Notice to Explain for Poor Work Performance Under Philippine Labor Law
(Disclaimer: The information provided below is for general informational purposes only and does not constitute legal advice. For specific concerns, it is always best to consult a qualified legal professional.)

1. Introduction

Under Philippine labor law, an employer has the right to discipline—or, in severe cases, terminate—an employee for just causes such as serious misconduct, willful disobedience, fraud, and gross and habitual neglect of duty. Another recognized just cause, though somewhat less frequently discussed, is poor work performance (often framed as “inefficiency” or “incompetence”). However, employers cannot simply dismiss or penalize an employee without affording due process. The first step in this due process is typically the issuance of a Notice to Explain (NTE), which requires the employee to respond to the alleged offense or deficiency.

This article discusses everything you need to know about a Notice to Explain (NTE) concerning poor work performance under Philippine labor law: its legal basis, purpose, scope, timing, and best practices for both employers and employees.

2. Legal Framework

Labor Code of the Philippines
- The primary statute governing employer-employee relations is the Labor Code (Presidential Decree No. 442, as amended). While the Labor Code itself does not explicitly spell out the phrase “Notice to Explain,” the twin requirements of substantive and procedural due process are enshrined in Article 297 (formerly Article 282) and related provisions on termination of employment for just causes.
Supreme Court Decisions
- Numerous Supreme Court rulings emphasize that any disciplinary action—especially termination—must follow the so-called “two-notice rule”:
  1. A notice informing the employee of the charges and directing them to explain (the first notice, often called the Notice to Explain);
  2. A subsequent notice, after due hearing or consideration, notifying the employee of the employer’s decision (the second notice, often called the Notice of Decision).
Department of Labor and Employment (DOLE) Issuances
- Department Order No. 147-15 (or its amendments) outlines the standards for due process in cases of termination for just causes. It prescribes that employers must inform employees in writing of the offenses and give them reasonable opportunity to respond.

3. Poor Work Performance as a Just Cause

Poor work performance or “inefficiency” can be a valid ground for termination. However, Philippine jurisprudence clarifies that simple inefficiency is not enough; the inadequacy or deficiency in performance should be both serious and sufficiently proven. Employers must establish:

Reasonable performance standards: The employee should have been clearly informed of the employer’s expectations, targets, and metrics.
Failure to meet these standards: The employee’s performance is measurably below expectations.
Opportunity to improve: The employer typically demonstrates that it gave the employee a chance to correct or improve performance (e.g., through coaching sessions, performance improvement plans).

Only when it is shown that an employee consistently fails to meet clear, reasonable, and communicated standards—and after being given reasonable time to improve—may the employer consider disciplinary measures, including termination.

4. Purpose of a Notice to Explain (NTE)

Inform the Employee of Allegations: The primary objective is to formally inform the employee of the specific acts or omissions that constitute poor work performance.
Allow the Employee to Defend Themselves: The NTE requires the employee to submit a written explanation or attend a hearing where they can present their side, clarify misunderstandings, or provide mitigating circumstances.
Satisfy Due Process: By issuing an NTE, the employer is complying with the procedural requirement that no employee can be sanctioned or dismissed without being given notice and an opportunity to be heard.

5. Contents of the Notice to Explain

Although there is no single “template” mandated by law, an effective NTE for poor work performance typically contains:

Statement of Purpose: A heading or introductory paragraph stating that the letter is a formal Notice to Explain.
Details of Alleged Poor Performance: A factual, specific account of how and why the employee’s performance is considered substandard—e.g., failure to meet sales quotas, repeated errors in documents, missed deadlines, or consistently low evaluation ratings.
Reference to Policies or Standards Violated: A citation of company policies, regulations, job descriptions, or performance standards that the employee failed to meet or follow.
Invitation to Respond: A clear instruction requiring the employee to submit a written explanation within a specified period (commonly 24 to 72 hours, although some companies grant a longer period).
Potential Consequences: A mention that failure to respond or justify could lead to further disciplinary action, including possible termination, if warranted.

