Published — June 1, 2022
The following post does not create a lawyer-client relationship between Alburo Alburo and Associates Law Offices (or any of its lawyers) and the reader. It is still best for you to engage the services of your own lawyer to address your legal concerns, if any.
Also, the matters contained in the following were written in accordance with the law, rules, and jurisprudence prevailing at the time of writing and posting, and do not include any future developments on the subject matter under discussion.
For more information about other employment status read: Knowing the Difference Between Probationary Employment and Project Employment
What is “Floating Status”?
- Floating Status is synonymous to temporary retrenchment of business or undertaking thereby inevitably forcing or causing its affected employees to go on leave.
- It is sometimes called as “Temporary Off – detail” or “off-detailing” and is a valid exercise of management prerogative.
What is the legal basis of “Floating Status”?
o The legal basis for “Floating Status” is Article 301 of the Labor Code which states the following:
“The bona fide suspension of the operation of a business or undertaking for a period not exceeding six (6) months, or the fulfillment (sic) by the employee of a military or civic duty shall not terminate employment. In such all cases, the employer shall reinstate the employee to his former position without loss of seniority rights if he indicates his desire to resume his work not later than one (1) month from the resumption of operations of his employer or from his relief from the military or civic duty.”
When “Floating Status” is not equivalent to dismissal
o “Off-detailing” or putting an employee on floating status is not equivalent to dismissal, for as long as it does not last for more than six (6) months. After six months, the employee should be recalled for work without loss of seniority rights, or for a new assignment; otherwise, he is deemed terminated.
When “Floating Status” is equivalent to constructive dismissal; thus, becomes unlawful
o In the case of Airborne Maintenance vs. Egos (G.R. No. 222748, April 03, 2019), to wit:
“Here, the totality of the foregoing circumstances shows that petitioner’s acts of not informing respondent and the DOLE of the suspension of its operations, failing to prove the bona fide suspension of its business or undertaking, ignoring respondent’s follow-ups on a new assignment, and belated sending of letters/notices which were returned to it, were done to make it appear as if respondent had not been dismissed. These acts, however, clearly amounted to a dismissal, for which petitioner is liable.” (emphasis ours)
o Also, in the case of Morales vs. Harbour Centre Port Terminal (G.R. No. 174208, January 25, 2012), to wit:
“Constructive dismissal exists where there is cessation of work because “continued employment is rendered impossible, unreasonable or unlikely, as an offer involving a demotion in rank or a diminution in pay” and other benefits. Aptly called a dismissal in disguise or an act amounting to dismissal but made to appear as if it were not, constructive dismissal may, likewise, exist if an act of clear discrimination, insensibility, or disdain by an employer becomes so unbearable on the part of the employee that it could foreclose any choice by him except to forego his continued employment.”
Who has the burden of proof?
o In the case of Lopez vs. Irvine Construction Corporation (G.R. No. 207253, August 20, 2014), to wit:
“The paramount consideration should be the dire exigency of the business of the employer that compels it to put some of its employees temporarily out of work. This means that the employer should be able to prove that it is faced with a clear and compelling economic reason which reasonably forces it to temporarily shut down its business operations or a particular undertaking, incidentally resulting to the temporary lay-off of its employees.
Due to the grim economic consequences to the employee, case law states that the employer should also bear the burden of proving that there are no posts available to which the employee temporarily out of work can be assigned.” (emphasis ours)
Hi. Good evening. One of the accounts that our company is handling won’t be renewing it’s contract. We were informed that we are now on floating status, however it was not communicated to us, that was almost a month ago. We are receiving monetary help from the company, but I wanted to know if we are eligible to still get a basic salary while we are on floating status? How long can they place us under floating status? Thank you and hope to hear from you soon.
Hello. In that case, there is a suspension of an undertaking. The Company is allowed to put the employees on floating status, which shall NOT exceed 6 months. Sadly, during this period, the employee is NOT entitled to salary.
Please be reminded that this advice is based solely on the facts you have narrated and our appreciation of the same. Our opinion may vary when other facts are changed or elaborated.
Is there a notice period required for floating status? Also, what is the differene between redundancy and retrenchment?
Hello. There is no required period for the notice to place an employee under floating status since it is not termination of employment. As for your second question:
Retrenchment is what we call as downsizing. Retrenchment is undertaken when it is necessary to prevent business losses. (There must be proof of losses as indicated in the Financial Statement). Whereas, redundancy is undertaken when there is superfluous positions or when the positions or services are in excess of what the company reasonable demands. The effect as regards payment of separation pay differs between the two. For retrenchment, payment must be half month pay for every year of service or 1 month, whichever is higher. A fraction of 6 months shall be considered as 1 year. If the employee worked for less than 6 monthse shall receive separation pay equivalent to 1 month.
