1) Probationary employment in Philippine law: what it is (and what it is not)

Probationary employment is a form of employment where the employer tests whether the employee meets the employer’s standards for regular employment. Under the Labor Code, a probationary employee enjoys security of tenure, but the employer has a wider (still regulated) ability to end the employment before regularization.

Key rules under the Labor Code (commonly cited as Article 296, formerly Article 281):

Maximum length: Probationary employment generally must not exceed six (6) months from the employee’s first day of work (with limited special situations discussed later).
Standards must be disclosed at engagement: The employer must make the reasonable standards for regularization known to the employee at the time of engagement. If the standards were not made known at engagement, the probation arrangement is vulnerable, and the employee may be treated as regular for purposes of security of tenure.
Not “at-will”: A probationary employee cannot be terminated simply because the employer “doesn’t like” the employee. Termination must be for legally recognized grounds and follow due process.

2) Lawful grounds for terminating a probationary employee

A probationary employee may be terminated only on grounds recognized by law. In practice, these fall into three main buckets:

A. Failure to qualify under the employer’s reasonable standards (probation-specific ground)

Under Article 296, the employer may terminate a probationary employee who fails to qualify as a regular employee in accordance with reasonable standards that were made known at engagement.

What “reasonable standards” usually mean:

Job-related performance metrics (quality, accuracy, productivity)
Behavioral standards (attendance, punctuality, conduct)
Competency requirements tied to the job description
Compliance with policies that were communicated upon hiring

Common pitfalls for employers (often cited in disputes):

Standards were not given at hiring (or were vague)
No documented evaluations/coaching
Standards were applied inconsistently or in bad faith

B. Just causes (employee fault) — applies to probationary employees too

Under the Labor Code (Article 297, formerly Article 282), an employer may dismiss an employee for just causes, such as:

Serious misconduct
Willful disobedience / insubordination
Gross and habitual neglect of duties
Fraud or willful breach of trust
Commission of a crime/offense against the employer or its representatives
Analogous causes

Probationary status does not reduce the employer’s burden to prove the just cause.

C. Authorized causes (business-related) — can apply even during probation

Under Article 298 (formerly 283) and Article 299 (formerly 284), employment may be terminated for business-related reasons, including:

Redundancy
Retrenchment to prevent losses
Installation of labor-saving devices
Closure or cessation of business
Termination due to disease (subject to strict conditions)

Important: Authorized-cause terminations usually trigger separation pay (with some exceptions), and have specific notice requirements.

3) Due process requirements: notice and procedure still matter

Even for probationary employees, employers must observe procedural due process. The exact procedure depends on the ground:

A. If terminated for just cause (fault-based)

The generally accepted standard is the two-notice rule plus opportunity to be heard:

First notice (Notice to Explain / Charge Sheet): Specifies the acts/omissions and gives time to respond.
Opportunity to be heard: Written explanation and/or administrative conference/hearing as appropriate.
Second notice (Notice of Decision): Informs the employee of the decision and reasons.

Failure to follow proper procedure can expose the employer to liability (often as “nominal damages”), even if there was a valid cause.

B. If terminated for failure to meet probationary standards

The law recognizes this as a distinct probationary ground, but employers should still provide:

A written notice of termination stating that the employee failed to meet the standards, and
A fair basis for the assessment (performance records, evaluations, documented feedback).

Many employers still follow a two-notice approach as a risk-control measure, especially when the “failure to qualify” overlaps with alleged misconduct or policy violations.

C. If terminated for authorized cause (business-related)

Authorized causes have statutory notice requirements, typically:

Written notice to the employee and DOLE at least 30 days before effectivity (for most authorized causes under Article 298).
For disease termination under Article 299, additional medical certification requirements apply.

4) Final pay (“back pay”) when a probationary employee is terminated

In Philippine practice, “back pay” is often used informally to mean final pay, but legally what matters is that the employee receives all amounts earned and due.

Under DOLE guidance (commonly referenced through DOLE Labor Advisory No. 06, Series of 2020), final pay generally includes amounts such as:

A. Unpaid wages and wage-related pay up to the last day

This typically includes:

Unpaid basic salary for days worked
Overtime pay (if applicable)
Night shift differential (if applicable)
Holiday pay and premium pay for rest days/special days (if applicable)
Any unpaid allowances that are legally demandable or contractually promised

B. Pro-rated 13th month pay

Under P.D. 851, rank-and-file employees are entitled to 13th month pay.

