FAQ: Probationary Employees

FAQ: Probationary Employees

As I provided a sample probationary employment contract in my last post I thought I would discuss probationary status a bit further.

Most businesses in the Philippines start their employees as probationary. It’s rumored even that some extremely large businesses circumvent the law by treating their employees as permanently probationary (yes that’s an oxymoron).

With such rumors common place, some employees can be wary of probationary periods and may (fairly or not) see them as yet another means of the employer extracting maximum work from them for minimal pay.

Hopefully some of the Q and A below can help dispel some of the doubts regarding probationary employment status.

How long can a probationary period be? – Six months (Article 281 of the Labor Code).

Can the probationary period be shorter? – Yes, the period can be shorter at the option of the employer. So it can be a month, 3 months, 5 months; however length of time as long as it does not exceed 6 months.

Can the probationary period be extended? – Yes, it can be extended at the option of the employer. If at the end of the initial probationary period (whatever length it may be) the employer determines that the employee has not met the criteria for regularization but has potential if given more time, then he may choose to extend the period. The extension is supposed to allow the employee more time to learn the skills he needs to fulfill his job function.  (Mariwasa Manufacturing vs. Leogardo, GR No. 74246)

Does an employee automatically become regular at the end of the probationary period? – No. At the end of the probationary period the employee has to demonstrate that he has learned the skills he needs to fulfill his job function.

If the probationary period is extended does that mean an employee will automatically become regular at the end of the extended period? – No. Again, the employee still has to prove that he has what it takes to be a regular employee.

Is a probationary employee entitled to holiday pay? – Yes. The law states that employees are entitled to holiday pay (Articles 93 and 94 of the Labor Code). As the law doesn’t distinguish between regular and probationary employees (it simply states employees or workers) the employer cannot distinguish between them as well (for purposes of holiday pay).

Is a probationary employee entitled to 13th month pay? – Yes. A 2013 labor advisory from DOLE stresses that all rank and file employees, “regardless of their position, designation or employment status” are entitled to 13th month pay.

Are probationary employees entitled to leave? –  No. For workers to qualify for leave (or Service Incentive Leave as it’s termed under the law) they must have worked for a minimum of one year with their employer. As the maximum term of a probationary employee is 6 months (assuming the period is not extended) then a probationary employee can never have worked with their employer for at least a year.

Are probationary employees covered under the mandatory contributions for SSS, Pag-ibig and Phil-Health? – Yes. Both the employer and employee are required to submit their respective contributions even though the employee is on probationary status. Again, the rationale here is that the law governing those three institutions does not distinguish between the status of the employee so we cannot distinguish as well.

What’s the difference between a trainee and probationary employee? – A trainee could be a regular employee while a probationary employee is never a regular employee. For small business owners I suggest, to avoid any doubt, just use probationary or regular status. Designating employees as trainees just confuses everyone. (Trainees are also different from apprentices but that’s a different bag of worms.)

Working stiffs unite
Working stiffs unite

Photo credit: Slovenia June 2008 – 093 via photopin and a Creative Commons License

43 thoughts on “FAQ: Probationary Employees

    1. Hi Kryssa,

      Thanks for your question! Honestly I don’t know the answer to that, I’ll have to do some research.

      I’m out of town until the end of the month but I’ll post an answer when I get back.

      1. Sorry it took me a while to get back to you.

        Your question is novel – ie. none of the 3 lawyers I asked was quite confident on the answer. :p

        Based on what we discussed though an apprentice is probably not covered under SSS. This is because there is no employer-employee relationship between the master (for lack of a better term) and the apprentice (always 2 there are, a master and an apprentice, but that’s Star Wars, not the law, and I digress). Absent an employer-employee relationship SSS is not mandatory.

    1. Yes, a probationary employee is still entitled to holiday pay even though he did not work.

      As mentioned in my post, the law does not distinguish between probationary employees and regular employees for purposes of holiday pay. As such, for holiday pay, what applies to regular employees also applies to probationary employees.

      If a normal employee did not work on a regular holiday then he is entitled to 100% of his salary for that day. Since regular and probationary employees get the same holiday pay then the probationary employee is also entitled to 100% of his salary for that day.

      For special non-working days (no work but not a regular holiday) then the law is no work no pay. This applies to both regular and probationary employees.

  1. Hello

    I just want to ask, Im now 5 months and according to the company contract once you exceeded 5 months automatic, you are regular. adjustment of the salary and allowance after 6 months. During my 3 months our GM evaluate me and my grade was almost perfect despite the fact that they know Im pregnant. Now that the management knew about my situation, they now want to finish my contract since Im pregnant.

    Please advise.

    Thank you.

