“Floating Status” in Philippine Labor Law
and the Employee’s Right to Seek Other Work
I. Introduction
“Floating status” (also called “off-detail,” “temporary off-duty,” or “temporary displacement”) is a uniquely Philippine labor-law device that allows an employer to suspend the actual work of employees without ending the employer-employee relationship. Because the workers are, for a time, literally “floating” between work assignments, a recurring question arises: May they take other employment while they float? The short answer is yes—but with conditions. This article gathers the statutory text, regulations and Supreme Court rulings that govern the matter, and distills the practical rules for both employers and workers.
II. Legal Framework
| Source | Key Text |
|---|---|
| Labor Code, Art. 301 (formerly Art. 286) |
“The bona fide suspension of the business operations… or the fulfillment by the employee of a military or civic duty shall not terminate employment. The employer shall reinstate the employee within six (6) months… or permanently dismiss him/her.” |
| DOLE Labor Advisory No. 17-20 (COVID-19 period, but of general application) | Re-affirms six-month cap; reminds employers that employees “may engage in alternative employment during the suspension.” |
| Dept. Order No. 147-15 | Lists “suspension of operations” as an authorized cause and prescribes procedural due process: twin written notices to the employee and DOLE at least 30 days in advance. |
| Republic Act 5487 (Private Security Agency Law) | Provides a similar six-month “off-detail” rule for security guards; upon lapse of period without posting, the guard is deemed constructively dismissed. |
III. Concept and Requisites of Floating Status
- Bona fide business reason – e.g., lack of clients, raw-material shortage, repair of factory, seasonal drop, or force majeure.
- Temporariness – maximum of six (6) months counted from effectivity date stated in the notices.
- Proper notice – 30-day written notice to (a) each affected employee and (b) the Regional DOLE Office.
- Good-faith reduction of cost – Employer must show the status is not a subterfuge to skirt separation pay.
Failure in any of the above converts the status to an illegal dismissal.
IV. Effect on the Employment Relationship
| Aspect | Effect During Floating Period |
|---|---|
| Wage | No wage is due (work is suspended). |
| Seniority | Continues to accrue; years of service not broken. |
| SSS/PhilHealth/Pag-IBIG | Employer may temporarily cease regular remittances (no earnings to deduct from), but coverage continues. |
| Union membership | Stays; collective bargaining rights merely frozen. |
| Separation pay | Not yet due; becomes due only if employer cannot recall after 6 months. |
V. The Employee’s Right to Seek Other Work
Yes, the right exists.
- Art. 301 itself does not prohibit moonlighting and Supreme Court cases treat the relationship as “in suspension, not termination.”
- Leading cases: a) Manila Mining v. Abello (G.R. 151618, 17 Aug 2016): employee who took a short-term job while on floating status did not forfeit his right to be recalled. b) Sebrico v. NLRC (G.R. 115394, 27 May 1994): security guard accepted temporary posting in another agency; SC said this “did not constitute resignation.”
Conditions and Limits.
- Conflict of interest – Employee may not work for a direct competitor or disclose confidential information.
- Non-compete clauses – If a valid, reasonable non-competition agreement exists, the employee must respect it even while floating.
- Return-to-work duty – The employee must report back within a reasonable period after written recall or at the end of six months, whichever comes first. Failure equals abandonment.
- Health & safety compatibility – For regulated industries (e.g., pilots, seafarers), concurrent employment may be barred by administrative rules.
No need for employer consent (general rule).
- Because the employer has chosen to withhold work and pay, the law perceives any interim work as an act of self-preservation by the worker.
- Employers may require disclosure of the interim job solely to check for conflicts of interest.
VI. Consequences of Accepting Outside Employment
| Scenario | Legal Consequence |
|---|---|
| Employee takes a purely temporary job and later returns when recalled | Relationship resumes; no loss of security of tenure. |
| Employee obtains a regular, full-time position elsewhere before recall | If he expressly resigns from the first employer, relationship ends; otherwise, first employer may invoke implied resignation—but must give notice and chance to explain. |
| Employer fails to recall within six months | Employee may file for constructive dismissal and claim separation pay and damages, even if already employed elsewhere. |
| Employee returns but employer refuses to readmit | Illegal dismissal; remedies: reinstatement with back wages or separation pay in lieu. |
VII. Jurisprudential Themes
Six-Month Ceiling is Jurisdictional.
- Lopez Sugar v. Federation (G.R. L-56087, 30 Aug 1990) – placing workers on “temporary lay-off” for more than six months without permanent retrenchment or recall is illegal dismissal.
Notice Lapse Does Not Cure Substantive Illegality.
- Valdez v. NLRC (G.R. 106971, 5 Sept 1994) – even with notices, employer must prove the bona fide suspension; otherwise workers are illegally dismissed on day one.
Right to Find Work is Inherent to Survival.
- Slepcevic v. NLRC (G.R. 199908, 19 July 2017) – SC cited Art. 3 of the Constitution (right to life) in upholding an OFW’s right to accept alternative employment while waiting for redeployment.
VIII. Practical Pointers
For Employers
- Draft clear floating-status memoranda: reason, start date, target resumption, employee’s obligation to keep contact information active.
- Avoid blanket non-moonlighting prohibitions; restrict only competing or confidential roles.
- Diary the six-month expiry; by the 5th month decide: (a) recall, (b) retrench with pay, or (c) negotiate resignation/transfer.
For Employees
- Keep written proof of interim employment offers and contracts.
- Respond in writing to any recall notice—even to state inability because of conflicting schedules—so as not to be tagged as abandoning post.
- If the six-month cut-off is near, send a formal demand for recall or separation pay to preserve claims.
IX. Remedies and Enforcement
- Complaints – File with the NLRC or DOLE Single-Entry Approach (SEnA) for conciliation first.
- Reliefs – (a) Reinstatement with back wages; (b) separation pay (½-month salary per year of service if due to suspension of business; 1-month salary per year if redundancy/closure); (c) nominal damages for due-process violations; (d) attorney’s fees if employer acted in bad faith.
X. Conclusion
The Philippine Labor Code’s floating status mechanism balances an employer’s need for flexibility and a worker’s constitutional right to livelihood. The decisive safeguards are the six-month cap and the employee’s freedom to seek other work in the interim. Employers who invoke the mechanism must scrupulously observe statutory procedures and respect that freedom; employees, in turn, must avoid conflicts of interest and be ready to return when legitimately recalled. When handled within these bounds, floating status can remain a lawful—and humane—tool for weathering temporary business storms.