Terminating the employment of a probationary employee: The

law, rules and applicable jurisprudence:

An owner of a business enterprise is given consideration

leeway in managing his business because it is deemed
important to society as a whole that he should succeed. Our
law, therefore, recognizes certain rights as inherent in the
management of business enterprises. These rights are
collectively called "management prerogatives" or acts by which
one directing a business is able to control the variables thereof
so as to enhance the chances of making a profit (Fernandez
and Quiason, The Law on Labor Relations, 1963 ed., p.43,
quoted in Chu v. NLRC, 232 SCRA 764 [1994]).

This prerogative has better application when it comes to hiring

of employees as there is no question that it is within the right
of an employer to hire its own employees. In the exercise of the
right to select his employees, the employer may set or fix a
probationary period within which the latter may test and
observe the conduct of the former before hiring him
permanently (International Catholic Migration Commission v.
NLRC, 169 SCRA 606 [1989]).

Probation is the period during which the employer may

determine if the employee is qualified for possible inclusion in
the regular force. It is prescribed, however, that the
probationary period shall, as a rule, not exceed six months.
This means that the probationary employee may be dismissed
for cause at any time before the expiration of six months after
hiring (Cielo v. NLRC, 193 SCRA 410 [1991]). Thus, if after
working for less than six months, he is found to be unfit for
the job, he can be dismissed. But if he continues to be
employed longer than six months, he ceases to be a
probationary employee and becomes a regular or permanent
employee.

Article 281 of the Labor Code governs the termination of

employment of a probationary employee. It states, inter alia,
that "[t]he services of an employee who has been engaged on a
probationary basis may be terminated for a just cause or when
he fails to qualify as a regular employee in accordance with
reasonable standards made known by the employer to the
employee at the time of his engagement. An employee who is
allowed to work after a probationary period shall be considered
a regular employee." This codal provision is implemented by
Rule XXIII, D.O. No. 10, Series of 1997 which states in part,
thus:

Section 1. Security of Tenure – (a) In cases of regular

employment, the employer shall not terminate the services of
an employee except for just or authorized causes as provided
by law, and subject to the requirements of due process.

(b) The foregoing shall also apply in cases of probationary

employment provided, however, that in such cases, the
termination of employment due to failure of the employee to
qualify in accordance with the standard of the employer
made known to the former at the time of engagement may
also be a ground for termination of employment.
***
III. If the termination is brought about by the completion of the
contract or phase thereof, no prior notice is required. If the
termination is brought about by the failure of an employee
to meet the standards of the employer in the case of
probationary employment, it shall be sufficient that a
written notice is served the employee within a reasonable
time from the effective date of termination.

The basis of the right of the employer to terminate the

employment of a probationary employee is underscored by the
following legal principle enunciated in International Catholic
Migration Commission v. NLRC, et al., 169 SCRA 606 [1989],
that — "It is well settled that the employer has the right or
is at liberty to choose who will be hired and who will be
denied employment. In that sense, it within the exercise
of the right to select his employees that the employer may
set or fix a probationary period within which the latter
may test and observe the conduct of the former before
hiring him permanently. As further stated by the Supreme
Court – "[A]s the law now stands, Article 281 of the Labor
Code gives ample authority to the employer to terminate
a probationary employer for a just cause or when he fails
to qualify as a regular employee in accordance with
reasonable standards made known by the employer to the
employee at the time of his engagement. There is nothing
under Article 281 of the Labor Code that would preclude the
employer from extending a regular or a permanent appointment
to an employee once the employer finds that the employee is
qualified for regular employment even before the expiration of
the probationary period. Conversely, if the purpose sought by
the employer is neither attained nor attainable within the said
period, Article 281 of the Labor Code does not likewise preclude
the employer from terminating the probationary employment on
justifiable causes."

This ample authority given to the employer to determine,

and conclude judgment with regard to the fitness of the
employee, must therefore, be respected. This is especially
true where there is no showing that the dismissal of the
probationary employee is arbitrary, fanciful or whimsical.
The dissatisfaction of the employer over the performance
of the employee is a legitimate exercise of management
prerogative to select whom to hire, or refuse employment
for the success of its undertaking (Grand Motor Parts Corp.
v. Minister of Labor, et al., 130 SCRA 436 — involves the
termination of a branch manager who failed to qualify as a
regular employee.

In Manila Electric Co. v. NLRC, 178 SCRA 198 [1989], the

Supreme Court upheld the dismissal of a probationary
employee who was found unfit for his position. The Court
noted that despite reasonable efforts exerted by the employer
to apprise the employee of the standard of performance
required of him, he did not follow the same. Further, he was
shown to be "uncooperative toward his co-
employees," and "disrespectful to his superiors."

In the 1996 of Flores v. NLRC et al. 253 SCRA 494, the

Supreme Court affirmed the dismissal of a loan processor of a
bank who was placed on probationary status for a period of six
months. In that case, her performance was evaluated by the
management every month on the results of which depended
her chances of permanent or regular appointment. On Sept.
23, 1992, prior to the lapse of the six-month probationary
period, she was notified by the bank that her probationary
employment was considered automatically terminated, she
having failed to meet the reasonable standards imposed by the
bank for a permanent employee.

Read more at
http://beta.philstar.com/business/2002/12/17/188229/ter
minating-employment-probationary-employee-law-rules-and-
applicable-jurisprudence#uXWsL5LbVshJVEjg.99

What is a probationary employee?

What is the correct legal procedure for terminating a
probationary employee?

What is a probationary employee?

