The hottest topic this week are Employees who are placed on Floating Status.
As we are now almost on the very 6th month since ECQ was declared and thousands of employees started their work suspension, people are now asking — What will happen to us: Will we be recalled back to work or be paid our separation pay? When will the company ask us to report? How much separation pay will we get if we are retrenched?
Here’s a compilation of the Top 15 Questions Answered About Floating Status. This is most relevant for employees whose work has been temporarily suspended since March. And to Employers who have Employees still on Floating Status from March till September. These are:
What is Floating Status?
What is the Legal Basis for Floating Status?
How Much are Floating Status Employees Paid?
What are the DOLE Paper Requirements for Putting People in Floating Status?
How Long Can Floating Status Last?
Can Employers Extend the 6 Months Floating Status because of COVID-19?
What About the DOLE Email that’s Circulating Around Saying that ECQ is not included in the 6 Month Period? What Can You Say About It?
But I Thought Putting People on Floating Status was the Same as “Forced Leave” written on the Flexible Work Arrangement, which is renewable every 6 months. Are they NOT the Same?
What Date Does I Use to Count the Start of Floating Status?
How Do We Count 6 Months?
What do I Need to Do within the 6 Month Mark of Floating Status?
What is the Proper Due Process of Retrenching the Employee?
What is the Proper Process of Asking a Staff to Report?
But I Don’t Have a Lot of Work to Give to the Staff if I ask them to Report?
What is the Consequences of Not Respecting the 6-Month Max Period for Floating Status?
What about the Industries that are Not Allowed by IATF to Operate?
1. What is Floating Status?
- Layman’s term for Temporary Retrenchment, Lay-Off, Furlough or Off-Detailing
- Management prerogative: The due process termination of employment is not necessary or required in a bona fide suspension of business operations
- You’re still employed: “A temporary displacement of employees”
- It lasts a maximum of 6 months: Complaining before the 6th month period is premature
- Suspension of work due to stopped contractual obligations with the principal for which an employee is assigned. Floating is an option if the employer cannot find any other available or similar positions.
- Burden of proof is on the employer
- JPL Marketing Promotions v. Gonzales: Employees on “floating status” who found gainful employment within the six (6) month temporary work suspension were considered to have severed their employment
The legal basis is direct from Article 301 of the Labor Code (ex. Article 286)
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.
This means that the employee on floating status is still considered as an employee of the company. He is not retrenched, and hence, is not qualified to even apply for the SSS Involuntary Unemployment Benefit.
3. How Much Are Employees Paid While They are on Floating Status?
None is mandated. Anything given by the employer is EXTRA and GRACIA. So stop complaining if you only got a small allowance because it’s not enough for your family’s needs.
Source: Labor Advisory No. 1, Series of 2020
Once again, with work, with pay. No work, no pay. And no, no holiday pay too when a staff is on floating status. Kaya nga floating e. That’s temporary suspension of work.
4. What are the DOLE Paper Requirements for Putting People in Floating Status?
DOLE required the company to inform them and the employee 30 days beforehand if you’re placing a person on Floating Status, the same way as you do a permanent retrenchment.
This is clear via the IRRs of the Labor Code, which require employers to inform DOLE and the employee at least 30 days before if they’re going to permanently or temporarily retrenched an employee:
- Temporary suspension, lay-off, or temporary retrenchment, must provide the employee and the DOLE with at least 30 days notice before the start of the suspension period
- A company must comply with the one-month notice rule to both DOLE and the employee(s) prior to the suspension of its business operations, for your temporary lay-off to be valid and in accordance with our laws (Article 298).
Because the COVID-19 pandemic was so unprecedented, came so suddenly and left everyone unprepared, DOLE adjusted the rules last March by still insisting that lay-offs still be at 30 days, but Flexible Work Benefits be more “flexible” with just a one-week notice.
On June 11, 2020, they updated the form by issuing Labor Advisory No. 17-A, Series of 2020. The latest version indicated that Temporary Closure and Flexible Work Arrangements (FWA) must be reported AS SOON AS POSSIBLE, although Permanent Retrenchment or Closure still required a 30-day advanced notice.
Reports can be filed online via https://reports.dole.gov.ph/
5. How Long Can Floating Status Last?
6. Can Employers Extend the 6 Months Floating Status because of COVID-19?
So far, there is ZERO DOLE Labor Advisory, changes in Labor Code or any jurisprudence that clearly indicates that the 6 month maximum to float an employee can be done.
So unless DOLE releases a brand new Labor Advisory regarding this this week, there is no extension to the 6 months period:
7. But What About the DOLE Email that’s Circulating Around Saying that ECQ is not included in the 6 Month Period? What Can You Say About It?
Are you talking about this email?
Now, Google Labor Advisory No. 104, Series of 2020…
That’s right. Labor Advisory No. 104, Series of 2020 DOES NOT EXIST.