    1. Hello Meg,

      Just based on your description then you have a good case for wrongful termination. Firing someone solely on the basis of pregnancy is not only a labor issue but is a criminal offense in the Philippines.

      If you feel strongly about this then you should consult a lawyer who can go through the relevant documents in question (labor contract, evaluation) and ask you more questions so that they can get a better picture of the strength of the case.

  2. Is it a duty of an employer to notify an employee if he/she is suitable to be a regular employee or is for termination a month before the probation period ends?

    1. It is in the best interest of the employer (ER) to inform the employee (EE) right away whether the decision has been made to make the EE regular or not.

      If the ER does not inform the EE of the decision and the probationary period ends and the EE continues to work for the ER then it could be argued that the EE has become a regular employee (even without the express declaration of the ER).

      If the ER has decided to end the probationary period and not take on the EE as regular then it is in the best interest of the ER to inform the EE right away; otherwise the ER is paying the salary of an employee he has already deemed is not fit for the job. (Of course the ER could just wait till the very end of the probationary period to tell the EE. This is not very efficient as it takes away time from a potential employee who could do the job well but it is in the ER’s purview to do so.)

  3. Hi,
    I would like to ask, what if our business is closed on Holidays, are we required to pay our employees holiday pay premium?

    Thanks,
    Choi

    1. Assuming it’s a regular holiday then yes you still need to pay your employees their regular pay even though your place is closed and therefore they did not work. However, if you’re a retail or service establishment with less than 10 workers then the employer is not required to give employees their pay on a holiday. (See Article 94 of the Labor Code.)

      Please note that the above is only true for regular holidays. There can also be special non-working days where there is no work but that is not considered a holiday requiring holiday pay. You can google whether a declared no work day is a regular holiday or a special non-working day. And here’s a concise graphic explaining the differences between the two.

  4. Good day. I have been in the BPO industry for more than 5 years now. In Dec 2015, I previously resigned from my last company since I needed to go abroad for 3 months, and after which I decided to go back to work as a call agent again.

    I am currently a trainee in a BPO company in Makati . I previously signed a training agreement, which said that the training will last approximately 3 months, and bec I am a trainee, I will not be entitled of any gov’t benifits such as SSS, pagibig, philhealth, leaves, will not be deducted of any govt taxes and also not eligible to get 13th month. We are asked to work for 9.5 hours and was advised that since we are trainees we are not entitled of paid break times. I have been on this situation for more than 6 months now, and until now they have not given me any clear information on when I will be a regular employee. I am already doing the same task of a regular employee. Please help me on what I should do. I fear that they might just terminate me anytime they want. I appreciate your response and time about this. God bless you. – Anne

    1. Hi Anne,

      I sympathize with your situation. It’s not easy when your employer is not up front with the terms of your employment.

      I can only offer general advice at this point. A lot depends on the training agreement that you signed. The length of your training and how and when you will be evaluated should be detailed there.

      You’ve noted that the agreement says you shall be a trainee for a maximum of 3 months but you’ve already been working more than 6 months with the company now. I do not know though if there are other clauses in the agreement, or other notices sent to you, whereby the training period can be extended.

      As a lot is unclear the only advice I can give is to ask a lawyer to look over your training agreement and any work related notices you have received. If you do not want/are unable to consult a lawyer I suggest emailing your manager or direct superior to ask when your evaluation to become a regular employee shall be. Copy furnish your HR department on this email as well. You can always go to DOLE later if you feel you have a legitimate concern about your employer.

      On one hand it’s difficult to complain at work as you don’t want to be the person who rocks the boat. On the other hand, just based on the facts presented above, you would seem to have legitimate grounds for complaint.

      1. Is it legal not to have any 13th month pay, government benefits and taxes while I am still under this training agreement?

        Thank you so much for everything. You have been a great help. I appreciate it.

        1. Generally if you’re employed (regardless if you’re a trainee or however else you’re designated) you’re entitled to 13 month pay, SSS coverage, etc.

  5. Hi just wanna ask if is it a company’s prerogative to implement the pay of a probationary employee. For example a probationary is still on a day-to-day basis pay, And he/she has no specific rest day. Thank you!

    1. Hi, I’m not sure I understand the basis of the question but any employer (company or individual) is required to pay its/his employees. This is true regardless of the rank (eg. probationary, temporary, regular, etc.) of the employee.

  6. If there is no written contract just verbal agreement is the employee considered probationary or regular? We are small skill-required business and need to train. We do a 25% deduction during training period that lasts as long as the supervisor can guarantee his skill. Is that apprenticeship?

    1. Generally the form of the contract (ie. whether it’s written or oral) is not important. What is important is the content or the terms of the agreement. It is the terms of the agreement which will determine whether an individual is working as a probationary or regular employee.

