(For COVID-19 related concerns, please check the post here.)
The employer is allowed to temporarily suspend work due to bona fide suspension of business operations or undertaking for a period not exceeding six (6) months. This is provided for the Labor Code, as follows:
ART. 300 [286]. WHEN EMPLOYMENT NOT DEEMED TERMINATED
The bona fide suspension of the operation of a business or undertaking for a period not exceeding six (6) months, or the fulfillment by the employee of a military or civic duty shall not terminate employment. In all such cases, the employer shall reinstate the employee to his former position without loss of seniority of rights if he indicates his desire to resume his work not later than one (1) month from the resumption of operations of his employer or from his relief from the military or civic duty.
Concept of work suspension
There is no termination of employment during the bona fide suspension of business operations. The establishment simply temporarily suspends its operations for legitimate and valid reasons, including but not limited to, serious financial losses or business reverses, force majeure (fire, flood, typhoon, etc.), failure to obtain a permit or license to operate, or due to a lawful order by a competent authority – i.e. Temporary Restraining Order/Injunction by a competent court, work stoppage order by the DOLE, or cease operations from the LTFRB for public transportation, etc.
Business operations
In MMCEAFFW Chapter v. Manila Mining Corp., the employer (mining company) was constrained to temporarily suspend business operations due to its inability in obtaining consent from the residents of the community where the company would operate its tailing pond. This consent was one of the conditions required by the DENR-EMB in granting the application for a permanent permit. This faultless failure on the employer was the primary reason for the bona fide suspension of business operations as supported by substantial evidence.
Thus, in a bona fide suspension of business operation, the employer does not terminate the employment of the employee. Rather, there is only “a temporary displacement of employees.”
Conversely, the employee cannot claim to have been dismissed from employment as his employment status is merely suspended. Any labor complaint for illegal dismissal before the lapse of the 6-month period is generally considered premature. For the same reasons, the due process termination of employment is not necessary or required in a bona fide suspension of business operations.
In ARC-MEN Food Industries, Inc. v. Alcomendras, the employee (company driver) claimed that he was dismissed during the temporary suspension of operations of the business (an export-oriented processing company). It was held that he was not dismissed but merely suspended as there was temporary suspension of plant operations due to recurring problems in the equipment and machines, dependence on suppliers for raw materials, and essentially lack of work.
Undertaking
Suspension of work may also be attributable to the bona fide suspension of an undertaking. To the employer, this may be contractual obligations with clients, partners, or affiliates for which an employee is assigned or designated. If such undertaking is suspended, the employer may be justified in placing the employee on “floating status” provided that there is no other available and similar position.
In Nippon Housing Phil. Inc. v. Leynes, the employer undertook to manage the building of its one and only client. Thus, it assigned a property manager. Something thereafter, the employee (property manager) got into a misunderstanding with the Building Engineer assigned to the employer’s one and only client whose building it manages. To resolve the conflict, the employer issued a memorandum directing the employee to allow the said engineer entry into the client’s premises and attributing the incident to “simple personal differences.” Disappointed, the employee wrote the company president asking for an emergency leave of absence to supposedly coordinate with her lawyer and subsequently signified her intention to resign. In response, the employer was constrained to look for a replacement. Surprisingly, the employee indicated here intention to report back to work. As there is only one post available (and a replacement had been posted), the employer directed her to report to the main office while on “floating status”. It was held that “off-detailing” was not a form dismissal so long as it does not exceed six (6) months. As the company ventured into building management with only one client, there was no property manager position available for the employee resulting in her “floating status.” Eventually, the employer was justified in dismissing the employee for redundancy.
Dire exigency required
As held by Supreme Court, the “paramount consideration” to take note for a bona fide suspension of business operation is the “dire exigency” of the employer’s business compelling it “to put some of its employees temporarily out of work.”
There are no hard and fast rules on what may constitute as a dire exigency. Thus, the validity of a bona fide suspension of business operation will be on a case to case basis and taking into consideration the surrounding circumstances.
In De Guzman v. Philippine Rabbit Bus Line Company, the employer (Bus Company) was held liable for illegal dismissal after the employee (bus conductor) was not given any work assignment for over six (6) months without any justification or explanation.
For security services, guards placed on temporary “off-detail” happens when the agency’s clients no longer renew their service agreements or exercise the right to replace assigned personnel. With these, the relieved or replaced security guard may be placed in such temporary “off-detail” or on “floating status” if there is no available posts or assignments. During this non-posting, the employee is not entitled to any salary or monetary benefit provided by law.