As of today, there are only 27 Labor Advisories published by DOLE. The latest one was published last August 19, and talked about the payment of wages for the two holidays held last August 21 (Ninoy Aquino Day) and August 31 (National Heroes Day).
The closest thing to Labor Advisory No. 104, Series of 2020 which DOES NOT EXIST is Labor Advisory No. 14-A, Series of 2020. This Advisory is particularly written for Probationary Employees and specifically states that the ECQ up to the GCQ is not counted in the 6 months probationary period count of a probationary employee if unworked.
This is the exact Labor Advisory with red boxes, emphasis mine:
As emphasized repeatedly on the memo, this is only for probationary employees. For regular employees on floating period, this memo does not count.
8. But I Thought Putting People on Floating Status was the Same as “Forced Leave” written on the Flexible Work Arrangement, which is renewable every 6 months. Are they NOT the Same?
Labor Advisory No. 17, Series of 2020, Section 5 states that Wage adjustments can be renewed if voluntarily agreed to by the employee.
This is absolutely true.
However, Employees placed on Temporary Retrenchment/Floating Status is NOT the same as the Forced Leave that’s being talked about in the advisory.
Forced Leave is clearly defined by DOLE as follows — It is the use of leave credits if any for staff who goes on leave. This is different from Floating Status, which officially starts the day after the employee runs out of leave credits.
If you can see the previous versions of RKS Form 5, Temporary Retrenchment and Flexible Work Arrangement are clearly defined and separate:
So hope this clears this misunderstanding up.
Here’s the usual scenario — The company starts to float their employees from the start of ECQ last March 17. However, they never informed DOLE until they were reminded about their obligation to inform DOLE of any permanent or temporary lay-offs and flexible work arrangement last June 11, 2020. It was only then that they informed DOLE via submitting the RKS Form 5 online or via emailing the closest DOLE branch office. On the letter, they wrote that they are requesting to float their staff from June 1 to December 31, 2020.
When do they start the floating status:
a. March 17: When ECQ was announced and the work of the staff was suspended?
b. May 16: When it was MECQ and the LGU allowed the company to operate?
c. June 1: When the company actually decided to resume operations but still kept a few people on floating status?
d. June 12: When the company actually filed the RKS Form 5 to DOLE asking for permission to lay-off people from June 1 to December 31, 2020?
e. September 10: If you neglected to submit the RKS Form 5, and only after reading online that you decided to file the RKS Form 5 late (Better late than never), and inform your staff they are on floating status from September 10 to February 9.
The Correct Answer: Floating Status starts from the date the worker’s job was suspended. If you have been floating your staff from March 17 to present, the starting date of their floating status is on March 17.
10. How Do We Count 6 Months?
There’s two ways to count a 6th month notice — first is to count the actual number of days or to use 180 days. The Supreme Court has made it clear that for probationary status, 6 months is 180 days. So if we consider 180 days, the 180th day is September 12, 2020 (Next Saturday) if our forced leave started last March 17, 2020.
Source: Time and Date Calculator Many other readers would count 6 months from March 17 to September 16, 2020 (Wednesday).
You know me though… I would prefer to be conservative, especially when it comes to labor laws. So the safest calculation is September 12, 2020 as the deadline to place the staff who have been on leave since March 17 on floating status. Once you reach this point, you have to make a decision on what to do with your employees.
11. What do I Need to Do within the 6 Month Mark of Floating Status?
Employers have two valid and very legal choices:
a. Permanently retrench the employee (Option A) — In Sanoh Fulton Phils Inc. vs. Emmanuel Bernardo (GR 187214, August 14, 2013), the Supreme Court discussed the requirements for retrenchment to be valid, to wit:
“Retrenchment is reduction of personnel usually due to poor financial returns so as to cut down on costs of operations in terms of salaries and wages to prevent bankruptcy of the company. It is sometimes also referred to as down-sizing. Retrenchment is an authorized cause for termination of employment which the law accords an employer who is not making good in its operations in order to cut back on expenses for salaries and wages by laying off some employees. The purpose of retrenchment is to save a financially ailing business establishment from eventually collapsing.
b. Recall the person back to work (Option B)
12. What is the Proper Due Process of Retrenching the Employee?
Here are the steps:
- Inform DOLE AND the Employee in writing that you will be terminating his/her employment, and the last day of employment will be on the 30th day of the letter.
- Pay the Final Pay within the 30 days of her last day of employment (Labor Advisory No. 6, Series of 2020). Final pay consists of Unpaid Wages + Pro-rata 13th Month Pay + Unused Mandated Leaves + Separation Pay if any.
- Separation Pay is 1/2 Month Pay per Year of Service. A fraction of at least least six (6) months being considered as one (1) whole year. In short, that results to:
- 1 mo – 2 yrs 5 mos = 1 month pay
- 2 yrs 6 mos – 3 yrs 5 mos = 1.5 months pay
- 3 years 6 months – 4 years 5 months = 2 months pay
4 yrs 6 mos – 5 yrs 5 mos = 2.5 months pay
A gentle reminder when picking which employees to retrench — Always follow due process and do everything in good faith:
IMPORTANT: Retrenchment must be done with absolute thought and care. You cannot fire anyone just because you hate his guts. While Last-In-First-Out is commonly used, it is not the only way to evaluate who to keep and who to retrench. Make sure management has developed a Retrenchment Plan BEFORE firing the person. Never do it after the retrenchment when a staff complains to DOLE.