If employment ends before year-end, the employee is generally entitled to pro-rated 13th month pay based on basic salary earned within the calendar year.
Common computation: (Total basic salary earned during the calendar year) ÷ 12

Notes:

“Basic salary” generally excludes certain allowances and benefits not treated as basic pay.
Managerial employees are not covered by the statutory 13th month requirement, but many employers grant it contractually.

C. Cash conversion of unused leave (as applicable)

Service Incentive Leave (SIL) under Labor Code Article 95: at least 5 days with pay after one year of service (subject to exemptions). If unused, SIL is generally convertible to cash upon separation.
If the employee has not yet completed one year, SIL may not be legally due yet—unless company policy grants earlier accrual.
Vacation/Sick leave beyond SIL is usually policy- or CBA-based. Whether unused leave is convertible depends on the employer’s rules, employment contract, and established practice.

D. Separation pay (only if legally or contractually due)

A probationary employee may be entitled to separation pay if termination is for certain authorized causes or disease, or if company policy provides it.

Typical statutory separation pay rules (Labor Code):

Redundancy / labor-saving devices: 1 month pay OR 1 month pay per year of service, whichever is higher
Retrenchment / closure not due to serious losses: 1 month pay OR 1/2 month pay per year of service, whichever is higher
Closure due to serious business losses: Separation pay may be not required.
Disease termination (Article 299): 1 month pay OR 1/2 month pay per year of service, whichever is higher, plus compliance with medical certification requirements.

“Year of service” counting rule: In separation pay computations, a fraction of at least six (6) months is typically treated as one whole year.

E. Commissions, incentives, and bonuses: depends on “earned” status and policy

Commissions that are already earned under the commission scheme are generally payable.
Bonuses are typically demandable only if:
- They are promised in a contract/CBA, or
- They have become a company practice that is consistent and unconditional, or
- They are already “earned” under a defined plan.

Plans that require the employee to be “actively employed on payout date” are common; enforceability depends on the overall structure and fairness of the plan and surrounding circumstances.

F. Final tax adjustments and BIR Form 2316

Final pay often includes:

Proper withholding tax computation up to separation date
Release of BIR Form 2316 (Certificate of Compensation Payment/Tax Withheld), typically required upon separation or within BIR-prescribed timelines.

5) When must final pay be released?

DOLE guidance commonly sets the expectation that final pay should be released within 30 days from the date of separation, unless:

A different period is provided by a collective bargaining agreement (CBA), employment contract, or company policy consistent with law, or
There are justified, documented reasons recognized in the applicable company procedure—without using delay as leverage.

Practical point: Employers often require “clearance” (return of property, completion of accountabilities). Clearance processes are common, but final pay should not be unreasonably withheld.

6) Mandatory government benefits upon termination: what happens to SSS, PhilHealth, Pag-IBIG

Termination during probation does not erase statutory coverage. From Day 1 of employment, covered employees should have been reported and contributions remitted (subject to applicable rules).

A. SSS

The employer must remit required SSS contributions for covered months.
The employee’s SSS membership continues; if unemployed, the employee may later contribute voluntarily under the appropriate category.

SSS Unemployment Benefit (Involuntary Separation): Under R.A. 11199 (Social Security Act of 2018), qualified members who are involuntarily separated may claim unemployment benefits (subject to eligibility conditions, contribution requirements, and acceptable causes under SSS rules). Termination for just cause or voluntary resignation typically does not qualify.

B. PhilHealth

Coverage continues; the employee can transition to voluntary payment if unemployed.
Employers should ensure proper remittance up to the last covered period.

C. Pag-IBIG Fund

Employer remits contributions up to separation.
Member may continue as a voluntary member, and may be eligible for benefits/loans depending on Pag-IBIG rules and contribution history.

7) Other documents and end-of-employment obligations

Certificate of Employment (COE)

Under the Labor Code as amended (commonly associated with R.A. 10395), an employer must issue a Certificate of Employment upon request within the period required by law (widely implemented as three (3) days from request). The COE typically states:

Employment dates
Position(s) held (And sometimes last salary only if requested and if company practice allows; the law focuses on basic employment information.)