6. Process and Timeline

Issuance of Notice to Explain
- Upon discovering the poor performance issues, the employer drafts and issues the NTE to the employee.
- The NTE may be handed personally to the employee or sent via registered mail if the employee is absent, though personal service is preferred for clarity and expediency.
Employee’s Response
- The employee is given a reasonable period to respond—commonly at least 48 hours to several days—allowing them adequate time to prepare written explanations and gather evidence.
- The employee may also request a hearing or meeting where they can clarify their side further.
Evaluation of Response and Evidence
- Management or the authorized representative (e.g., HR department) carefully evaluates the employee’s explanation, the performance records, prior notices, and any relevant documentation.
- If necessary, management may schedule a clarificatory hearing to ask follow-up questions, examine the facts in detail, or allow the employee to present witnesses.
Decision or Second Notice
- After considering all evidence, the employer issues a Notice of Decision. This notice should state whether the employee’s explanation was accepted or rejected and the corresponding penalty, if any (e.g., warning, suspension, demotion, or termination).
- If the decision is termination, the notice should explicitly state the reasons and the effectivity date of separation.

7. Common Challenges and Best Practices

For Employers

Document Everything: Keep a detailed paper trail of performance evaluations, coaching sessions, warnings, emails, and other records that may be relevant to proving consistent substandard performance.
Communicate Performance Standards: Ensure that employees are aware of performance metrics from the outset—preferably through orientation programs, employee handbooks, or continuous updates.
Allow Ample Time for Improvement: Philippine labor tribunals often look for evidence that the employer gave the employee a reasonable period to remedy any deficiencies. Performance Improvement Plans (PIPs) are a best practice to demonstrate that the employer tried to assist the employee before resorting to disciplinary measures.
Ensure Impartial Evaluation: Use objective metrics (e.g., numeric targets, deadlines, quality scores) where possible. If subjective assessments are necessary, use consistent criteria across all employees.

For Employees

Read the NTE Carefully: Understand the specific issues raised and the policies or standards allegedly violated.
Respond Promptly and Comprehensively: Address each point made in the NTE with clarity and provide supporting documents or witnesses if available (e.g., record of completed tasks, improved metrics, project logs).
Seek Clarification If Needed: If parts of the NTE are unclear, request a meeting or additional information to properly address the allegations.
Consult a Professional: If the accusations are serious and may lead to dismissal, employees may wish to seek advice from a union representative (if unionized) or a legal professional.

8. Consequences of Non-Compliance With Due Process

If an employer fails to issue a Notice to Explain or otherwise neglects to afford the employee the opportunity to respond:

Illegal Dismissal Claims: The dismissal can be deemed illegal if it proceeds without the legally required notices and hearing.
Indemnity or Damages: Even if the employer can prove that the dismissal was for a just cause, the lack of procedural due process may result in the employer being liable for nominal damages.
Reinstatement and Back Wages: In instances where neither substantial nor procedural due process is observed, the employee may be entitled to reinstatement and full back wages.

9. Frequently Asked Questions (FAQs)

How many notices does an employer need to give before terminating an employee for poor performance?
Under Philippine law, two notices are required: the Notice to Explain (first notice) and the Notice of Decision (second notice).
Is there a specific format for the Notice to Explain?
The law does not prescribe an exact format. However, it must be in writing and must clearly detail the charges or allegations, the specific acts complained of, and require the employee to respond.
Can an employer terminate an employee for a single instance of poor performance?
Typically, one instance of poor performance is insufficient to justify termination. Employers usually must show a pattern of substandard work, documented attempts to help the employee improve, and clear evidence that the employee continually failed to meet performance standards.
What if an employee refuses to respond to the NTE or attend a hearing?
If the employee refuses to respond or participate, the employer may proceed with the investigation based on available evidence. However, the employer must still document all efforts to inform the employee and conduct a fair inquiry.
Can the employee question the fairness of performance targets?
Yes. In responding to the NTE, the employee may argue that performance targets are unrealistic or that they were not properly communicated. Whether this argument will prosper depends on how the employer established or communicated those targets.

10. Conclusion

The Notice to Explain is a critical element of procedural due process in Philippine labor law. Employers must use it to clearly inform employees of the grounds for alleged poor performance and give them an opportunity to defend themselves. On the flip side, employees should treat an NTE seriously, responding comprehensively and consulting professionals if necessary.

By ensuring a transparent and fair process, both parties can help prevent disputes, maintain workplace harmony, and preserve legal rights. Ultimately, a well-documented performance management system and a properly issued Notice to Explain reduce misunderstandings and safeguard against claims of illegal dismissal, benefiting both employer and employee under Philippine labor law.