A probationary employment contract is an employment contract given during the initial employment of an employee. It allows an employer to determine the suitability of the employee within the fixated period. Before the end of the probation period, the employer shall evaluate whether the employee possesses the skill, competence, and attitude to qualify for regular employment.
But do you know what are the regulations regarding the probationary employment?
- What is a probationary employee?
- How long is the probation period for new employees?
- Probationary Employee Benefits in the Philippines
- Non-Regularization of Probationary Employee in the Philippines
- Termination of Probationary Employee
- Extension of Probation Period
A probationary employee is an employee who will be assessed and evaluated over a period of time to determine if he is qualified for regular employment.
According to the Labor Code of the Philippines, an employee shall not be placed on probation for more than 6 months; with the standards to qualify as a regular employee made known to the employee at the time of engagement.
In normal circumstances, an employee who is allowed to work after the probation period shall be considered a regular employee. This probation period may be mutually agreed to be less than 6 months as seen in the case of Dusit Hotel Nikko vs. Renato M. Gatbonton.
Furthermore, if the duration of the probationary contract or the standards to qualify as a regular employee is not make known to the employee at the time of engagement, the employee shall be deemed as a regular employee from the start of the employment.
Probationary Employee Benefits in the Philippines
Are probationary employees entitled to vacation leave?
No, probationary employees are not entitled to vacation leave.
The Labor Code of the Philippines does not require employers to grant vacation leave benefit to their employees. What is required is the grant of service incentive leave benefit. However, employers who grant at least 5 days of vacation leave to their employees is exempted from granting the service incentive leave benefit.
In order to qualify for the service incentive leave benefit, the employee is required to render at least 1 year of service. Since probation period shall not exceed 6 months, the probationary employee shall not be entitled to service incentive leave. Therefore, the employer is also not required to grant vacation leave benefit to probationary employees. This is without prejudice to any favorable agreement granting the vacation leave benefit to the employee.
Are probationary employees entitled to 13th month pay?
Yes, all rank-and-file employees, including probationary employees, are entitled to 13th month pay.
In general, all rank-and-file employees are entitled to the 13th-month pay regardless of the nature of their employment and irrespective of the methods by which they are paid provided they worked for at least one month during a calendar year.
Probationary employees are also entitled to the members’ benefits under SSS, Philhealth and HDMF if they meet the respective institution requirements.
Non-Regularization of Probationary Employee in the Philippines
At the end of the probation period, if the employee failed to meet the standards to qualify as a regular employee, the employer may choose not to regularize the employee.
DOLE has advised that if the termination of the employment relationship is due to the employee’s failure to meet the standards for regular employment, the employer shall serve a written notice to the employee within a reasonable time prior to the expiration of the probationary employment contract.
However, in the case of Radin C. Alcira vs NLRC et. al., the court has ruled that the employee is not illegally dismissed when the employer chose not to regularize the employee on the last day of his probationary employment. As the employee failed to meet the standards for regular employment, the employer exercised its option not to renew the employment contract upon the expiration of the probationary employment contract.
As a rule of thumb and to prevent possible labor dispute, employers should evaluate the suitability of the employee and inform the employee 1 month before the end of the probation period.
Termination of Probationary Employee
A probationary employee may only be terminated for a just cause or when the employee fails to qualify for regular employment. Therefore, if the employee is terminated without a just cause before the end of his probation period, the act of termination shall constitute illegal dismissal.
Extension of Probation Period
There may be times when an employee has shown exemplary performance in certain areas but failed in the others. This situation often results to a dilemma on whether to qualify the employee for regular employment. The employee may have failed the evaluation, but if he is given a longer period of time, he may be able to perform his duties as demanded.
As seen in the case of Mariwasa Manufacturing, Inc., et al. vs. Hon. V. Leogardo Jr., et al, the employer may offer to extend the probationary period out of goodwill and upon mutual understanding and agreement. The court has ruled that such goodwill of the employer to grant a second chance to the employee cannot be unjustly turned against the employer to compel the employer to keep an employee who could not perform according to its work standards.
However, an employer may not extend the probation period as a mean to circumvent the employee’s right to become a regular employee. The qualification to become a regular employee shall be based on the standard as made known to the employee at the time of engagement. And it is the employer’s duty to evaluate the probationary employee before the end of the probation period. In the absence of an evaluation, the employee shall automatically acquire regular status upon the expiration of the probationary employment contract.
For more information on labor regulations, please refer to the Presidential Decree No. 442, s. 1974.