Short answer: Generally, no. Placing employees on floating status without pay is lawful only in very specific situations (e.g., genuine lack of work, bona fide suspension of operations, or certain security-agency scenarios). If the company is operating normally and not in slowdown, putting someone on unpaid “floating status” is usually treated as constructive dismissal and therefore illegal.

Below is a structured deep dive in Philippine context.

1. What Is “Floating Status” in Philippine Labor Law?

“Floating status” isn’t a formal term in the Labor Code, but it is widely used in practice and in jurisprudence. It usually refers to a situation where:

The employee is not given any work or post
The employment relationship continues in theory, but
The employee receives no salary (“no work, no pay”)
The status is claimed to be temporary

You often see it in:

Security agencies – when a guard is “off-detail” because a client contract ended.
Project-based or client-based industries – when a project ends but the company claims the employee is only temporarily unassigned.

2. Legal Basis: Article 301 [286] of the Labor Code

The closest express legal basis is Article 301 [formerly 286] of the Labor Code, on the bona fide suspension of business operations or undertaking.

Key points:

Temporary suspension of work is allowed when:
- There is a bona fide (good faith) suspension of operations; or
- There is a lack of work due to legitimate business reasons.
This suspension:
- Must not exceed six (6) months; and
- After six months, the employer must either:
  - Recall the employee to work; or
  - Legally terminate employment under an authorized cause (e.g., retrenchment, redundancy), with proper notice and separation pay.
During a legitimate suspension:
- The employment tie is preserved, but
- The employer is generally not obligated to pay wages (no work, no pay), unless:
  - There’s a company policy, CBA, or contract stating otherwise; or
  - The employee is actually made to perform work.

This is where the idea of “floating status” came from: a temporary, time-limited, good-faith suspension of work because there really is no work.

3. When Is Floating Status Lawful?

To be lawful, a “floating status” or temporary off-detail arrangement should generally meet all of the following:

There is a legitimate business reason
- There is a real lack of work or a bona fide suspension of operations (full or partial).
- Examples:
  - A client contract ends and there is temporarily no posting for a security guard.
  - A plant or department temporarily shuts down due to repair, accident, or external economic conditions.
It is temporary and not more than six (6) months
- The Supreme Court has repeatedly held that beyond 6 months, continued off-detail or floating status effectively becomes termination, requiring:
  - Authorized cause;
  - Notice to the employee and to DOLE;
  - Separation pay (if applicable).
It is done in good faith
- Not used to punish or get rid of an employee.
- Not used to bypass procedures for retrenchment, redundancy, or closure.
Fair and non-discriminatory application
- Clear, reasonable criteria in choosing who goes on temporary suspension.
- No targeting due to union activity, complaints, or personal differences.
Proper communication with the employee
- The employee should be informed of:
  - The reason for floating status;
  - Expected duration; and
  - That the relationship is temporarily suspended, not terminated—subject to the 6-month cap.

4. What If the Company Is Not in Slowdown?

Now to your specific scenario:

Is it legal to put employees on unpaid floating status when the company is not in slowdown and operations are normal?

4.1. Absence of a Bona Fide Suspension or Lack of Work

If the company is:

Fully operational,
Not in crisis,
Not undergoing a genuine business slowdown, and
There is still work to be done (or posts available),

then the core legal justification for temporary suspension disappears.

In such a case, unilaterally putting an employee on unpaid floating status usually means:

The employer is refusing to give work despite operations continuing; and
The employee is deprived of both work and pay without just or authorized cause.

That situation is typically treated as constructive dismissal.

4.2. Constructive Dismissal

Constructive dismissal happens when:

The employer’s act makes continued employment impossible, unreasonable, or unlikely,
Such as:
- Substantial reduction in pay or benefits;
- Demotion without valid cause;
- Harassment or hostile work environment;
- Or denial of work and pay without valid reason.

