Employee Rights During “Floating Status” After Account Closure (Philippines)

This guide explains what “floating status” (a.k.a. temporary lay-off or off-detail) means in the Philippine setting—especially when a client account closes (common in security agencies, BPOs, facilities management, merchandising, logistics contractors). It’s general information, not legal advice.

1) What “floating status” is—and when it’s allowed

Legal basis. The Labor Code recognizes a bona fide suspension of business operations where employment is not deemed terminated for up to six (6) months (Art. 301 [formerly 286]). Employers use this when a client pulls out and there’s no immediate assignment.
Who uses it. Frequently invoked by contractors (e.g., security agencies) when a client ends a service contract, or by companies pausing a unit/project.
Key limit. It’s temporary. The employer must either recall/redeploy you within 6 months or formally terminate on an authorized ground (with pay/notice, if required). Keeping someone “floating” beyond 6 months is generally treated as constructive dismissal.

2) Pay and benefits while on floating status

Wages. “No work, no pay” applies during a valid suspension, unless a CBA, company policy, or individual contract grants allowances or retainer pay.
13th-month pay. Still due for the year, pro-rated based only on basic pay actually earned that calendar year (months with zero pay contribute zero).
Leave credits. Existing unused leave credits remain; accrual during months with no work depends on company policy/CBA (law requires at least 5-day Service Incentive Leave per 12 months of service, but accrual mechanics vary—many compute on actual days worked).
Government contributions. SSS/PhilHealth/Pag-IBIG remittances are based on actual compensation; with no pay, deductions usually pause. (Coverage rules are agency-specific; you keep your membership. Employees normally shouldn’t switch to “voluntary” while still employed—ask the agency if you need continuous coverage options.)
HMO and non-wage perks. Unless mandated by contract/CBA, these can be paused; check your policy.

3) Your status, tenure, and redeployment rights

Still employed. You remain an employee with tenure intact during the 6-month suspension.
Redeployment. The employer should exercise good faith efforts to reassign you to a substantially equivalent post (pay, rank, security of tenure).
- If the offer is reasonable (e.g., similar pay/role, standard site/shift changes), refusing it can risk disciplinary action.
- If the offer materially degrades your pay/rank without valid business reason, you may question it as constructive dismissal.
Distance/shift changes. Transfers must be reasonable and not designed to force resignation. Hardship (e.g., prohibitively distant site) is a valid consideration—document why it’s unreasonable.

4) The 6-month deadline: what must happen

By the end of month 6 from the start of floating/off-detail, one of these should occur:

Recall/Return to work, same or substantially equivalent role; or
Permanent termination on an authorized cause, with 30-day prior written notice to you and DOLE, and separation pay if applicable (see next section).

If neither happens and you remain sidelined, that typically amounts to constructive/illegal dismissal.

5) If redeployment fails: authorized causes & separation pay

When a client account closes but the employer’s business continues, they can’t simply claim “closure of business.” They must choose an appropriate authorized cause and follow due process:

Redundancy (position no longer needed) or *installation of labor-saving devices: Separation pay: 1 month pay for every year of service (a fraction ≥ 6 months counts as a year). Notices: 30 days to employee and DOLE.
Retrenchment to prevent losses (financial reverses genuinely proven) or closure/cessation not due to serious losses: Separation pay: ½ month pay for every year of service (≥ 6-month fraction = 1 year) or 1 month pay, whichever is higher, depending on policy/precedent used by the employer. Notices: 30 days to employee and DOLE.
Closure due to serious business losses (and proven): No separation pay required, but the burden to prove serious losses is on the employer; notices still required.

Important: The end of a client contract is not an automatic authorized cause to terminate you without separation pay. Contractors are expected to reassign. Failure to do so within 6 months generally triggers liability.

6) Distinguish from preventive suspension

Preventive suspension (disciplinary, pending investigation) is different: limited to 30 days, with specific rules. Don’t let a disciplinary preventive suspension be mislabeled as “floating status.”

7) Final pay, COE, and records when termination happens

Final pay timeline. As a practical rule in DOLE advisories, final pay (including separation pay, pro-rated 13th month, encashment of unused leaves per policy, and any last wage) is typically released within 30 calendar days from separation, unless a more favorable company/CBA rule applies.
Certificate of Employment (COE). You’re entitled to a COE upon request stating dates and last position.
Clearance. Employers may process clearance, but it shouldn’t be used to unduly delay lawful payouts.

