In the Philippine labor landscape, the "Floating Status" of an employee is often a source of confusion and anxiety. Whether due to a downturn in business, a temporary suspension of operations, or the completion of a specific project, many workers find themselves in a legal limbo. Understanding the interplay between this temporary displacement and an employee's right to documentation—specifically the Certificate of Employment (COE)—is vital for both labor and management.
I. Understanding "Floating Status" (Off-Detail)
In legal terms, "Floating Status" is referred to as Bona Fide Suspension of Operation. It is not a termination of employment but a temporary period where an employee is not provided work, and consequently, is not paid wages ("No work, no pay").
Legal Basis and Duration
Under Article 301 (formerly Article 286) of the Labor Code of the Philippines, an employer may place an employee on floating status for a period not exceeding six (6) months in cases of:
- Bona fide suspension of business operations or undertakings.
- Fulfillment by the employee of a military or civic duty.
Key Rules for Floating Status
- The Six-Month Limit: This is the "Golden Rule." If the floating status exceeds six months without the employee being recalled to work, the employee is considered constructively dismissed. In such cases, the employee is entitled to separation pay.
- Good Faith: The suspension must be genuine. If an employer uses "floating status" to harass an employee or force them to resign, it constitutes illegal dismissal.
- Reporting Requirements: Employers are generally required to report the suspension of operations to the Department of Labor and Employment (DOLE) at least one month prior to the effectivity of the suspension.
II. The Right to a Certificate of Employment (COE)
A Certificate of Employment is a document issued by an employer specifying the period an employee was employed, the type or types of work performed, and the date of termination (if applicable).
The DOLE Labor Advisory No. 06, Series of 2020
This advisory clarified the rules regarding the issuance of COEs. It mandates that every employee—whether currently employed, resigned, or terminated—has the right to request and receive a COE.
Issuance Timelines
The employer must issue the COE within three (3) days from the time of the request.
III. Floating Status vs. The Issuance of COE
A common point of contention is whether an employee on floating status can request a COE, and if doing so implies a resignation.
1. Can an employee on floating status request a COE?
Yes. Being on floating status does not sever the employer-employee relationship. Since the relationship still exists (albeit in a suspended state), the employee retains the right to request a COE to document their tenure and current status.
2. Does requesting a COE mean the employee has resigned?
No. Jurisprudence has consistently held that requesting a COE is not an act of resignation. An employee on floating status may need a COE for various legitimate reasons, such as:
- Applying for temporary work elsewhere to survive the six-month period.
- Loan applications.
- Visa applications.
3. What should the COE state for a "floating" employee?
The COE should accurately reflect the facts. It should state the start date of employment and the current date. It may specify that the employee is "Currently Employed" but on "Temporary Off-detail" or "Floating Status" due to a suspension of operations.
IV. Legal Consequences of Non-Compliance
Failure to Recall After Six Months
If the employer fails to recall the worker or permanently close the business after the six-month period, they must pay Separation Pay (usually one month's salary or at least one-half month's salary for every year of service, whichever is higher).
Refusal to Issue a COE
If an employer refuses to issue a COE within the mandated three-day window, the employee may file a request for assistance with the DOLE Single Entry Approach (SEnA). Persistent refusal can lead to administrative penalties and may be used as evidence of bad faith in a constructive dismissal case.
V. Summary Table
| Feature | Rule under Philippine Law |
|---|---|
| Max Duration of Floating Status | 6 Months |
| Status after 6 Months | Constructive Dismissal (if not recalled) |
| COE Request Deadline | Must be issued within 3 days of request |
| Impact of COE on Status | Requesting a COE does not constitute resignation |
| Separation Pay Requirement | Due if floating status exceeds 6 months or in cases of redundancy/retrenchment |
Conclusion
The Floating Status is a temporary management prerogative intended to help businesses survive lean periods, not a tool to circumvent security of tenure. Similarly, the COE is a fundamental right of the worker. Employers must ensure that while an employee's pay is suspended, their right to documentation and their path back to active duty (or a legal exit with pay) remains clear and respected.