The Supreme Court ruled that an employer must clearly inform a probationary employee of the standards required for regularization at the start of their employment. Failure to do so means the employee is considered a regular employee from day one and cannot be dismissed without just cause and due process. This decision protects probationary employees from arbitrary dismissal by ensuring they are aware of the criteria they must meet to achieve regular employment status.

Univac’s Oversight: How Unclear Standards Led to Illegal Dismissal Claims

This case revolves around William Soriano’s complaint against Univac Development, Inc., alleging illegal dismissal. Soriano, hired as a probationary legal assistant, claimed he was terminated before his probationary period ended due to cost-cutting measures, without proper notice. Univac countered that Soriano abandoned his job after being informed of his unsatisfactory performance and intention to review for the bar exams. The Labor Arbiter (LA) initially dismissed Soriano’s complaint, a decision affirmed by the National Labor Relations Commission (NLRC). However, the Court of Appeals (CA) reversed these rulings, finding Univac failed to inform Soriano of the standards for regularization, leading to his illegal dismissal. This case highlights the crucial role of clearly defined standards in probationary employment.

The core issue before the Supreme Court was whether Univac illegally dismissed Soriano. Article 281 of the Labor Code, crucial to understanding probationary employment, states:

Art. 281. Probationary Employment. — Probationary employment shall not exceed six (6) months from the date the employee started working, unless it is covered by an apprenticeship agreement stipulating a longer period. The services of an employee who has been engaged on a probationary basis may be terminated for a just cause or when he fails to qualify as a regular employee in accordance with reasonable standards made known by the employer to the employee at the time of his engagement. An employee who is allowed to work after a probationary period shall be considered a regular employee.

Moreover, the Implementing Rules of the Labor Code further emphasizes that:

(d) In all cases of probationary employment, the employer shall make known to the employee the standards under which he will qualify as a regular employee at the time of his engagement. Where no standards are made known to the employee at that time, he shall be deemed a regular employee.

Building on this principle, the Supreme Court emphasized that probationary employees, while not holding permanent status, are still entitled to security of tenure. This means they can only be dismissed for a just cause or failure to meet reasonable standards made known to them at the start of their employment. In this case, the court found Univac failed to present adequate evidence proving Soriano was informed of these standards. The LA and NLRC’s reliance on Soriano’s educational background to presume his knowledge of the standards was deemed insufficient.

Furthermore, the Court stressed that simply stating standards isn’t enough. An employer must also demonstrate how these standards were applied to the employee. Univac failed to show any performance evaluation proving Soriano’s performance was unsatisfactory. The power of an employer to terminate a probationary employee is limited by specific requirements. Dissatisfaction with the employee’s performance must be genuine and in good faith, and there must be no unlawful discrimination in the dismissal. Here, Univac failed to prove both communication of standards and their application to Soriano’s case.

Pursuant to established legal doctrine, the absence of specified reasonable standards, and the failure to prove these were communicated at the start of employment, leads to the conclusion that Soriano was a regular employee from the beginning. To justify dismissing an employee, the employer must prove a just cause and afford due process. In this case, Univac failed on both counts, rendering Soriano’s termination illegal. As a result, Soriano was entitled to reinstatement and backwages.

The Supreme Court affirmed the CA’s decision with modifications. Reinstatement, however, was deemed inappropriate due to strained relations, leading to an award of separation pay instead. The court ordered Univac to pay Soriano backwages, separation pay, attorney’s fees, and legal interest. This decision highlights the importance of clear communication and fair evaluation in probationary employment, protecting employees from arbitrary dismissal.

The Court also addressed Univac’s claim regarding a stay order from a rehabilitation case. However, the Court noted that the rehabilitation case had been dismissed for lack of jurisdiction, rendering the stay order ineffective. Thus, Univac could not rely on it to suspend the labor case.

FAQs

What was the key issue in this case?	The central issue was whether Univac Development, Inc. illegally dismissed William Soriano, a probationary employee, by failing to inform him of the standards required for regularization at the start of his employment. This determination hinged on the employer’s responsibility to communicate these standards clearly.
What is probationary employment according to the Labor Code?	Probationary employment is a trial period, not exceeding six months (unless otherwise stipulated in an apprenticeship agreement), during which an employer assesses an employee’s fitness for regular employment based on reasonable standards. The employer must communicate these standards to the employee at the beginning of the engagement.
What are the employer’s responsibilities during probationary employment?	The employer must inform the probationary employee of the standards for regularization at the start of employment. They must also demonstrate how these standards are applied to the employee’s performance, and any termination must be for just cause or failure to meet the communicated standards.
What happens if the employer fails to inform the employee of the regularization standards?	If the employer fails to inform the probationary employee of the standards for regularization at the time of engagement, the employee is deemed a regular employee from the beginning of their employment. This significantly changes the conditions for lawful termination.
What is the effect of being deemed a regular employee from day one?	When an employee is considered a regular employee from day one, they gain greater protection against dismissal. The employer must then demonstrate a just cause for termination and follow due process requirements, which are more stringent than for probationary employees.
What remedies are available to an illegally dismissed employee?	An illegally dismissed employee is typically entitled to reinstatement to their former position without loss of seniority and other benefits, as well as full backwages from the time of dismissal until reinstatement. If reinstatement is not feasible due to strained relations, separation pay may be awarded instead.
What is separation pay in lieu of reinstatement?	Separation pay is a monetary compensation awarded to an illegally dismissed employee when reinstatement is not viable. It is typically equivalent to one month’s pay for every year of service, with a fraction of at least six months considered as one whole year.
Why was reinstatement not ordered in this case?	Reinstatement was not ordered due to the strained relations between William Soriano and Univac Development, Inc. In such cases, courts often deem separation pay a more appropriate remedy to avoid further conflict and disruption.
What additional compensation was awarded to William Soriano?	In addition to backwages and separation pay, William Soriano was also awarded attorney’s fees equivalent to 10% of the total monetary award, as well as legal interest at a rate of 6% per annum from the date of termination until full payment.

In conclusion, the Univac case reinforces the importance of transparency and fairness in probationary employment. Employers must ensure that probationary employees are fully aware of the standards for regularization at the start of their engagement. Failure to do so can lead to significant legal repercussions, including the employee being deemed a regular employee from day one and facing potential illegal dismissal claims.

For inquiries regarding the application of this ruling to specific circumstances, please contact ASG Law through contact or via email at frontdesk@asglawpartners.com.

Disclaimer: This analysis is provided for informational purposes only and does not constitute legal advice. For specific legal guidance tailored to your situation, please consult with a qualified attorney.
Source: UNIVAC DEVELOPMENT, INC. VS. WILLIAM M. SORIANO, G.R. No. 182072, June 19, 2013