Floating Status and “No Work” in Fixed-Term Contracts: Employee Rights in the Philippines

This article is for general information only and is not legal advice.

Executive summary

“Floating status” (off-detail/temporary layoff) is a lawful, time-bound pause in work without pay when business operations or client assignments are suspended in good faith. If it goes beyond the legally permitted period (generally up to six months) or is used in bad faith, it can ripen into constructive dismissal with potential backwages and/or separation pay.
Fixed-term employment is valid in the Philippines only in narrow circumstances (e.g., truly time-bound projects; freely agreed term not meant to defeat security of tenure). Repeated short terms to avoid regularization are risky and may be struck down.
For fixed-term employees, the general “no work, no pay” rule applies. Exceptions exist: when the employer prevents work, or contract/CBA guarantees pay, or the law requires pay (e.g., certain leaves or illegally implemented suspensions). If a fixed-term worker is illegally sidelined before the term ends, remedies can include wages for the unexpired portion and damages.
Employers must observe proper documentation, notice, and DOLE reporting where required. Employees should keep written records and assert rights promptly.

Key legal foundations (high level)

Security of Tenure – Employees cannot be dismissed except for just or authorized causes and with due process.
Temporary Suspension of Work (Floating Status) – The Labor Code allows bona fide suspension of operations for a limited period; beyond that, termination rules (and remedies) can attach.
Fixed-Term Employment Doctrine – Validity stems from true agreement and legitimate business reason, not as a device to circumvent regular employment (leading case law establishes criteria).
No Work, No Pay – Wages are generally for work actually performed. Limited exceptions apply when the law or contract says otherwise, or when the employer is at fault for the non-work.

“Floating status” explained

What it is

A temporary, good-faith suspension of work (and corresponding wages) used when operations are paused, client contracts lapse, or assignments end (common in security, janitorial, project-based outsourcing, and seasonal businesses).

What it is not

It is not a disguised termination.
It is not a permanent assignment to “nowhere.”
It is not a license to keep someone idle indefinitely.

Time limit and consequences

The outer limit for bona fide temporary layoff is generally six (6) months.
If the employer fails to recall/reassign the employee within the limit, the law treats the situation as constructive dismissal—triggering rights to reinstatement with backwages or separation pay (if reinstatement is no longer viable), plus possible damages and attorney’s fees depending on bad faith.

Pay and benefits during floating

Wages: Typically no wages accrue (no work, no pay), unless:
- There is a CBA/company policy/contract promising pay or allowance during layoff,
- The employer prevents an employee who is ready, willing, and able from working despite available work,
- Specific laws mandate pay (e.g., certain leaves).
Seniority and tenure: The employment relationship continues; seniority accrues, but pay-based benefits (e.g., 13th-month pay) are usually prorated based on actual earnings within the calendar year.
Social benefits: SSS, PhilHealth, and Pag-IBIG contributions are normally suspended when no wages are paid, unless the employer elects to continue contributions or the employee pays voluntarily.

Employer duties during floating

Good-faith basis and clear business need (e.g., loss of client, temporary closure).
Written notice to the employee stating reason, start date, and expected duration; keep service records.
Active efforts to reassign/recall (especially in manpower/security settings).
Observe DOLE reporting, when applicable, and comply with notice requirements if the situation turns into an authorized cause termination (redundancy, retrenchment, closure) before six months elapse.

Employee options and remedies

Engage HR in writing: Ask for status, expected recall date, and available reassignments.
Offer availability: State you are ready, willing, and able to work or accept reassignment.
If floating exceeds six months or appears pretextual, consider:
- Filing a complaint for illegal/constructive dismissal,
- Seeking reinstatement with backwages, or separation pay in lieu,
- Claiming monetary benefits (e.g., 13th-month differential, if applicable), damages, and attorney’s fees (as appropriate).

“No work” situations in fixed-term contracts

When fixed-term is valid

The term is genuinely time-bound (e.g., a show run, campaign window, seasonal rush).
The employee freely agrees to the term (no coercion), understanding its consequences.
The term is not used to evade regularization for work that is usually necessary and desirable to the business on a continuing basis.
The arrangement is consistent with prior practice/industry norm and documented.

If there’s “no work” during the term

Default: “No work, no pay” applies.
Critical exceptions:
1. Employer-caused idleness: If the employer prevents the fixed-term employee from working (e.g., unreasonably denies access, refuses to give tasks) despite the employee’s availability, wages may be recoverable for the idle period.
2. Contractual guarantees: Some fixed-term contracts guarantee minimum hours or a standby retainer; these are enforceable.
3. Illegal suspension/constructive dismissal: If the employer unlawfully sidelines the employee mid-term, the worker can claim wages for the unexpired portion, plus possible damages.
4. Statutory pay: Where law mandates payment (e.g., certain paid leaves, holiday pay when the criteria are met), fixed-term status does not dilute those rights.

End of term vs. early termination

Arrival of the term lawfully ends the contract without need of cause, provided the fixed term is valid and not a subterfuge.
Early termination by the employer without cause exposes it to liability (e.g., wages for the balance of the term, damages).
Repeated renewals of short fixed terms to perform the same core roles may convert the relationship into regular employment, making security of tenure protections fully applicable.

