294 of the Labor Code implements that protection by providing that a regular employee may be dismissed only for a just cause or an authorized cause recognized by law. (Lawphil)

Just causes

Just causes under Article 297 generally involve wrongdoing attributable to the employee, such as:

Serious misconduct;
Willful disobedience of lawful and reasonable orders;
Gross and habitual neglect of duties;
Fraud or willful breach of trust;
Commission of a crime against the employer, the employer’s family, or an authorized representative; or
Other causes similar to those listed in the law.

The employer must establish the cause through substantial evidence and observe procedural due process, normally through a written notice of the charge, a meaningful opportunity to respond, and a written notice of the decision. (Lawphil)

Authorized causes

Authorized causes under Articles 298 and 299 may include:

Installation of labor-saving devices;
Redundancy;
Retrenchment to prevent losses;
Closure or cessation of business; and
Disease under the conditions prescribed by law.

These grounds have their own documentary, notice, good-faith, and separation-pay requirements. An employer cannot avoid those requirements by first declaring the regular employee “probationary” and then terminating the employee for alleged non-regularization.

What Happens When an Employer Issues a New Probationary Contract?

A new contract does not automatically remove previously acquired regular status. The actual circumstances will be examined, including:

How long the employee has worked for the company;
Whether the employee previously completed probation;
Whether the company had already confirmed regularization;
Whether the work remains necessary or desirable to the business;
Whether there was a genuine break in employment;
Whether the employee voluntarily accepted an entirely different arrangement;
Whether the employer threatened dismissal unless the document was signed; and
Whether the arrangement was designed to avoid security-of-tenure obligations.

An employee’s signature is evidence that the document was received or accepted, but it is not always conclusive. Labor rights created by law generally cannot be defeated by contractual language intended to circumvent the Labor Code.

A forced reclassification is especially questionable when the employee:

Continues performing substantially the same job;
Reports to the same employer without interruption;
Retains the same employee number or company records;
Receives no final pay reflecting a genuine termination;
Is told that refusal to sign will result in dismissal; or
Is placed under “probation” only after a disagreement, complaint, pregnancy, illness, union activity, or change in management.

Is Downgrading a Regular Employee Constructive Dismissal?

It can be.

Constructive dismissal occurs when the employer does not openly fire the employee but makes continued employment impossible, unreasonable, seriously prejudicial, or unbearable. It may arise from a demotion in rank, diminution of pay or benefits, or discriminatory and hostile treatment that would compel a reasonable employee to leave.

In Del Rosario v. Isabela-1 Electric Cooperative, Inc., the Supreme Court explained that a demotion may involve a reduction in duties, responsibilities, status, or rank even when the employee’s current salary is not immediately reduced. The Court found constructive dismissal where the employee was arbitrarily moved to a position carrying lower status and responsibilities. (Lawphil)

Therefore, changing a regular employee’s status to probationary can be legally serious even if the salary remains temporarily unchanged. Regular status itself carries meaningful protection: the employee cannot ordinarily be terminated merely for failing newly imposed regularization standards.

Constructive dismissal becomes more apparent when the employer:

Reduces salary, allowances, benefits, or rank;
Removes supervisory functions or meaningful duties;
Threatens termination at the end of the new probationary period;
Requires the employee to surrender seniority or tenure;
Assigns humiliating or clearly inferior work;
Uses the reclassification to pressure the employee to resign; or
Terminates the employee for “failure to pass probation.”

Management prerogative must be exercised in good faith and with justice and fair play. The employer bears the burden of showing that a prejudicial transfer or demotion was supported by valid and legitimate grounds rather than used as a method of removing an unwanted employee. (Lawphil)

Can an Employer Demote a Regular Employee for Poor Performance?

Poor performance does not automatically justify returning an employee to probationary status.

The employer may use performance management measures such as:

Coaching and written feedback;
A performance improvement plan;
Additional training;
Reassignment consistent with the employment contract;
Proportionate disciplinary action under valid company rules; or
Dismissal for gross and habitual neglect, when the legal requirements are proven.

Ordinary mistakes, isolated poor ratings, or failure to meet newly invented standards do not automatically amount to a just cause for dismissal. The employer must identify a lawful ground and prove it with substantial evidence.