For redundancy, payment must be one month pay for every year of service or 1 month, whichever is higher. A fraction of 6 months shall be considered as 1 year. If the employee worked for less than 6 months, he shall receive separation pay equivalent to 1 month.
Requirement: The employee must receive a written notice of dismissal to the employee specifying the grounds must at least 30 days before the date of termination. A copy of the notice shall also be furnished the Regional Office of the Department of Labor and Employment (DOLE) where the employer is located.
Please be reminded that this advice is based solely on the facts you have narrated and our appreciation of the same. Our opinion may vary when other facts are changed or elaborated.
Hi, i wanted to ask what are the requirements for putting employees on floating status and where to get them. Thanks!
The employer is allowed to temporarily suspend work due to bona fide suspension of business operations or undertaking for a period not exceeding six (6) months. This is provided for in the Labor Code, which states:
ART. 300 [286]. WHEN EMPLOYMENT NOT DEEMED TERMINATED
The bona fide suspension of the operation of a business or undertaking for a period not exceeding six (6) months, or the fulfillment by the employee of a military or civic duty shall not terminate employment. In all such cases, the employer shall reinstate the employee to his former position without loss of seniority of rights if he indicates his desire to resume his work not later than one (1) month from the resumption of operations of his employer or from his relief from the military or civic duty.
There is no formal written template; a notice to the employee explaining that they would be placed under floating status (indicate period) because of financial losses brought by the covid 19 pandemic would suffice.
Please be reminded that this advice is based solely on the facts you have narrated and our appreciation of the same. Our opinion may vary when other facts are changed or elaborated.
Hi, I was on floating status for 6 months and I was told that I did not earn any leave credits while I was on floating, is it right?
Yes. This is because the period when you are placed during floating status, is not considered as a working period. However, the company can always provide by agreement that such period would be considered part in the computation of leave credits.
Please be reminded that this advice is based solely on the facts you have narrated and our appreciation of the same. Our opinion may vary when other facts are changed or elaborated.
Hello, my account on the system was disabled as requested by the client (alleged neglect of work) but what really happened was client got mad when I informed him of my wish to transfer to a different team so he hastily built a case against me and had my account disabled with no due process. HR is trying to give me due process by asking me to go on leave while investigation is on-going. HR is also actively trying to find a team where I can transfer. Is it legal to ask me to use my leaves while pending investigation? HR didn’t say I am suspended but am I entitled to a salary once I’ve used up all my leaves and they haven’t found a replacement project for me yet? Thanks!
Hello. It is up to you if you want to use your leaves. I think you are presently under preventive suspension. A preventive suspension is not a penalty, but a means for the company to conduct investigation on the alleged violation. Remember that the period of preventive suspension is limited as the law provides that:
“Section 9. Period of suspension. No preventive suspension shall last longer than thirty (30) days. The employer shall thereafter reinstate the worker in his former or in a substantially equivalent position or the employer may extend the period of suspension provided that during the period of extension, he pays the wages and other benefits due to the worker” (Rule XXIII, Book V, Omnibus Rules Implementing the Labor Code, as amended by Department Order No. 9, Series of 1997).
In the event that your employer would continue to preventively suspend you for more than thirty (30) days, you are entitled either to an actual reinstatement to your previous work or to a payroll reinstatement (meaning you are given your salary in case you are not actually reinstated by your employer).
During the period of your suspension, please note that an employee placed under preventive suspension is not entitled to payment of wages. However, if the basis for suspension is later proven to be unfounded or invalid, you are entitled for your salary during the whole period of your suspension (Gatbonton vs. NLRC).
Please be reminded that this advice is based solely on the facts you have narrated and our appreciation of the same. Our opinion may vary when other facts are changed or elaborated.
We were just hired last April 24 and finished training, nesting and orientation for 6 days. After that, they put us on a floating status without pay. They said we are on a waiting list for the next program. No guarantee when would that be. We need the job that is why we applied. Is it legal to hire us and put us on a floating status without pay for the next program even what we signed is a full time position?
The employer may place you under floating status not only if there is suspension of business operations, but also if an undertaking is suspended, which in your case is a new program. The employer is allowed to temporarily suspend work due to bona fide suspension of business operations or undertaking for a period not exceeding six (6) months. This is provided for the Labor Code, as follows:
ART. 300 [286]. WHEN EMPLOYMENT NOT DEEMED TERMINATED
The bona fide suspension of the operation of a business or undertaking for a period not exceeding six (6) months, or the fulfillment by the employee of a military or civic duty shall not terminate employment. In all such cases, the employer shall reinstate the employee to his former position without loss of seniority of rights if he indicates his desire to resume his work not later than one (1) month from the resumption of operations of his employer or from his relief from the military or civic duty.