      (Of course written contracts are preferred as the content of oral agreements is difficult to prove.)

      By themselves a pay cut during a training period coupled with actual training are not sufficient to determine whether a working is being employee as an apprentice. For one, the Secretary of Labor must approve those industries which may take on apprentices (see Article 60 of the Labor Code). Apprenticeship agreements must also conform to regulations set forth by DOLE (Article 61 of the Labor Code).

      I am not up to date as to the current state of DOLE regulations regarding apprenticeship.

      And on that note I would like to remind everyone that while I am a lawyer my field of practice is NOT labor law. Honestly I’ve always found the subject to be tedious. So take everything I say with a grain of salt and do further research. (Sound advice for anything you read on the internet.)

    1. No you may not. An employer cannot demote a regular employee back to probationary status.

      You can (if it’s allowed by your company handbook/employee policies) place an employee on notice or preventive suspension or temporary suspension or any other remedial or disciplinary stages stated in your employee policies. But doing so does not change the status of a regular employee. Even on suspension the employee remains a regular employee.

  7. Hello,

    I’d like to clarify something, despite me having been to DOLE which confused me more.

    I was a probationary employee (1st job after graduation) earning minimum salary ( allowance as my employer would say). And in my employment contract, I was notified that my employer is not obligated to pay for my SSS, PagIbig and PhilHealth benefits. The company is employing less than 10 workers (exemptions everywhere). Now, I’d like to ask if this is legally acceptable practice? As I know, these as mandatory laws which [logically] should supersede any form of contract.

    Also, I am expecting to incur a penalty for my personal account wherein I receive my salary. The personal account was my employer’s idea. Since he failed to pay my salary on time, I failed to maintain the min requirement. Can i demand for reimbursement? DOLE cannot ascertain me that I’d be reimbursed bcz it’s a personal account. My argument is that I wasnt able to fulfill my obligations bcz the employer failed to fulfill his. I am not paying 300php for this. What’s my best course of action?

    1. Also, as someone with probationary status, I was not given 13th mo pay but was given a bonus not explicitly stated as 13th mo pay in my payslip. Can I demand be payed? I was Employed last august.

        1. Per my friend who has experience in labor law: If the bonus was generic (ie. it was just labelled as bonus with no other qualifiers) then the employer could argue that the 13th month pay is already included or subsumed therein.

          Of course that assumes that the bonus given was larger than what your 13th month would have been. If the bonus was less then you have are entitled to claim the difference between the 13th month due and the “bonus” given.

    2. Hi Randy,

      For your first question: You’re correct that the law is superior to any contract. And yes the law does require the employer to pay for SSS, PI and PH of its employees. The law can also provide for exemptions to this mandatory coverage requirement. As far as I know employing less than 10 people is not a en exemption covered by law (the less than 10 people applies to holiday pay if I remember correctly). If your employer or DOLE can show a law which specifically provides for why that employer is exempted then the provisions of the contract are valid. If those clauses have no legal basis then they’re invalid or void as the mandatory obligation imposed by the law supersedes any contractual stipulation.

      For your second question: I assume you’re referring to a personal account with a bank and since you’re below the minimum daily balance requirement the bank is now going to fine you. Short story, its perfectly legal for the bank to do that and you have no course of action against the bank. Long explanation, the contractual relationship in this case is between you and the bank. In opening an account you agreed to abide by the conditions set by the bank, one of which was the balance requirement. It’s immaterial (at least against the bank) that the reason why you did not meet the daily balance requirement was due to a third party (in this case your employer).

      What should you do? Honestly if your payment was late only one time then I would let it go and just pay the bank fine. You can find better things to do than running after this. If your employer is/was perennially late or did not pay at all then that’s a more serious matter which you should bring to DOLE.

      1. Thank you.

        For my first concern, this is what the DOLE rep told me initially so I set up a conference with my employee and the rep. I went to the conference and that same rep wasnt there, and the one who handled the conference was someone superior to her in rank. But that someone went in favor with the employer bcz of the contract. I argued these are mandatory laws, and she acted like nothing coz she seems to have impression of me that I was just a curious newbie. She just argued that their own job-order workers also don’t have their own benefits, like wtf? I dont know, I’m going back to the initial rep to clarify everything again. I’m getting my supposed allowance in full, so no deductions. I am still entitled for benefits right?

        For the bank, I have no issue. It’s with the employer I have issue with bcz “it” didn’t fulfill its obligations to me by paying me on time so I could not fulfill my obligations with the bank.

      2. Can you please give me references on this online, if possible? I tried scanning through the Labor Code but I can’t exactly pinpoint rules due to me potentially misinterpreting legal jargons.

