Summary

Hiring employees in the Philippines through an Employer of Record (EOR) streamlines global expansion but still demands strict compliance with local labor law—especially around probationary periods. Under the Philippine Labor Code, probation may last no more than six months and the employer must state performance standards up front.  Even during probation, employees enjoy security of tenure and must receive statutory pay and benefits. An EOR becomes the legal employer, drafting compliant contracts, handling payroll and government registrations, and guiding due-process terminations, while the client company manages day-to-day performance.

For HR teams, success hinges on tight coordination with the EOR: communicate standards clearly, review performance mid-probation, track the 180-day deadline, document feedback, and involve the EOR early in any separation decision. Done well, an EOR partnership lets multinational firms hire Filipino talent quickly without missteps—turning probation into a smooth path to regular employment.

Introduction

Hiring employees in the Philippines through an Employer of Record (EOR) arrangement can simplify global expansion, but it also requires understanding local labor laws. One critical aspect is managing probationary periods in compliance with Philippine regulations. Probationary employment in the Philippines is tightly governed by the Labor Code to protect workers’ rights even during their trial period. This article provides HR professionals with a comprehensive overview of how probation works under an EOR in the Philippine context, covering legal foundations, typical duration, rights and responsibilities, termination rules, EOR compliance, and best practices for managing probationary staff.

What is an Employer of Record (EOR) in the Philippines?

An Employer of Record (EOR) in the Philippines is a third-party organization that serves as the legal employer on behalf of a company. The EOR handles all employment duties – from onboarding and payroll to tax withholding and labor law compliance – while the client company directs the day-to-day work. In essence, an EOR assumes the liabilities and administration of employment, managing payroll, benefits, taxes, and compliance for employees in the Philippines​. This arrangement allows foreign companies to hire Filipino talent without setting up a local entity or navigating complex labor laws themselves. In practice, the EOR will sign the employment contract with the worker and ensure it meets Philippine legal requirements, including probationary period terms, while the worker performs services for the client company.

How EOR Functions in the Local Context

The EOR is registered in the Philippines and well-versed in local employment regulations. For each hire, the EOR provides a localized, compliant employment contract – covering statutory probationary period limits, working hours, minimum wage, benefits, and termination policies​. The EOR then handles ongoing HR tasks such as registering the employee for government-mandated benefits (Social Security System, PhilHealth, Pag-IBIG Fund), administering payroll with 13th-month pay, and ensuring taxes are paid. During the probation period, the EOR works closely with the client company’s HR to monitor the employee’s progress and make sure any action (confirmation of regular employment or termination) is carried out in line with Philippine law. Essentially, the EOR is the legal employer of record, but the day-to-day supervision and performance evaluation of the probationary employee typically remain the responsibility of the client company’s managers, requiring coordination between the two. This partnership helps multinational employers remain compliant with local laws while focusing on managing performance and business objectives.

Legal Basis of Probationary Employment in the Philippines

Philippine Labor Code Provisions: Probationary employment in the Philippines is governed by the Labor Code (Presidential Decree No. 442). Article 296 of the Labor Code (formerly Article 281) lays out the key rules for probationary periods. It stipulates two fundamental requirements: (1) the employer must inform the employee of the standards or criteria they must meet to become a regular employee (often called “regularization standards”) at the time of hiring, and (2) the probationary period must not exceed six (6) months from the date the employee started working. These requirements form the legal basis for all probationary arrangements in the country. In other words, an employee should know upfront what is expected during probation, and the trial period has a firm time limit set by law.

Maximum Duration (6 Months): The general rule is that probationary employment cannot extend beyond 180 calendar days (approximately six months). If a probationary employee continues to work beyond six months (even one day over) without being formally regularized, the law deems that person a regular employee by default Employers cannot repeatedly extend or renew probationary contracts to avoid granting regular status – the Supreme Court has struck down schemes of consecutive 5-month contracts as an illegal attempt to evade regular employment​. The six-month cap may be shortened by the employer (some companies choose a 3-month probation by policy), but it cannot be lengthened except in very specific, legally-recognized circumstances. For example, apprenticeships or learnership agreements approved by government agencies can have longer training periods, and teaching personnel in educational institutions may have up to three years of probationary period as allowed by law​. These exceptions aside, “six months” is the standard probationary term for most employees in the Philippines.