In Eagle Star Security Services, Inc. v. Mirando, the employee (security guard) was relieved from his post in a bank and placed on “floating status.” Failing to present evidence that there was a lack of available posts where he may be re-assigned or that his relief was due to the request of the client-bank, the employer was held liable.
In Sentinel Security Agency, Inc. v. Cabano, the employer (security service agency) was awarded a new contract by the client but still placed the employee (security guard) on “floating status”. Consequently, it was held that there was no bona fide suspension of operation, business or undertaking that would justify placing the employee on off-detail and make him wait for six (6) months.
Burden of proof is on employer
Due to the “grim economic consequences” to the employee, the employer has the burden of proving that suspension of operation is valid. The same rule applies for employees who are placed on “floating status.” Failure to do so, the employer may be held liable for illegal dismissal.
For suspension of business operations due to serious financial losses, these are ordinarily evidenced by the audited financial statements, balance sheets, profit and loss statements, annual income tax returns. In Manila Mining Corporation v. Amor, the employer (mining company) was held liable after failing to present substantial evidence to support its claim for serious financial losses as the basis for temporary suspension of operations.
Notwithstanding, the presentation of an analysis of an independent certified public accountant was considered sufficient when a company claimed impending future losses which are neither past nor actual ones. After all, the employer is not required to actually suffer business losses or financial reverses to suspend business operations.
Further, this burden of proof is designed to guard against scheming employers who may just be feigning or pretending of business losses or reverses in their business so as to manage or ease out employees.
Aspect of management prerogative
The employer’s decision to suspend operation is an aspect of management prerogative. “Closure or [suspension] of operations for economic reasons is, therefore, recognized as a valid exercise of management prerogative. The determination to cease [or suspend] operations is a prerogative of management, which the State does not usually interfere with, as no business or undertaking [is] required to continue operating at a loss simply because it has to maintain its workers in employment. Such an act would be tantamount to a taking of property without due process of law.”
Otherwise stated, the employer has every right to suspend its operations in order to avoid financial ruin. “The decision to suspend operation ultimately lies with the employer, who in its desire to avert possible financial losses, declares, as here, suspension of operations.”
As with any exercise of management prerogative, it is limited by good faith and with due regard to the rights of the employees.
In Dela Cruz v. Elin Pharmaceuticals, the employee was temporarily laid-off allegedly due to the employer’s “cost-saving program” in response to the daily brownouts. Of more than 100 workers, it was only the employee who was subject of such program showing that such was “a sham” and “a disguise of the true reason or intention of the company” to rid the employee from service.
In San Pedro Hospital of Digos, Inc. v. The San Pedro Hospital Employees Union – National Federation of Labor, the employer was held liable after it was shown that temporary closure was “motivated not by a desire to prevent further losses, but to discourage the workers from organizing themselves into a union for more effective negotiation with management.”
2 Types of Work Suspension
There are two (2) types of suspension of business operations: (a) entire business, or (b) specific component.
In Valdez v. Nelbusco, Inc., the employer (Bus Company) was constrained to temporarily stop the operations of a bus due to the breakdown in its air-conditioning unit. When the assigned bus driver challenged its validity, it was held that such a ground was a valid reason for suspension of operations provided it is for a reasonable period of time. Work suspension may either be for the entire business or of a specific component thereof.
6 Months Period
During the six (6) months period, the employee’s employment status is merely suspended and not terminated. If it continues beyond that period, the employment is permanently terminated resulting in illegal dismissal.
Temporary retrenchment or lay-off
Temporary lay-off is neither illegal nor is it a form of unfair labor practice. However, there is no exact legal provision that applies to temporary retrenchment or lay-off. Instead, Article 300 has been applied by analogy “to set a specific period that employees may remain temporarily laid-off or in floating status.” As 6 months is the limitation for suspension of business operations, the temporary retrenchment or lay-off should also not be longer than 6 months.
After the lapse of 6 months, the employer has two options: (a) recall the employees back to work, or (b) permanently retrench them. If the employer does not exercise any of these options, this would be “tantamount to dismissing the employee” with the employer being liable for the dismissal. If recalled back to work, the employer is required to reinstate the employees to their former positions without loss of seniority rights provided they exercise such right within one (1) month from resumption of operations.
