For HR leaders, in-house counsel, and business owners navigating authorized workforce adjustments under Philippine law.

1) What each term means (and why the distinction matters)

Redundancy is a permanent, authorized termination because a position has become unnecessary—e.g., streamlining, reorganization, elimination of duplicate functions, adoption of labor-saving tech, or over-staffing. It is an authorized cause of termination under the Labor Code.

Floating status (often called temporary lay-off or off-detail in some industries) is a temporary suspension of work—not a dismissal—triggered by bona fide business or operational exigencies (e.g., business suspension, lack of assignments, seasonal lulls, project gaps). It is lawful only up to six (6) months; if the employee is not recalled or permanently separated on an authorized ground within that period, it typically ripens into constructive dismissal.

Why this matters: Redundancy ends employment and triggers separation pay plus strict notice rules. Floating status does not end employment, has no separation pay during the temporary period, and follows a different compliance path—but carries a six-month ceiling.

2) Redundancy: the legal test and documentation employers must meet

A. Substantive standards (what you must be able to prove)

Courts generally look for the following:

Good faith: The redundancy is pursued to meet legitimate business needs (efficiency, cost alignment, reorganization), not to target particular employees or bust a union.
Actual redundancy: The role itself has become superfluous—functions are eliminated, consolidated, or absorbed. It’s not enough to declare redundancy; you must evidence it.
Fair and reasonable selection criteria when only some—and not all—positions in a job family are affected. Common lawful criteria include:
- Efficiency or performance ratings (based on documented, pre-existing metrics)
- Seniority and length of service
- Disciplinary record (objectively recorded)
- Skills match against the restructured roles
- Status of employment (e.g., project/seasonal/temporary vs. regular), where consistent with policy and law
- Any bona fide business-driven factor, applied uniformly and non-discriminatorily
Proof: Typical evidentiary set includes new/revised manpower complement, organizational charts, staffing pattern, job analyses, rationalization or feasibility studies, Board or management resolutions, and where relevant, documents showing adoption of labor-saving devices or process changes. (Unlike retrenchment, audited losses are not required for redundancy—though solid business evidence is still critical.)

B. Procedural standards (how to do it lawfully)

Thirty (30) days’ prior written notice to:
- The affected employee(s); and
- The DOLE Regional/Field Office having jurisdiction.
Separation pay: At least one (1) month pay or one (1) month pay per year of service, whichever is higher. (A fraction of at least six months is typically rounded up to a full year.)
Final pay and clearances: Release separation pay and earned benefits on or before effectivity (or within a very short, reasonable period), together with government certificates (e.g., COE) and statutory documentation as applicable.
Due process niceties: While redundancy is an authorized cause (not a “just cause” misconduct case), ensure written, specific, and comprehensible notices (reason, role, effectivity date, how the selection worked). Failure to observe the 30-day notice may expose the employer to nominal damages, even if the redundancy is substantively valid.

C. Practical safeguards

Use written, dated criteria approved before you start scoring people.
Score against records that predate the program (to avoid post-hoc fabrication).
Offer reasonable reassignment if a substantially equivalent vacancy exists (this is not mandatory to make redundancy valid, but it shows good faith and can mitigate risk).
Avoid replacement hiring into essentially the same role soon after; if unavoidable due to business pivots, be prepared to show the role’s materially different content or qualifications.

3) Floating status: when it is allowed, the six-month rule, and pay

A. Legal basis and limits

Bona fide suspension of work or lack of assignment may place employees on temporary “floating” status for up to six (6) months.
Beyond six months: If work does not resume or the employee is not recalled, the employer must either (a) permanently separate on an authorized ground (e.g., redundancy, retrenchment, closure) with the proper 30-day notices and separation pay, or (b) recall to work. Keeping employees afloat past six months without action is generally treated as constructive dismissal.

B. Pay and benefits during floating

No work, no pay applies during a legitimate floating period. There is no statutory “standby pay.”
Statutory contributions are ordinarily based on actual wages paid. If none are paid, there’s typically no employer remittance for the idle months (employees may opt for voluntary/self-payments where allowed). Check CBAs, company policies, or DOLE advisories that could provide better-than-law arrangements.
Tenure continues (the employment tie isn’t severed); the period does not earn wages but often still counts for service-based benefits once work resumes, subject to policy/CBA.

C. Notice and documentation

The Labor Code does not require the same 30-day dual-notice for mere temporary floating (because it is not a termination). Still, written advice to employees explaining the bona fide reason, expected duration (and the six-month cap), recall mechanics, and contact channels is a best practice and often decisive in disputes.
If the floating stems from business suspension, retain proof (e.g., plant stoppage orders, client cancellation letters, project suspension notices). In industries like security and contracting, “off-detail” memos and client disengagement letters are important.

4) Choosing between redundancy and floating status

Business situation	Appropriate tool	Key legal risks	Pay obligation
You know the role will no longer exist after reorg/automation	Redundancy	Must prove good faith, actual superfluity, and fair selection; 30-day dual-notice	Separation pay (≥ 1 month or 1 month/year, higher of the two)
The business has a temporary lull or suspension (e.g., project pause, seasonal dip) and you expect to recall within ≤ 6 months	Floating status	Exceeding 6 months without recall/authorized separation → constructive dismissal	No wages during lawful floating (unless policy/CBA provides otherwise)
Demand collapsed and you’re unsure if work will resume in ≤ 6 months	Start with floating only if a credible return is likely; otherwise proceed to authorized separation (redundancy/retrenchment)	Misuse of floating to delay paying separation pay	Floating saves cash short-term but may raise litigation risk if optimism proves wrong

5) Selection standards under redundancy (deep dive)

When only some incumbents in a role are affected, selections must reflect objective, pre-set, consistently applied criteria:

Define the pool: Identify comparable roles/functions (same job family/level).
Fix the criteria (examples):
- Last two to three performance ratings (tie to documented KPIs)
- Skills matrix against the new structure (certifications, cross-functional capability)
- Seniority (clear tie-break rule)
- Attendance/disciplinary records (final, documented)
Weighting and scoring: Publish the weighting scheme internally (e.g., performance 50%, skills 30%, seniority 15%, record 5%).
Panel review: Use a multi-person panel; retain scoring sheets and sign-offs.
Adverse-impact check: Scan for disparate impact on protected groups; if found, reassess criteria application.