Standards for Regularization: The Labor Code also requires that reasonable job standards or criteria for regular employment be communicated to the employee at the start of probation. This typically means the employee’s job description, performance metrics, or other qualifications for the role should be made clear in the offer letter or employment contract and discussed during onboarding. Case law emphasizes this obligation – for instance, the Supreme Court has held that if an employer fails to clearly inform a probationary hire of the performance standards expected, the employer cannot later terminate for “failure to meet standards”In such a scenario, the employee would be considered a regular employee from the beginning, because the condition for probation (notification of standards) was not met. HR should ensure that the EOR-provided contract or documentation includes a section on the probationary period and the specific criteria or performance targets the employee must satisfy to be confirmed in post. This legal requirement protects employees from arbitrary evaluations and gives them a fair chance to meet the job requirements.

Rights of Probationary Employees under the Law: It is a common misconception that probationary status means an employee can be dismissed “at will.” In the Philippines, even probationary employees are covered by the constitutional and statutory right to security of tenure. This means they cannot be terminated during the probation period without a valid reason that is compliant with the Labor Code. The primary difference between a probationary and a regular employee is that failure to qualify for regular status (by not meeting the prescribed standards) is a valid ground for dismissal during probation, in addition to the usual just causes for termination​. Aside from that specific situation, probationary employees enjoy the same basic rights as regular employees with respect to minimum wage, overtime pay, premium pay on holidays/rest days, 13th-month pay, and contributions to SSS, PhilHealth, and Pag-IBIG Fund. They also accrue service incentive leave (after 1 year of service) and other benefits mandated by law. In summary, the Labor Code’s provisions ensure that probation is used as a genuine assessment period – not as a loophole to deprive employees of protections.

Typical Probationary Period Duration and Terms

Length of Probation: As noted, six months is the maximum probationary period allowed. Employers (or the EOR acting on their behalf) will typically set a probationary period of 3 to 6 months, with 6 months being most common for regular full-time roles. It is important to count the period in calendar days (180 days), not working days​. If the employee has any absences during probation, the employer cannot unilaterally extend probation beyond the 180th day unless a formal extension is agreed before the original probation ends and is justified (Philippine courts have allowed rare extensions if mutually agreed in writing and if warranted by the nature of work, but this is not routine). HR should diarize the end date of each probation to ensure a decision is made on or before that date – either terminate the employment within probation for a valid reason or confirm the employee as regular. Failing to take action effectively means the employee continues working past probation and thus gains regular status by operation of law.

Allowable Terms and Conditions: During probation, the employee is essentially “on trial” to prove their fitness for the job. The employer (through the EOR) can specify any reasonable conditions related to job performance, productivity, skills acquisition, or behavioral fit that will be assessed. For example, sales roles might require achieving a certain quota by the end of six months, or a support role might require completing a training certification. These terms should be documented. However, the conditions cannot violate labor laws or basic rights – for instance, an employer cannot set a condition that an employee must work 60 hours a week or waive their right to overtime, as that would be illegal. The probationary terms should also align with any company policies that apply (e.g., code of conduct, attendance rules) since probationary employees are usually subject to the same workplace rules as regular staff.

Mid-Probation Reviews: While not legally mandated, it is a best practice to conduct a performance check-in during the probationary period (e.g., at the 3-month mark for a 6-month probation). This gives the employee feedback and an opportunity to improve if they are falling short of the standards. For HR teams working with an EOR, the client company should communicate performance feedback to both the employee and the EOR. That way, if things are not working out, the EOR is aware of potential issues early on. EORs often appreciate this because it helps them prepare to ensure any eventual termination is well-documented and defensible. Conversely, if the employee is meeting expectations, a mid-probation review can affirm that and keep them motivated. Remember, the goal of probation is to transition the employee to regular status successfully if they are a good fit.