8) Government benefits you might access (once separation is final)

SSS Unemployment Benefit. If you’re involuntarily separated due to authorized causes (e.g., redundancy, retrenchment, closure), you may claim unemployment insurance (file within one year from separation; benefit amount/duration are set by SSS rules). Note: While merely on floating status (not yet separated), you generally cannot claim this yet.
Other benefits. Statutory maternity/solo parent benefits follow their own laws; eligibility is not forfeited by a lawful temporary lay-off, but the paying party/mechanism (SSS vs. employer top-ups) depends on your employment status and company exemptions.

9) If you suspect abuse or “indefinite” floating

Watch the dates. Keep your off-detail memo or messages; calendar the 6-month mark.
Ask for updates in writing. Request redeployment status before month 6.
SEnA (DOLE). Start with Single-Entry Approach (conciliation-mediation) for quick resolution.
NLRC case. For illegal dismissal, you can file a complaint.
- Prescriptive periods: Generally 4 years for illegal dismissal actions; 3 years for purely money claims (unpaid wages/benefits). Filing sooner is better.
Evidence helps. Keep: assignment history, notices, payroll records, chats/emails about redeployment, proof of client account closure, and any job offers you received/refused (with reasons).

10) Special notes for common setups

Security agencies / manpower contractors. “Off-detail” is recognized, but the 6-month cap applies. Agencies are expected to reassign you; mere client pull-out is not a just cause to terminate without benefits.
Labor-only contracting risk. If your “contractor” is a labor-only contractor, the principal (client) may be deemed your employer. That can change who owes separation pay or even lead to regularization claims against the principal. (This is fact-specific—seek advice.)
Probationary employees. They may also be placed on floating status. The 6-month floating cap still applies, but rules on probation completion/extension are nuanced; employers must avoid using floating to dodge regularization in bad faith.

11) What employers should do (to stay compliant)

Use floating status in good faith and only when genuinely necessary.
Document the start date and reason; keep employees informed.
Exert real efforts to reassign to a substantially equivalent role.
If redeployment won’t happen by month 6, move to the proper authorized cause with DOLE + employee notice and pay the correct separation amounts.
Don’t keep workers “indefinitely floating,” or change pay/rank punitively to force resignations.

12) Practical checklist for employees

Note the start date of off-detail and the 6-month deadline.
Keep all written notices and communication re: redeployment.
Respond to job offers promptly; if declining, state reasonable grounds in writing.
Before month 6, ask in writing about status.
If terminated, check: cause, 30-day notice, separation pay math, 13th-month pro-rate, leave encashment, and final pay timeline.
If there’s non-compliance, try SEnA first; escalate to NLRC if unresolved. Consider consulting counsel or a DOLE desk officer.

Quick FAQs

Q: Can my employer stop paying my HMO while I’m floating? A: Unless your contract/CBA requires it, yes—non-wage perks can be paused during valid suspension. Ask HR; some companies maintain coverage.

Q: I was offered a site far from my residence with the same pay. Can I refuse? A: You can object if the transfer is unreasonable or appears in bad faith, but blanket refusal of a reasonable assignment risks discipline. Put your reasons in writing.

Q: The agency says the client left, so I get no separation pay. Is that correct? A: Not automatically. If you’re not redeployed within 6 months, the agency must use a proper authorized cause and, in many scenarios, pay separation. Only proven serious losses exempt separation pay.

Q: When will I get my final pay if I’m terminated? A: As a practical rule, within 30 calendar days from separation, absent a more favorable policy.

Q: Can I claim SSS unemployment while floating? A: Generally no. It becomes available after involuntary separation on an authorized cause and within SSS filing timelines.

Bottom line

Floating/off-detail is lawful only up to 6 months and must be used in good faith.
After 6 months, you should be recalled or properly separated (with notices and separation pay where required).
Keep everything in writing, track the timeline, and use SEnA/NLRC if your rights are ignored.

If you want, tell me your exact dates and documents (e.g., off-detail memo, any redeployment offers), and I’ll help you assess where you stand and what to ask HR for—step by step.