What not to do

Post-hoc scores, opaque “management discretion,” or criteria invented after you know who you want out.
Selecting unionists or complainants—this suggests bad faith and retaliation.

6) Pay computations and related money claims

A. Redundancy separation pay

Formula: Higher of (a) 1 month basic pay, or (b) 1 month basic pay × years of service (≥ 6 months in a final year counts as a whole year).
Other payouts on separation: accrued 13th-month, unused service incentive leave/vacation leave if convertible, prorated allowances if company policy provides, and any CBA or plan benefits.
Tax: Separation benefits due to causes beyond the employee’s control (which includes redundancy) are generally income-tax exempt under the NIRC, subject to Bureau of Internal Revenue rules in effect at payout time.

B. Floating status pay

None during the lawful floating period (no work, no pay), unless a CBA, policy, or side agreement grants a stipend/allowance.
If floating exceeds six months without recall or authorized separation, employees may claim constructive dismissal, seeking backwages, separation pay in lieu of reinstatement, and damages/attorney’s fees as adjudged.

7) Notice artifacts and timing

Redundancy (mandatory)

Employee notice (≥ 30 days before effectivity): identifies the position eliminated, business grounds, selection methodology, effectivity date, and pay computation.
DOLE notice (same timing): lists affected employees, positions, reasons, and effectivity.
Effectivity date: On or after the 30th day from receipt of notices.
Final pay release: On or before effectivity or within a reasonable, short period thereafter; issue COE upon request.

Floating status (best practice)

Employee advisory: explains the bona fide reason, start date, expected duration (note the six-month limit), recall protocol, and contact person.
Recall notice: written, with reporting date/time/place and role; keep proof of service.
Conversion: If no recall by month 6, issue authorized-cause notices (30-day employee + DOLE) and pay separation benefits on effectivity, or recall to work.

8) Common pitfalls (and how to avoid them)

Using “floating” as a shield when you already know the role is gone → proceed with redundancy instead; delaying invites constructive-dismissal claims.
Announcing redundancy, but rehiring for essentially the same job soon after → shows lack of good faith unless the new role is materially different and you can prove it.
Skipping the DOLE notice or the 30-day lead time → even if the redundancy is valid, expect nominal damages and closer scrutiny.
No paper trail (no staffing plan, no objective scores) → the employer bears the burden of proof; lack of documents usually sinks the defense.
Pay delays and incomplete clearances → generate money claims and penalties; plan funding and processing before serving notices.

9) Industry-specific notes

Security/contracting/project-based: “Off-detail” is common. Keep client termination/PNs, assignment logs, and deployment rosters. If there’s no new post within six months, transition to authorized separation with proper notices and separation pay (often the retrenchment rate if the reason is lack of business, unless the role itself is eliminated company-wide—then redundancy may apply).
Seasonal operations: True seasonal workers outside the season are not “floating” (the engagement naturally lapses), but repeated seasons can create regular seasonal status—treat with care.

10) Employee remedies and employer defenses

If redundancy is defective: employees may seek reinstatement with full backwages (if the job still exists) or separation pay in lieu of reinstatement plus backwages and damages. Employers defend with documented business necessity, objective criteria and proper notices.

If floating exceeds six months or is a sham: employees may claim constructive dismissal; employers must show bona fide temporary exigency, duration control, and either timely recall or proper authorized-cause separation within the limit.

11) Quick compliance checklists

Redundancy

Board/management approval of reorg
Business rationale memo + staffing pattern before/after
Written selection criteria and scoring sheets
30-day employee notices (specific, dated)
30-day DOLE notice (roster, reasons)
Computed separation and final pay, ready for release
Turnover/exit and COE process

Floating status

Written advisory (start date, reason, six-month limit)
Evidence of bona fide suspension/lack of work
Calendar ticklers for months 3–5 to decide recall vs. separation
Written recall (if resuming) or authorized-cause notices + separation pay (by month 6)

12) FAQs

Can we reduce pay or hours instead of redundancy or floating? Yes, but substantial reductions without consent can amount to constructive dismissal. Use mutual agreements or temporary flexible work arrangements documented in writing and, if material, notify DOLE per applicable issuances.

Is “garden leave” required during the 30-day redundancy notice? No. You may have employees work through notice or relieve them with pay until effectivity. The key is that effectivity cannot be earlier than 30 days from notice service.

Do we need to offer vacant roles? Not strictly—but offering substantially equivalent vacancies and documenting any declinations is excellent risk control.

Are redundancy payments taxable? Generally tax-exempt if the separation is for causes beyond the employee’s control, subject to current BIR rules at the time of payment.

13) Bottom line

Use redundancy for permanent role eliminations; meet the good-faith + fair-selection + dual-notice triad and pay the higher-of separation formula.
Use floating status for temporary slowdowns; mind the six-month cap, maintain documentation, and either recall or convert to an authorized separation with proper notices and pay.

If you want, I can draft ready-to-use templates (redundancy employee notice, DOLE notice, floating advisory, recall memo, selection matrix) tailored to your headcount plan and dates.