Rights and Responsibilities During the Probation Period

Employer (EOR) Responsibilities

During probation, the employer – which in an EOR setup means the EOR as the legal employer in partnership with the client company – has several key responsibilities:

• Communicating Job Standards: The employer must clearly communicate the performance standards, job responsibilities, and company policies at the outset of employment. This typically happens via the employment contract and orientation. As noted, making the “standards for regularization” known from day one is a legal requirement. The EOR will usually ensure the contract includes this, but the client’s HR and managers should reinforce these expectations with the employee in practical terms.
  
• Providing Proper Onboarding and Training: Even though the employee is on probation, they should be given the training, resources, and guidance needed to perform their job. The EOR can assist with onboarding according to the company’s policies and ensure the employee receives any mandatory training (e.g., workplace safety, code of conduct). The client company’s role is to integrate the new hire into the team and provide job-specific training or mentorship during the probation period. This is both a responsibility and a best practice – an employee cannot meet performance standards if they were not adequately introduced to the role.
  
• Compliance with Labor Standards: The employer must treat a probationary employee in accordance with all labor law standards. This means paying at least minimum wage and the required wage supplements (overtime pay, night shift differential, etc.), remitting social contributions, and providing statutory benefits like the 13th-month pay. Probationary status is not an excuse to defer or reduce legally mandated benefits. For example, the law requires that even a probationary employee’s SSS, PhilHealth, and Pag-IBIG contributions be paid from their first day of employment. The EOR, as the employer on record, will take charge of these payroll and compliance tasks so that the client company doesn’t have to navigate Philippine payroll regulations. HR should verify that the EOR’s processes are in place for timely payment of salaries and benefits during probation.
  
• Fair Evaluation: The employer has the responsibility to evaluate the probationary employee’s performance objectively and in good faith against the communicated standards. It is expected that employers will give the employee a genuine opportunity to demonstrate their capabilities over the probation period​. Any decision on retention or termination should be based on merit (or legitimate business reasons), not on arbitrary or discriminatory factors. The EOR can guide the client company on what documentation to maintain – for instance, keeping records of training given, feedback sessions, or any performance reports. This ensures that if the employee is let go for not meeting standards, there is evidence to back up that decision.
  
• Adherence to Due Process: Even for probationary staff, if issues arise (like misconduct or severe performance problems), the employer must observe due process in handling them. This could involve issuing warning letters or notices to explain, conducting a fair inquiry, and coordinating any disciplinary action through the EOR. We will discuss due process in termination in the next section, but HR should be aware that probationary employees are not exempt from proper procedure when it comes to disciplinary matters. The EOR’s local HR team will typically ensure any required notices or documentation are served to the employee in compliance with Philippine law.
  

Employee Rights and Responsibilities

Probationary employees in the Philippines have important rights, as well as responsibilities to their employer:

• Right to Fair Treatment and Security of Tenure: A person on probation has the right to not be terminated without just cause or lawful reason. While the employer can end the probation if the employee fails to meet the job standards, the employee cannot be fired on a whim. In fact, probationary employees enjoy security of tenure and are protected by the Labor Code just like regular employees​. The only difference is that “failure to meet the standards for regularization” is considered a valid reason to terminate a probationer (on top of the usual just causes for dismissal like misconduct If a probationary employee feels they were terminated unjustly or without the proper process, they have the right to file a complaint for illegal dismissal with the Department of Labor and Employment (DOLE).
  
• Right to Know the Terms of Probation: Employees have the right to be clearly informed of their probationary period duration, the criteria for evaluation, and any company rules they must adhere to. This transparency allows them to understand what is expected. If an employee finds that these terms were not given or were ambiguous, they should seek clarification. Philippine law is on the employee’s side here: if standards were not made clear at the start, the employer cannot terminate for poor performance against unknown standards​. In such a case the employee could claim they should be regularized. Thus, employees should take initiative to review their job description and ask questions early on – this is both a right (to know what the job entails) and a responsibility (to ensure they have understood their duties).
  
• Right to Statutory Benefits: During probation, employees are entitled to mandatory benefits and protections. For example, they must receive their proportionate 13th-month pay (a bonus equivalent to one-twelfth of annual pay) for the months worked, even if they do not complete the full year. They also earn at least 5 days of Service Incentive Leave (SIL) after 12 months of service – meaning a probationary employee who crosses the 6-month mark and continues as regular will eventually get SIL like any other worker. Probationary employees can also join labor unions or engage in concerted activities, as these rights are not reserved only for regular employees. In practice, few do so in the short probation window, but the rights are legally protected.
  
