HR Talk: 16 Most Common Questions Answered About Employees on Floating Status

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: 

  1. What is Floating Status?

  2. What is the Legal Basis for Floating Status?

  3. How Much are Floating Status Employees Paid? 

  4. What are the DOLE Paper Requirements for Putting People in Floating Status?

  5. How Long Can Floating Status Last?

  6. Can Employers Extend the 6 Months Floating Status because of COVID-19?

  7. 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?

  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?

  9. What Date Does I Use to Count the Start of Floating Status?

  10. How Do We Count 6 Months?

  11. What do I Need to Do within the 6 Month Mark of Floating Status?

  12. What is the Proper Due Process of Retrenching the Employee?

  13. What is the Proper Process of Asking a Staff to Report?

  14. But I Don’t Have a Lot of Work to Give to the Staff if I ask them to Report?

  15. What is the Consequences of Not Respecting the 6-Month Max Period for Floating Status?

  16. What about the Industries that are Not Allowed by IATF to Operate?

Let’s go!

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

2. What is the Legal Basis for Floating Status?

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).

See attached RKS Form 5 that was issued back then to see that DOLE requires 30 days notice before any displacement or adoption of any flexible work arrangement.

   

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?

The law is once again very clear — 6 months maximum from the start of the employer suspending the work of the employee (Article 301 of the Labor Code).

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:

Sources:
G.R. No. 222748 Airborne Maintenance and Allied Services vs. Arnulfo M. Egos, April 3, 2019
G.R. No. 147002. PT & T Corp. v. National Labor Relations Commission, April 15, 2005

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.

9. What Date Does I Use to Count the Start of Floating Status?

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:

  1. 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.
  2. 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. 
  3. 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.

  1. He’s angry at the boss for not receiving any ayuda from ECQ to present day. 
  2. He’s already in the province and don’t want to take the trouble to return back to his workplace.
  3. There’s no convenient public transportation available to report to work day by day.
  4. He’s living with at-risk individuals and don’t want to expose them to COVID-19.
  5. His parents don’t want him to work in the fears of him getting sick. In short, “Takot ako sa buhay ko.”
  6. He does not think it’s worthwhile to work only 3x a week since the company is doing Flexible Work Arrangement.
  7. He does not want to physically report to the office and insists that he does WFH.
  8. He stubbornly just does not want to report to work. 
  9. 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:

Source: Labor Advisory No. 17, Series of 2020 

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?




IMPORTANT: Please ensure that you have informed DOLE and secured the employees’ consent before instituting a Flexible Work Arrangement.

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. 

Another Weekend, Another Work Day @ Kidzania Manila

Highly Recommended: Kidzania —- Where Kid’s Ambitious Dreams Come True!

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! 

 

 

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25 thoughts on “HR Talk: 16 Most Common Questions Answered About Employees on Floating Status

  1. Hi Tina,

    If the implementation of Forced Leave was questioned due to alleged bad faith, how does HR defend the decision? Upper management decided and HR was just the bearer of bad news. Also, if the employee was targeted (only person placed on Forced Leave), is it constructive dismissal (although he is technically not dismissed yet)?

    1. It’s management prerogative to float a staff if needed. The only thing is complaining before the 6th month is premature and unfair to the employer. Only do it when done in bad faith.

      1. Thanks, Tina. Can we still put people on rotation/ reduced hours if we’ve already maximized the 6 months on Forced Leave? How is 6 months counted, cumulative or just one time per year, etc?

  2. Hi Tina! Great and comprehensive info once again! Thank you so much for sharing. Got questions. 1) If leave credits of employees have been given and maximized until April 15, should the 6 month period be counted instead from April 16 and not March 17? 2) Re your point on #16, what if it’s really true that those industries mentioned above were just allowed to reopen only recently (last Sept 1) and worse, only at 30% venue capacity, shouldn’t that be a valid excuse to not re-hire everyone back just yet so that it can recoup some of its losses and restart the business. The company can’t afford to pay sep pay either because it’s been closed since March 17 and has just re-opened only recently. Company’s only option is to do flexible work arrangements like allow employees to work once or 2x a week until operations, clientele base and sales get normalized. Would that be okay? Thank you Tina. Always a God-sent! Take care.

  3. Hi Tina

    This is very informative.

    May I ask if constructive dismissal is applicable to me or is it a bona fide suspension. Our company is a manufacturing of essential products thus we are really not affected by the pandemic. I was on a work from home since then. However, last August. My boss called me to tell me that for now, I am not hired by the company. With no pay also. No prior notice were given to me as well. Then all my mails and access we’re terminated.

    Thanks in advance 🙂

  4. Hi Ms. Tina!

    All of our employees have been on floating status (not called back to work) since March 16. By June, 80% of our employees were called back to work but on rotation. We currently have 2 employees who we have not called back since March. Both have yet to fully exhaust their leave credits. When do we start counting when their floating status commenced?

