Regularization Standards Failure To Inform Converts Probationary Employee To Regular Status

The Supreme Court has reaffirmed a crucial protection for probationary employees: if an employer fails to inform them of the standards for regularization at the time of engagement, they are deemed regular employees by operation of law. In Simon v. The Results Companies (G.R. Nos. 249351-52, March 29, 2022), the Court also clarified that an employee who is illegally dismissed is entitled to full backwages and separation pay when reinstatement is no longer feasible. The ruling serves as a reminder to employers of their strict obligations during probationary employment and to employees of their rights when those obligations are ignored.

The Facts of the Case

Edna Luisa B. Simon was hired as a Customer Service Representative by The Results Companies, a business process outsourcing firm, on October 6, 2012. She claimed she was forced to resign on December 13, 2012, after an operations manager verbally told her not to report to work anymore. She filed a complaint for illegal dismissal in October 2016.

The company initially denied that Simon was ever its employee. After she presented her company ID and payslips, the company changed its position and argued she was merely a probationary employee who either voluntarily resigned or went on absence without leave (AWOL). The company claimed its two-month probationary period was too short to assess her fitness for regularization.

The Issue

The central question was whether Simon was a probationary or regular employee, and whether she was illegally dismissed.

The Ruling

The Court held that Simon was a regular employee by operation of law because the company failed to inform her of the standards for regularization at the time of her engagement. It also ruled that she was illegally dismissed and entitled to separation pay in lieu of reinstatement, plus full backwages.

The Two Requirements for Probationary Employment

Under Section 6(d), Rule I, Book VI of the Omnibus Rules Implementing the Labor Code, as amended by Department Order No. 147-15, an employer must make known to a probationary employee the standards under which he or she will qualify as a regular employee at the time of engagement. Where no standards are made known, the employee is deemed regular.

The Court cited Moral v. Momentum Properties Management Corp., which explained that employers must comply with two requirements: (1) communicate the regularization standards to the probationary employee, and (2) do so at the time of engagement. Failure to comply with either converts the employee to regular status. The exception applies only when the job is self-descriptive, such as maids, cooks, drivers, and messengers.

In this case, the company neither presented evidence—such as a policy handbook, operations manual, or performance appraisal document—nor even alleged that it informed Simon of the criteria for regularization. The Court found the NLRC's ruling that she was merely probationary unsupported by substantial evidence.

Proving the Fact of Dismissal

The Court also clarified that while the employer bears the burden of proving that a dismissal was for a valid cause, the employee must first establish by substantial evidence that he or she was actually dismissed. Simon presented text messages from her supervisor stating that the managers had decided to terminate her and that she was on the list of non-rehirable agents. The Court found this sufficient to prove dismissal. The fact that she did not know the specific manager's name was inconsequential.

Since the company presented no resignation letter or evidence of AWOL, its claims of voluntary resignation or abandonment were rejected.

Monetary Awards for Illegal Dismissal

Under Article 294 of the Labor Code, an illegally dismissed regular employee is entitled to reinstatement without loss of seniority rights and full backwages, inclusive of allowances and other benefits, computed from the time compensation was withheld up to actual reinstatement. When reinstatement is no longer possible—such as when the employee has reached the compulsory retirement age of 65—separation pay is awarded in lieu of reinstatement.

Because Simon was already 66 years old, the Court granted separation pay and computed her backwages from her dismissal on December 13, 2012 up to her compulsory retirement on August 19, 2020. She was also awarded attorney's fees of 10% of the total monetary award, plus 6% legal interest from the finality of the decision.

Practical Takeaways

• Employers must inform probationary employees of regularization standards in writing at the time of engagement. Verbal or belated communication may not suffice.
• Failure to communicate these standards converts a probationary employee to regular status by operation of law. This means full security of tenure protections apply.
• The exception is narrow. Only jobs that are self-descriptive by nature, such as maids, cooks, drivers, and messengers, may not require explicit standards.
• Employees who are illegally dismissed are entitled to full backwages and separation pay when reinstatement is no longer possible, such as upon reaching compulsory retirement age.
• Employers bear the burden of proving valid dismissal. Merely alleging resignation or AWOL without documentary evidence will not defeat an illegal dismissal claim.

This article is general information and not legal advice. For your specific situation, consult a lawyer or ask ASG Legal AI.