1) What “Floating Status” Means in Philippine Labor Law

In Philippine practice, “floating status” usually refers to a temporary layoff or temporary suspension of work where the employee remains employed but is not given work (and is generally not paid) because of a legitimate business reason—most commonly:

Bona fide suspension of business operations (e.g., temporary closure, work stoppage, lack of materials, loss of clients), or
Fulfillment of a specific project/assignment with no immediate reassignment (often seen in security services, staffing, contracting setups).

The Labor Code recognizes a concept often cited as temporary layoff (now commonly referenced as Article 301 of the Labor Code, formerly Article 286):

A bona fide suspension of operations or business undertaking may allow temporary non-assignment, but it is not a permanent termination.
If the suspension lasts more than 6 months, the employee may treat it as constructive dismissal/termination unless recalled to work within that period (subject to the circumstances and case law principles).

Key idea: Floating status is not “leave.” It’s a management measure tied to a real suspension of work, and it comes with strict limits and good-faith requirements.

2) What “Leave Credits” Are (and Why the Source Matters)

“Leave credits” can come from law or from company policy/contract/CBA. The rules differ depending on the source:

A. Statutory (Required by Law)

Service Incentive Leave (SIL) – generally 5 days leave with pay per year after 1 year of service (with exemptions).
Maternity Leave (RA 11210) – event-based entitlement for childbirth/miscarriage/emergency termination of pregnancy.
Paternity Leave (RA 8187).
Solo Parent Leave (RA 8972, as amended).
Special Leave for Women (RA 9710, for qualifying gynecological surgery).
VAWC Leave (RA 9262).
Other special leaves (sector-specific rules may apply).

These leaves exist for specific purposes and/or minimum labor standards.

B. Company-Granted (Contractual/Policy/CBA)

Vacation Leave (VL), Sick Leave (SL), Emergency Leave, birthday leave, etc. These are typically governed by the employment contract, handbook, CBA, or established practice.

Why it matters: An employer’s ability to schedule, require, or convert leave depends heavily on whether the leave is statutory or purely contractual—and what the governing policy says.

3) The Core Question: Can Employers Charge Your Leave Credits Without Your Consent During Floating Status?

The practical legal answer:

Sometimes yes, sometimes no—depending on the kind of leave, the company policy/CBA, and how the employer implements it.

But there are firm boundaries:

Rule 1: An employer cannot “use” leave credits as a bookkeeping trick.

If your leave is deducted, it should correspond to what leave legally is: time off with pay (for paid leave types).

If the employer deducts leave credits but you receive no pay, that is highly problematic: it defeats the nature of paid leave and may support money claims (restoration of credits and/or payment).

Rule 2: “Floating status” is not automatically the same as “forced leave.”

Floating status is a temporary layoff/suspension of work; forced leave is a leave scheduling decision. An employer may try to treat the downtime as leave so employees still receive pay, but whether the employer can do that without consent depends on authority from:

A clear company policy/handbook,
A CBA provision, or
A valid management prerogative exercise that is reasonable, communicated, and in good faith.

Rule 3: Management prerogative has limits.

Employers in the Philippines generally have management prerogative to regulate operations, including work scheduling and, to an extent, leave scheduling—but it must be:

In good faith,
Not arbitrary or oppressive,
Not contrary to law, and
Not in violation of contract/CBA or established company practice.

So, unilateral leave charging is more defensible when:

The policy expressly allows it (e.g., “During temporary shutdowns, employees shall first exhaust available VL/SIL”), and
Employees are properly informed and paid accordingly.

It is more vulnerable to challenge when:

There is no policy basis,
It is imposed selectively or punitively,
It effectively causes diminution of benefits, or
It is used to mask an improper/indefinite floating status.

4) Statutory Leave vs. Floating Status: What Can and Can’t Be Charged

A. Service Incentive Leave (SIL): Can it be required and charged?

SIL is a statutory minimum of 5 paid leave days (for covered employees). In practice:

Employers commonly allow employees to schedule SIL, but employers may also control timing for operational reasons, provided it’s reasonable.
During a temporary work stoppage, an employer may attempt to apply SIL so the employee receives pay for up to 5 days.

However:

SIL should not be charged in a way that violates the intent of the law or the employer’s own implementing rules.
If the employer forces SIL during floating status without clear policy and without reasonable notice/consultation, employees may argue it is an unfair depletion of a statutory benefit—especially if SIL is normally convertible to cash under company practice.

Practical takeaway: Charging SIL during a short temporary stoppage is commonly done, but it should be implemented transparently, with pay, and consistently.