  5. Hi. question, dole advised for the 30 days notice to them and to the ee within the filling of floating status. for ex. march 17 ecq, lets say nkapag file sila that day then april 17 palang ba ang start ng 6 mos?

    1. Does not matter which day you filed. The important is suspension of work started March 17. This is the first day of floating status.

  6. Hello, Ms. Tina!

    On May 15, our company imposed the “streamlined period” where there are non-essential & essential employees. I was one of the non-essential employees (no pay since then). According to the company pres, the streamlined period would only be until end of July 2020. But, come August 3, we have not received any formal memo on being recalled to work. August 11, the company president sent me a letter informing me that the dept I belonged to will be absorbed by a newly formed office of legal affairs with an assisting hr consultant (i’m an hr btw) which deems my position/services redundant. However, she said, that the BOARD has not decided on my employment pending resolution to some issues in the HR dept. In that same letter, the company president said that I would be called back by August 19 but as of date, they have not called me back for anything.

    Am I on “floating status”? They already have an assisting volunteer hr consultant which means that if ever they called me back I would be not reinstated in my former position, right? In my case, can I push for constructive dismissal?

    Hoping to hear from you!!! Thank you!!!

    1. Yes, you’re on floating status.

      You MAY file for constructive dismissal, but I suggest you won’t first. Remind your employer of the 6 month max rule and if they can’t ask you to report back to work, to just pay you the correct separation pay.

      Madaling magreklamo pero if you read what I wrote, hindi din madaling manalo. Mahabang process din. So just make sure there’s real abuse. Talk to your HR and ask you to report. Huwag yung antay ng antay lang ng tawag.

    2. Hi Ms Tina,

      May I ask for your advice:

      My HR consultant said that the floating status is when you released the document to dole. In our case, we reported the floating status on June. We resumed operations for flexible wf on end of May. My HR consultant said that she has spoken to the dole officer stating this rule and thus floating status can be decided until December. I’m not sure who to follow anymore.

  7. Hi Ms. Tina,

    We would like to seek your help and advise in our case below.

    1. Our company is fully aware of our floating status and until today they don’t have yet the final decision
    2. We haven’t received any notice from our company regarding work resumption or retrenchment letter, HR just saying no decision yet from the Management.
    3. Not all employees are aware of this 6 months status, should the HR inform the employee about it? or
    4. Should we wait for the Management’s final decision?
    5. Is it still legal and no sanction will be given to the company if they will inform the employee on the day of his/her retrenchment?

    Hoping for your response on this.

  8. Hi Ms. TINA A BIG INSPIRATION! VERY INFORMATIVE PO

    I would appreciate if you could help my husband
    He was not given any work schedules since March 17. Almost all the drivers, except him, were working on a regular schedules since they are in the food industry. He’s bern calling the Manager and the HR dept but were not given any updates. He recieved a call last July from the manager asking if he is still interested to work and he said YES. but then after that , no updates.
    Last Aug 28 The HR dept held a zoom meeting with 9 other employees announcing notice of lay off effective Aug.28. My husband did not sign yet the notice and made a letter of inquiry to the HR regarding start date or period of lay off. This would mean ANOTHER six months of waiting from Aug 28 as indicated in the notice, but as up to this date, we received no reply.

    As an employee, is there any rule or labor issue, if one refuses to sign yet the notice of lay off?

    Does the rule of Seniority applies on lay off issue? My husband has been connected with the company for 7 years and the senior driver among all the drivers who are working regularly since March. He is physically fit and even had rapid test done by local govt.
    Based from your article, the six month period alredy expired… what will you advise then since the company want it to start Aug.28? Is this legal?

    THANK YOU IN ADVANCE! Please keep writing to help others enlightened into relevant issues.
    Please stay safe and hope to read more and more of your articles.

    1. Talk nicely to the company. While you’re ok to wait, work suspension actually started 6 months ago last March 17. Hence, it’s now 6 months from Sept 16.

      Can they recall your husband to work or just pay him the correct separation pay which is 1/2 month salary per year of service? If so, sep pay is 3.5 months of pay. If they can’t pay, simply ask your husband to report back to work.

  9. Thank you for your immediate response! Appreciated po. Just in case po that the company insist that lay off period starts aug. 28, can we say that it is still acceptable? Illegal?
    Say company decides to retrench his employment, can he refuse to sign notice based on FILO “First In, Last out? Again po, he is the most senior among all the drivers. And all other drivers are working regularly since March.

    Thank you again!

    1. Why would it be illegal? Employee can refuse to sign but as mentioned earlier, company need only a witness to say worker was offered the letter but refused to sign or receive. This technicality is then irrelevant.

      The question is, will the company pay the correct separation pay?

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