Where company rules or a collective bargaining agreement permit demotion as a disciplinary penalty, the employer must still establish a valid factual basis, apply the penalty fairly and proportionately, and observe due process. The Supreme Court has recognized that due process applies to demotions because a demotion materially affects employment rights. (Lawphil)

Even a valid disciplinary demotion does not necessarily convert the employee from regular to probationary. The employee generally remains a regular employee in the employer’s workforce unless a legally valid termination has occurred.

What If the Probationary Period Is for a Promotion?

This situation requires an important distinction.

A company may evaluate whether a regular employee is suitable for a newly promoted, technical, supervisory, or managerial role. The employer may describe the arrangement as:

An acting appointment;
A temporary assignment;
A promotional trial period;
An officer-development program; or
A conditional promotion.

A trial period for the new position is not necessarily the same as making the person a probationary employee of the company again.

A legally defensible arrangement should clearly address:

The duration and standards of the promotional evaluation;
The employee’s compensation during the trial;
What happens if the employee does not qualify for the promoted role;
Whether the employee returns to the former or an equivalent position; and
Whether seniority, regular status, benefits, and length of service remain intact.

The employee’s underlying regular employment should not be treated as automatically terminated merely because the employee did not succeed in the higher position. Terminating the employee altogether would still require a lawful cause unless there was a genuine, voluntary, and legally valid termination of the previous employment relationship.

The Supreme Court’s probationary-employment cases, including Jaso v. Metrobank and Abbott Laboratories v. Alcaraz, emphasize that a true probationary employee must be informed of the probationary nature, duration, and reasonable standards at the time of engagement. Those cases concern employees engaged on probation; they do not give employers a general power to erase the tenure of workers who are already regular. (Supreme Court E-Library)

Can the Employer Transfer the Employee Instead?

An employer generally has the right to transfer or reassign employees for genuine business reasons. A valid transfer normally does not:

Reduce rank or status;
Decrease salary or benefits;
Impose unreasonable hardship;
Humiliate or discriminate against the employee; or
operate as a hidden method of dismissal.

A transfer to another department, branch, shift, or equivalent role may be valid when it is supported by business necessity and does not prejudice the employee. In contrast, a transfer that strips the employee of authority, substantially reduces responsibilities, or places the employee in an inferior position may amount to constructive dismissal even if the job title or basic salary remains the same. (Supreme Court E-Library)

What a Regular Employee Should Do After Being Downgraded

1. Obtain the instruction in writing

Ask for copies of:

The memorandum changing the employment status;
The new probationary contract;
The stated business or disciplinary reason;
The new job description;
The regularization or evaluation standards;
The organizational chart; and
Any notice of salary, benefit, rank, or reporting-line changes.

If management communicated the downgrade verbally, send a calm email summarizing what was said and asking for confirmation.

2. Send a written protest promptly

State that:

You have already acquired regular status;
You do not agree to surrender security of tenure;
Your continued work should not be interpreted as consent to the downgrade;
You remain ready to perform your lawful duties; and
You request clarification of the legal and factual basis for the change.

A written protest helps prevent an argument that the employee knowingly and voluntarily accepted the arrangement.

3. Preserve proof of regular status

Save both physical and electronic copies of:

Original employment contract;
Regularization letter;
Payroll records and payslips;
Company identification cards;
Performance evaluations;
SSS, PhilHealth, and Pag-IBIG contribution records;
Emails or chat messages from HR and supervisors;
Previous job descriptions;
Promotion or transfer documents; and
Employee handbooks or collective bargaining agreements.

Do not rely solely on files stored in a company email account or company-issued device.

4. Avoid signing a resignation or quitclaim without understanding it

Some documents presented as a “new contract” contain provisions stating that the employee:

Voluntarily resigned from the previous position;
Waived seniority;
Received complete final pay;
Released the employer from all claims; or
Accepted termination if probation is not passed.

The title of the document is less important than its actual contents.

5. Continue reporting for work when appropriate

An employee who immediately stops reporting may face an allegation of abandonment. Unless the employer has expressly terminated employment, denied entry, or created circumstances making continued work genuinely impossible, the employee should normally continue reporting while documenting the protest.

If entry is refused:

Record the date and time;
Identify the person who denied access;
Keep screenshots, gate logs, or witness details;
Send an email stating that you reported but were prevented from working; and
Reiterate your willingness to work.

