Floating Status in the Philippines

PUBLISHED ON: December 10, 2020
LAST UPDATED ON: May 1, 2021

Floating Status is the suspension of employment due to a temporary suspension or cessation of business which shall not exceed six (6) months unless an agreement has been made between the employee and an employer that would last up to an additional six (6) months. The term is synonymous with temporary lay-off, temporary laid-off, temporary off-detail, suspended employment and other similar terms.

Defining Floating Status

What is the meaning of Floating Status?

The term "Floating Status" is not a term found in Presidential Decree No. 442 also known as the Labor Code or in the Implementing Rules and Regulations of the Labor Code. The legal basis of the term where it is derived from is from the renumbered Labor Code 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.

Article 301 [286]

In 2020, the Implementing Rules and Regulations of the Labor Code has been amended by the Department of Labor and Employment (DOLE) through Department Order No. 215, series of 2020 to reflect the following:

The employer-employee relationship shall be deemed suspended in case of suspension of 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 a military or civic duty shall subject to EXISTING laws and decrees and to the applicable individual or collective bargaining agreement and voluntary employer practice or policy.

Section 12 regarding Suspension of relationship

Although the term "Floating Status" is nowhere to be seen, the courts have recognized it as the term to indicate the period of a temporary suspension of employment that shall not exceed six (6) months.

From the provisions, the issuance of a Floating Status to an employee is within the prerogatives of the employer. Often, it is a necessity to temporarily lay-off employees should there be no work to be assigned to them.

Should the period of an employee's floating status or suspension of employment near the six (6) month period, the employer should consider to recall the employees to work, retrenchment, or discuss to the employee if they wish to extend the floating status up to an additional six (6) months.

An employee who has been recalled to work shall retain the previous position and other benefits granted to them prior to the suspension of employment.

Extension of the period of Floating Status or Suspension of Employment

Can a Floating Status be extended beyond 6 months?

The employer and employee, in good faith, may mutually agree to extend the suspension of employment or floating status up to an additional six (6) months. An employer cannot simply extend the suspension of employment without the consent and agreement of the employee.

The employer shall report to the Department of Labor and Employment (DOLE) through its regional offices the extension of suspension of employment or floating status ten (10) days prior to the effectivity of the extension.

The extension of the suspension of employment need not be exhausted. The employee may either be recalled to work or be retrenched at any point during the extension of the period of floating status.

Can an employee refuse the extension of period of floating status?

Yes, it is within the rights of an employee to refuse the extension.

Can Separation Pay be withheld if an employee refuses to agree to extend the floating status?

No, an employee is entitled to Separation Pay even if they do not agree to extent the period of the floating status.

Miscellaneous

Who has the burden of proof that there is no work or lack of work to be assigned?

Employers have the burden of proof should an employee contest that there has been constructive dismissal.

Can an employee find work while on a floating status?

Yes, an employee shall not lose employment should they find work during the extended suspension of employment unless they have resigned.

How long can an employee decide when to return to work?

The Labor Code of the Philippines and the Implementing Rules and Regulations issued gives an employee a month to decide if he would return to work upon resumption of operations. The employer should issue a "Notice of Return to Work Order" or other analogues issuances.

Can a retrenched employee be rehired?

Yes, in fact, a retrenched employee has the priority in the re-hiring should they desire to work again for the company not later than (1) month from the resumption of operations.

What if an employee's floating status exceeds six (6) months?

It is to be construed as constructive dismissal If an employee is on a floating status and was not given any assignment within six (6) months from the start of the period. The employee should have been retrenched prior to the sixth-month period.

Alternatively, the employer and employee may agree to extend the floating status up to an additional six (6) months.

Is a retrenched employee entitled to Separation Pay?

Yes, a retrenched employee is entitled to Separation Pay and it is part of the due process.

Is the period of floating status included in the computation of Separation Pay?

Yes, the implementing rules and regulations of the Labor Code of the Philippines states that the first six (6) months of suspension of employment shall be included in the computation of the Separation Pay.

In terms of the inclusion of the extended period of the suspension of employment, the rules are silent on this.

Is intermittent work days allowed while on a Floating Status?

An employee who is on a Floating Status or employment is suspended should not be working as that is the opposite of the suspension of employment. The employer may have reduced the number of workdays to compensate due to the on-going pandemic.


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