Probationary Employment in the Philippines: A Comprehensive Overview

Probationary employment is one of the most common types of employment in the Philippines. Employees are almost always required to go through a probationary employment period, although this does not apply to fixed-term or project-based employment. Employers seldom hire employees as regular staff members from the outset.

Article 296 of the Labour Code sets out the requirements for probationary employment. First, employees must be informed of the standards of regularisation during the initial hiring process. Second, the probationary employment must not exceed six months. However, there are a number of issues with these requirements.

Regularisation standards should be explicitly communicated to employees. Ideally, they should be informed about the metrics and key performance indicators, and explicitly told that these are the standards of regularisation. In Enchanted Kingdom v Verzo (December 2015), it was decided that a provision in the employment contract indicating the employee’s duties and responsibilities, along with their job description, suffices as compliance. Furthermore, the High Court has adopted a liberal approach in certain cases, stating that for some jobs such as maid, cook, driver, or messenger, there is no need to inform the employee of the standards of regularisation (Robinson’s Galleria v Ranchez, January 2011).

Ideally, regularisation standards should be communicated at the time of hiring; ie, when the employee signs the contract or starts work. However, In Enchanted Kingdom v Verzo, the court held that this is not an ironclad rule, stating that “The true test of compliance is one of reasonableness. As long as the employee is given a reasonable time and opportunity to be made fully aware of what is expected of him during the early phases of the probationary period, the requirement has been satisfied.” In the said case, a total of 14 days had lapsed when the employee officially received the letter containing what he already knew – that he was still a probationary employee.

The rulings issued in Viernes, et al v NLRC (April 2003), A.M. Oreta & Co., Inc. v NLRC, et al (August 1989), and Karen Jaso v Metrobank & Trust Co., et al (May 2021), support the position that it is not obligatory for the probationary employee to be notified of their probationary status and the regularisation standards in their employment contract or appointment letter.

There are certain exceptions where the probationary period may extend beyond six months: i) when the parties agree otherwise in the employment contract, and this is justified by the nature of the work (Buiser, et al v Leogardo, et al, July 1984); ii) when a valid extension of the period is made before the end of the six-month period (Mariwasa Manufacturing, Inc. v Leogardo a, January 1989); and iii) for teachers in private and public schools, where the probationary period is three years.

There may be cases where an employee undergoes a probationary period of five months, followed by termination of their employment, only to be rehired for another probationary period of the same duration, and this process repeats. The Supreme Court has declared this scheme to be an explicit attempt to evade the establishment of regular employment and is therefore prohibited.

In the case of Lina B. Octaviano v NLRC, et al (October 1991), the employee was hired as a probationary employee on four consecutive occasions. The court saw “these successive hirings and firings as a ploy to avoid the obligations imposed by law on employers for the protection and benefit of probationary employees of xxx.” Octaviano’s case involved consecutive probationary periods. However, this raises the question: what if there was a gap between hirings, such as a three-month period?

The ruling in Manalo, et al v TNS Philippines, Inc. (November 2014) states that “project-based employment and probationary employment are distinct from one another and cannot co-exist with each other.”

For fixed-term employment, the court in Servidad v NLRC, Innodata Philippines, Inc., et al (March 1999), held that if a contract was in fact for a fixed term, a company should not be given the discretion to dismiss an employee during the agreed period of employment for grounds other than those that are justified and authorised under the law.

Can an employer hire someone as a trainee prior to hiring them as a probationary employee? Yes and no.

If the training takes the form of an apprenticeship (under TESDA or DOLE) or a training under the Dual Training System Act (Republic Act No 7686), or even a student internship programme (pursuant to CHED Memorandum Order 104-17), the employer may subsequently hire the trainee as a probationary employee. The training is separate and distinct from employment.

However, if the training is not under any of the foregoing, even with the employee’s agreement, the employer cannot hire them first as a trainee and then as a probationary employee. In Holiday Inn Manila v NLRC (Holiday Inn) (September 1993), the court considered the complainant’s three-week on-the-job training period as her probationary employment period. Similarly, in Oyster Plaza Hotel, et al v Melivo (October 2016), the training period of three months was considered as the employee’s probationary employment period.

Considering the above, could an employer include the training period within the six-month probationary period, thereby treating the training as part of the probationary employment and considering satisfactory performance during training as one of the standards of regularisation? This topic certainly warrants further discussion.