6. Use the company grievance procedure when applicable

If the employee is unionized or covered by a collective bargaining agreement, the dispute may need to pass through the agreed grievance machinery. Disputes primarily involving the interpretation or implementation of a CBA or company personnel policy may fall under voluntary arbitration rather than ordinary Labor Arbiter jurisdiction.

The grievance deadline in a CBA can be much shorter than the general period for filing an illegal dismissal case, so the employee should check the agreement immediately.

7. File a request under DOLE’s Single Entry Approach

Republic Act No. 10396 institutionalized the Single Entry Approach, commonly called SEnA. It provides a 30-calendar-day conciliation-mediation period intended to help parties settle labor disputes before full litigation. (DOLE NCR)

A Request for Assistance may be filed onsite at participating:

DOLE regional or provincial offices;
NLRC regional arbitration branches;
National Conciliation and Mediation Board offices; or
Other authorized SEnA desks.

Online requests may also be submitted through the official DOLE Assistance Request Management System. (DOLE ARMS)

Possible settlement terms include restoration of regular status, reinstatement to the former position, withdrawal of the disputed memo, payment of salary differentials, correction of employment records, or an agreed separation package.

8. File the appropriate labor complaint if no settlement is reached

A dispute involving actual or constructive dismissal generally falls within the jurisdiction of an NLRC Labor Arbiter. Under the 2025 NLRC Rules of Procedure, the complaint must identify the parties and causes of action and include verification and certification against forum shopping. Claims arising from the same employment relationship should be included together.

Possible causes of action may include:

Illegal dismissal;
Constructive dismissal;
Illegal demotion;
Reinstatement to the former position;
Salary and benefit differentials;
Unpaid wages or benefits;
Damages when bad faith is proven; and
Attorney’s fees when legally warranted.

No filing fee is required for filing an NLRC labor case, and the NLRC provides assistance in completing complaint forms. (NLRC)

Documents Commonly Needed

Document	Why it matters
Original employment contract	Shows the initial position and employment terms
Regularization letter or notice	Direct proof that probation was completed
New probationary contract or downgrade memo	Shows the disputed employer action
Payslips and payroll records	Establish salary and any reduction
Job descriptions before and after the change	Helps prove demotion or diminished duties
Performance evaluations	Tests the employer’s poor-performance allegations
Emails, text messages, and chat records	May show threats, pressure, or the real reason for the downgrade
Company handbook or disciplinary code	Shows applicable procedures and permitted penalties
CBA and grievance records	Determines whether grievance machinery applies
SSS, PhilHealth, and Pag-IBIG records	Supports continuity and length of service
Witness affidavits	Corroborates verbal instructions or denial of work
Proof of reporting for work	Counters allegations of abandonment

Notarization is generally important for formal affidavits, verifications, and certifications submitted in proceedings. Ordinary emails, payslips, contracts, screenshots, and company memoranda should be preserved in their original form whenever possible.

Likely Remedies if the Downgrade Leads to Illegal Dismissal

If the Labor Arbiter finds that the employee was illegally dismissed, Article 294 generally allows:

Reinstatement without loss of seniority rights;
Full backwages;
Allowances and benefits, or their monetary equivalent;
Restoration to the proper position;
Salary differentials; and
Other relief justified by the evidence.

An order of reinstatement issued by a Labor Arbiter is immediately executory even while an appeal is pending. The 2025 NLRC Rules require a reinstatement decision to direct the employer to report compliance within 10 calendar days from receipt.

When reinstatement is no longer workable, separation pay may be awarded in lieu of reinstatement, usually in addition to backwages. Moral and exemplary damages may also be awarded when the employer acted fraudulently, oppressively, or in evident bad faith.

Expected Timeline

Stage	Statutory or procedural period	Practical note
SEnA conciliation-mediation	Up to 30 calendar days	May end earlier if settled or referred
NLRC conferences and position papers	Depends on settings and submissions	Missing conferences or deadlines can seriously damage a case
Labor Arbiter decision	30 calendar days after the case is submitted for decision	This period does not run from the date the complaint was first filed
Appeal to the NLRC	10 calendar days from receipt of the Labor Arbiter’s decision	No extension is ordinarily allowed
Further judicial review	Separate strict periods apply	Court of Appeals review is not an ordinary appeal

The 10-calendar-day NLRC appeal period is particularly strict. The 2025 Rules state that when the tenth day falls on a Saturday, Sunday, or holiday, filing may be made on the next working day.