13. What is the Proper Process of Asking a Staff to Report?
Simply issue a Return to Work Order (RTWO) asking them to report on X Date and Time as they are not recalled back to work.
If they do not show up, you may want to gently remind them that this is a terminable offense following due process. Send the RTWO via the easy way (e.g., Couriers like JRS, LBC, Lalamove, Grab Delivery or Email) AND registered mail.
If they do not show up, please follow due process. So long as the company is following the proper health guidelines, you can compel the staff to report. All these excuses are NOT valid reasons for a staff to NOT REPORT BACK TO WORK.
- He’s angry at the boss for not receiving any ayuda from ECQ to present day.
- He’s already in the province and don’t want to take the trouble to return back to his workplace.
- There’s no convenient public transportation available to report to work day by day.
- He’s living with at-risk individuals and don’t want to expose them to COVID-19.
- His parents don’t want him to work in the fears of him getting sick. In short, “Takot ako sa buhay ko.”
- He does not think it’s worthwhile to work only 3x a week since the company is doing Flexible Work Arrangement.
- He does not want to physically report to the office and insists that he does WFH.
- He stubbornly just does not want to report to work.
- Any other reason as to why the staff refuses to return back to work.
Simply, if they don’t show up, this is a terminable offense following due process. Due process to remind everyone is following the Twin Notice Rule (Notice to Explain and Invitation to Admin Hearing if Any AND Notice of Termination). I discussed this thoroughly in my previous post, HR Talk: Employers of “Floating Employees Only Have One Week to Go:”
If you terminate them because you asked them to report and they did not show up AND followed the proper due process, there is nothing to fear. As this is a Just Cause for Termination, there is no need to pay Separation Pay. Just the final pay which is due them by law.
14. But I Don’t Have a Lot of Work to Give to the Staff if I ask them to Report?
The DOLE Bureau of Working Conditions have generously reminded us that there are multiple Flexible Work Arrangement that an employer can legally choose to preserve jobs and stay compliant. I wrote about them on my last post, HR Talk: Here are the Legal Flexible Work Arrangements Available to Employers for them to Preserve Jobs. These include the following:
Given the options which include asking a staff to report to work one, two or three days a week only and pay them accordingly just to save their jobs, what are we complaining about?
15. What is the Consequences of Not Respecting the 6-Month Notice Period?
Be careful of being found guilty of Constructive Dismissal. This is defined in G.R. No. 174208, Morales vs. Harbour Centre Port Terminal, G.R. No. 174208, January 25, 2012:
“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.”
If found guilty, the penalties as stated in Article 279 of the Labor Code include:
- Reinstatement without loss of seniority rights
- Separation pay of one month pay for every year of service (instead of just the 1/2 month pay per year of service)
- Full back wages, inclusive of allowances and other benefits of their monetary equivalent from the time compensation was withheld up to the time of reinstatement
16. What about Industries Not Allowed by the IATF to Operate?
So far, many businessmen in the following industries have complained that the IATF is still not allowing them to operate. These include:
- Kids entertainment facilities
- Massage parlors
- Provincial buses
- Movie theatres
- Gyms and Stadiums
- Concerts and events
Here’s the question — Are you sure it is truly the government who is asking the company to remain closed, or is company management themselves who insist on remaining close para hindi malugi? There is a big difference from the two especially when it comes in judging good faith and bad faith.
A positive thought is that if you feel that your company is close to not being compliant and there’s a risk that there may be a labor case against you, a very viable option is to just be fair to the person, retrench him following due process and pay the correct separation pay.
Do it as what Kidzania did to its hundreds of employees. Upon checking the commercial viability of staying closed indefinitely since kids are all required to remain at home, Kidzania management decided to simply close down Kidzania and let their people go.
There has nobody sadder than me and my daughter when Kidzania announced its closure. Kidzania had the best experiences and employees, and we would go there almost every weekend. I even wrote multiple articles on it.
But while it was a complete bummer to have Kidzania shut down, I understand that Kidzania is also trying to be compliant with the law and fair to its employees. Since they don’t know when the pandemic crisis will end, the best way is to just shut down, let the people go, pay them the correct separation pay and when situation changes, just rehire them again if ever the employees still want to join Kidzania again.
Yes, employers can still legally rehire those they retrenched before because of bad circumstances. If the person is good, hire him again. But at least you don’t leave the person hanging and that person can do whatever he wants in his life.
The choice is yours of course. All I am here is to just lay down the facts, share what I know and hope that you do the right thing for the company and the people.
Time is running short. Hope this post helps clear out a few things!
Have a good week ahead!