• Responsibility to Meet Job Requirements: On the responsibility side, a probationary employee’s main duty is to perform their work to the best of their ability and strive to meet the standards set out for the role. They should take the feedback from supervisors seriously and demonstrate improvement if needed. Being proactive – for instance, seeking clarification on performance goals or asking for support or training – is part of taking responsibility for one’s own success during probation. Since the probationary period is essentially an “evaluation phase,” employees should treat it as such by showcasing reliability, learning quickly, and following company policies carefully.
  
• Abiding by Company Rules: Probationary employees must adhere to the employer’s code of conduct, attendance policies, and other rules just as any other employee would. Any misconduct or violation committed during probation can be grounds for disciplinary action or even dismissal (if severe and justified). Employees should be mindful that while on probation, they are under scrutiny, so maintaining professionalism and good attendance is crucial. Notably, if an employee on probation wants to resign, they are generally expected to give a 30-day notice (the standard notice period under Article 300 of the Labor Code), unless a shorter period is agreed upon. Quitting without proper notice could lead to issues like being marked as having abandoned the job, which might reflect poorly on their record.
  

In summary, the probationary period is a two-way street: the employer (via the EOR) must uphold the employee’s rights and provide a fair chance to succeed, while the employee must fulfill their role’s requirements and follow lawful instructions. When both sides understand their obligations, the probationary phase can effectively lead to a well-founded decision on regular employment.

Termination Rules and Due Process for Probationary Employees

One of the most sensitive aspects of probationary employment is termination. Philippine labor law sets specific grounds and procedures for terminating employees – and these apply to probationary employees, albeit with one additional allowable ground. Both employers and probationary employees should understand what rules govern an early dismissal or a decision not to regularize.

Valid Grounds for Termination: Under the Labor Code, there are two broad categories of termination grounds for any employee: just causes and authorized causes​.

• Just causes are employee-related reasons for termination, usually stemming from misconduct or poor performance. These include serious misconduct, willful disobedience of lawful orders, gross and habitual neglect of duties, fraud or breach of trust, commission of a crime against the employer, and similar causes enumerated in Article 297 (formerly 282). For a probationary employee, a just cause termination could be, for example, if they were caught stealing company property or consistently refusing to follow reasonable instructions – such violations can justify immediate dismissal even before the probation period ends (with due process observed). Additionally, for probationary employees, failure to qualify as a regular employee by not meeting the prescribed standards is considered a justifiable ground for termination specific to probation. This means that if by the end of the probation period (or even earlier, after a fair evaluation) the employee has clearly failed to perform as expected despite guidance, the employer can terminate on the basis that the employee did not meet the standards of the role. However, this ground is only valid if the standards were indeed communicated to the employee at the time of engagement​ – otherwise, the lack of notice of standards is the employer’s fault and they cannot blame the employee for not meeting an unknown criteria.
  
• Authorized causes are economic or operational reasons not related to the employee’s fault. These include redundancy (the role is no longer needed), installation of labor-saving devices, retrenchment (reduction of workforce to prevent losses), closure or cessation of business, or a disease/illness that makes continued employment hazardous and is beyond healing for 6 months (Article 298, formerly 283). Authorized cause terminations apply to all employees, including those on probation. For instance, if the company (or EOR on its behalf) undergoes downsizing, a probationary employee can be let go due to redundancy. In such cases, the employee is entitled to separation pay as required by law (the amount varies by cause, generally one month pay or half-month pay per year of service, whichever is higher, for redundancy/retrenchment). Authorized cause terminations also require advance notice (more on that shortly). It’s worth noting that if an employer tries to terminate a probationary employee without a valid cause (neither just nor authorized) – for example, simply because a manager “doesn’t like” the person or wants to hire someone else – that is illegal and could result in an illegal dismissal claim. Probationary status does not give a free pass to terminate without cause​.
  

