Introduction

In the Philippine labor landscape, probationary employment serves as a trial period for employers to assess an employee's fitness for permanent regularization. Governed primarily by the Labor Code of the Philippines (Presidential Decree No. 442, as amended), this arrangement allows employers to evaluate performance against predefined standards. However, termination during or at the end of this period, particularly following a failed evaluation, must adhere to specific legal parameters to avoid claims of illegal dismissal. This article comprehensively explores the procedures, legal foundations, requirements, employee rights, potential liabilities, and related considerations for terminating a probationary employee due to evaluation failure, drawing from statutory provisions, Department of Labor and Employment (DOLE) guidelines, and jurisprudence from the Supreme Court of the Philippines.

Legal Basis for Probationary Employment and Termination

Definition and Duration

Probationary employment is a temporary status where an employee undergoes a trial period to demonstrate qualifications for regular employment. Under Article 296 (formerly Article 281) of the Labor Code, this period shall not exceed six months from the date of engagement, unless a longer apprenticeship or learnership period is required by law or agreement. Extensions beyond six months may render the employee regular by operation of law, as held in cases like Mitsubishi Motors Philippines Corp. v. Chrysler Philippines Labor Union (G.R. No. 148738, June 29, 2004).

The essence of probation is mutual evaluation: the employee proves capability, while the employer assesses suitability. Termination can occur for two main reasons during probation:

Just or authorized causes (similar to regular employees, e.g., serious misconduct or redundancy).
Failure to qualify as a regular employee based on reasonable standards communicated at the time of hiring.

This article focuses on the second scenario—termination due to failed evaluation— which is distinct and less stringent than dismissals for cause.

Key Statutory Provisions

Article 296, Labor Code: An employee fails to qualify if they do not meet reasonable standards made known at engagement. No probationary employee can be terminated except for just/authorized causes or such failure.
DOLE Department Order No. 147-15: Reiterates due process requirements, emphasizing evaluation and notice.
Omnibus Rules Implementing the Labor Code (Book VI, Rule I, Section 6): Probationary employees are entitled to security of tenure during the period, meaning termination must be justified.

Supreme Court rulings emphasize that probationary status does not strip employees of constitutional protections against arbitrary dismissal (Article XIII, Section 3, 1987 Constitution). In Abbott Laboratories Philippines v. Alcaraz (G.R. No. 192571, July 23, 2013), the Court clarified that employers bear the burden of proving that standards were communicated and that the employee failed to meet them.

Prerequisites for Valid Termination Due to Failed Evaluation

For a termination to be lawful, several foundational elements must be in place:

1. Communication of Reasonable Standards

Standards must be reasonable, job-related, and made known to the employee at the time of engagement. This could include performance metrics, skill benchmarks, or behavioral expectations outlined in the employment contract, job offer letter, or orientation materials.
Failure to communicate standards invalidates the termination, potentially deeming the employee regular and the dismissal illegal (International Catholic Migration Commission v. NLRC, G.R. No. 72222, January 30, 1989).
Examples of standards: Sales targets for a probationary salesperson, accuracy rates for a data encoder, or client satisfaction scores for a service role.

2. Conduct of Evaluation

Evaluations should be periodic, objective, and documented. Best practices include mid-probation reviews (e.g., at 3 months) to provide feedback and allow improvement.
Tools may include performance appraisal forms, supervisor reports, or key performance indicators (KPIs). Objectivity is crucial to withstand scrutiny in labor disputes.
If the evaluation reveals deficiencies, the employer should provide coaching or training opportunities, though not strictly required by law unless stipulated in the contract.

3. Evidence of Failure

The employer must substantiate the failure with concrete evidence, such as evaluation scores, incident reports, or comparative data. Mere subjective dissatisfaction is insufficient (Dusit Hotel Nikko v. Gatbonton, G.R. No. 161242, May 5, 2006).

Step-by-Step Procedures for Termination

Terminating a probationary employee for failed evaluation does not require the full twin-notice rule applicable to regular employees under Article 297 (just causes) or Article 298 (authorized causes). However, basic due process—notice and opportunity to be heard—must be observed to align with constitutional mandates and avoid illegal dismissal claims.

