Due Process and Performance Management Rules in the Philippines

1) Why this question matters

A Performance Improvement Plan (PIP) is widely used in Philippine workplaces as a performance-management tool and, sometimes, as a stepping stone to termination. But a PIP is not the legal standard for a valid dismissal. In the Philippines, what controls is:

Substantive due process: there must be a lawful ground for dismissal, proven by the employer; and
Procedural due process: the employer must follow the legally required notice-and-hearing steps (for just causes), or the statutory notice and pay requirements (for authorized causes).

A termination “immediately after a PIP” can be lawful only if both substantive and procedural requirements are satisfied. A PIP is evidence that may help show fairness, but it does not automatically make a dismissal valid.

2) The legal framework: what “cause” is being used?

Philippine law recognizes two broad categories of grounds:

A. Just causes (employee fault)

These are the “disciplinary” grounds (Labor Code, renumbered provisions commonly cited as Article 297). Poor performance usually gets argued under a just cause when it is framed as:

Gross and habitual neglect of duties (a common fit for sustained poor performance tied to neglect), or
In some situations, other fault-based grounds depending on facts (e.g., willful disobedience, fraud, breach of trust), though these are not performance issues per se.

Key idea: For just causes, the employer must show fault-based grounds with substantial evidence and must observe the two-notice rule and opportunity to be heard.

B. Authorized causes (business/health reasons)

These are non-fault grounds (commonly Article 298 for redundancy, retrenchment, closure; Article 299 for disease). A PIP usually has little relevance here because the ground is not “performance,” but organizational necessity or medical incapacity.

Key idea: If the employer is actually downsizing, automating, or closing, calling it “performance” and running a PIP can look like mislabeling the true reason.

3) What a PIP is (legally) and what it is not

What a PIP is

A PIP is a management tool to:

clarify performance expectations,
document gaps,
provide coaching/resources,
set timelines and measurable targets, and
assess whether the employee can meet job standards.

What a PIP is not

A PIP is not:

a substitute for the statutory notices required for termination;
proof by itself that a ground exists;
a “waiver” of the employee’s right to due process; or
an automatic trigger that termination becomes valid the moment the PIP ends.

A PIP can help demonstrate fairness, but the employer still must prove the ground and follow the process.

4) The core question: can termination be immediate after a PIP?

The practical rule

An employer may terminate immediately after a PIP only when:

the PIP has concluded (or the evaluation point has arrived),
the employee demonstrably failed to meet reasonable, job-related standards, and
the employer complied with procedural due process applicable to the ground invoked.

“Immediate” in this context means: once the basis is established and the due process steps are completed, the employer need not extend employment further.

What is usually unlawful

Termination is commonly struck down when it happens:

right after placing an employee on a PIP (without giving a reasonable chance to improve), or
right after the PIP but without the legally required notices/hearing steps, or
after a PIP built on vague, shifting, or impossible metrics, or
where the PIP is used as a pretext for a different unlawful reason.

5) Substantive due process: when “poor performance” can justify dismissal

“Poor performance” is not a stand-alone just cause in the Labor Code’s wording. It becomes legally cognizable when it meets standards recognized in labor jurisprudence and practice, generally along these lines:

A. Standards must be known and reasonable

To dismiss for performance, the employer should be able to show:

clear performance standards, quotas, or KPIs;
that these standards were communicated to the employee (job description, policies, scorecards, onboarding materials, signed performance agreements, coaching notes);
that the standards are reasonable for the role and circumstances.

B. Proof of failure must be credible and job-related

Evidence often includes:

performance appraisals with objective bases,
quality audits, error rates, customer complaints (validated),
sales/production reports,
attendance/efficiency logs (if tied to output),
contemporaneous coaching records.

C. The failure should be persistent or serious in context

For just-cause dismissal, the employer typically must show more than an isolated shortfall. When the ground is framed as gross and habitual neglect, “habitual” implies repeated failure over time, and “gross” implies a serious, substantial disregard of duties—not minor deficiencies.

D. Good faith and fairness matter

Labor tribunals closely examine whether the evaluation system was applied in good faith, without arbitrariness, discrimination, retaliation, or shifting goalposts.

How a PIP helps substantively: A well-constructed PIP can demonstrate that (1) standards were clear, (2) support was provided, and (3) the employee was given a fair opportunity to meet expectations.

6) Procedural due process for just-cause termination: the two-notice rule

If the employer terminates based on a just cause (including performance framed as neglect/inefficiency), procedural due process generally requires:

Step 1: First written notice (Notice to Explain / charge notice)

This should state:

the specific acts/omissions complained of (not generic “underperformance”),
the policy/standard violated or performance expectation unmet,
supporting facts (dates, metrics, incidents),
and a directive giving the employee a reasonable opportunity to respond in writing.

Step 2: Opportunity to be heard

This can be:

a hearing or conference, especially when the employee requests it, disputes facts, presents defenses, or when credibility/factual issues need clarifying; and/or
an administrative conference where the employee can explain and present evidence.

A full-blown trial-type hearing is not the norm, but the opportunity must be real—not cosmetic.

Step 3: Second written notice (Notice of Decision / termination notice)

This should:

state that all circumstances were considered,
explain the findings and reasons,
specify the ground and effective date of termination.

