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)
Good morning. I work in a BPO. Our manager advised, 2 and a half months after work suspension, that our client could not provide volume for us and this is not temporary. They also advised that they are “formally” waiting for the client to advise that they do not have any business for us anymore before they can put us on a floating status. Now, per our HR, we can only be on floating status for 60 days. Question is, aren’t we already on suspension of business since the lockdown and thus that would have counted to the 6months provision of DOLE for employers to put their employees on floating status?
Yes. The period during lockdown, IF the company is non-operational, may be considered/included in the counting of the 6 month floating status.
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. We were placed under floating status. I am a Sales Account Manager and our US counterpart is currently covering for our accounts. Some people from our PH office (OM, HR manager, a few graphic technicians) are on WFH at the moment while us in the sales position are on floating status. As a rule, the person covering for another Sales acct Manager will get half of the commission generated. Normally, commission is calculated and extracted every 21st of the month. To cut the story short, come today, May 26th, the company gave a memorandum than our commission will be held due to financial reason. Is that legal? Also, I was told by a friend that if our company closes due to the pandemic, we will only receive a month or 1/2 month salary per year of service whichever is higher. However, all our offices outside the country is still operating. Would that affect any law here in PH? In addition, I I resign while on floating status, what are the statutory benefits that should be included on my backpay? Thank you so much.
Hi. To answer your questions:
1. “To cut the story short, come today, May 26th, the company gave a memorandum than our commission will be held due to financial reason. Is that legal?” – Yes. The action of the company is correct. If you are placed on floating status, then you are not entitled to the commission. You are entitled only to the commission you’ve earned.
2. “Also, I was told by a friend that if our company closes due to the pandemic, we will only receive a month or 1/2 month salary per year of service whichever is higher.” Yes, separation pay would be 1/2 month pay for every year of service.
3. “However, all our offices outside the country is still operating. Would that affect any law here in PH?” No. The decision to close the company is a company prerogative which you cannot question and which does not depend on whether the offices outside the country are still operating or not.
4. “If I resign while on floating status, what are the statutory benefits that should be included on my backpay?” An employee who resigns is NOT entitled to a separation pay. You will only receive your last pay. You said that you are a Managerial Employee – technically you are not entitled to 13th month pay. However, if you are already receiving it by company practice, then you may get your proportionate 13th month pay, and cash conversion of leave credits IF that is part of your benefits.
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 afternoon!
I am a regular teacher in a private school. Supposedly, all regular teachers will report back for work last May 11, 2020,however, due to the extended MCQ in our place pursuant to the Executive Order of the City Mayor, we are not allowed to report. Thus, despite temporary closure of my school business operations, the school managed to pay our salaries in full even through we did not report since March 19, 2020. Last May 7, we were informed that our remaining sick leave credits which is normally convertible to cash (10 days or below) will be forfeited in lieu of our non-reporting for work from 11- 31, 2020, but we will be given our full salary. The explanation given was that, the school finances are already depleted since we were not able to collect the outstanding balance of our students this year due to closure and our online enrollment at present is remarkably very slow. Moreover, all regular office personnel and maintenance staff were also asked to use their remaining SL and VL credits for the whole month of May while everyone is not required to report for work. We are also allowed to use in advance our VL and SL credits for next school year if our present leave credits are not enough just to ensure that we receive our May salary in full.
Additionally, we knew that as per labor labor advisories no.s. 1, 4, 9 and 11 states that No Work, No Pay.
Question:
May I ask if the decision of the school to forfeit the teachers’ SL credits is legal?
Thank you very much.
Sincerely,
Maria T. Bangot
Yes. The action of the school management is correct. The employer may exhaust the leave credits of the employee. After such time, the employees would then be placed under the No Work No Pay scheme. Hence, you are actually lucky that you received your salary during that period. There might have been some misunderstanding, but I believe your SL/VL are not forfeited per se, but that it was just converted to cash so that you would be able to receive payment for the month of May. The way I see it, the management is considering its finances at the moment (just like all business). if it would continue to pay you your salary, the case reserves might be depleted leading to a closure of the business. Hence, the next step would be to exhaust/use the vacation 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 and good day, I’m a supervisor on one of the BPO companies here in the Philippines. I would like to know if it is legal for a company to promote or hire a new supervisor and then put another supervisor on floating status? On behalf of all the employees who’s seeking your advice, we thank you all.
Hi. It depends on whether you are supervising the same entity. Let’s say A is the supervisor of B, C, D, and E. A was placed on floating status, but hired Z to replace him and Z now supervises B,C,D and E. In that case, it is illegal and may amount to constructive dismissal.
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.
