Probationary Employment Agreement

What is a Probationary Employment Agreement?

A Probationary Employment Agreement is a contract between a new employee (the "probationary employee") and an employer where the probationary employee is hired on a probationary basis which is for a period of 6 months. Like other employment agreements, it outlines the duties, responsibilities, the rights, compensation, and benefits of the probationary employee that arise out of their employment. However, unlike other employment agreements, a Probationary Employment Agreement also outlines the standards or criteria under which a probationary employee will be evaluated to see if they qualify as a regular employee.

What are the different types of employment?

The definition of the different types of employment can be seen below:

• Probationary Employment. In probationary employment, an employee is hired on a probationary basis to allow the employer to evaluate the qualifications or capacity of the employee. The probationary employee must be given the standards upon which they shall be evaluated and said standards must be explained to him. The probationary employment cannot exceed 6 months. If the probationary employee passes his evaluation, they become a regular employee. This document should be used if this will be a stand-alone Probationary Employment Agreement.
• Regular Employment. Regular employees are those employed as permanent employees and can only be dismissed for just and authorized causes such as poor performance, misconduct, or redundancy.
• Project Employment. A project employee is hired for a specific undertaking or project. His employment ends upon the completion of the project. The date of completion of the project must be determined at the time of engagement of the employee.
• Seasonal Employment. A seasonal employee is hired for a specific period or season of the year.
• Fixed Term Employment. Employment with a fixed period means that the employment is for a fixed period of time that has been voluntarily agreed upon by the parties and is not designed to circumvent labor laws.
• Casual Employment. A casual employee is one doing work that is not usually necessary or desirable to the employer and is not a project, seasonal, or fixed-period employee.

An Ordinary Employment Agreement can also be used for the foregoing types of employment. For a more tailored employment agreement for domestic workers, the following can be used:

• Domestic Work Agreement. This also known as a Kasambahay Contract, is an agreement whereby an individual called a domestic worker will perform household work in favor of the employer who should also be an individual person.

What is the most common type of Employment Agreement?

The most common type of Employment Agreement is the Probationary Employment Agreement. This is a practice in the Philippines where employers usually want to test or determine the capability of the employee to perform his work usually for a period of 6 months. After this period, then the employee may become a regular permanent employee if they succeed in meeting the employer's work standards.

Is it mandatory to have a Probationary Employment Agreement?

It is important to note that the work standards should be made known to the probationary employee at the time of engagement or beginning of employment otherwise (if the standards are not made known to the probationary employee), the probationary employee will be deemed a regular employee.

One of the ways to ensure that the standards are made known to the probationary employee is to have a written Probationary Employment Agreement and include the work standards therein so in that sense, it is mandatory to have a written Probationary Employment Agreement to prevent unintended regularization of the probationary employee.

Since the employment agreement will have to be read and signed by the probationary employee, they would be made aware of the standards for qualifying as a regular employee. A written Probationary Employment Agreement is also easier to prove, thus in case there will be a case brought to the labor courts (i.e. National Labor Relations Commission) regarding probationary employment, the probationary employment contract may be used as evidence.

What are the rules on work hours in a Probationary Employment Agreement?

The standard work hours are 8 hours per day, with a maximum of 48 hours per week. The probationary employee is entitled to an additional 25% of the regular hourly rate if they work overtime or beyond a period of 8 hours unless otherwise permitted by the nature of employment.

Note that the employer can arrange that a probationary employee could work for less than 8 hours as in the case of part-time employment. Note further that under the law, lunch breaks of 1 hour are not paid as this is excluded from the counting of 8 hours, however, short rest periods are counted as working hours.

What are the rules on minimum wage in a Probationary Employment Agreement?

The minimum wage depends on wage orders issued by the Regional Tripartite Wages and Productivity Boards (RTWPBs) of the region where the employer's premises are located. Employers are mandated to pay their probationary employees the minimum wages applicable to their region, but employers may opt to increase the wages beyond the minimum rate. Note that the prevailing minimum wage in Metro Manila is PHP 610 per day (work performed for 8 hours).

How is the payment of the wages done in a Probationary Employment Agreement?

Wages should be paid in cash to the probationary employee and should be done at biweekly or once every two weeks, or twice a month, and the intervals of payment of wages should not exceed 16 days.

Note that the employer is not permitted by law to pay wages other than in the form of cash, and the manner of payment may be agreed upon by the employer and probationary employee e.g. bank transfer or check. Thus, if the employer pays the probationary employee merchandise for the work done, this will be considered an illegal payment of wages. Nothing, however, prevents the employer from providing benefits for the employee of things other than cash so long as the employee is paid the minimum wage.

What must a Probationary Employment Agreement contain?