Due Process Requirements: The Philippines has strict due process requirements for termination to ensure fairness​. The exact procedure depends on the ground:

• For just cause (including failure to meet standards): The law requires the “twin notice” rule. First, the employer must give the employee a written notice detailing the acts or omissions that are being cited as cause for termination. In a misconduct case, this is a notice to explain the alleged infraction. In a poor performance case for a probationer, this could be a notice that the employee is not meeting the required standards (some companies issue a performance memo or a formal evaluation notice). The employee should be given an opportunity to respond to this notice and defend themselves or explain their side. This is often done through a written explanation and sometimes a meeting or hearing. After considering the employee’s explanation, if the employer decides to terminate, a second notice – a final decision notice – must be served to the employee stating that they are being terminated, the effective date, and the reasons (grounds) for dismissal​. For probationary employees, if the cause is purely “failure to meet performance standards,” employers sometimes handle this by giving a notice of termination at the end of probation specifying that the employee did not satisfactorily meet the job requirements. While some employers may not conduct a formal hearing for a performance-based non-regularization, it is wise to at least document the performance issues and inform the employee of these issues ahead of the final notice. This not only fulfills the spirit of due process but also demonstrates that the decision was based on merit. If the just cause is an act of misconduct committed by a probationer, then the full twin-notice procedure (charge notice + hearing + decision notice) absolutely must be followed, just as it would for a regular employee. Skipping due process can render an otherwise valid termination illegal due to procedural infirmity.
  
• For authorized cause: The employer must provide at least 30 days advance written notice of termination to the employee and to DOLE​. This is to inform them of the impending separation and the reason (e.g., redundancy, closure). The 30-day period is meant to give the employee time to prepare and to give DOLE oversight of mass layoffs or closures. In an EOR scenario, if a client company decides to discontinue a project causing redundancies, the EOR would issue this notice to the affected probationary employee and handle the DOLE reporting. Additionally, the appropriate separation pay must be readied and paid to the employee. Even a probationary employee terminated for an authorized cause is entitled to separation pay (there’s no tenure requirement to qualify) – although with short service it might equate to one month’s pay, as typically mandated​. During that 30-day notice period, the employee usually continues to work, but the employer may also opt to pay in lieu of notice and end the employment immediately (paying the salary that would have covered the notice period). All these steps would be managed by the EOR in consultation with the client.
  

Termination at End of Probation vs Early Termination: If an employer decides not to continue the employment at the end of the 6-month probation, this is effectively a termination based on failure to meet standards (assuming no just cause like misconduct has occurred). In practice, employers will notify the employee on or just before the last day of probation that they will be separated for not qualifying for regular employment. It’s prudent to provide this in writing, citing that the employee did not satisfactorily meet the required performance standards within the probationary period. While some HR practitioners wonder if letting a probationary contract “lapse” is easier, the law views continued work beyond the probation period without notice as automatic regularization​ So, HR must take proactive action by the probation end date. If the employee is terminated earlier in the probation (for example, at 3 months into a 6-month probation due to gross misconduct or very poor performance), the same just cause due process applies – the employer should not wait until month 6 if the cause is valid and proven, but they must document the reason and follow procedure.

Employee Remedies: A probationary employee who believes they were terminated in violation of the rules (for instance, no standards were given but they were dismissed for poor performance, or they were fired without any notice or valid cause) can file a complaint for illegal dismissal. If the labor authorities find in the employee’s favor, the usual consequence is that the employee is deemed to have been a regular employee, and the dismissal was unlawful. The employer (which could implicate the EOR and the client company jointly, depending on agreements) could be ordered to reinstate the employee or pay separation pay in lieu of reinstatement, plus back wages from the time of dismissal​. In a notable 2022 case, an employee on probation for only two months was illegally dismissed and ended up being awarded nearly 8 years’ worth of back wages because the courts considered her a regular employee who was unjustly terminated. This illustrates how costly mishandling a probationary termination can be. Therefore, compliance with the legal grounds and due process is not only a matter of legal obligation but also of financial prudence for employers.

In summary, terminating a probationary employee requires lawful grounds and adherence to due process, just as it does for any other employee. The involvement of an EOR can help ensure these steps are properly executed. We turn next to how EORs specifically manage compliance with local laws to support their clients.

