Employee “Floating Status” After Sick Leave: Legality and Limits Under Philippine Labor Law

(Updated as of 07 July 2025. For general information only; not a substitute for legal advice.)

1. Why the Question Arises

Workers who go on extended sick leave—whether through paid sick‐leave credits, SSS sickness benefit (min. 4 consecutive days of incapacity, §14 SSS Law), or a company-agreed leave of absence—sometimes find, upon medical clearance to return, that they are “placed on floating status.” Employers justify the move on operational grounds (no available post, suspended client contract, etc.). Employees, however, fear constructive dismissal. The legal boundaries turn on three pillars:

Pillar	Main Source	Key Idea
Sick- or medical-leave framework	Labor Code Art. 95 (Service Incentive Leave), company policy, CBA, SSS Law	Leave is time-bound; once exhausted, the employment tie remains, but wage entitlement is suspended.
Floating / temporary off-detail	Labor Code Art. 301 (old 286)	Employer may suspend work (a) in good faith; (b) for legitimate business reason; (c) not > 6 months.
Separation for disease	Labor Code Art. 299 (old 284)	If an employee’s illness is incurable within 6 months & continued employment is prejudicial, employer may terminate with separation pay after DOH-certified findings and twin notices.

Understanding how these overlap is crucial.

2. Sick Leave & Medical Absence in the Philippines

Minimum statutory leave
- Every rank-and-file employee who has rendered ≥ 1 year of service is entitled to 5 days Service Incentive Leave (SIL) with pay (Art. 95). The Code does not distinguish vacation and sick; usage is management-prerogative or policy-driven.
SSS sickness benefit
- Employers advance daily sickness allowance once an employee is incapacitated ≥ 4 days, later reimbursed by SSS (Sec. 14 SSS Law, as amended). The benefit may extend up to 120 days per calendar year, but beyond 240 days the illness may ripen into permanent total disability.
Free‐enterprise leave schemes
- Many CBAs and handbooks grant additional paid sick leave (10-30 days common). Exhaustion of those credits merely suspends the wage component; the employment bond remains.

3. What Exactly Is “Floating Status”?

Art. 301 allows an employer to temporarily suspend business operations or place employees on “off-detail” for not more than six (6) months, without severing the employment relationship, provided it is bona fide and not intended to defeat workers’ rights.

Typical triggers:

Security / janitorial agencies — loss or non-renewal of a client.
Manufacturing / service firms — machine breakdown, raw-material shortage, remodeling.
Economic slow-down — temporary lack of orders.

Six-Month Rule. Failure to recall or permanently terminate (with authorized-cause pay) after 6 months constitutes constructive dismissal (e.g., Sebro Commercial Security Agency v. NLRC, G.R. 132271, 21 Jan 1999).

Procedural expectations (though Art. 301 itself is silent):

Written notice to affected workers stating cause, effectivity, duration.
Consultation or union notice if CBA coverage exists.
Notice to DOLE is required only if the suspension later graduates into an authorized-cause dismissal (Art. 298/299 on retrenchment, closure, disease).

Special sector rules:

Security agencies — DOLE Dept. Order 14-01 obliges redeployment or, if impossible, payment of financial assistance after 6 months.
Construction & project employment — suspension counts against the project duration; extension beyond six months implies end-of-project or regularization issues.

4. Interplay With Sick-Leave Returnees

Scenario A – Fully Medically Fit, but No Available Work

Employer may place the employee on floating only if the same operational exigency exists for other similarly-situated staff.
Selectively floating a recently-ill worker alone risks a finding of discriminatory or retaliatory act → constructive dismissal.

Scenario B – Partially Fit / Needs Light Duty

Employer must first explore reasonable accommodation under:
- Republic Act 11058 (OSH Law) requiring a safety/health program;
- RA 7277 (Magna Carta for Persons with Disability) if the illness results in permanent impairment;
- Anti-Age Discrimination in Employment Act and related policies.
If no light-duty slot exists, the employer may use Art. 301 temporarily while searching for one, but must recall within 6 months or proceed under Art. 299 (termination due to disease with medical findings and separation pay).

