Article 301 [286] of the Labor Code: When employment is not ended: floating status
The number in brackets, [286], is the article's number before the 2015 renumbering of the Labor Code.
Status: In force
What does Article 301 [286] say?
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.
Read the Labor Code on the DOLE website (it uses the article numbers before 2015)
What does it mean in plain language?
Article 301 (Article 286 before the 2015 renumbering) says that some interruptions do not end employment. A bona fide (good faith) suspension of the business for up to six months, or an employee's military or civic duty, keeps the employment alive. When the business resumes, or the duty ends, the employee who asks to return within one month must be taken back without loss of seniority. This article is the basis of what workers call "floating status".
The full text:
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.
How does it work in real life?
A factory after a flood
A garment factory stops operating after a flood. Its workers remain employed while the suspension lasts, up to six months. After that, the factory must recall them or end their employment properly, with notice and separation pay, as in Keng Hua.
Rodel: a guard without a post
Rodel, a security guard, is relieved because the client did not renew its contract. His agency has six months to give him a new post with a specific client. A letter that only says "report to the office" does not end his floating status, under Padilla.
Lito: a case filed too early
Lito files an illegal dismissal case two weeks after being placed on floating status, without having been dismissed. Under Nippon Housing, the complaint is generally premature.
What does this mean in practice?
- Count the six months from the start of the suspension or off-detail.
- When operations resume, the article requires the employee to signal the wish to return within one month.
- Workers not recalled and not properly terminated after six months may claim the remedies for illegal dismissal ([Article 294 [279]](/law/labor-code/article-294)).
- For the full question-and-answer guide, see floating status for six months.
What is floating status?
It is the period when an employee is still employed but has no work, because the business or a part of it has stopped. The words "floating status" are not in the article; courts use them for the situation Article 301 describes. Courts have also applied the six-month rule to security guards who are between client assignments. In Nippon Housing Phil. v. Leynes (2011), the Supreme Court said the article has been applied to other industries as well. See the glossary entry on floating status.
How long can floating status last?
Up to six months. The suspension must also be bona fide, meaning real and in good faith, not a way to get rid of workers.
What must happen after six months?
The employee must be recalled or properly terminated. In Keng Hua Paper Products v. Ainza (2023), the Supreme Court quoted an earlier ruling: "After six months, the employees should either be recalled to work or permanently retrenched following the requirements of the law, and that failing to comply with this would be tantamount to dismissing the employees and the employer would thus be liable for such dismissal." In that case, workers laid off after Typhoon Ondoy and not recalled within six months were held illegally dismissed.
A proper termination after six months follows [Article 298 [283]](/law/labor-code/article-298): a written notice to the workers and to the Department of Labor and Employment (DOLE) at least one month before, and separation pay.
What are the special rules for security guards?
The Supreme Court has applied Article 301 to guards placed on "off-detail":
- In Soliman Security Services v. Sarmiento (2016), the Court said: "The floating status period, wherein the security guards are not paid, should not last longer than six (6) months". Without a valid justification, placing a guard on floating status is tantamount to constructive dismissal.
- In Padilla v. Airborne Security Service (2017), the Court said the new assignment "must be to a specific or particular client" and that "a general return-to-work order does not suffice."
Can an employee sue right away?
Usually not before the six months are up. In Nippon Housing (2011), the Supreme Court said a complaint for illegal dismissal filed before the six-month period lapses, and before any actual dismissal, is generally considered premature.
Frequently asked questions
How long can an employee be on floating status?
Not more than six months. Article 301 [286] says a bona fide suspension of the operation of a business for up to six months does not end employment. After six months, the Supreme Court says the employee must be recalled to work or properly terminated.
What happens after six months without recall?
In Keng Hua Paper Products v. Ainza (2023), the Supreme Court said that failing to recall or properly retrench the employees after six months is tantamount to dismissing them, and the employer is liable for that dismissal.
Is a floating employee paid?
Article 301 does not provide for pay during the suspension. In Soliman Security Services v. Sarmiento (2016), the Supreme Court described the floating status period of security guards as one in which they are not paid, and said it should not last longer than six months.
Is a general order to report to the office enough to end floating status?
Not for security guards. In Padilla v. Airborne Security Service (2017), the Supreme Court said the new assignment must be to a specific or particular client and that a general return-to-work order does not suffice.
What must the employee do when operations resume?
Article 301 says the employer shall reinstate the employee without loss of seniority rights if the employee indicates the desire to resume work not later than one month from the resumption of operations or from relief from military or civic duty.
General information, not legal advice. For your case, ask a lawyer, the Public Attorney's Office (PAO) or the agency.
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