In Lagonoy Bus Co., Inc. v. Cariño, the temporarily laid-off employees (bus drivers and conductors) who were already regular employees were rehired by the employer as probationary employees after the suspension of operations due to change of management. As probationary employees, they were dismissed for failure to meet the company standards. The employer was held liable for illegal dismissal since the returning employees were already regular employees, and cannot be downgraded to probationary employees, despite a change in management as the company remains to be the same entity acting as the employer.
More than 6 months: Constructive dismissal or retrenchment
If the bona fide suspension of operations exceeds six (6) months, the employment is considered terminated and made permanent resulting in constructive dismissal.
In SKM Art Craft Corporation v. Bauca, the employer’s establishment was razed by a fire resulting in the bona fide suspension of operations. While valid, the employer failed to recall the employees after the expiration of the six (6) months period resulting in permanent dismissal.
In International Hardware, Inc. v. Pedroso, the employee (delivery truck driver) was rotated by the employer for over six (6) months resulted in the reduction of his working days and his income. By way of defense, the employer explained that the rotation was due to the financial losses suffered by the business. However, it was held that suspension of operations in excess of 6 months resulted in the termination of employment by way of constructive dismissal or retrenchment. Thus, the employee was entitled to separation pay.
In Agro Commercial Security Services Agency, Inc. v. Jimenez, the employees (security guards) were placed on “floating status” for over six (6) months after their assigned companies and government agencies were sequestered by the Government. While valid, the “floating status” of an employee should only last “for a reasonable time.” In this case, the employees were placed on such status for over six (6) months resulting in them being considered illegally dismissed from service.
Gainful employment elsewhere
The affected employees who find gainful employment elsewhere are considered to have severed their employment relationship.
In JPL Marketing Promotions v. Gonzales, the employees placed on “floating status” who found gainful employment within the six (6) month temporary work suspension were considered to have severed their employment. “As they admitted in their comment, all three [employees] applied for and were employed by another establishment after they received the notice from [the employer]. [The employer] did not terminate their employment; they themselves severed their relations with [the employer]. Thus, they are not entitled to separation pay.”
Despite such case above, it is a best legal practice to still issue a report back to work to the employees within the six (6) month period. The above jurisprudence does not directly do away with the responsibility on the employer before the lapse of such period – i.e. (a) recall the employees back to work, or (b) permanently retrench them. If indeed it is established by documentary evidence that the employees have been employed elsewhere and they choose to remain there, the employer should proceed with the process of abandonment –report to work order, and thereafter notice of termination.
Temporary to Permanent Closure
In San Pedro Hospital of Digos, Inc. v. The San Pedro Hospital Employees Union – National Federation of Labor, the employer’s temporary suspension resulted in its permanent closure. While the temporary suspension was invalid as the claim for serious financial losses was unsubstantiated, the permanent closure was valid as it was corroborated with substantial evidence. As the Supreme Court noted the irony, it was the temporary suspension of operations of the hospital “that made inevitable and irreversible (as well as legally tenable) its subsequent permanent closure.”
Forced Leave of Absence
The bona fide suspension of business operations or undertaking is not to be equated with forced leave of absence, and vice-versa. If there is indeed a valid ground for work suspension, then there is no need for a leave of absence from the employees.
In Bontia v. Consolidated Plywood Industries, Inc., the employer imposed an indefinite work suspension and required employees to submit applications for leave of absence. It was held that “if there was a bona fide suspension, then there was no necessity to require [the employees] to sign applications for leave of absence with uncertain and indeterminable terms.” With an unspecified length on the leave, it was highly inequitable on the pitiful employees who were compelled and keep reporting for work only to be told that there was no work. They incurred transportation costs and wasted their time which could have been devoted looking for other sources of income.
Employment Law Project 
Hi,
I have a concern as a HR Staff of the Company and employee, We have this situation that Or Company is Located in Muntinlupa City, but we file a temporary closure with employees lists, letter from the owner stating the financial losses addressed to every employees and agreement from employees with signature.
We call them for a meeting with an attorney, informing them the situation of the company, and offering them that the Manila branch is temporarily close due to financial losses because of pandemic, but we do have a warehouse/project/work in Bacolod City.
In this, their Salary is still the same, we also offer a Staff House for them, food allowance, a round trip ticket for their vacation to revisit they family. But most of them wanted to stay in Muntinlupa and didn’t agree with our terms and offer of work for them in Bacolod. They wanted a separation pay or money because they didn’t want to go to Bacolod for work. But there are some employees who agreed and willing to work in Bacolod with these terms. Some of them who refuse are also working now in other companies or accepting work from other establishments and we are ware of it and they told us about it.