Atty I was just placed by my company on floating status. This was due to over staffing and the Pandemic but operation did not stop. I’am a regular employee for 14 years with the company. What is our best option since we could not apply for another job because technically we are still employed. If we file constructive dismissal against them would the case prosper? Thanks in advance
It is not correct that you cannot find another job while you are placed under floating status. One of the options is to resign and find another job. Filing a case for constructive dismissal at this point is premature. You need to wait for the lapse of 6 months, AND the employer has not yet retained you back to your former position – that’s the time that you can already file a case for constructive dismissal.
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.
Thanks ma’am. So does it mean that i can file for constructive dismissal after reinstate me for work?
Yes. If after 6 months, there is still no work for you, then you may file a case for illegal (constructive) dismissal.
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 would just like to inquire on something. My employer has decided to temporarily suspend his business by 50%, meaning all of the departments are still operational but only 50% of the employees are allowed to continue to work. Is this allowable under the law? Thank you.
Yes this is allowed by law. This is company prerogative to shut down 50% of its operations.
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,
Is it proper to place an employee under floating during pandemic? Particularly, that the employee is residing in another city, currently on a lockdown? Thank you.
Yes. Unfortunately, a company is allowed to place an employee under floating status even if it is during pandemic. 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 under the Labor Code, as follows: ART. 300. 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. xxx
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! According to DOLE, employers could either implement Flexible Work Arrangements (FWA) or Temporary Closure during this COVID-19 season. May I ask, 1.) How many months can the FWA be implemented by the employer? 2.) If not FWA, how many months can the Temporary Closure be implemented by the employer? 3.) Although some have said that 6 months is perfectly legal for Temporary Closure, I saw the DOLE Dept. Order 174 saying that the 6-month period has been reduced to 3 months. Will this Dept. Order govern, or will it still be 6 months mainly because if this current health crisis? Thanks in advance, and keep safe!
On Q1: DOLE Labor Advisory 09-20 states that implementation of the FWA should be temporary in nature, taking into consideration the “adverse consequences of the situation on the financial viability of the company.” No specific period of time was discussed.
On Q2: Temporary closure should not extend for more than 6 months. Otherwise, you need to pay the employees affected separation pay. Please note that the 3 month period mentioned in DOLE 174 only pertains to employees hired by a legitimate job contractor which has contracts with a client (Principal – client relationship). If the contract with the client expired, the employees assigned to it would be pulled-out by the Principal (which is their employer). The employer has 3 months to look for another work assignment for that employee. The 6 month period, on the other hand, pertains to the act of placing an employee under floating status due to suspension of business operation of undertaking.
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 advised by my manager today that I’ll be placed on a “floating status” because my spot as a training coordinator in the training management team has been dissolved because it was considered as an unnecessary cost. The other training coordinators from our team are temporarily assigned to other tasks while our department is waiting resume its normal tasks. My teammates would then resume their jobs as training coordinators when things go back to normal. Other departments in our BPO company is still operational.
Is this still considered as a floating status or is it already a redundiation of a specific post due to labor-saving devices?
Hi. To place an employee under floating status is only justified when there is suspension of business operations. However, even if the operations of the company continues, there may be suspension of an undertaking based on the clients changing demands, making the act pf placing the employee on floating status legal. The “floating status” of such employees is often justified by invoking Article 286 of the Labor Code which allows the suspension of the employment relationship as a result of a bonafide suspension of a business or undertaking for a period not exceeding six months. After six months, the employee should either be recalled to work or, if this is not feasible, permanently separated for cause and paid the appropriate separation pay. You may then de terminated for redundancy (or retrenchment if the company can prove that the termination is necessary to prevent financial losses.)
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.
Our account in the company was dissolved. We did not received any letter or information about it. We are put on floating status by the company and HR told us that they will look for another account for us. Without clear information and process, we were interviewed one by one for another account. Some were told they passed and some were not. We could not believe that there are employees who failed. They did not provide reason why there were employees who failed the interview. In fact, we are all regular employees.Those who passed started the training while those who failed according to HR, they will still look for another account. Since those who failed according to them are still on no work no pay scheme is there any way wherein we can ask for assistance from DOLE to clarify if the process done by the company is correct or valid?
Hello. Yes. By all means you can go always go to DOLE which has jurisdiction for your company, to inquire.
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, if you are placed on “floating status” for 3 months and reinstated your work, will we be paid for the 3 months floating status?
Hello. Unfortunately, the employee is NOT entitled to any salary during the period when he was placed in floating status.
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.
Let’s say today is Wednesday morning(May 27,2020) and we we’re just informed today that this Friday is going to be our last day of work (May 29, 2020) we will be on floating status without prior notice due to the program we are working for will be dissolved in our company(BPO) but other site or company will be operational. My concern is that the prior notice in a short time may I know our rights or legal actions on this situation?
Hi. There is no required prior notice when it comes to putting employee under floating status. In your case, there is a suspension of an aspect of the business operation(due to the program you are working for will be dissolved in your company). Hence, placing the employee under floating status is legal.
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.