Ensuring Compliance: How EORs Manage Local Labor Law Requirements

A major reason companies use an Employer of Record is to tap into their expertise in local labor compliance. In the Philippines, the EOR’s role is crucial in navigating the intricacies of probationary employment rules and other regulations. Here are ways an EOR helps ensure compliance with Philippine labor laws during the hiring and probation period:

• Localized Employment Contracts: EORs provide contracts that are tailored to Philippine law. As mentioned, these contracts include all statutory requirements for probationary periods, working hours, minimum wage, benefits, and termination policies. For probation specifically, the EOR ensures the contract clearly indicates the length of the probation (e.g., “six months from start date”) and outlines the standards or performance metrics if available. By having a compliant contract in place, the EOR protects the client company from inadvertently violating any labor code provision (for example, by forgetting to include the probationary status or terms in writing).
  
• Onboarding and Documentation: The EOR typically handles the administrative side of onboarding, which includes collecting necessary personal information and government numbers from the new hire (Tax ID, SSS, PhilHealth, Pag-IBIG) enrolling them in the payroll system, and registering them with government agencies as needed. From a compliance standpoint, this means from day one the employee is on the books and covered. EORs also maintain personnel files and can keep copies of any communications regarding performance standards or evaluations. By centralizing the documentation, the EOR can readily produce evidence of compliance (e.g., that the employee signed off on knowing the job standards) if ever questioned by a labor inspector or court.
  
• Policy Adherence and Guidance: An EOR’s HR team is knowledgeable about Philippine labor standards and common practices. They advise the client’s HR if a requested action might conflict with local laws. For example, if a client wanted to extend a probationary period to 9 months, the EOR would flag that as non-compliant and explain the 6-month limit. Or if a client wanted to terminate someone on the spot without documentation, the EOR would likely insist on following due process to avoid legal fallout. In essence, the EOR acts as a compliance gatekeeper, ensuring that the employment decisions made by the company’s managers are executed in a legally sound manner. They help translate the client’s intentions into actions that fit within Philippine legal requirements.
  
• Payroll Compliance: Compliance isn’t just about avoiding illegal dismissal; it’s also about everyday rules like timely wage payment, proper calculation of deductions, and remitting taxes. The EOR runs payroll according to local law – for instance, making sure any overtime the probationary employee works is paid at the correct premium, and that wages meet at least the regional minimum wage. They also handle the mandatory 13th-month pay computation (which a probationary employee would receive pro-rata if they worked at the company in that calendar year). By handling these, the EOR ensures the company doesn’t accidentally shortchange a probationary staff on something that could cause a complaint.
  
• Handling Termination Procedures: When it comes to ending employment, the EOR truly proves its value in compliance. Suppose a client decides not to regularize a probationary employee. The EOR will typically help draft the notice of termination citing failure to meet standards, making sure it is delivered by the 180th day. If the termination is for a just cause (like misconduct), the EOR will guide or directly carry out the required notices and hearing. And if it’s an authorized cause, the EOR will prepare the 30-day notices to both the employee and DOLE, and calculate the separation pay due. In all cases, the EOR’s involvement helps ensure no step is missed in the legal process. They also often consult with legal counsel to double-check that terminations are defensible. This is particularly important in the Philippines where labor cases can be pro-worker; having the EOR manage terminations reduces the risk for the client company. Essentially, the EOR acts as the compliance safety net – they keep the client on the right side of the law.
  
• Staying Updated on Law Changes: Philippine labor laws and DOLE regulations can evolve (for example, interpretations of certain rules might change via new Supreme Court rulings or department orders). EOR providers usually stay up-to-date with these changes and adjust their practices accordingly. HR teams partnering with an EOR benefit from this expertise. For instance, if a new law affected probationary arrangements, the EOR would inform the client and incorporate the necessary changes into contracts or processes immediately. This proactive compliance management is something an in-house team unfamiliar with Philippine laws might struggle to do alone.
  

