Legality of Placing an Employee on “Floating Status” After Sick Leave (Philippine Labor-Law Perspective)
1. What “Floating Status” Means in Philippine Law
| Point | Key Details |
|---|---|
| Statutory anchor | Article 301 of the Labor Code (formerly Art. 286) authorizes a “bona-fide suspension of business operations or undertaking” for up to six (6) months. During that period, employees may be placed on “off-detail,” “floating,” or “temporary off-assignment” status with no pay but without loss of employment. |
| Purpose | To allow an employer to weather a genuine lack of available work unrelated to the employee’s fault, without immediately terminating employees. Typical in security, janitorial, and project-based contracting firms when a client contract ends. |
| Employer’s obligations | (1) Act in good faith and prove the lack of work; (2) give the employee written notice stating the date the floating status starts and why it is necessary; (3) recall or reassign the employee within six months or serve the two-notice & hearing requirements for permanent separation (e.g., redundancy, closure). |
| After 6 months | If no work is available, the employment may be ended—but only through a valid authorized cause (e.g., redundancy, installation of labor-saving devices, closure) or through Art. 299 (disease), and with payment of statutory separation pay. Otherwise, non-recall is constructive dismissal. |
2. Sick Leave Under Philippine Law
No stand-alone statutory sick leave in the private sector, except the mandatory five-day Service Incentive Leave (SIL) under Art. 95 of the Labor Code (convertible to cash if unused) and SSS sickness benefit (R.A. 11199) which is a social-insurance cash allowance, not a wage.
Many companies grant voluntary sick-leave credits or extended medical leave under CBA or policy—once exhausted, the absence becomes leave without pay unless covered by SSS.
Dismissal due to disease (Art. 299, formerly 284). An employer may terminate an employee who is suffering from a disease and whose continued employment is prohibited by law or prejudicial to the employee’s or co-workers’ health. Requirements:
- Certification by a competent public health authority that the disease is incurable within six months even with proper medical treatment;
- Procedural due process under DOLE Department Order 147-15: two written notices and an opportunity to be heard;
- Separation pay of at least one-month salary or one-half-month salary per year of service, whichever is higher.
3. May an Employer Place an Employee on Floating Status Because of Sick Leave?
General rule – No. Floating status is a business-necessity remedy, not a disciplinary or medical measure. The employee’s illness itself does not create the “lack of available work” contemplated by Art. 301. If the employer genuinely needs the employee’s services but the employee is temporarily unable to work, the proper responses are:
- approval of paid or unpaid sick leave;
- filing for SSS sickness benefit; or
- for long-term or permanent incapacity, dismissal under Art. 299 with separation pay.
When floating status might still occur after sick leave. Scenario: The employee returns medically fit, but between the start of the sick leave and the return-to-work date the business lost a client or shut down an operating unit. The lack of work is real and not caused by the illness. In that case, placing the recovered employee on floating status can be valid if:
- The timing is not a pretext;
- The employer complies with the six-month rule and documentation requirements;
- All similarly situated employees (not only those who went on leave) are treated alike.
Red flags indicating illegality (Constructive Dismissal).
- Placing only the returning patient on floating status while co-workers remain at work;
- Absence of written notice or vague “no assignment” reason;
- Extending floating status beyond six months without recall or separation pay;
- Requiring the employee to resign in exchange for clearance;
- Failure to remit SSS sickness benefits or refusal to accept a medical clearance.