Interplay: Floating status and fixed-term employment

True floating status presupposes a continuing employment relationship; it is more naturally aligned with regular or ongoing hires.
For fixed-term employees, “floating” is conceptually awkward: the term keeps running. If the employer suspends work mid-term without a valid, documented basis, it risks claims for the unexpired portion of the term and constructive dismissal.
If a fixed-term contract anticipates gaps (e.g., “on-call days,” “dark weeks”), it should spell out whether those days are unpaid and whether retainers apply, and it must still comply with law and good-faith standards.

Due process and documentation

For employers

Before implementing floating or no-work periods:
- Establish a written business justification (client termination, force majeure, temporary shutdown, etc.).
- Issue individual notices with reasons, dates, and expected duration.
- Report to DOLE as required; keep proof of filing.
- Explore alternatives: reduced workweeks, rotation, WFH, reassignment, leave conversions with consent.
If six months will lapse with no recall: initiate authorized cause processes (redundancy/retrenchment/closure), observe 30-day notice to employees and DOLE, and pay proper separation pay where the law requires.

For employees

Keep copies of your contract(s), notices, and messages; document availability to work.
If placed on floating, send a polite letter/email confirming you are ready, willing, and able to return or accept reassignment.
Track the timeline: if six months is approaching with no recall, seek clarification in writing and, if needed, pursue remedies.

Monetary entitlements at a glance

Wages during floating/no work: Not due under the general rule, unless employer-caused idleness, contractual guarantee, or statutory pay applies.
Separation pay: Not due for mere floating; due in many authorized cause terminations (amount depends on cause and service length).
Backwages: Potentially due upon a finding of illegal/constructive dismissal.
13th-month pay: Based on basic earnings in the calendar year; no earnings → no accrual for that period.
Service Incentive Leave (SIL): Accrues for eligible employees; cash conversion applies upon separation if unused and legally required.
Statutory benefits (SSS/PhilHealth/Pag-IBIG): Depend on actual remittances; no wages often means no employer remittance for the period.

Red flags that suggest illegality or bad faith

Indefinite “floating” beyond six months without proper action.
Using “floating” to mask redundancy/retrenchment without paying separation benefits.
Serial fixed-term renewals for work that is core and continuous.
Denying work to a fixed-term employee who is available while hiring replacements or assigning their tasks to others.
Failure to provide clear written notices and DOLE reporting (when required).

Practical checklists

Employee checklist (floating or no-work)

☐ Keep your contract(s), company policies, and prior CBAs (if any).
☐ Ask HR (in writing) for the reason, start date, and expected end date of floating.
☐ State you are ready, willing, and able to work or accept reassignment.
☐ Track the six-month clock; diary key dates.
☐ Preserve proof of communications and any offered reassignments you accepted/rejected (with reasons).
☐ Upon reaching six months with no recall, consider filing for constructive dismissal and monetary claims.

Employer compliance snapshot

☐ Confirm a bona fide business reason.
☐ Serve individual notices and, where applicable, report to DOLE.
☐ Reassign/recall diligently; document efforts.
☐ If recall is not feasible by month 6, shift to authorized cause routes with proper notice and separation pay (as applicable).
☐ Avoid serial fixed-term renewals to perform regular work.
☐ Audit contracts to ensure clear terms on gaps, retainers, and paid/unpaid periods.

FAQs

1) Can an employer place a fixed-term employee on floating status? It’s risky. A true floating status assumes continuing employment. With fixed-term, time keeps running. If the employer pauses work without valid cause or contractual allowance, the employee may claim wages for the unexpired portion and constructive dismissal.

2) Do I get paid during floating? Ordinarily no, unless a contract/CBA or law says otherwise, or the employer caused the idleness despite your availability.

3) What happens at six months of floating? If there’s still no recall or reassignment, the situation often matures into constructive dismissal. Employees may pursue backwages or separation pay, plus other monetary awards.

4) My fixed-term contract keeps being renewed every few months for the same job. Am I regular? Possibly. If the work is usually necessary and desirable to the business and the fixed terms are used to evade regularization, the law may deem you regular despite the paper terms.

5) Can the employer close a department and put us on floating indefinitely? No. A closure is an authorized cause with notice and (often) separation pay. Floating is temporary and time-bound—not indefinite.

Sample clause ideas (for guidance only)

Floating/Off-Detail Clause (for industries with client assignments)

“In the event of bona fide temporary suspension of operations or lapse of client assignments, the Employee may be placed on temporary off-detail (floating status) for a period not exceeding six (6) months, without pay, subject to applicable laws. The Company will exert good-faith efforts to reassign the Employee. If reassignment is not feasible within the period, the Company shall implement the appropriate authorized-cause measures with statutory notice and benefits, as applicable.”

Fixed-Term Contract Gap Handling

“The Parties agree that the Contract Term covers active production weeks only. Dark weeks between milestones are unpaid, unless the Company calls the Employee to work or unless a retainer of ₱____ per week is expressly stated herein. Any suspension of work initiated by the Company during the Term shall be documented in writing and shall not prejudice the Employee’s entitlement to wages for days the Employee was ready, willing, and able to work.”

(Always have counsel tailor language to your facts.)

Action steps if you’re affected today

Employees: Write HR confirming your availability and asking for the specific recall date. Note the start date of floating and calendar six months out. If you hit that date with no recall, consult counsel about constructive dismissal and monetary claims.
Employers: Audit who is on floating, age of each case, and reassignment efforts. If anyone is nearing six months, decide now between recall or authorized-cause termination with proper notice and payouts (if due).

Staying on top of timelines, documentation, and good faith is the difference between a lawful temporary measure and a costly labor dispute.