Important: A PIP does not replace these notices

A PIP document that merely says “you are on PIP” is not the same as a charge notice for termination. And a “PIP failed” memo is not automatically a valid termination notice unless it satisfies the legal content and timing requirements and is preceded by the opportunity to explain.

7) How PIPs fit into due process in real life

Scenario A: PIP as performance support, then formal due process

Common compliant pattern:

Regular performance management →
PIP with coaching/resources and documented check-ins →
If failure continues, employer initiates two-notice rule and hearing →
Decision.

Here, termination can occur “right after” the final evaluation because the employer has already built a record and then completes the formal due process steps.

Scenario B: PIP used as the “first notice”

Risky unless done carefully. A PIP can sometimes double as the first notice only if it clearly reads as a charge notice: it specifies the acts/metrics, warns that dismissal is being considered for a legally recognized ground, and gives a chance to explain. Many PIPs do not meet this standard.

Scenario C: Termination immediately upon PIP placement

Usually problematic because:

it suggests no meaningful opportunity to improve, and/or
the employer may be skipping the two-notice rule.

There are exceptions only if the real ground is different (e.g., serious misconduct discovered) and the employer follows due process for that ground.

8) Special situations

A. Probationary employees

Probationary employment allows termination when the employee fails to meet reasonable regularization standards made known at engagement. For probationary employees:

standards must be communicated at the start (or very early),
evaluation must be fair and evidence-based.

A PIP is not strictly required but may be used. Termination can happen once it is clear the standards are not met—still subject to basic fairness and notice, and careful documentation.

B. Managerial employees / positions of trust

Employers often claim broader discretion in evaluating managerial performance, but tribunals still look for:

objective basis,
good faith,
consistent application of standards.

C. Commission-based/sales roles

Sales metrics are often used, but employers should still show:

the targets were realistic,
market/territory changes were accounted for,
support (leads, training, pricing authority) was not arbitrarily withheld.

D. Work-from-home / remote monitoring

Performance standards must remain transparent and compliant with privacy and labor standards. Overreliance on opaque productivity surveillance can create evidentiary and fairness issues.

9) Common legal pitfalls that invalidate “PIP-to-termination” cases

1) Vague allegations

“Not meeting expectations” without конкрет metrics, dates, or outputs.

2) Shifting or retroactive targets

Changing KPIs mid-stream or applying standards not previously communicated.

3) “Impossible PIP”

Unreasonable timelines, unattainable numbers, lack of tools/access/resources.

4) Unequal treatment

Similarly situated employees not penalized; selective enforcement.

5) Lack of documentation

No contemporaneous records; relying on after-the-fact narratives.

6) Skipping statutory due process

No first notice, no real chance to explain, no second notice.

7) Pretext / bad faith PIP

PIP used to push out an employee for:

union activity,
whistleblowing,
pregnancy/family responsibilities,
protected complaints,
discrimination,
retaliation after filing labor claims,
personality conflicts dressed up as “performance.”

A bad-faith PIP can support claims of illegal dismissal and, in some cases, constructive dismissal.

10) Constructive dismissal risks: when “performance management” becomes coercion

Even without a formal termination, performance management can be attacked as constructive dismissal when it effectively forces resignation, such as:

humiliating or punitive PIPs,
demotion in rank or pay without valid basis,
impossible goals designed to ensure failure,
harassment framed as “coaching,”
isolation, removal of tools, or withholding accounts necessary to meet targets.

If an employee resigns under pressure tied to these tactics, the resignation may be treated as involuntary.

11) Burden of proof and where disputes are decided

In illegal dismissal disputes:

The employer bears the burden to prove the dismissal was for a lawful cause and that due process was observed.
The standard is substantial evidence in labor cases.

Disputes are typically filed before the labor arbiters and may proceed through NLRC review and judicial remedies.

12) Remedies and consequences if the dismissal is defective

If there is no valid cause (substantive defect)

The dismissal may be declared illegal, potentially resulting in:

reinstatement (or separation pay in lieu in certain circumstances), and
backwages and other monetary awards as adjudged.

If there is a valid cause but defective procedure (procedural defect)

Philippine labor rulings have recognized that an employer may still be liable for monetary consequences (often in the nature of indemnity/damages) for violating due process, even if a just cause existed.

13) Practical compliance checklist (Philippine context)

For employers

Define standards: role-based, measurable, communicated early.
Document fairly: objective records, consistent rating methodology.
Run a credible PIP: realistic goals, resources, coaching, check-ins.
Separate performance support from discipline: know when you’re transitioning to termination consideration.
Follow the two-notice rule: first notice (specifics), chance to explain/hearing, second notice (reasoned decision).
Ensure consistency and good faith: avoid pretext signals.

For employees (what to watch for)

Were standards and targets clearly communicated and stable?
Was there a real chance to improve with support?
Were you given written notice of charges and a chance to respond?
Are you being singled out compared to peers?
Is the PIP being used right after a complaint, protected leave, or conflict?

14) Bottom line

An employer can terminate “immediately after a PIP” only if the employer can prove a legally recognized ground (often framed as gross and habitual neglect/serious performance failure) and the employer observed the required due process. A PIP can strengthen the employer’s case when it is fair and well-documented—but it does not, by itself, legalize a termination, and it does not replace the statutory notices and opportunity to be heard.