Floating Status: Is It Legal and What Happens After 6 Months?

"Floating status" is when an employee is temporarily not given work, but is not dismissed. It is common for security guards between posts, and it happens in other businesses when operations stop for a while, for example after a flood or a fire. The article on suspension of operations does not use the phrase "floating status". In Keng Hua (2023), the Court explained that the article is applied by analogy to set how long employees may stay temporarily laid off or on floating status.

The rule is Article 301 of the Labor Code (Article 286 before the 2015 renumbering), as quoted in Keng Hua Paper Products v. Ainza (2023). In simple words:

• A bona fide (good faith) suspension of a business or undertaking for not more than six months does not terminate employment. The same is true while an employee fulfills a military or civic duty.
• When the employer resumes operations, it must reinstate the employee to the former position without loss of seniority, if the employee says he or she wants to return within one month from the resumption of operations.

In Keng Hua, the Court explained that six months is the period set by law. It quoted an earlier ruling: "After six months, the employees should either be recalled to work or permanently retrenched following the requirements of the law". If the employer does neither, that is "tantamount to dismissing the employees" and the employer is liable.

A paper factory in Malabon stopped operating after Typhoon Ondoy in September 2009 and resumed only in May 2010. Some workers were never called back. The company admitted it did not recall them when the six months ended. The Court said their employment ended by operation of law because the suspension went beyond six months. It then found that the company had effectively retrenched them without meeting the legal requirements, such as proof of losses and one month notice to the workers and the Department of Labor and Employment (DOLE). The workers were held illegally dismissed and awarded separation pay and attorney's fees. See Retrenchment and closure: when is it legal?

The Supreme Court has several rulings on guards placed "off-detail" after a client contract ends.

• Six months, no more. In Soliman Security Services v. Sarmiento (2016), the Court said the floating period, "wherein the security guards are not paid, should not last longer than six (6) months". It also said that placing a guard on floating status without a real business reason, such as a lack of clients, is treated as a dismissal.
• A specific assignment. 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." Letters that only told the guard to report to the head office were not enough.
• Proper termination after six months. In Soliman, the Court said that when the floating status is justified and lasts six continuous months, the agency may terminate the guard for an authorized cause, but must serve written notice on the guard and DOLE one month before, and pay separation pay. Notices sent only after the guard had filed a complaint were "mere afterthoughts".

Soliman applied the DOLE rules for security guards in force at the time. Later DOLE issuances for guards were not checked for this page.

Usually not yet. In Nippon Housing v. Leynes (2011), the Court said floating status, called "off-detailing", is not a dismissal as long as it does not go beyond a reasonable time, and only when it lasts more than six months may the employee be considered dismissed. A complaint filed before the six months end, and before any actual dismissal, "is generally considered as prematurely filed". The same case confirms that the six-month rule has been applied to industries other than security agencies.

If the employer actually dismisses you during the floating period, you do not have to wait for the six months to end. Under Nippon, the premature-complaint rule covers complaints filed before the six months end and before any actual dismissal. See Illegally dismissed: what can you get?

These are made-up examples to show how the rules work. They are not advice for any real case.

Rodel is a security guard in Makati. The bank he guards does not renew its contract with his agency, and he is relieved. The agency has six months to give him a new post with a specific client. A text saying only "report to the office" is not enough under Padilla.

A garment shop in Bulacan stops work for three months after a flood. Its workers stay employed during the suspension. When the shop reopens, a worker who says within one month that he or she wants to return must be taken back to the same position.

Lito files an illegal dismissal case two weeks after being placed on floating status, while his employer is still looking for a new post for him. Under Nippon, the complaint is generally premature.

Cora's employer keeps her on floating status for eight months, with no recall and no notice of termination. Under Keng Hua and Soliman, this can be treated as a dismissal.

If you are terminated properly after six months, separation pay is generally due. Estimate it with the separation pay calculator and see what else you are owed in the final pay guide. For the meaning of the term, see Floating status.

Talk to a lawyer if your floating status is close to six months, if you received a general order to report without a real assignment, or if you were told your job ended without notice or separation pay. Timing matters in these cases. If you cannot afford a lawyer, see Free legal help in the Philippines for the Public Attorney's Office (PAO) and other options.