Validity of an Unsigned HR Memo Placing an Employee on “Floating Status” in the Philippines
Key takeaway: A memorandum that is not signed by an authorized company representative is very weak evidence that an employee was properly placed on floating status. While the Labor Code does not literally say “the memo must be signed,” Philippine jurisprudence and due‑process doctrine make the signature—and proof of receipt—practically indispensable. Without them, the employer risks a finding of constructive dismissal, back‑wages, and damages.
1. What “Floating Status” Means under Philippine Law
| Item | Explanation |
|---|---|
| Statutory hook | Article 301 (formerly 286) of the Labor Code allows a bona‑fide suspension of business operations for up to 6 months without terminating employment. |
| Alternate terms | Temporary suspension of employment, temporary off‑detail (security industry), temporary lay‑off, floating status. |
| Effect on employment | The employment tie is suspended (no work, no pay), but not severed. Benefits tied strictly to actual work (e.g., overtime) may cease; statutory benefits that accrue per calendar year (13th‑month pay, service incentive leave) continue to accrue. |
| Deadline | If the employee remains “float” for > 6 months and is not recalled or formally separated (closure/retrenchment), the law deems this constructive dismissal. |
2. Dual Requirements for a Valid Floating Status
2.1 Substantive (the “why”)
- Real business exigency—lack of assignment, bona‑fide suspension of operations, force majeure, etc.
- Good faith—not a ruse to avoid security of tenure or bust a union.
- Temporary character—the employer must intend to resume normal operations within six months.
2.2 Procedural (the “how”)
| Step | What the employer must do | Source / Typical Practice |
|---|---|---|
| Notice to employee | Serve a written memorandum stating: |
- reason for the float,
- effectivity date,
- expected duration (≤ 6 months),
- employee’s right to reinstatement or separation pay if recall is impossible. | Derived from Art. 301 and due‑process doctrine (see Agabon v. NLRC, G.R. 158693, 17 Nov 2004). | | Notice to DOLE | File an Establishment Report (often on the DOLE’s ER Form) at least 10 days before effectivity. | DOLE Labor Advisories No. 17‑2020, 4‑2024; D.O. 147‑15. | | Recall or separation | Within six months, either (a) recall to work or (b) proceed to authorized cause dismissal (retrenchment, closure, redundancy) with 30‑day notice + separation pay. | Art. 298‑299, 301; cases infra. |
Failure in either arm = illegality, even if the business reason is valid.
3. Why the Signature Matters
Authenticity and authorship.
- The memo is the employer’s affirmative act; without a signature (wet or e‑signature of an authorized officer) there is no competent proof it was actually issued by management.
Burden of proof in labor cases.
- In illegal‑dismissal suits, the employer bears the burden of showing a valid cause and due process. An unsigned memo is easily discredited; at best it yields nominal‑damages liability (Agabon framework), at worst a ruling of constructive dismissal.
Best evidence vs. secondary evidence.
- The NLRC and courts prefer the original, duly signed and acknowledged memo. Photocopies or computer print‑outs with no signature/acknowledgment are secondary evidence admissible only under strict conditions.
Case law trend.
| Case | G.R. No. / Date | Holding on notice |
|---|---|---|
| Sebastian Security & Investigation Agency v. Court of Appeals | G.R. 144200, 16 Jan 2002 | Off‑detail guards for > 6 months with verbal notice were constructively dismissed. |
| Industrial Timber Corporation v. NLRC | G.R. 124213, 17 Oct 1996 | “Relocation” letters unsigned & undelivered ≠ valid notice; employees illegally dismissed. |
| Agabon v. NLRC | G.R. 158693, 17 Nov 2004 | Even if cause is valid, failure in procedural due process → nominal damages. |
| SMC Power v. Bangayan | G.R. 219865, 26 Jan 2021 | Emails not signed by authorized officer insufficient to prove notice; constructive dismissal. |
Bottom‑line: Unsigned = unproven. Without proof of proper notice, the employer loses the procedural‑due‑process defense.