A probationary employee is provided for in Article 281 of the
Labor Code of the Philippines:
Art. 281. Probationary employment. Probationary employment
shall not exceed six (6) months from the date the employee
started working, unless it is covered by an apprenticeship
agreement stipulating a longer period. The services of an
employee who has been engaged on a probationary basis may
be terminated for a just cause or when he fails to qualify as a
regular employee in accordance with reasonable standards
made known by the employer to the employee at the time of
his engagement. An employee who is allowed to work after a
probationary period shall be considered a regular employee.
The Supreme Court has elaborated on what it means to be a
probationary employee:
A probationary employee, as understood under Article 282
(now Article 281) of the Labor Code, is one who is on trial by
an employer during which the employer determines whether or
not he is qualified for permanent employment. A probationary
appointment is made to afford the employer an opportunity to
observe the fitness of a probationer while at work, and to
ascertain whether he will become a proper and efficient
employee. The word probationary, as used to describe the
period of employment, implies the purpose of the term or
period but not its length.
Being in the nature of a trial period the essence of a
probationary period of employment fundamentally lies in the
purpose or objective sought to be attained by both the
employer and the employee during said period. The length of
time is immaterial in determining the correlative rights of both
in dealing with each other during said period. While the
employer, as stated earlier, observes the fitness, propriety and
efficiency of a probationer to ascertain whether he is qualified
for permanent employment, the probationer, on the other,
seeks to prove to the employer, that he has the qualifications
to meet the reasonable standards for permanent employment.
It is well settled that the employer has the right or is at liberty
to choose who will be hired and who will be denied
employment. In that sense, it is within the exercise of the right
to select his employees that the employer may set or fix a
probationary period within which the latter may test and
observe the conduct of the former before hiring him
permanently.[1]

What is the correct legal procedure for terminating a

probationary employee?
The scenario is of an employee who has not yet been
regularized. If, before the end of the probationary period, the
employer determines that the employee is not qualified for
permanent employment, how is his employment terminated in
accordance with legal due process?
The process actually begins early in the employment of the
probationary employee. It begins with informing the new
hire of the standards by which he is to be judged during
the probationary period. The Supreme Court discusses this
in Mercado vs. AMA Computer College-Paranaque City,
Inc., G.R. No. 183572, April 13, 2010, 618 SCRA 218:
Labor, for its part, is given the protection during the
probationary period of knowing the company standards the
new hires have to meet during the probationary period, and to
be judged on the basis of these standards, aside from the
usual standards applicable to employees after they achieve
permanent status. Under the terms of the Labor Code, these
standards should be made known to the [employees] on
probationary status at the start of their probationary period,
or xxx during which the probationary standards are to be
applied. Of critical importance in invoking a failure to meet the
probationary standards, is that the [employer] should show as
a matter of due process how these standards have been
applied. This is effectively the second notice in a dismissal
situation that the law requires as a due process guarantee
supporting the security of tenure provision, and is in
furtherance, too, of the basic rule in employee dismissal that
the employer carries the burden of justifying a dismissal.
These rules ensure compliance with the limited security of
tenure guarantee the law extends to probationary employees.
Whereas a regular employee is typically entitled to the two-
notice requirement[2] for his employment to be terminated due
to just cause, the process is different in the case of a
probationary employee dismissed because of his failure to
qualify as a regular employee in accordance with reasonable
standards made known to him at the time of engagement.
In the case of Philippine Daily Inquirer vs. Leon M. Magtibay,
Jr., G.R. No. 164532, July 24, 2007, the Supreme Court ruled
that such a dismissal
… does not require notice and hearing. Due process of law
for this second ground consists of making the reasonable
standards expected of the employee during his
probationary period known to him at the time of his
probationary employment. By the very nature of a
probationary employment, the employee knows from the
very start that he will be under close observation and his
performance of his assigned duties and functions would be
under continuous scrutiny by his superiors. It is in
apprising him of the standards against which his performance
shall be continuously assessed where due process regarding
the second ground lies, and not in notice and hearing as in the
case of the first ground.
Due process for a probationary employee consists in having
informed him of the standards against which his performance
will be continuously assessed during the probationary period.
These work standards should be understood at the time of his
engagement and then, if he fails to meet these standards, a
written notice is served to the him by the employer within a
reasonable time from the effective date of termination.[3]
In all cases of probationary employment, the employer shall
make known to the employee the standards under which he
will qualify as a regular employee at the time of his
engagement. Where no standards are made known to the
employee at that time, he shall be deemed a regular
employee.[4]
This was upheld in Abott Laboratories vs. Alcaraz, G.R. No.
192571, July 23, 2013:
A different procedure is applied when terminating a
probationary employee; the usual two-notice rule does not
govern. Section 2, Rule I, Book VI of the Implementing Rules
of the Labor Code states that “if the termination is brought
about by the x x x failure of an employee to meet the
standards of the employer in case of probationary
employment, it shall be sufficient that a written notice is
served the employee, within a reasonable time from the
effective date of termination.”
While affirming that the two-notice rule does not apply to
probationary employees who are terminated for failure to meet
the employer’s standards, Abott Laboratories also cautions
employers to comply with their own internal procedure in
evaluating the performance of a probationary employee. These
policies are often found in the company handbooks and in
office memoranda circulated to the employees. The reason is
that company personnel policies create a contractual
obligation on the part of both the employee and the employer
to abide by the same.
Note that the reason for terminating a probationary employee
seems to make a difference to the Court. The two-notice rule
does not apply to probationary employees terminated because
of failure to meet the reasonable standards made known to
them at the time of engagement. However, it still appears to be
a requirement for probationary employees terminated because
of just cause.[5] It is thus important that the grounds for
termination are made clear during the termination, and that
documentation be meticulous throughout the process.