Notice Requirement for Placing Employees on “Floating” Status in the Philippines

(A practitioner-oriented explainer)

1. What “Floating” Status Means

Concept	Key Points
Statutory hook	Article 301 of the Labor Code (renumbered, formerly Art. 286) – allows a “bona-fide suspension of the operations of business or undertaking for a period not exceeding six (6) months.” After six months the employer must (a) recall the employee, or (b) permanently terminate the employment with the appropriate authorized-cause separation pay.
Typical scenarios	Temporary absence of project/work, seasonal shut-down, loss of client for a security agency, suspension of operations pending permits/repairs, force majeure, or government-ordered lockdowns.
Legal effect	Employment is not severed; it is merely suspended. Wages may likewise be suspended (unless a CBA, policy, or company practice provides otherwise).

2. The Core Rule on Notice

There is no single, codified “X-days” notice period in the Labor Code for placing an employee on floating status. However, Philippine jurisprudence and Department of Labor and Employment (DOLE) issuances together create a two-tier duty of notice:

Tier	Addressee	Timing	Source / Rationale
Operational notice	Employee concerned	Before the start of the floating period	Due-process fairness; cases such as Sebro Mfg. v. NLRC (G.R. 115394, 28 Oct 1998) require that the employee be “made fully aware” of the cause, scope, and duration of the suspension.
Regulatory notice	DOLE Regional Office having jurisdiction	As soon as practicable after the suspension decision and before implementation, especially when the suspension exceeds 30 days or affects multiple workers	§12, DOLE Dept. Order 174-17 (for contractors); §4, DO 18-A-11 (for subcontracting); §6, DO 14-20 (for security agencies); Labor Advisory 17-2020 (pandemic flex-work) — all require reporting of any temporary closure or suspension.

Why it matters:

The Supreme Court consistently treats lack of a clear, written notice to the employee as constructive dismissal if the employee is left guessing about status or duration.
DOLE Labor Inspectors look for a suspension report (often submitted through the establishment report portal). Failure triggers compliance orders and potential back-wage findings.

3. Content of the Employee Notice

Heading / Subject line – “Notice of Temporary Suspension of Work (Floating Status)”
Specific business reason – e.g., “loss of primary client”, “shutdown of Line 2 for preventive maintenance”, “government lockdown”.
Legal basis cited – Art. 301, Labor Code (and any relevant DOLE advisory).
Effectivity date – the exact calendar date when reporting for work is no longer required.
Projected recall date – no later than six (6) months from effectivity; may state “or sooner if business conditions permit.”
Employee obligations while on float – (a) keep contact details updated, (b) report when recalled, (c) remain free from competitive employment if contractually bound.
Statement on pay/benefits – clarify whether wages are suspended, and whether government social security or health benefits will continue.
Contact point – HR name, email, phone.
Conformé line – space for employee signature to acknowledge receipt (not necessarily agreement).

Tip: Serve the notice personally with acknowledgment, or by registered mail / courier plus e-mail to create a robust paper trail.

4. Special Sectors & Issuances

Sector / Instrument	Additional Notice Nuances
Security Services (DO 14-20; R.A. 11917)	Agencies must (a) give the guard written notice, (b) offer available posts, and (c) file a Special Report to DOLE/PNP SOSIA within 30 days.
Contracting / Sub-contracting (DO 174-17)	Contractor must: (1) notify both the contractual employee and the principal, and (2) report to DOLE any “temporary lay-off or off-rotation” within five (5) days of effectivity.
Pandemic-period flexible work (Labor Advisory 17-2020 & subsequent issuances)	Employers had to file Establishment Report Form at least one (1) week prior to adopting floating or flex-work arrangements.
Collective Bargaining Agreements	A CBA can impose a longer notice period or prior union consultation; failure to observe becomes a ULP.