B. Maternity, Paternity, Solo Parent, VAWC, Special Leave for Women: Generally not chargeable to cover floating status

These are purpose-specific statutory leaves. They are not “general leave credits” to be used as management sees fit.

It is generally improper to “convert” downtime into maternity/paternity/VAWC leave, etc., unless the legal conditions for those leaves exist.

Example: An employee on floating status cannot be told, “We’ll deduct your solo parent leave because you’re not reporting anyway.” That’s not what the law intends those leaves for.

C. Vacation Leave / Sick Leave (Company-Granted): Depends heavily on the policy/CBA

Many employers treat VL/SL as “credits” that accrue and can be scheduled. In that scenario:

If the handbook/CBA provides that the company may schedule a company-wide mandatory leave during closures (or that employees must exhaust VL first), the employer has a stronger footing.
If there is no written policy, unilateral charging is more contestable—especially if it contradicts past practice (e.g., the company previously placed staff on unpaid temporary layoff without touching credits, and now suddenly deducts them).

5) The Consent Issue: Is Employee Consent Always Required?

Consent is not always required to schedule leave, but…

In many workplaces, leave is “applied for,” giving the impression that consent is always required. Legally, however:

Employers can set rules on leave scheduling (e.g., vacation shutdowns, mandatory leave windows), as part of management prerogative—if supported by policy/CBA and done fairly.

That said, charging leave during floating status can be a flashpoint because it shifts a temporary layoff into a paid-benefit depletion. So even if explicit consent is not strictly required in all settings, lack of consultation and policy basis raises risk.

Stronger cases for employees (where lack of consent matters more)

Employees tend to have stronger objections where:

The employer retroactively charges leave (e.g., “Last month you were floating; we’re now deducting your VL”).
The employer charges leave but does not pay.
The employer forces leave beyond available credits and later treats “negative leave” as a future wage deduction without written authorization.
The employer’s action contradicts the handbook/CBA or longstanding practice (diminution of benefits).

6) Floating Status vs. “No Work, No Pay” vs. Forced Leave

No Work, No Pay

The general principle is: no work = no wages, unless there is a law/contract providing otherwise (e.g., paid leave, holiday pay in applicable situations, certain CBA provisions).

Forced Leave

Forced leave typically means the employer directs the employee to go on leave and uses leave credits, so the employee is still paid using accrued paid leave.

Floating Status

Floating status is closer to temporary layoff: there is no work to assign. In many industries, pay stops unless:

There’s a company policy/CBA guaranteeing some pay, or
The employee uses paid leave by agreement or policy.

Important: Floating status is subject to the 6-month limit concept. Forced leave doesn’t “reset” that clock if the reality is still a business suspension with no real work assignment—though paid periods may complicate the factual analysis.

7) The 6-Month Rule: Why Leave Charging Can Be a Red Flag

If an employer places an employee on floating status approaching or beyond six months, issues arise:

If not recalled within the allowable period, it may be treated as termination/constructive dismissal, exposing the employer to potential liabilities (reinstatement, backwages, separation pay depending on findings).
Some employers may attempt to “paper over” extended non-assignment by continuously labeling it as “leave,” “mandatory vacation,” or “rotation,” even when there’s no genuine work.

Reality test: If there’s truly no work and the employee is indefinitely sidelined, calling it “leave” may not cure the legal defects.

8) Diminution of Benefits and Illegal Deductions: Where Claims Often Land

A. Diminution of benefits

If employees have an established benefit/practice (e.g., leave accrual/encashment rules, discretionary scheduling), unilateral depletion may be argued as diminution, especially when:

The company previously allowed monetization/encashment and the forced leave removes that value, or
The policy is changed unilaterally to the employees’ disadvantage without lawful basis.

B. Wage deduction issues (negative leave)

A common risky practice is “advanced leave” or “negative leave balance” to keep employees paid during downtime, then later deduct amounts from future wages. Wage deductions are regulated and generally require legal basis/authorization.

If an employer forces negative leave and later offsets it against wages without proper written authorization or lawful basis, this can create exposure as an unlawful deduction or underpayment claim.

9) Special Contexts: Security Guards, Staffing, Project-Based, and Client Pull-Outs

Floating status is especially common in:

Security agencies (guards unposted due to loss of client; awaiting reassignment),
Contracting/subcontracting (end of assignment; awaiting next deployment),
Project-based work (gap between projects).

