Employee Pay During “Floating Status” in Philippine Labor Law

1. What “Floating Status” Means

The Labor Code (Art. 301, formerly 286) allows an employer to suspend employment for reasons not attributable to the employee’s fault—e.g., lack of market, machine breakdown, cancellation of a client contract, or (for security agencies) the loss of a guarding post. This temporary, bona fide suspension is commonly called:

Off‑detail or floating (security and manpower services)
Temporary lay‑off (manufacturing, BPO, retail, etc.)

Employment ties are not severed; the employee is merely “parked” while the business hurdle is addressed.

2. The Six‑Month Limit

Maximum period: 6 consecutive months counted from the employee’s first day without an assignment.
What must happen before 6 months elapse:
1. Recall/Redploy – resume work under the same terms, or
2. End the relationship for an authorized cause – redundancy, closure, retrenchment, etc., with proper separation pay and notices.

Going beyond six months without either step constitutes constructive dismissal; wages, back pay, and damages may become due.

Pandemic note: Department Order No. 215‑20 briefly let firms extend the period, but only with a duly‑filed Establishment Report and employee consent. Absent those filings, the classic six‑month rule still governs.

3. Procedure for Placing Employees on Floating Status

Step	What the employer must do
a. Good‑faith basis	Document the business exigency (client pull‑out, repair downtime, etc.).
b. Written notice to the employee	State the cause, the expected duration and the right to be recalled or paid separation benefits later. Best practice: 5–15 days before effectivity.
c. Notice to DOLE	File an Establishment Report (RKS Form 5) within 30 days of effectivity.
d. Keep records	Show efforts to reassign, advertise posts, or reopen operations.

No twin‑notice “just‑cause” procedure is required because floating status is an authorized (not disciplinary) measure—but due process in the form of notice and good faith still applies.

4. Pay and Monetary Benefits While on Float

Item	During floating status (no actual work rendered)
Basic wage / salary	Not payable. “No work, no pay” is the default rule (Art. 97‑101).
13ᵗʰ‑month pay	Accrues only on wages actually earned during the calendar year. If zero wages during float, no accrual.
Service incentive leave (SIL)	SIL accrues only after 12 months of service with pay. Pure float periods are excluded from the count.
Health maintenance, allowances, bonuses	Governed by CBA, company policy, or long‑established practice. Absent stipulation, they may be suspended.
Statutory SSS, PhilHealth, Pag‑IBIG contributions	May be voluntarily continued by either party. Many employers keep paying the minimum bracket to preserve coverage, though the law does not compel it.
Tax withholding	None, because no wages are paid.

Exception: If the employer opts to give a retainer stipend, it is considered a benefit — it does not waive the six‑month cap nor alter the constructive‑dismissal test.

5. Jurisprudence Snapshot

Case	Holding (simplified)
PT&T v. NLRC (G.R. No. 144130, 21‑June‑2001)	Six‑month off‑detail beyond which dismissal ripens; employer liable for back wages.
Sebro Security v. NLRC (G.R. No. 115394, 27‑Sept‑1995)	Security guard on float is not entitled to wages during the off‑detail period.
Valdez v. NLRC & NLRC v. Asia Brewery	Good‑faith business suspension shields employer from illegal dismissal claims within six months.
Aliling v. Feliciano Security (G.R. No. 259743, 12‑Oct‑2022)	Re‑assignment to a far‑flung post without allowance after floating may still be constructive dismissal if unreasonable.

The Court consistently applies “no work, no pay” during a legitimate float; the remedy for an over‑extended float is full back wages from day 181 forward, not from day 1.

6. What Happens at the End of Six Months?

Recall to work
- No gap in tenure; wages resume prospectively.
- Wage increases due to CBA or law (e.g., wage orders) must be recognized upon return.
Authorized‑cause termination
- Notice requirements:
  - 30‑day written notice to the employee, and
  - 30‑day notice to DOLE Region (still using RKS Form 5 but marked “closure/retrenchment”, etc.).
- Separation pay:
  - Closure not due to losses / retrenchment: ½ month salary per year of service (≥ 6 months = 1 year).
  - Redundancy / installation of labor‑saving devices: 1 month salary per year.
- Include prorated 13ᵗʰ‑month pay and any convertible benefits.

Failure to give notice and pay separation benefits again converts the situation into illegal dismissal.

7. Employee Options While on Float

Seek other employment. The Labor Code does not bar moonlighting during a bona‑fide suspension.
Demand separation pay early if the employer has clearly closed shop or repeatedly refuses deployment.
File a complaint for constructive dismissal after the 6‑month mark, or sooner if the float is obviously a ruse (e.g., less‑senior replacements are hired).
Continue SSS/PhilHealth contributions voluntarily to maintain coverage.

8. Practical Compliance Tips for Employers

Document every step. Keep emails to clients, job‑order cancellations, and repair invoices.
Give sincere timelines. If you expect only 2 months’ downtime, say so; don’t default to “6 months”.
Regularly update employees (e.g., monthly memo) to show ongoing efforts.
Consider partial work or rotation instead of full float to spare employees pay loss.
Budget separation pay early. Cash‑flow mismatches are no defense to illegal dismissal.

9. Common Misconceptions

Myth	Reality
“I can float staff repeatedly every year.”	Re‑floating after recall may be allowed if each stint has a separate, real business reason. Abusive pattern = bad faith.
“Giving a ₱2,000 allowance protects me.”	A stipend doesn’t reset or extend the 6‑month cap.
“Security guards are different.”	Only the reason (loss of guarding post) differs; Art. 301 still caps the period at six months.
“If the employee refuses transfer, I owe nothing.”	The alternative job must be reasonable (distance, pay, rank). Unreasonable redeployment ≈ dismissal.

10. Checklist Summary

□ Written notice to employee & DOLE before effectivity
□ Six‑month calendar diarized
□ Maintain evidence of recall efforts
□ Recall or legally terminate before day 181
□ Compute separation pay, prorated 13ᵗʰ‑month, clearances
□ Issue COE within 3 days of request (Labor Advisory 06‑20)

11. Take‑Away

“Floating status” is a temporary, exceptional remedy for employers—never a wage‑saving shortcut. During the float, the no‑work‑no‑pay rule reigns, but the employer must either put the employee back to work or pay lawful separation benefits within six months. Proper notices, documentation, and good‑faith timing spell the difference between a valid business pause and an expensive illegal‑dismissal suit.

(Updated as of April 18, 2025; reflects the Labor Code, Department Orders 174‑17 & 215‑20, relevant DOLE Advisories, and Supreme Court jurisprudence.)