Guide to hiring employees in the Philippines

Guide to hiring employees in the Philippines

Complete guide to hiring employees in the Philippines. From taxation to salary standards, here's everything you need to know about having employees in the Philippines.

Terminating an employee

Terminating an employee is a sensitive process that must be done carefully and following precisely the law. Labor disputes due to unlawful termination of employment are common. 

Importance of probationary period

The key deadline to pay attention to is when the employee is completing their probationary period which can be a maximum of six months since the start of the employment and must be clearly stated in the employment contract. Once your employee passes the probationary period, terminating them becomes significantly more complicated, although still possible.

A common mistake is to either forget or not pay attention to the ending of the probationary period – use this time wisely to decide whether you want to work with the employee for the foreseeable future.

Terminating an employee during a probationary period

Terminating an employee on a probationary period must consist of the following steps:

  1. Issue a Notice to Explain (NTE). In this letter you should outline the violations and reasons why an employee is not fulfilling their employment contract. An employee has five days to respond to the Notice to Explain.
  2. Once the employee submits a response to the Notice to Explain, you have time to evaluate and analyze the employee performance. This usually takes 3-5 working days. It’s important that the employee’s response is given serious consideration.
  3. If after the explanation you conclude that the employee should still be terminated, issue an official termination notice of the employment contract which concludes the employment.

Terminating a regular employee

Terminating a regular employee follows the steps outlined below:

  1. Issue an official Incident Report. An incident report is a written statement  that documents any event that may or may not have caused company policy violation to a person or damage to a company’s branding, client relationships and assets. It is used to capture infractions and malpractices, near misses, property and equipment damage, health and safety issues, security breaches and misconduct in the worksite. Together with the Incident Report, issue the Notice to Explain which gives the employee a chance to respond to the acquisitions. The employee has five days to respond.
  2. Once you receive the response to the Notice to Explain, carefully consider the employee’s response and determine whether to continue with the termination or not.
  3. Invite the employee to an administrative hearing. An administrative hearing is an internal company dialogue aimed at resolving disputes and/or concluding a company violation  between employer and employee without the strict procedural rules of a court. 
  4. After deliberation, the employer or management may issue the termination Notice to the employee to conclude the case. 

What if an employee doesn’t respond to the Notice to Explain within five days?

If an employee does not respond to the Notice to Explain (NTE) within five days, it is considered that the employee has had an adequate opportunity to respond to the accusations and the employer can serve the termination notice.

Examples of just causes for employee termination

As you can see from the termination processes above, it’s important to sign proper employment contracts with employees that clearly outline the employee’s responsibilities. It’s important for both parties to know their rights and responsibilities and when either one of them has been violated.

The following is an incomplete list of just termination causes:

  • Unsatisfactory performance, not meeting the key performance indicators
  • Being absent from work without reasonable cause
  • Fraudulent practices 
  • Workplace misconducts – abusive language, profanity, obscene gestures, sexual harassment, physical harm, etc. 
  • Abandonment of work 
  • Insubordination or direct refusal to follow company policies 
  • Damaging company properties 
  • Data privacy violations – Internal and client related privacy policy