The following information should be provided to complete the document:

• Information concerning the identity of the employer and the probationary employee,
• The duties and responsibilities of the probationary employee if these will be specified,
• The standards for the regularization of the probationary employee,
• The work schedule of the probationary employee,
• The location where the probationary employment will be performed,
• The compensation for the probationary employment,
• The benefits that will be provided by the employer,
• If desired by the employer, a prohibition on the probationary employee against performing acts that compete with the employer, and
• The term or duration of the agreement.

What is not allowed in a Probationary Employment Agreement?

Employment Agreements are given great importance under the law as compared to other types of contracts which is why they must be compliant with the minimum requirements provided for by law. The law provides for minimum benefits and wages which the probationary employees are entitled and this cannot be denied by the employer. To name a few:

• The probationary employee cannot be denied the proper benefits mandated by law such as SSS, Pag-Ibig, and Philhealth.
• The probationary employee cannot be paid a wage lower than the prevailing minimum wage. (The prevailing minimum wage is PHP610.00)
• The probationary employee cannot be denied the right to humane working conditions, i.e. they should only be permitted to work for 8 hours a day subject to overtime pay if they work beyond 8 hours.
• The probationary employee should be entitled to a night shift differential (10% of the basic pay) in case they will be working at night or within the hours of 10:00 PM and 6:00 AM.
• The probationary employee cannot be dismissed outright by the employer. The employee should only be dismissed for just and authorized causes such as poor performance, misconduct, or redundancy, or if the probationary employee does not meet the work standards of the employer.

What are the prerequisites of a Probationary Employment Agreement?

If required by the employer, the probationary employee must undergo a pre-employment medical examination to determine the probationary employee's fitness to work.

Further, the probationary employee should obtain a National Bureau of Investigation Clearance before the start of employment. This is the usual requirement among all of the employers in the Philippines).

Who can enter into a Probationary Employment Agreement?

The parties to an Employment Agreement will be the employer and the probationary employee.

The employer may be an individual or an organization. If the employer is an organization, then the Employment Agreement may be signed by an authorized representative of the same, e.g. Human Resources Manager.

Note that a probationary employee should be at least 18 years of age to be able to work. However, minors may also be employed if they are working under the responsibility of their parents and as long as they do not perform hazardous work.

What is the duration of a Probationary Employment Agreement?

In probationary employment, an employee is hired on a probationary basis for a period of 6 months.

Employers may choose to extend the probationary period of employment. This should be communicated to the employee in writing, along with the revised duration and evaluation criteria. Such a valid reason is when the probationary employment is extended in order to give the employee a chance to improve and further his prospects to demonstrate his fitness for regular employment. This is an exception to the general rule that probationary employment should not exceed a period of 6 months.

The industry applicable to the probationary employee may also determine the extent or duration of the probationary employment.

Examples: It may be shorter than 6 months such as in the case of internship or trainee positions which is designed to provide hands-on experience and training to students or recent graduates may have probationary periods ranging from a few weeks to a few months. The duration may also be longer than 6 months such as in the case of teachers under whose probationary period should not be more than 3 consecutive years of satisfactory service for those in the elementary and secondary levels.

For a more extensive explanation, the following guide can be checked: What is a Probationary Employee?

What has to be done once a Probationary Employment Agreement is ready?

At least two original copies of the Probationary Employment Agreement should be printed and signed by both the employer and the probationary employee, and each party should keep their own copies. It is the choice of the parties if they want to acknowledge the agreement before a Notary Public. Acknowledgment will make it easier for the agreement to be enforced against either party.

If the document will be acknowledged before a Notary Public, three original copies must be printed, one for the Notary Public and one for each party. Then the original copies must be presented and signed in front of the Notary Public.

Which documents should be attached to a Probationary Employment Agreement?

The document outlining the duties and responsibilities of the probationary employee should be attached to this agreement if desired by the employer.

Is it necessary to notarize a Probationary Employment Agreement for it to be valid?

No. Notarization is not mandatory, but the employer and probationary employee can choose to do so. Notarization of the document converts the document from a private document to a public document so that it becomes admissible in court without the need for further proof of its authenticity, meaning, the document will be presumed to be validly written and signed once it is shown to court in case a dispute is brought before it.

Is it necessary to register a Probationary Employment Agreement?

Probationary Employment agreements do not require registration before the Department of Labor and Employment if the employment will be done locally. However, if the employee will be an Overseas Filipino Worker (OFW), then registration and requirements needed by the Philippine Overseas Employment Administration, should be obtained.

Note that this Probationary Employment Agreement is only applicable to local employment.

What are the costs involved in the finalization of a Probationary Employment Agreement?

Notarization fees for a Probationary Employment Agreement are typically PHP100 to PHP500.

Which laws are applicable to a Probationary Employment Agreement?

The Labor Code of the Philippines governs employment in the Philippines. The Department of Labor and Employment also issues Department Orders and Guidelines for the implementation of the Labor Code and to set the minimum wage.

The general laws on contracts and obligations found in the Civil Code of the Philippines also apply.

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