Termination of Probationary Employees for Poor Performance (Philippine Perspective – 2025)
1. Statutory Framework
| Provision | Key Points |
|---|---|
| Labor Code, Art. 296 (renumbered; formerly Art. 281) | Probationary employment may not exceed six (6) months unless apprenticeship or learner programs apply. Termination is valid “for a just cause or when the employee fails to qualify under the reasonable standards made known by the employer at the time of engagement.” |
| Department Order (DO) 147-15 (Series of 2015, implementing the Labor Code on termination) | Reiterates the need to communicate standards and follow procedural due process even for probationary employees. |
| Department Order 174-17 (rules on contracting) | Holds principals solidarily liable when a contractor dismisses a probationary employee improperly. |
| Civil Code, Art. 19 & 20 | Imposes the obligations of human relations and damages for bad-faith terminations. |
2. Elements of a Valid Probationary Dismissal for Poor Performance
Reasonable Standards
- Must relate to the work to be performed, be measurable/observable, and conform to public policy.
Communication at the Time of Engagement
- The standards must be expressly conveyed on or before the first day of work (employment contract, job offer, employee handbook, or orientation deck).
- If not duly communicated, the employee is deemed a regular employee from Day 1 (Art. 296; Mariwasa Mfg. v. Leogardo, G.R. 74246, 30 May 1986).
Substantial Evidence of Failure to Meet Standards
- Quantitative (KPIs, productivity quotas, error rates) or qualitative (customer feedback, behavioral metrics) records.
- Evaluations should span a reasonable period within the six-month window; one-day “snap” evaluations are disfavored (Integrated Micro-electronics v. Paganes, G.R. 221290, 9 Jan 2019).
Procedural Due Process (see § 3 below).
Dismissal within the Probationary Period
- Effectivity must fall on or before the 180th day; otherwise the employee acquires regular status and the higher “just cause” threshold applies.
3. Procedural Due Process for Probationary Dismissal
| Step | Minimum Requirement | Notes & Leading Cases |
|---|---|---|
| 1. First (Notice to Explain) | Written notice specifying: (a) evaluation results; (b) the exact standards unmet; (c) a directive to submit a written explanation or appear at a conference. | Abbott Laboratories v. Alcaraz (G.R. 192571, 23 Jul 2013) affirmed that the twin-notice rule applies even to probationary terminations. |
| 2. Opportunity to be Heard | At least 48-hours to respond in writing; optional hearing/conference especially if requested. | GRP Maintenance v. Alcon, G.R. 217562, 11 Jan 2021: written explanation sufficed where the employee declined a meeting. |
| 3. Second (Notice of Termination) | Contains: (a) specific ground—“Failure to meet communicated probationary standards”; (b) a summary of evidence; (c) effectivity date. | Service may be personal or by registered mail; effectivity can be immediate upon receipt since separation pay is not mandated. |
Non-compliance with steps 1–3 does not reinstate the employee if the substantive ground is proven, but it entitles the employee to nominal damages (₱30,000 as baseline – Jaka Food Processing v. Pacot, G.R. 151378, 10 Mar 2005).
4. Burden of Proof & Evidentiary Standards
- Burden rests on the employer (Art. 299) to show both substantive and procedural validity.
- Substantial evidence – such relevant evidence as a reasonable mind might accept (≈ quantified performance metrics, supervisor sworn assessments, customer complaints).
- Contemporaneous documentation (weekly scorecards, performance-improvement plans) is best practice; post-hoc affidavits alone are normally inadequate (Aliling v. Starbucks Coffee, G.R. 195145, 14 Jun 2016).