Although an illegal dismissal complaint generally prescribes in four years under Article 1146 of the Civil Code, employees should not wait. Evidence can disappear, witnesses may leave, and separate money claims may be governed by a shorter three-year period. (Lawphil)

Special Considerations for Foreign Employees

Foreign employees working in the Philippines generally receive the same Labor Code protections concerning regular employment and dismissal. A foreigner’s nationality does not, by itself, allow an employer to remove regular status without lawful cause.

However, a change in position may also affect immigration and work authorization. Under current DOLE rules, a foreign national holding an Alien Employment Permit generally cannot transfer to another job or employer without the required approval. The employer and employee should check whether a significant change in job title, duties, or employer requires action involving the AEP or the employee’s 9(g) pre-arranged employment visa. (BWC)

Immigration paperwork and labor rights are separate issues. A problem with an AEP or visa does not automatically validate an otherwise unlawful downgrade, although it may affect whether the foreign employee can legally continue performing the changed job.

Frequently Asked Questions

Can my employer make me sign another six-month probationary contract after regularization?

The employer may present the document, but signing it does not necessarily make the reclassification lawful. Employment status is determined by law and the actual employment relationship. A contract designed to erase accrued regular status may be disregarded.

Can I be terminated for refusing to sign the probationary contract?

Refusal alone is not automatically a just cause for dismissal, particularly when the contract requires the employee to surrender a legal right. The employer must still prove a lawful ground for termination and observe due process.

Does a change in company ownership reset my employment status?

Not automatically. A change of shareholders, management, business name, or corporate structure does not by itself erase continuity of employment. A genuine asset sale, closure, merger, or transfer to a legally distinct employer may create more complicated issues, but the employer cannot rely solely on a new name or new contract.

Is the downgrade valid if my salary stays the same?

Not necessarily. Demotion can involve a reduction in rank, responsibility, authority, status, or security even without an immediate salary cut. Removing regular status exposes the employee to a weaker form of tenure and may be materially prejudicial.

Can the company put me on a performance improvement plan?

Yes. A performance improvement plan is not automatically illegal. It becomes questionable when the standards are impossible, discriminatory, applied only to one employee without reason, or used to manufacture a basis for dismissal.

Can I remain employed while disputing the downgrade?

Yes. Continuing to work does not necessarily mean the employee agrees, especially when the employee promptly protests in writing. Clearly state that continued service is under protest and does not waive regular status.

Should I resign and file constructive dismissal?

Resignation is not always necessary to establish constructive dismissal, and resigning without adequate documentation may create evidentiary problems. The legal test considers whether a reasonable person would have felt compelled to leave because of the employer’s actions. Preserving evidence and documenting objections are critical.

What if I already signed the new contract?

The claim is not automatically lost. The circumstances of signing matter, including threats, unequal bargaining power, lack of explanation, misleading provisions, and whether the employee continued doing the same regular work.

Can the employer return me to my old position after I fail a promotional trial?

A return to the former or an equivalent position may be valid when it was clearly part of a genuine promotional arrangement and does not reduce the employee below the position, pay, benefits, or status previously held. It is different from terminating the employee or treating the employee as newly probationary in the company.

Where should I file a complaint?

A SEnA Request for Assistance may be filed through a DOLE, NLRC, or NCMB SEnA desk or through the official online system. If conciliation fails and the dispute involves illegal or constructive dismissal, the complaint is generally filed with the appropriate NLRC Regional Arbitration Branch. A CBA-based dispute may first require grievance machinery or voluntary arbitration.

Key Takeaways

A regular employee generally cannot be unilaterally returned to probationary status.
Employment status is determined by law and actual working conditions, not merely by a new contract or HR memo.
An employer may evaluate performance, transfer employees, reorganize, or impose lawful discipline, but cannot use management prerogative to defeat security of tenure.
A downgrade in status, rank, duties, authority, pay, or benefits may amount to constructive dismissal.
A promotional trial may test suitability for a higher role, but it should not automatically erase the employee’s underlying regular status.
Employees should obtain documents, protest in writing, preserve evidence, continue reporting when appropriate, and avoid signing resignation or waiver documents without understanding their effect.
SEnA provides a 30-day conciliation-mediation process, while unresolved dismissal disputes may be brought before an NLRC Labor Arbiter.
Strict procedural deadlines apply, including the 10-calendar-day period for appealing a Labor Arbiter’s decision.