4. Common Employer Arguments—and Why They Usually Fail
| Argument | Court’s response |
|---|---|
| “Employee received the memo anyway.” | Receipt must still be proved. A signature serves as acknowledgment. Without it the employer must present independent proof of personal service or registered mail. |
| “The Labor Code does not expressly require a signature.” | True, but Art. 301 is read with constitutional due‑process guarantees. The Supreme Court uses the signature to gauge authenticity. |
| “We announced suspension verbally / via group chat.” | Verbal or chat notice may inform the employee, but does not satisfy the documentary requirement and cannot be reported to DOLE. |
| “Operations were really suspended, so substantive due process cures the defect.” | Agabon doctrine: absence of procedural due process is a distinct violation. At minimum the employer owes ₱30,000–₱50,000 nominal damages per employee; in many cases, the dismissal is declared illegal outright. |
5. Practical Consequences of an Invalid (Unsigned) Memo
- Constructive dismissal—Employee may walk away and sue; employer liable for reinstatement (or separation pay), full back‑wages from the date of float, 13th‑month differential, and attorney’s fees.
- Nominal damages even if float is otherwise legitimate.
- Possible wage liabilities during the supposed “float” because the suspension was never perfected.
- Labor inspection findings—DOLE may cite the company for non‑compliance with D.O. 147‑15 and impose administrative fines.
6. Best‑Practice Checklist for Employers
| ✓ | Action |
|---|---|
| 🖋️ | Prepare a written memo on company letterhead, signed by an HR Manager or authorized officer. |
| 📅 | Date the memo and state the effectivity and end date (or “six months from ____”). |
| 📨 | Serve it personally and by registered mail; secure the employee’s signature or a refusal‑to‑sign notation with witnesses. |
| 🗂️ | Report to DOLE using the latest Establishment Report form (filed electronically in many regions). |
| 🔄 | Evaluate monthly if the business conditions still justify the float; document these assessments. |
| 🔔 | Recall or terminate with authorized‑cause procedure before the 6‑month cap expires. |
| 📝 | Keep complete records (signed memo, DOLE acknowledgment, proof of service) for at least 3 years. |
7. Remedies and Options for Employees
Seek clarification in writing; ask for a signed memo.
File an illegal‑dismissal case with the NLRC if:
- no signed notice was served, or
- float exceeds six months, or
- there is evidence the float is a pretext.
Claim monetary benefits—back‑wages from start of illegal dismissal, reinstatement or separation pay, moral and exemplary damages if bad faith is shown.
Option to stay but protest—continue waiting but lodge a preventive NLRC complaint to toll prescriptive period.
8. Special Sectors and Nuances
| Sector / Rule | Nuance |
|---|---|
| Security agencies | Often rotate guards “off‑detail.” Department Order No. 150‑16 requires written deployment / off‑detail orders and maintenance of a Valid License to Operate. Unsigned orders expose the agency to license suspension. |
| BPO / project‑based work | Employers sometimes invoke “benching.” The same Art. 301 cap and notice rules apply. |
| Force majeure (e.g., pandemic lockdowns) | DOLE Labor Advisory No. 17‑2020 allowed e‑mailed notice if the e‑mail shows the sender’s official designation; still treated as “signed.” |
9. Frequently Asked Questions
| Question | Short answer |
|---|---|
| Is an electronic signature enough? | Yes, if traceable to an authorized officer (e.g., company’s corporate e‑signature system). |
| Can an unsigned memo be “cured” later by issuing a signed one? | Only if the 6‑month period has not lapsed and the employee has not yet sued. Otherwise, the defect is considered fatal. |
| Does the employee have to acknowledge the memo? | Ideally, yes. If they refuse, note the refusal and secure witness signatures; the employer’s signature remains essential. |
| What if the employee keeps working elsewhere during float? | Moonlighting does not forfeit tenure unless prohibited by contract and expressly communicated. Courts generally allow it because the employer pays no wages during float. |
10. Conclusion
In Philippine labor practice, the signature on an HR memorandum is not a mere formality. It is a linchpin that:
- Proves the employer’s decision,
- Shows the notice was duly issued by someone with authority, and
- Shields the employer from costly litigation.
Without that signature, a “floating status” defense is built on sand. Employers should therefore always issue a signed, dated, and duly served memo, alongside the DOLE notice, and should vigilantly track the six‑month deadline. Employees, for their part, should know that an unsigned or unserved memo is grounds to contest the float as illegal and to seek redress.
Disclaimer: This article provides general information only and is not legal advice. Specific situations may require professional counsel or guidance from the Department of Labor and Employment.