5. Common Pitfalls & How to Avoid Them
| Pitfall | Why It Fails | Compliance Tip |
|---|---|---|
| Oral communication of standards only | Courts require written proof. | Attach KPI matrix to the employment contract; have employee sign “conforme.” |
| Moving targets | Changing metrics mid-probation is “unreasonable.” | Reserve a contractual clause identifying fixed metrics and process for revisions (with employee consent). |
| Delayed notice | Serving termination after Day 180 converts the employee to regular status. | Maintain HRIS alerts for Day 160 evaluations and Day 175 cut-offs. |
| Generalized “poor attitude” ground | Must relate to job duties and be documented (e.g., incident reports). | Use behavior-based rubrics (attendance, policy violations). |
| Single-notice dismissals | Jurisprudence generally requires twin notices. | Even if management thinks one notice suffices, send the second to hedge risk and minimize nominal damages. |
6. Separation Pay & Final Pay
- No separation pay is required for a valid probationary dismissal (unless an employment contract, CBA, or company policy grants it).
- Final pay (accrued wages, unused SIL/VL, 13th-month pro-rated, tax clearance, COE) must be released within 30 days of termination (DOLE Labor Advisory No. 06-20).
- Certificate of Employment (COE) must indicate nature and inclusive dates of employment only; including the reason for termination without employee request may expose the employer to moral damages.
7. Remedies & Liability
| Party | Forum | Remedy |
|---|---|---|
| Employee | NLRC (Region → Commission → CA → SC) | Illegal dismissal complaint—reinstatement (or separation pay in lieu) + full backwages + damages & attorney’s fees. |
| Employer | Same | May defend with documentary proof; may implead contractor when applicable. |
| Contractor/Sub-con | Solidarily liable under DO 174-17 if termination is found illegal. |
Nominal damages (P10k–P50k) are routinely awarded for procedural lapses; moral and exemplary damages require proof of bad faith, fraud, or oppressive behavior (Cathay Pacific v. NLRC, G.R. 110353, 26 Feb 1997).
8. Recent Jurisprudential Trends (2019-2025)
- Strict View of Written Standards – Mercury Drug Corp. v. Hernandez (G.R. 236261, 27 Apr 2022) declared that a generic job description is not equivalent to specific performance standards.
- Hybrid / Remote Work Evaluations – Ingles v. OutsourcingWorld (NLRC L-051-23, 15 Aug 2024) upheld dismissal where productivity software logs established sub-par efficiency ratios.
- Nominal Damages Upward Adjustment – EON Solutions v. Gadia (G.R. 254789, 19 Mar 2024) raised nominal damages for due-process infractions to ₱50,000 given inflation and deterrent goals.
- AI-assisted KPIs – While permissible, employers must prove transparency and fairness in AI metrics (DOLE Labor Advisory 02-25, “Algorithmic Management”).
9. Best-Practice Workflow for HR & Managers
- Day 0-1: Issue employment contract + detailed KPI schedule; obtain signed acknowledgment.
- Day 30 & 60: Conduct midpoint evaluations; document deficiencies; launch Performance Improvement Plan (PIP) if needed.
- Day 90-150: Monitor PIP; gather objective data (dashboards, peer reviews).
- Day 160: HR legal audit—verify evidence sufficiency & procedural calendar.
- Day 165: Prepare Notice to Explain; give 3-5 days to respond.
- Day 170: Hold conference/hearing (optional but recommended).
- Day 175: Issue Notice of Termination effective immediately or by Day 180.
- Day 180: Release final pay, COE, and BIR Form 2316; record in DOLE RKS Form 5 (monthly termination report).
10. Conclusion
Termination of a probationary employee for poor performance in the Philippines is both a management prerogative and a legal minefield. Success hinges on three pillars:
- Clear, written, job-related standards disclosed from Day 1;
- Consistent, well-documented evaluations establishing failure to meet those standards;
- Meticulous observance of the twin-notice procedural requirement within the six-month probationary window.
When these requisites align, employers protect productivity while respecting constitutional guarantees of security of tenure and due process. Conversely, shortcuts—however expedient—expose companies to reinstatement orders, hefty backwages, and reputational damage.
Staying abreast of evolving jurisprudence, digitizing performance data, and integrating legal review into HR workflows remain the surest safeguards as the world of work—and its metrics—continues to evolve.