5. End-of-Float Scenarios

If after ≤ 6 months…	Employer must…	Notice requirement
Business revives	Recall employee to original or substantially equivalent post.	Written recall letter indicating return-to-work date.
Business still suspended	Either (a) extend only if there is mutual agreement and the employee receives wages/benefits, or (b) proceed to authorized-cause retrenchment/closure.	For authorized-cause dismissal under Art. 298 (old 283): 30-day prior notice to both employee and DOLE + payment of separation pay.
Employer keeps silent	Risk a finding of constructive dismissal from the 6-month mark; employee may file money claims.	None — the law deems dismissal on the day immediately following the 6-month period.

6. Consequences of Non-Compliance

Constructive dismissal – employee may file an illegal dismissal case and be awarded full back-wages and reinstatement or separation pay in lieu of reinstatement (e.g., Valdez v. NLRC, G.R. 105872, 10 Mar 1994).
Money claims – wage recovery for the floating period, service incentive leave conversion, pro-rated 13th-month.
Administrative fines – DOLE labor standards citation; security agencies may face PNP-SOSIA suspension of license.
Labor-only contracting finding – for contractors who float workers without client assignment and fail the required reporting.

7. Compliance Checklist (Quick Reference)

Draft individual written notices with clear cause, dates, and recall clause.
Serve notices and secure proof of receipt before day 1 of floating.
File DOLE Establishment/Flexible Work/Temporary Suspension Report within required period.
Calendar the 6-month expiry and set automatic HR alerts.
Issue recall or authorized-cause termination notices before the 6-month limit.
Keep communication lines open; respond to employee queries promptly.
Document all business conditions justifying the suspension (client letters, financials, government orders).

8. Frequently Asked Questions

Q 1. Must I give two notices and a hearing as in a just-cause dismissal?

No. The “twin-notice and hearing” rule applies to just-cause terminations. Floating status is not a dismissal, but a temporary suspension. What is required is a single advance written notice that is clear and specific.

Q 2. Can the notice be verbal if my staff are willing?

Verbal notice is risky; the employer bears the burden of proof in labor disputes. Always document in writing.

Q 3. Do I have to pay anything during the six months?

The Labor Code allows suspension of wages. However, if your policy or CBA grants a retainer pay, or you retain managerial employees “on call,” you must honor that.

Q 4. The employee refuses to receive the notice. What now?

Serve through registered mail to the employee’s last known address, e-mail a scanned copy, and make a notarized proof of service. The notice obligation is satisfied by valid service, not by the employee’s consent.

Q 5. What if we recall the employee but they refuse to return?

Send a second recall letter with a definite reporting date and a warning that failure to report will be deemed abandonment. Document all efforts.

9. Practical Draft Template (suggested language)

Subject: Notice of Temporary Suspension of Work (Floating Status) Date: 29 May 2025

Dear [Employee Name],

Pursuant to Article 301 of the Labor Code and DOLE Dept. Order 174-17, we regret to inform you that due to the sudden cancellation of Client XYZ’s contract effective 15 June 2025, your position of Security Guard assigned at XYZ Plant will be placed on floating status starting 16 June 2025.

The suspension is purely temporary and shall not exceed six (6) months from the above date, or until earlier redeployment to a new client post. During this period, no wages shall accrue, but your statutory social security, Pag-IBIG, and PhilHealth coverages will remain active.

You will be immediately notified of any assignment opening. Please keep us informed of your current contact details. Should no suitable post become available by 16 December 2025, we will initiate authorized-cause separation with payment of benefits under the law.

For any queries, contact HR Officer Ana Reyes at 0917-123-4567 or hr@abcsecurity.com.

Thank you for your understanding.

Respectfully, [Signature] HR Manager

Take-away

While the Labor Code gives employers room to suspend operations for up to six months, sound practice demands proactive, written communication to both the employee and DOLE. Clear notice at the front end, and timely recall or separation at the back end, are the twin pillars that keep floating status lawful—and protect the business from costly illegal-dismissal claims.

This article is for general guidance only and does not constitute legal advice. Consult counsel for specific cases.