Published — July 15, 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.
After reading “May an employee be placed on floating status?”, read also “Floating Status: Not Unlawful Per Se”
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The bona-fide suspension of the operation of a business or undertaking for a period not exceeding six (6) months.
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In all such 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.
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When the floating status of an employee lasts for more than six (6) months, such employee may be considered to have been constructively dismissed from service.
What does the term “floating status” mean?
Floating status, also called temporary lay-off or forced leave, is the suspension of employment due to a temporary suspension or cessation of business. The floating status of an employee should last only for a reasonable time. When the floating status of an employee lasts for more than six (6) months, such employee may be considered to have been constructively dismissed from service.
The law says:
Article 301 of the Labor Code of the Philippines provides that:
Article 301. 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 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.
Department Order No. 215 of the Department of Labor and Employment (DOLE) or the Rule Amending Section 12 of Rule I, Rules Implementing Book VI of the Labor Code on Suspension of Employment Relationship provides that:
Section 12. Suspension of Relationship. – The employer-employee relationship shall be deemed suspended in case of suspension or operation of the business or undertaking of the employer for a period not exceeding six (6) months, unless the suspension is for the purpose of defeating the rights of the employees under the Code, and in case of mandatory fulfillment by the employee of a military or civic duty. The payment of wages of the employee as well as the grant of other benefits and privileges while he is ON SUSPENDED EMPLOYMENT or on military or civic duty shall be subject to EXISTING LAWS and decrees and to the applicable individual or collective bargaining agreement and voluntary employer practice or policy.
Jurisprudence says:
In the case of Innodata Knowledge Services, Inc. v. Inting, et. al. (G.R. No. 211892, December 06, 2017), the Supreme Court ruled that an employer may validly put its employees on floating status upon bona fide suspension of its business operation, to wit:
“The law set six (6) months as the period where the operation of a business or undertaking may be suspended, thereby also suspending the employment of the employees concerned. The resulting temporary lay-off, wherein the employees likewise cease to work, should also not last longer than six (6) months. After the period of six (6) months, the employees should either then be recalled to work or permanently retrenched following the requirements of the law. Failure to comply with this requirement would be tantamount to dismissing the employees, making the employer responsible for such dismissal. Elsewise stated, an employer may validly put its employees on forced leave or floating status upon bona fide suspension of the operation of its business for a period not exceeding six (6) months. In such a case, there is no termination of the employment of the employees, but only a temporary displacement. When the suspension of the business operations, however, exceeds six (6) months, then the employment of the employees would be deemed terminated, and the employer would be held liable for the same.”
Does voluntary resignation within the allowable six-month floating status period operate as constructive dismissal of the employee?
In the case of ICT Marketing Services, Inc. v. Mariphil Sales (G.R. No. 202090, September 09, 2015), the Supreme Court ruled that:
“In any event, respondent’s voluntary resignation prior to the expiration of the allowable six-month “floating status” period cannot constitute constructive dismissal, and her immediate filing of the labor case thereafter is thus premature.”
The Supreme Court further held in the same case that:
“[D]ue to the grim economic consequences to the employee of being placed on a floating status, the employer should bear the burden of proving that there are no posts available to which the employee temporarily out of work can be assigned.”
Alburo Alburo and Associates Law Offices specializes in business law and labor law consulting. For inquiries, you may reach us at info@alburolaw.com, or dial us at (02)7745-4391/0917-5772207.
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