If an employee is:

Sent home,
Told to “wait until further notice,”
Not given any definite end date (or it exceeds 6 months),
While the company is fully operational and others continue working,

courts and labor tribunals are very likely to treat this as dismissal, not a benign temporary measure.

And if the employer cannot justify the dismissal on any just cause (serious misconduct, gross neglect, etc.) or authorized cause (retrenchment, redundancy, closure, etc.), then it becomes illegal dismissal.

5. Common Scenarios and How They’re Viewed

5.1. Security Guard “Off-Detail” While Agency Has Other Posts

In the security industry, the Supreme Court has recognized that:

When a client contract ends, security guards may be placed on “off-detail” or floating status up to 6 months.
The agency must exert effort to reassign the guard to another client.
If no new assignment is given after 6 months, the guard is considered terminated, and the agency must pay separation pay if the reason is an authorized cause.

But if:

The agency still has other client posts available, and
It deliberately does not assign the guard (e.g., due to personal conflicts, union activity, or complaints),

then the off-detail arrangement can be deemed constructive dismissal, even before 6 months, because the lack of assignment is not in good faith.

5.2. Regular Company, No Slowdown, Employee Suddenly Floated

Examples:

A regular office employee is told, “You’re on floating status starting next week. No pay, stay home, we’ll call you.”
The company is pushing normal operations, hiring additional staff, or even expanding.

This is highly suspect.

If there is no legitimate lack of work, the company cannot simply sidestep:

Authorized causes (like redundancy); or
Just causes (for disciplinary dismissal),

by branding a unilateral and indefinite unpaid layoff as “floating status.”

In such a case, the employee has strong grounds to claim constructive and illegal dismissal.

5.3. Department Restructuring Without Slowdown

Sometimes the company isn’t in slowdown, but a specific unit or role becomes surplus due to internal restructuring or automation.

In that situation, the proper route is usually:

Redundancy or retrenchment, not floating status.

That means the employer must:

Serve written notice to the employee and DOLE at least 30 days before the effective date;
Show good faith and fair criteria in selecting who is redundant;
Pay separation pay as required by law.

Using floating status to avoid paying separation pay or avoid DOLE notice is an abuse of management prerogative and often struck down as unlawful.

6. Pay and Benefits During Floating Status

6.1. “No Work, No Pay” Principle

Under Philippine law, the general rule is:

No work, no pay.

So during a lawful temporary suspension (bona fide, within 6 months, etc.):

The employer is not generally required to pay wages.
Exceptions:
- When there is a company policy, CBA, or employment contract granting pay during such periods.
- If the employee is still required to perform some work (in which case they must be paid for those days).

6.2. Benefits, SSS, PhilHealth, etc.

Some practical points:

13th-month pay: Usually pro-rated based on actual basic wage earned for the year. No wages during floating = no accrual for that period.
Leave credits: Depends on company policy; many employers freeze accrual during periods of no work.
SSS, PhilHealth, Pag-IBIG: Contributions are typically based on actual compensation; without salary, employer may not remit regular contributions (unless voluntarily arranged).

However, if the floating status itself is illegal, the employee may claim:

Backwages, which may trigger recalculation of benefits that should have accrued.

7. Floating Status vs. Other Legal Concepts

7.1. Floating Status vs. Preventive Suspension

Preventive suspension:

Used when an employee under investigation for serious misconduct poses a threat to the company or co-employees.
Maximum of 30 days in most jurisprudence.
After 30 days:
- Employer must either recall the employee; or
- Continue suspension with pay.

If an employer labels something as “preventive suspension” but:

It goes beyond 30 days without pay, or
There is no real disciplinary investigation or pending charge,

it may be treated as constructive dismissal—in the same way improper floating status is.

7.2. Floating Status vs. Leave Without Pay (LWOP)

Leave Without Pay (LWOP):

Generally requires employee consent (express or implied).
Usually documented (leave form, email, etc.).
Time-bound (e.g., 30 days LWOP).

By contrast, floating status is unilateral—the employer imposes it.