I understand your problem of being hired only to be placed in a floating status. Please note that the COVID -19 pandemic / ECQ has affected many businesses. If the program to which you were hired was suspended because of the ECQ/Covid 19, then the employer may put you in floating status provided that it will not last for more than 6 months (without pay).
Please be reminded that this advice is based solely on the facts you have narrated and our appreciation of the same. Our opinion may vary when other facts are changed or elaborated.
Hi,
My company did not close down it’s operation. There’s no account for us to be transferred to so they put us under floating status however, only a verbal communication was done today and the floating status will be effective tomorrow immediately and no formal email was sent prior or after. Is it illegal?
Hello. If there is no account for you to be transferred, it may be considered as suspension of that undertaking. The employer is allowed to temporarily suspend work due to bona fide suspension of business operations or undertaking for a period not exceeding six (6) months. This is provided for the Labor Code, as follows:
ART. 300 [286]. WHEN EMPLOYMENT NOT DEEMED TERMINATED
The bona fide suspension of the operation of a business or undertaking for a period not exceeding six (6) months, or the fulfillment by the employee of a military or civic duty shall not terminate employment. In all such cases, the employer shall reinstate the employee to his former position without loss of seniority of rights if he indicates his desire to resume his work not later than one (1) month from the resumption of operations of his employer or from his relief from the military or civic duty.
Since it is not a termination of employment, prior written notice is not required. However, you should ask your employer to give you a written notice so that you would have reference of the 6 month period.
Please be reminded that this advice is based solely on the facts you have narrated and our appreciation of the same. Our opinion may vary when other facts are changed or elaborated.
Good day,
Thank you to the comment moderator for being patient in answering questions and clarifications.
I would just like to ask the legalities of this situation:
Company – BPO/Web Developer
Operations – 50 to 70 percent still operating.
The company is planning to put on a floating status employees who are not needed due to some clients/accounts closing or as a result of such, excessive man power with no new roles/positions that they can offer to these employees. Is this legal as per Labor Code and that of policies of DOLE?
Thank you
Yes. This would fall under “redundancy” under Article 298 of the Labor Code. Redundancy means there are superfluous positions or services of the employees. The positions or services are in excess of what is reasonably demanded by the actual requirements of the business to operate in an economical and efficient manner. Please note that employees terminated on the ground of redundancy should be paid separation pay of 1 month pay per year of service, or one month, whichever is higher; a fraction of 6 months is considered as one year.
Please be reminded that this advice is based solely on the facts you have narrated and our appreciation of the same. Our opinion may vary when other facts are changed or elaborated.
Hi, we were placed under floating status yesterday. We were informed verbally, no email/ written notice from HR/Management. May I know if there should be “palugit” or time allowance on informing the employees that they will be in floating status? Like for example, a month ahead? We were informed verbally yesterday and it was also effective the same day. We were all shocked.
Hello. Since placing the employees on a floating status is not termination, there is no specific rule regarding prior notice. While we understand your plight, please also consider the viewpoint of the company. This pandemic affected the economy. It would be difficult to provide prior notice because the COVID 19 pandemic is an unforeseen event. If they were not able to give prior notice, it might be because they still hope that they could continue with their business. However, the unfolding of events led them to such unfortunate decision.
Please be reminded that this advice is based solely on the facts you have narrated and our appreciation of the same. Our opinion may vary when other facts are changed or elaborated.
Hi, good day. How many times can an employer put an employee on floating status? I was put once before and now they’re are planning to put me again on floating status due to financial crisis that company is experiencing now because of the pandemic.
It is not a question of “how many times.” Rather, it is the length of time that you must take into consideration. The employer is allowed to temporarily suspend work due to bona fide suspension of business operations or undertaking for a period not exceeding six (6) months. This is provided for the Labor Code, as follows:
ART. 300 [286]. WHEN EMPLOYMENT NOT DEEMED TERMINATED
The bona fide suspension of the operation of a business or undertaking for a period not exceeding six (6) months, or the fulfillment by the employee of a military or civic duty shall not terminate employment. In all such cases, the employer shall reinstate the employee to his former position without loss of seniority of rights if he indicates his desire to resume his work not later than one (1) month from the resumption of operations of his employer or from his relief from the military or civic duty.
Thus, placing you under floating status must not exceed 6 months.
Please be reminded that this advice is based solely on the facts you have narrated and our appreciation of the same. Our opinion may vary when other facts are changed or elaborated.