Final payslip / accounting

Good practice (and often demanded in disputes) is a clear breakdown of:

Gross amounts due
Deductions and their legal basis
Net amount released

Return of company property / accountabilities

Employers may require return of items (IDs, laptops, tools) and liquidation of cash advances. Disputes arise when this is used to delay final pay.

8) Deductions, offsets, and “clearance” issues: what employers can and cannot do

Philippine labor standards treat wages with special protection. Employers must be careful with deductions and withholding.

Generally defensible deductions (subject to proper proof and compliance):

Statutory deductions (SSS/PhilHealth/Pag-IBIG, withholding tax)
Deductions authorized in writing by the employee (certain loans, agreed arrangements), subject to limits
Deductions allowed by law or regulation

High-risk practices (often challenged):

Withholding the entire final pay indefinitely due to incomplete clearance
Charging “training costs” without a valid, reasonable, and enforceable agreement
Unilateral deductions for alleged damages/losses without clear authorization or due process

Where the employer asserts a monetary claim against the employee, the safer path is typically to:

Document the basis,
Obtain a legally sound written authorization (where allowed),
Or pursue recovery through proper legal channels rather than using wage withholding as leverage.

9) What the employee is still entitled to even if dismissed “for cause”

Even if termination is valid for just cause or failure to meet probationary standards, the employee generally remains entitled to:

All earned wages up to the last day worked
Pro-rated 13th month pay (if covered)
Earned and demandable benefits under law/contract/policy (as applicable)

What usually does not automatically follow:

Separation pay (generally not due for just cause, unless policy/CBA grants it)
Certain discretionary incentives not yet earned under the plan rules

10) Special situations that change the analysis

A. Probation period longer than 6 months

As a general Labor Code rule, probation should not exceed six months (outside limited exceptions). If the employee continues working beyond the probationary period without valid regularization action, disputes may treat the employee as regular.

Certain sectors (notably education) have special frameworks recognized in regulation/jurisprudence, which can affect probation length and standards.

B. Probationary employee labeled as “trainee” or “intern”

Calling someone a “trainee” does not remove labor standards coverage. True apprenticeship/learnership arrangements have legal requirements (including registration and compliance with applicable rules). Misclassification can lead to liability for unpaid benefits.

C. Termination as “end of probation”

In law, ending employment at any time during probation is still a termination that must be supported by a valid ground and proper process. Employers should avoid treating it as a mere administrative end-date.

11) Remedies and common disputes (why final pay issues escalate)

When probationary termination is challenged, common claims include:

Illegal dismissal (no valid cause, or standards not disclosed at engagement, or bad faith)
Non-payment/underpayment of final pay components (wages, 13th month, leave conversions)
Improper deductions or unreasonable withholding pending clearance

Potential consequences for unlawful termination can include reinstatement (or separation pay in lieu, depending on circumstances), backwages, and damages—separate from final pay obligations.

Money claims have their own prescriptive periods (often cited as 3 years for money claims under the Labor Code), while illegal dismissal claims are commonly treated under longer prescriptive rules applied by jurisprudence.

12) Practical reference: “What should be in the final pay?” (quick matrix)

Reason for probationary termination	Unpaid wages & premiums	Pro-rated 13th month (if covered)	Leave conversion	Separation pay
Failure to meet probation standards	✅	✅	✅ (if accrued/convertible)	❌ (unless policy/CBA)
Just cause (misconduct, etc.)	✅	✅	✅ (if accrued/convertible)	❌ (unless policy/CBA)
Redundancy / labor-saving devices	✅	✅	✅	✅ (statutory)
Retrenchment / closure not due to serious losses	✅	✅	✅	✅ (statutory)
Closure due to serious losses	✅	✅	✅	Often ❌ (by statute)
Disease (Article 299 conditions met)	✅	✅	✅	✅ (statutory)

13) Bottom line

A probationary employee can be terminated only for lawful reasons—just cause, authorized cause, or failure to meet reasonable standards made known at hiring—and procedural due process remains critical. Regardless of the reason for termination, the employee is generally entitled to all earned compensation and legally demandable benefits, with separation pay due only in specific situations (mainly authorized causes/disease or policy/CBA). Final pay is generally expected to be released within the DOLE-recognized timeframe, with careful handling of deductions and clearance-related accountabilities.