In these contexts:

Employers often maintain that the employee remains on the roster awaiting posting.
Employees often challenge prolonged non-posting as constructive dismissal, especially if it exceeds lawful limits or is done in bad faith.

Leave charging here is sensitive because:

It can appear like the employer is making the employee “pay for the gap” through their earned benefits.

10) What Proper Implementation Looks Like (Employer Compliance Lens)

A more legally defensible approach for employers generally includes:

Written notice explaining:
- The business reason (temporary closure/suspension, lack of work, client loss, etc.),
- The expected duration (or best estimate),
- The status of employment (still employed; temporary measure),
- The pay implications (no work, no pay unless leave is used).
Clear basis for leave usage, such as:
- Handbook policy,
- CBA clause,
- Written agreement with employee representatives, or
- Individual employee election (opt-in).
Employee choice when feasible:
- Use available paid leave to receive pay, or
- Preserve leave credits and go on unpaid temporary layoff.
Correct payroll treatment:
- If leave credits are deducted, pay must be released consistent with the leave type.
Consistency and non-discrimination:
- Uniform application prevents claims of arbitrariness.
Respect statutory leaves:
- Do not re-purpose maternity/paternity/VAWC/solo parent leaves.

11) What Employees Should Check (Employee Rights Lens)

If you suspect your leave credits were used without your consent during floating status, check:

A. Your documents

Employment contract
Employee handbook/company policies
CBA (if unionized)
Memos/notices on floating status or temporary shutdown
Payslips and leave ledger

B. The key questions

Was there a written notice placing you on floating status?
Was there a written basis for charging leave credits? (policy/CBA)
Were you paid for the days deducted as paid leave?
Was the charging retroactive?
Are they forcing “negative leave” that will be deducted later?
How long has the floating status lasted? (watch the 6-month threshold)

C. Common “problem patterns”

Leave credits reduced but no corresponding pay
Leave charged even after credits are exhausted (creating negative balances)
Selective charging (some employees not charged)
Floating status extended repeatedly without recall, while the company keeps “rotating” labels

12) Remedies and Forums (What Typically Happens in Practice)

Employees usually pursue concerns in escalating steps:

Internal HR clarification (request a copy of leave ledger and the policy basis).
Written dispute (ask to correct leave records, restore credits, or pay unpaid amounts).
DOLE assistance mechanisms for labor standards money claims (depending on the nature/amount and current procedural rules).
NLRC case if the dispute involves illegal dismissal/constructive dismissal or broader claims, especially if floating status exceeded lawful limits or was used oppressively.

Possible outcomes sought:

Restoration of leave credits improperly deducted, and/or
Payment of wages corresponding to leave days charged, and/or
Damages/separation pay/reinstatement if the overall situation amounts to constructive dismissal.

13) Frequently Asked Questions

“My employer says it’s a ‘temporary shutdown’ so they can auto-deduct my leave. Is that always valid?”

Not automatically. It’s stronger if there is a clear written policy/CBA and proper notice, and if paid leave is actually paid. If it’s done without basis, inconsistently, or without pay, it’s vulnerable.

“They deducted my leave credits but paid me. Do I still have a complaint?”

Possibly—especially if:

There was no policy basis and you were not properly notified,
The deduction violates established practice (diminution), or
The forced leave is being used to stretch an improper floating status.

But disputes where the employee was paid may become more fact-specific and policy-driven.

“They used my sick leave even though I wasn’t sick.”

Sick leave is usually company-granted (not generally mandated beyond SIL), and its use depends on policy. Using SL as a generic downtime bucket without policy support can be challenged as a policy violation or unfair practice.

“Can they require me to exhaust leave credits before floating status becomes unpaid?”

Some employers adopt “leave exhaustion first” rules. This is more defensible when stated in a handbook/CBA and applied fairly. Without such basis, the employee can argue that forced exhaustion is improper.

“Does using leave credits stop the 6-month floating status limit?”

Not necessarily. If the reality is continued non-assignment due to suspended operations, calling it “leave” does not automatically eliminate legal exposure if the employee is effectively sidelined beyond allowable limits.

14) Bottom Line

In the Philippine context, an employer may be able to charge certain paid leave credits during a period of no work without individual employee consent when it is supported by a clear company policy or CBA, implemented in good faith, with proper notice, and with correct payment for deducted leave days.

However, unilateral use of leave credits during floating status becomes legally risky—and often actionable—when it is done without policy basis, without pay, retroactively, selectively, by forcing negative leave leading to wage deductions, by misusing purpose-specific statutory leaves, or as a tactic to sustain an improperly prolonged floating status beyond lawful limits.