        1. Section 9 of RA 8282 requires that coverage in the SSS “shall be compulsory upon all employees not over sixty (60) years of age and their employers”.

          I suggest if you go back to DOLE you point out that coverage in the SSS is mandatory. If DOLE is saying you are not covered by this then what law is DOLE citing to explain why you are not covered. Argument by analogy (our job-order workers are not covered under SSS so you are also not covered) will not do. Ask for their legal basis for saying why you are not covered by the SSS law and therefore why your employer is correct in denying you this benefit.

          To be clear, there are exemptions to SSS coverage. Moreover depending on the corporate structure of your employer perhaps someone else (not your “direct” employer) should be responsible for paying your SSS coverage. Not knowing more about your type of work though and your employment status I can only speculate at this point.

          1. Thank you.

            One last thing, just a fast one, if there are mandatory laws enforced like the SSS, PI, and PH benefits, can contracts negate those laws? Won’t these contracts be considered null and void?
            What will prevail?

          2. The law prevails over any contract. So if the law is saying something is mandatory a contract cannot say that the parties agree that the the act in question is merely optional (ie. not mandatory). Again though there are exemptions to the mandatory coverage of the SSS law so you have to make sure you do not fall within one of those exceptions.

  8. Hi!

    I just want to ask, we all know that companies have good recruitment practices to ensure that they will be able to hire the most qualified applicant. But, after the applicant undergo different kinds of tests in order for them to qualify, the applicant when hired would need to be a probationary employee first before they become permanent on their job.

    The argument lies in here, so is there a need for probationary period for a newly hired employee even if he qualifies all of the tests and able to meet all the requirements needed by the company?

    While, if there is a need for probationary period, what’s the real purpose and advantage of implementing it and why is it needed?

    And, are the employer’s the only once who benefited from this or also the employee?

    Thank you in advance! 😀

    1. Hi Julie,

      Having been both an employer and an employee I do think the probationary period has value. A person can pass tests with flying colors but it’s only when he starts to do the job you hired him for can you see if he will work out in that position. Moreover while tests can measure aptitude (can the applicant do the job) they can’t measure attitude (is the applicant motivated to work, is he pleasant to work with, is he a team player, etc.) In my experience attitude is just as important as aptitude when you’re figuring out who you want working for you.

      I do agree that a probationary period seems to favor only the employer. However many other provisions of the Labor Code tend to favor the employee. In fact compared to other countries it is quite difficult to terminate employment under Philippine law (assuming you strictly follow the law). In that sense those provisions almost exclusively favor the employee.

      When the lawmakers crafted the Labor Code (well actually the Labor Code was issued when Pres. Marcos exercised both legislative and executive powers so there were no lawmakers, eg. elected representatives, per se) they had to be fair to both employees and employers. So you’ll find provisions which benefit the employer more but on the other hand there are also provisions which benefit employees more.

  9. Hello! I just want to ask something. I’m a probationary employee in our company for almost 4 months now. But my employer doesn’t pay my income taxes and mandatories (sss,pag-ibig,philhealth), meaning I have been receiving my salary without any deductions. As my employer said, my taxes and mandatories will be paid quarterly. Since I am working for them for almost 4 months now, nothing has been deducted then. I have been on this dilemma for weeks now. Any advice or solutions that can help? Is there any way that those mandatories will be paid? Thank you!

    1. Realistically it would be difficult at this point to force your employer to pay the mandatories. Sure you could report the employer to the various agencies involved but this will take time, effort and will most likely not result you being popular with your employer. My advice would be wait until you are made a permanent employee. If you do not when this will be it is your right to ask your employer how your probationary period is and under what metrics you will be judged on whether you are made permanent or not. Once you are a permnanent employee you are in a better position to demand that the mandatories be paid.

  10. Hello I would like to ask..im an employer and i hired 5 employees, they will be starting their work this month, is it mandatory to deduct from the employees first month salary the SSS, Philhealth, PagIbig and tax contributions?

  11. What is the computation of Leaves if you are probationary starting September 2016 then become regular April 2017?

    Thank you.

    1. Usually it’s proportional to the year when you became regular.

      So if effective April 1 you became a regular employee then you should get 9/12 of the leaves you are due per year.

      For example if you are entitled to 10 leaves a year and 9/12 of that would be 7.5 days.

  12. Good day!

    I’d like to ask if it is legally right to terminate a probationary employee if the said employee failed for first two consecutive month on his evaluation?

    Thank you!

    1. These kind of things can only really be judged on a case to case basis when all the facts of the case are clear.

      In general though there is nothing illegal in firing a probi employee 2 months into the evaluation period if the assessment of his performance clearly shows that the employee is incapable of doing the work assigned to him.

Leave a Reply

Your email address will not be published. Required fields are marked *