Scenario C – Prognosis: Not Recoverable Within 6 Months

Art. 299 governs; placing the worker on floating would be a circumvention.
Requirements:
1. Certification by a competent public health authority (normally DOH retained physicians) that the disease is incurable within 6 months or prejudicial to health of co-workers;
2. Two written notices (notice to explain & notice of termination);
3. Separation pay: half-month salary per year of service (minimum one month).

5. Landmark Jurisprudence

Case	G.R. No. / Date	Doctrine Relevant to Post-Sick Leave Floating
Sebro Commercial Security Agency v. NLRC	132271 • 21 Jan 1999	Non-deployment beyond 6 months = illegal dismissal; six-month limit is mandatory, not merely directory.
Valdez v. NLRC (Bureau of Customs Security Guard)	116140 • 23 Feb 2000	Failure to recall absent valid business reason shows bad faith; backwages due.
Maunlad Transport, Inc. v. Manliclic	211646 • 20 Jan 2021	Driver returned after 3-month medical leave; company kept him floating despite available routes → constructive dismissal.
International Hardware, Inc. v. NLRC	80770 • 10 Aug 1990	Temporary suspension allowed where five-month store renovation prevented work; employee reinstated after. Shows Art. 301 flexibility if time-bound.
Fuji Television Network v. Espiritu	204944 • 25 June 2014	Art. 299 separation for disease requires DOH certification; otherwise dismissal invalid.

(Older jurisprudence like College of the Holy Spirit v. NLRC and Malaya Lighterage re-affirm the six-month ceiling.)

6. Employer “Do’s and Don’ts” Checklist

Action	Compliance Tip
Assess actual work lack	Floating must hinge on genuine business necessity. Document client cancellations, production stoppage, etc.
Notify in writing	State reason, start date, and definite recall/expiry date. Silence on duration suggests bad faith.
Observe rank-and-file equality	Cannot single out a recently-sick worker if peers are retained.
Count the calendar	Day 1 = date of effectivity; by Day 181 recall, reassign, or terminate with pay + due process.
Keep SSS/ECC contributions current	Even on no-work-no-pay, remit statutory contributions; otherwise bar SSS benefit when needed.
Plan medical accommodation	Keep OH records; explore light duty before floating.

7. Remedies & Claims for Employees

Constructive dismissal complaint (Art. 294) — if floating is unjustified or exceeds 6 months. Reliefs: reinstatement with backwages, or separation pay in lieu.
Monetary claims — back salaries, holiday pay, SIL conversion, proportionate 13th month.
SSS/ECC benefit enforcement — if sickness recurs or disability lingers.
Disability or discrimination suit — under RA 7277 / OSH Law for failure to accommodate.

8. Practical Illustrations

Timeline	Employer Move	Legality
Guard goes on SSS leave 01 Jan–15 Feb; agency loses client 10 Feb; guard cleared 20 Feb; agency floats him with others until 15 Aug (6 mos)	Valid, prima facie — same operational lack applies to all guards. Must recall or dismiss with pay by 16 Aug.
Clerk cleared to return 01 Mar; company floats only her citing “budget,” co-workers retained	Illegal — discriminatory; constructive dismissal.
Driver suffers stroke, prognosis > 6 mos. Employer floats 9 mos. then ends employment without DOH certificate	Illegal — should have used Art. 299 with medical certification and paid separation.

9. Key Take-Aways

Floating status is lawful but tightly time-boxed; beyond 6 months it transforms into dismissal.
Compelling a recovered employee into floating status demands the same bona fide operational basis applicable to co-workers; otherwise it is retaliatory.
If the worker’s illness renders continued work unsafe beyond 6 months, employer must follow Art. 299 termination-for-disease procedure—not floating.
Written notice, objective documentation, and equal treatment are the employer’s best defenses; prompt complaint, medical evidence, and diary of communications are the employee’s.

10. Conclusion

The intersection of medical leave and floating status is delicate: the former protects a worker’s health and income, the latter shields an employer’s business during downturns. Philippine labor law allows both, but neither may be used to evade the other. A worker ready and certified fit for duty cannot be left in limbo unless the 6-month Art. 301 window is strictly observed and underpinned by genuine lack of work; otherwise, the law treats the act as constructive dismissal with full monetary consequences.

Prepared by an AI language model for educational purposes; always consult a licensed Philippine labor-law practitioner for specific cases.