If the employer forces an employee into LWOP (e.g., “Sign this or you’re fired”) when the company is not in slowdown, that can also be:

A form of coercion, and
Evidence supporting a claim of constructive dismissal.

8. What Can the Employee Do?

If an employee is placed on floating status without pay while the company is clearly not in slowdown, they may consider the following legal routes:

Important: This is general information, not a substitute for personalized legal advice from a lawyer or DOLE officer.

8.1. Clarify in Writing

First practical step: Get things in writing.

Ask HR or management to clarify:
- The reason for floating status;
- The exact period;
- Whether there is a target recall date;
- Whether DOLE has been notified (if applicable).

If they refuse to put things in writing or keep answers vague, that may later help show bad faith.

8.2. File a Complaint for Illegal Dismissal / Constructive Dismissal

An employee who believes they’ve been effectively dismissed can:

File a case with the National Labor Relations Commission (NLRC) for:
- Illegal dismissal; and
- Money claims (backwages, separation pay, etc.).

If the NLRC or the courts finds that:

There was no valid cause, and
Floating status was merely a way to sideline the employee,

then remedies may include:

Reinstatement without loss of seniority rights; and
Full backwages from the time of constructive dismissal until actual reinstatement; or
If reinstatement is no longer feasible, separation pay in lieu of reinstatement, plus backwages; and possibly
Moral and exemplary damages, if bad faith is proven;
Attorney’s fees, typically around 10% of monetary awards.

8.3. DOLE Assistance

For relatively smaller money claims (e.g., unpaid wages below a certain threshold), or for assistance, employees can also go to the DOLE Regional Office for:

Single-entry approach (SEnA) mediation; or
Labor standards complaints (if there are violations of minimum wage, holiday pay, etc.).

But illegal dismissal per se is within the jurisdiction of the NLRC, not DOLE, as a rule.

9. Employer’s Perspective: What Is Safer Instead of Floating Status?

For employers who genuinely want to comply with the law and avoid litigation, some safer alternatives (especially when there is no slowdown) are:

Reassignment or Transfer (with same pay and rank)
- Management has the right to transfer or reassign employees in good faith, provided:
  - No diminution of pay or benefits;
  - No demotion in rank;
  - Transfer is not unreasonable, inconvenient, or done in bad faith.
Flexible Work Arrangements (with consultation)
- Reduced workdays, job rotation, compressed workweek, etc., implemented:
  - In good faith;
  - With employee consultation; and
  - Preferably with clear written guidelines or DOLE notice, following DOLE advisories.
Proper Use of Authorized Causes
- If a position is genuinely no longer needed, or the company must cut costs:
  - Use redundancy or retrenchment with:
    - Written notices to employees and DOLE;
    - Separation pay as required by law;
    - Transparent and fair criteria;
    - Good faith evidence (e.g., financial statements, organizational changes).

Using “floating status” as a shortcut to avoid separation pay or DOLE notice is legally risky and often backfires in litigation.

10. Key Takeaways

Floating status is only lawful in narrow situations
- It must be based on a genuine lack of work or bona fide suspension of operations.
- It cannot exceed 6 months.
If the company is not in slowdown and operations are normal, floating status becomes highly suspect.
- Placing employees on unpaid floating status in that scenario is very often treated as constructive and illegal dismissal.
No work, no pay applies only in a lawful temporary suspension.
- If the floating status is illegal, employees may claim backwages and other monetary awards.
Employers should use proper mechanisms
- Reassignment or transfer in good faith;
- Legally compliant flexible work arrangements;
- Or authorized causes (redundancy, retrenchment, closure) with proper notice and separation pay.
Employees are not powerless
- They can document everything, seek DOLE assistance, and file a case before the NLRC if they believe their so-called “floating status” is being used to illegally remove them.

If you’d like, I can next help you apply all this to a specific fact pattern (e.g., your company’s exact situation) or draft a position paper or demand letter from either the employer’s or employee’s perspective, based on this framework.