In summary, EORs in the Philippines manage compliance by providing local knowledge, handling paperwork correctly, and executing HR processes (from hiring to firing) in line with the Labor Code. This allows HR professionals in the client company to focus more on talent development and performance management, while the EOR covers the legal bases.

Challenges and Best Practices for HR Teams Using EORs for Probationary Staff

While an EOR simplifies many compliance tasks, HR teams still need to actively manage and coordinate the probationary period for their employees. Here are some challenges to watch out for and best practices to ensure a smooth process:

1. Communication Gaps Between Company and EOR: A common challenge is ensuring that the EOR and the client company are in sync regarding the employee’s status and performance. The EOR might handle contracts and payroll, but they are not present in the daily work environment of the employee. If the employee is struggling, the EOR might not know until very late unless the company communicates this. Best Practice: Establish a clear channel for regular updates with the EOR’s account manager or HR contact. For example, at the mid-point of the probation, have a check-in with the EOR to report if the employee is on track or if there are performance concerns. This alerts the EOR to potentially prepare any needed paperwork or guidance. Moreover, ensure the EOR is aware of the company’s internal deadlines for performance reviews so they can align any formal notices accordingly.

2. Clarity of Performance Expectations: Sometimes the client’s hiring managers assume the EOR’s contract details are enough, but in practice the employee may not fully grasp the performance criteria. If expectations are not clear, the employee could fail without knowing why, leading to tension or disputes. Best Practice: From day one, reinforce the performance standards and objectives in person (or via video call) in addition to the written contract. Provide the probationary employee with specific, measurable goals if possible. Document this in an internal memo or email and share a copy with the EOR, so that everyone (employee, company HR, EOR) has a record of what was communicated. This alignment ensures that if issues arise, there’s a reference point to the agreed expectations.

3. Cultural and Legal Differences: Foreign HR teams might be used to different probation practices (for instance, some countries allow “at-will” like termination during probation). In the Philippines, expecting to terminate without a reason or with very short notice can lead to legal trouble. Challenge: Adapting company policies to local law. Best Practice: Work with the EOR to localize your HR approach. For example, if your global policy handbook says “either party may end employment at any time during probation,” have the EOR review that and edit it to clarify “in accordance with local law.” Educate your hiring managers that Philippine probation is not an absolute trial with no strings attached – it still requires cause and process. By setting the correct expectations internally, you avoid pushing the EOR to execute directives that conflict with law. Many EORs provide a “local labor law briefing” to new clients; taking advantage of that can prevent costly misunderstandings.

4. Timing and Decision-Making: Another challenge is ensuring the decision to regularize or terminate is made in time. Busy managers might postpone performance evaluations and then realize the 6th month is next week. Rushed decisions are risky. Best Practice: HR should use a tracking system for all probationary employees and send reminders to the relevant managers at least one month before the probationary period ends. Encourage managers to make a preliminary decision (continue or not) a few weeks ahead. If there are performance doubts, this allows time to consult with the EOR and possibly give the employee a warning or improvement plan with a few weeks to show progress. If the decision is non-renewal, early planning helps the EOR prepare the necessary notice and determine any payouts. On the flip side, if the decision is to confirm the employee, the EOR may need to issue a regularization letter or updated contract – something that also should be prepared in advance. Prompt decision-making prevents the scenario of an unintended regularization because someone forgot the date.

5. Documentation and Proof of Compliance: If a probationary termination is challenged, documentation is your best defense. The challenge is that some managers treat probation informally (e.g., they may have verbally coached the employee but kept no records). Best Practice: Maintain written records of key events during probation. This includes notes from coaching sessions, any email feedback given, and certainly any warning letters or notices of deficiency. Share copies of any official warnings with the EOR so that the employee’s file is complete. When it comes time for termination due to not meeting standards, having these documents will show that the employee was made aware of issues and given chances – strengthening the employer’s case that the dismissal was valid. EORs will usually keep what you send them, but it’s up to the company’s HR to generate those performance documents in the first place.