Step 1: Pre-Termination Assessment

Review the employee's performance against the established standards.
Compile documentation: evaluation forms, memos on deficiencies, and records of feedback sessions.
Ensure the termination decision is made before the probationary period expires. Allowing work beyond probation implies regularization (Cualopas v. NLRC, G.R. No. 142248, September 12, 2003).

Step 2: Issuance of Termination Notice

Provide a written notice of termination, ideally at least 24-48 hours before the effective date, though no specific timeline is mandated for this ground.
The notice must:
- State the specific grounds (failure to meet standards).
- Detail how the employee failed, referencing evaluations and evidence.
- Indicate the effective date of termination.
- Advise on final pay, benefits, and clearance procedures.
Sample language: "Based on your performance evaluation dated [date], you have not met the required [specific standard, e.g., 80% productivity rate], as communicated in your employment contract. Consequently, your probationary employment is terminated effective [date]."

Step 3: Opportunity to Respond (Recommended)

While not strictly required for failure-to-qualify terminations, offering the employee a chance to explain or contest the evaluation strengthens the employer's position. This can be via a meeting or written response.
In Sampaguita Auto Transport v. NLRC (G.R. No. 197384, January 30, 2013), the Court upheld terminations where employees were informed of shortcomings but failed to improve.

Step 4: Processing Final Pay and Clearance

Compute and release final wages, including unused leaves, 13th-month pay prorated, and any incentives due.
Issue a Certificate of Employment upon request (DOLE requirement).
No separation pay is required for this ground, unlike authorized causes like redundancy.

Step 5: Reporting to DOLE (If Applicable)

For establishments with 10 or more employees, report terminations to the nearest DOLE office within 10 days using the Establishment Termination Report (RKS Form 5), though this is more common for mass terminations.

Employee Rights and Protections

Probationary employees enjoy limited security of tenure but are protected from abuse:

Right to Due Process: Even without full hearings, arbitrary termination is prohibited.
Prohibition on Discrimination: Termination cannot be based on protected characteristics (e.g., gender, age) under the Labor Code and special laws like Republic Act No. 9710 (Magna Carta of Women).
Backwages and Reinstatement: If dismissal is ruled illegal, the employee may claim backwages from termination date until reinstatement or finality of decision (Agabon v. NLRC, G.R. No. 158693, November 17, 2004).
Union Rights: Probationary employees can join unions, and termination cannot be retaliatory (Article 259, Labor Code).

Potential Liabilities for Employers

Non-compliance can lead to:

Illegal Dismissal Claims: Filed with the NLRC, potentially awarding reinstatement, full backwages, damages, and attorney's fees.
Damages: Moral and exemplary damages if bad faith is proven.
Administrative Penalties: DOLE may impose fines for violations of reporting or due process.
Criminal Liability: Rare, but possible for willful violations under labor laws.

To mitigate risks, employers should maintain robust HR policies, train supervisors on evaluations, and consult legal counsel.

Special Considerations

Industry-Specific Variations

In highly regulated sectors (e.g., banking under Bangko Sentral ng Pilipinas rules or education under CHED), additional standards may apply.
For apprentices or learners, probation may extend under TESDA guidelines, with different termination rules.

Impact of Company Policies

Internal policies may impose stricter procedures (e.g., multiple evaluations), which must be followed to avoid breach of contract claims.

Jurisprudential Developments

Recent cases emphasize evidence-based terminations:

In University of Santo Tomas v. Samahan ng Manggagawa (G.R. No. 184262, April 24, 2017), the Court stressed that evaluations must be fair and not pretextual.
During crises like the COVID-19 pandemic, DOLE advisories (e.g., Labor Advisory No. 17-20) temporarily modified procedures, but core principles remain.

Alternatives to Termination

Employers may opt for extension (with consent), transfer, or additional training if failure is remediable, fostering goodwill and reducing litigation risks.

Conclusion

Terminating a probationary employee after a failed evaluation in the Philippines balances employer discretion with employee protections. By adhering to clear communication of standards, objective evaluations, and proper notice, employers can execute lawful terminations while minimizing disputes. Employees, conversely, should document their performance and seek DOLE or legal advice if aggrieved. This framework underscores the Labor Code's goal of promoting industrial peace through fair labor practices. For specific cases, consultation with a labor lawyer or DOLE is advisable to navigate nuances.