4. Jurisprudence Touchpoints
| Case | Principle Established |
|---|---|
| Sebitsu Security Services, Inc. v. NLRC & Ella (G.R. 150089, 15 Aug 2002) | Six-month floating status is lawful if founded on bona-fide lack of client contracts; beyond six months without valid cause = constructive dismissal with backwages. |
| Superlink Security Services Corp. v. De los Santos (G.R. 154994, 27 Aug 2004) | Employer must prove real business suspension; general “pending deployment” claims are insufficient. |
| Caridad Leus v. St. Scholastica’s College (G.R. 187226, 28 Jan 2015) | Dismissal due to illness under Art. 299 is valid only with proper medical certification and due process; otherwise, illegal dismissal despite employee’s ailment. |
| Philippine Long Distance Telephone Co. v. Pingol (G.R. 182622, 29 Aug 2012) | An indefinite forced leave or floating status imposed without basis is constructive dismissal. |
| Agabon v. NLRC (G.R. 158693, 17 Nov 2004) and Jaka Food Processing v. Pacot (G.R. 151378, 10 Mar 2005) | Even with valid authorized cause, failure to observe procedural due process results in nominal damages. |
5. Interaction Between Art. 301 (Floating) and Art. 299 (Disease)
| Aspect | Art. 301 – Floating | Art. 299 – Disease |
|---|---|---|
| Ground | Lack of business or operational requirements | Employee’s illness or disease |
| Pay During Period | No wage (unless company grants allowance) | Sick-leave pay/SSS benefit during treatment; none if exhausted |
| Maximum Duration | 6 months | None stated, but dismissal allowed only if incurable within 6 months |
| Separation Pay | Only if eventually terminated via redundancy/closure, etc. | Mandatory: 1 month or ½ month per year, whichever higher |
| Process | Written notice of floating; recall or separation after 6 mos. | Two-notice rule, medical certificate, opportunity to be heard |
Key takeaway: Using Art. 301 to sidestep the medical-termination safeguards of Art. 299 or to punish an employee for getting sick is unlawful.
6. Employer Compliance Checklist
Review medical certificates and determine whether the employee is now fit to work.
Assess business needs honestly. If there is real excess manpower, document the client-loss or business suspension.
Issue a formal notice placing the employee on floating status, specifying:
- Reason (e.g., loss of Project X account);
- Start date and target end date (≤6 months);
- Statement of recall priority;
- Option to use accrued leave credits or apply for SSS sickness benefit if still recuperating.
Recall in writing once an opening arises—floating status need not run the full six months.
If no work by the 6th month, decide and implement the appropriate authorized cause (redundancy, closure) or dismissal due to disease, with notices to DOLE and payment of separation pay.
Avoid discriminatory selection—use objective criteria such as seniority, efficiency, or “no client assignment” list applicable to all employees.
Keep records of notices, proof of lack of work, recall attempts, and correspondence with DOLE; these will defend against constructive-dismissal claims.
7. Remedies Available to Employees
File a complaint for illegal dismissal or constructive dismissal with the NLRC if:
- Floating status exceeded six months;
- There was no real lack of work;
- Procedural due process was absent; or
- The placement was clearly retaliatory for taking sick leave.
Money claims may include: backwages from the start of constructive dismissal, reinstatement (or separation pay in lieu), moral and exemplary damages, attorney’s fees, and in some cases nominal damages.
SSS & PhilHealth benefits remain claimable irrespective of the labor dispute.
8. Practical Tips for Both Parties
| For Employers | For Employees |
|---|---|
| Develop clear return-to-work protocols distinguishing medical incapacity from lack of work. | Secure medical clearance to establish readiness to work; keep copies. |
| Maintain an assignment roster visible to affected staff. | Respond in writing to floating notices; state willingness to accept any available assignment. |
| Rotate affected employees if only partial work suspension is needed. | Document all communications; a silence from employer after six months supports constructive dismissal claims. |
| Consider temporary alternative work arrangements (e.g., WFH, adjusted duties) before floating. | Explore internal transfer or redeployment opportunities proactively. |
9. Conclusion
Placing a worker on floating status is a narrowly tailored, time-bound measure to address business exigency, not a convenient substitute for medical leave administration. Sickness alone does not justify a floating status. When an employee returns from sick leave and is met with a “no-assignment” memo, the decisive legal question is whether there is genuine lack of available work and whether the employer strictly follows the safeguards of Article 301. Anything less runs afoul of Philippine labor standards and risks a finding of constructive dismissal—with all the attendant liabilities of illegal dismissal, separation pay, and damages.
Employers and employees alike should understand the separate legal regimes for business suspension and incapacity due to disease to ensure compliance, protect health, and preserve livelihoods.