Termination and notice in the Philippines

At a glance

Key figures with the official source for each, checked November 2026.

Probation: six months and written standards

Probation may not run longer than six months from the date the employee starts work. The Labor Code allows a probationary employee to be dismissed on two grounds only: a just cause, or failure to meet reasonable standards that the employer made known at the time of engagement.

Two practical consequences follow.

• Standards must be given at hiring. If the employer cannot show that the performance standards were communicated when the employee was engaged, the employee is treated as regular and the second ground is not available.
• The clock is strict. An employee allowed to work after the probationary period is a regular employee. Extending probation informally or letting the date pass creates regular status.

A probationary employee still has security of tenure for the length of the probation. A decision not to regularise needs a written notice that states the standard and how it was missed, served before the six months end. US employers used to at-will hiring often treat probation as a free trial. Philippine law does not.

Just causes and the two-notice procedure

Just causes relate to the employee's own conduct. The Labor Code lists serious misconduct or wilful disobedience of lawful orders, gross and habitual neglect of duties, fraud or wilful breach of trust, commission of a crime against the employer or the employer's family, and analogous causes. No separation pay is due.

DOLE Department Order 147-15 sets the procedure:

• First notice. A written notice stating the specific acts and the ground relied on.
• Time to answer. At least 5 calendar days from receipt to submit a written explanation.
• Hearing. A chance to be heard, with a representative or counsel if the employee wants one.
• Second notice. A written decision stating that all circumstances were considered and the ground is established.

Preventive suspension during the investigation is limited to 30 days without pay. After that the employee must be reinstated or kept on payroll.

If the cause is real but the procedure was skipped, the dismissal stands and the employer pays nominal damages of up to PHP 30,000. If the cause itself is not proven, the dismissal is illegal.

Authorized causes, notice and separation pay

Authorized causes are business or health reasons. The employer must serve written notice on the employee and on the DOLE Regional Office at least one month before the termination date. DOLE's approval is not required, only notice. Payment in lieu of notice is not accepted as a substitute for the notice period.

A fraction of at least six months counts as a full year. Redundancy needs proof that the position is superfluous, good faith, and fair selection criteria. Length of service is a recognised criterion but not the only one. Retrenchment needs evidence of actual or imminent losses.

Where the ground is valid but notice was defective, nominal damages of up to PHP 50,000 are awarded on top of separation pay.

What an illegal dismissal costs

An employee who believes the dismissal was unlawful files a complaint that goes first to mandatory conciliation under DOLE's Single Entry Approach, then to a Labor Arbiter of the National Labor Relations Commission (NLRC). The employer carries the burden of proving a valid cause and proper procedure.

If the employer loses, the Labor Code remedy is:

• Reinstatement to the former position without loss of seniority rights.
• Full back wages, including allowances and benefits, from the date pay stopped until actual reinstatement.
• Separation pay in place of reinstatement where returning is no longer workable.
• Attorney's fees, and damages where bad faith is shown.

Back wages keep running through every level of appeal, so a case lost after several years can cost a multiple of annual salary. In its 2022 Lazada riders ruling the Supreme Court also applied 6% annual interest on the award from finality until payment.

Resignation forced by demotion, pay cuts or intolerable treatment is treated as constructive dismissal and carries the same remedies.

Protected situations and common mistakes

Some dismissals are barred whatever the business case. Under the Expanded Maternity Leave Law, taking maternity leave cannot be a ground for demotion or termination. Dismissal based on age, sex, religion, disability or marital status is prohibited unless the trait is a genuine occupational requirement. Retaliation against an employee who files a wage claim or cooperates with a labor inspection is unlawful.

The mistakes foreign employers make most often:

• Dismissing for poor performance with no written standards and no documented warnings.
• Sending one termination letter instead of two notices and a hearing.
• Paying salary in lieu of the 30-day notice for redundancy and skipping the DOLE filing.
• Calling a performance exit a redundancy, then rehiring for the same role.
• Letting probation pass the six-month mark before deciding.
• Relying on a fixed-term contract for work that is ongoing. Courts look at whether the employee had real bargaining power.

Each of these turns a dismissal that could have been defended into an illegal dismissal claim.

Mutual separation, quitclaims and final pay

Many exits are settled by agreement. A mutual separation agreement ends the employment by contract, so the statutory notice rules do not apply and separation pay is not mandatory. In practice employers offer a package to make the agreement credible.

The employee normally signs a quitclaim. Labor tribunals uphold a quitclaim only where the employer can show that:

• the employee signed voluntarily, without fraud or deceit;
• the consideration is credible and reasonable; and
• the terms are not contrary to law or public policy.

A quitclaim for an unconscionably low amount, or one signed under pressure, can be set aside. Payment should be made and documented. Notarisation is advisable.

On any exit, DOLE Labor Advisory No. 06, Series of 2020 requires final pay within 30 days of separation, unless company policy is more favourable. Final pay covers unpaid salary, pro-rated 13th month, cash for unused leave, any separation or retirement pay and tax refunds. A certificate of employment must be issued within 3 days of request. An employee who resigns owes one month's written notice.

Frequently asked questions

More on hiring in the Philippines

Employer of record and hiring guide for the Philippines · Payroll and taxes · Benefits and leave · Contractors vs employees · Cost calculator · EOR vs PEO vs entity

Sources

• Labor Code of the Philippines (PD 442)
• DOLE Handbook on Workers' Statutory Monetary Benefits (2023 edition)
• Legal 500: Philippines Employment and Labour Law guide (secondary, DO 147-15 procedure)
• DOLE Labor Advisory 06-20 on final pay, as reported January 2026
• Supreme Court: Ditiangkin v. Lazada E-Services, G.R. No. 246892
• RA 11210, Expanded Maternity Leave Law

This page is general information, not legal, tax or immigration advice. Rates, thresholds and procedures change, and how they apply depends on the facts. Confirm current figures with a qualified adviser or with Dryft before acting. Checked November 2026.