6. Employee Integration and Morale: A subtle challenge is that EOR-hired employees might feel a bit different from direct hires, knowing their paycheck comes from a different company. This could affect their morale or sense of job security during probation. They might worry, for example, that being an “EOR employee” makes them more vulnerable. Best Practice: Integrate the probationary employee as much as possible into the company culture. Make sure they have a company email, are invited to team meetings, and are treated as part of the team, not an outsider. From the start, clarify to the employee that the EOR aspect is just an administrative arrangement and doesn’t mean they are a “contractor” or second-class in any way. This reassurance can improve their confidence and performance. HR can also explain to them that after probation, if confirmed, their status remains with the EOR but functionally they will continue as a full team member – in other words, nothing changes except the removal of probation conditions.

7. Navigating Termination with EOR: If the tough decision to terminate arises, the company’s HR and the EOR must coordinate closely. A challenge here is ensuring consistency in messaging. The employee should not receive mixed signals (e.g., manager says one thing, EOR’s letter says another). Best Practice: Align on the reason and communication plan before terminating. Typically, the client company will inform the EOR that they wish to terminate, providing the reasons and any evidence. Then the EOR’s HR will prepare the official notice. It’s wise to have the manager and a representative of the EOR together (if possible) in the meeting with the employee so that the message is delivered with empathy and authority from both sides. The EOR rep can explain the logistical aspects (final pay, separation benefits, etc.), while the manager can address any team-related points. This unified approach demonstrates professionalism and reduces confusion.

By anticipating these challenges and following best practices, HR teams can effectively manage probationary employees under an EOR arrangement. The key is proactive communication, clear documentation, and alignment with the EOR partner at every step of the probation period. When done correctly, using an EOR for hiring in the Philippines can be a seamless experience that combines the client’s talent management with the EOR’s compliance expertise.

Conclusion

Probationary periods in the Philippines serve as a critical trial phase to ensure the right fit between the employee and the role – but they come with strict rules that employers must follow. In an EOR arrangement, HR professionals gain a valuable ally to navigate these rules. We’ve seen that Philippine labor law mandates a maximum 6-month probation, upfront communication of job standards, and protection against unjust dismissal even during probation. Both the employer (through the EOR) and the employee have clear rights and responsibilities in this period, and compliance with due process is paramount when ending a probationary employment. An Employer of Record can greatly assist in managing these compliance aspects – from drafting locally compliant contracts to handling terminations properly – ensuring that neither legal requirements nor important deadlines are overlooked.

For HR teams, success in using an EOR for probationary hires hinges on collaboration and diligence: communicate expectations clearly, monitor performance actively, document everything, and work hand-in-hand with your EOR partner on any employment actions. By doing so, you not only protect your organization from legal risks but also create a fair and transparent probationary experience for your Filipino employees. With the right approach, probationary periods under an EOR arrangement can lead to confident hiring decisions and a strong foundation for the employee’s future with your company.

FAQ

How long can a probationary period be?

A maximum of six months (180 calendar days), unless a narrow statutory exception applies (e.g., apprenticeships, teachers)

Can we extend probation if the employee was absent?

Only in rare, mutually-agreed cases before day 180 and with solid justification; courts disfavor unilateral extensions.

What must be in the contract?

Probation length and the specific performance standards or metrics required for regularization.

Who evaluates performance—EOR or client?

The client’s managers usually conduct day-to-day evaluations; the EOR needs those results to prepare any confirmation or termination paperwork.

Can we dismiss “at will” during probation?

No. Termination still requires just cause (e.g., failure to meet stated standards or misconduct) or an authorized cause (redundancy, closure, etc.) plus due-process notices.

Do probationary employees get 13th-month pay and government benefits?

Yes. From day one they must receive minimum wage, overtime premiums, SSS, PhilHealth, Pag-IBIG contributions, and prorated 13th-month pay.

What happens if we miss the 6-month deadline?

The employee automatically becomes a regular employee with full security of tenure.

Who issues termination notices?

The EOR, as legal employer, serves the notices and files any required DOLE reports, in coordination with the client.

What documentation protects us in a dispute?

A signed contract with clear standards, written performance reviews, warning letters, and evidence of due-process notices—kept by both client HR and the EOR.

Is an EOR mandatory to hire in the Philippines?

No, but using an EOR lets foreign companies avoid setting up a local entity while ensuring payroll, tax, and labor-law compliance.