The manila and Bacolod is still the same company and owner. It’s Just that in terms of we just transfer location, because in manila we kept on losing because of renting a office and warehouse, while in Bacolod the owner owns the warehouse and office.
Can you guide us and give us advise on what are we going to do.
Thank you.
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If the employee has been provided a laptop and car and have been placed on floating status, can the employee validly refuse to surrender the laptop and car?
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In a word, no. The laptop and car are company property, and while they may be part and parcel of the contract, the company still has the right to remove them as and when necessary. Also, if the employee is placed on floating status, then they will not be working, so have no need of the company equipment, which should be returned without delay on request from the company.
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Good day, Sir! Our company closed due to financial problem. We no longer have the money to buy medical supplies which affects the operation of the business that belongs to healthcare industry. As an employee, we were just informed through a letter that we will temporarily shutdown. So we are somehow in a floating status. While in a floating status, we took an on call job to other healthcare facility. Last week, the management told us that there will be a meeting. However, what happened was we were interviewed by someone claiming that they are the new owners of the company. They told us that there’s no assurance that we will be absorbed by them. My question is 1. Are we entitled to a pay while we were on “floating status”? and 2. Are we entitled of a separation pay from the former owners? Also, what would be the basis of our separation pay since our employment contract gets renewed yearly. Lastly, some of the employees did not resign but are currently employed by another company. Are they eligible to get a separation pay?
Selling of business happened last week. As the former employer, what should we do? Should we report it to DOLE? What do we issue the employees? When will be the last day of our employees? 30 days after niotification or on the day of selling?
Hope you can help us Sir. Thank you very much!
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An interesting scenario, but one that is becoming more common these days.
To answer your main questions:
1. No, while on Floating Status the standard is No Work, No Pay, because the law only gives an honest day’s work for an honest day’s pay.
2. yes, as the company has closed, you are entitled to Separation Pay, whether you are absorbed into the new company or not.
As for contracts, unless you have Contractual Employment, then you may be considered as regular employees. For that, you would need to check your contracts with a lawyer that could advise you based on their content. Not all contractual agreements that are repeated are valid as true Contractual Employment. You can have them checked by our lawyers at:
https://www.facebook.com/ELPPhilippines/
The basis of any Separation Pay would be those contracts.
And this is the part that gets confusing. Why are you now asking as the employer?
“As the former employer, what should we do? Should we report it to DOLE? What do we issue the employees? When will be the last day of our employees? 30 days after notification or on the day of selling?”
The answers are:
Yes, you report the closure to DOLE, at least 30 days in advance.
You issue the employees Notice of Retrenchment at least 30 days in advance of the date of their retrenchment, and then pay their Separation Pay (if eligible) within 30 days of their last day of work.
Your legal team should be able to handle this for you. If you are selling the business, then you have lawyers, diba?
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Thank you for this Sir. I am the HR of the said company that’s why I’m asking for both sides. The selling of the company is more of a payment to a loan. It’s like we were “rematado” by a lending company. Due to financial struggles, we weren’t able to pay off our debt, thus, they have to foreclose and sell the company. All of it happened so fast that the 30 days notice was not followed. We don’t have any lawyer because we cannot afford one. Your response helped a lot. Thank you again, Atty!
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Do we need to officially notify DOLE and employee re: Floating Status? We were not able to notify both DOLE and employee during pandemic and all our employees had been floating since March 17, 2020. We we able to recall them Mid of May 2020 only upon submission of health permits/clearance from their municipality/baranggay. However, there were some that did not reply and some that did not comply right away. When they were able to secure health clearance it was July already and the business is still slowly picking up from the losses and there were hardly any work/project where we can assign them to. We just told them to wait for further advise. Up to now we cannot accommodate/afford adding more employees. Can they still be under floating status? Is it really extended to one year instead of 180 days because of the pandemic?
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Good afternoon.
There was a directive from the DOLE regarding notifying of floating status using the Establishment Report Form RKS Form 5, which was issued in July 2020, and required all employers to report the floating status of their employees.
However, if majority of those employees are now back to work, then it would not really be an issue for you to not have notified, unless there is a potential complaint from one of the employees.
Regarding the continuation of floating status, DO 215 does permit this, as long as the employees agree to it. If they do not, then you are obliged to retrench or reinstate them accordingly. I would suggest talking to your employees and asking them to agree to the extension, then submitting the correct Establishment report form to the DOLE.
* Labor Advisory No. 17, Series of 2020
* Labor Advisory No. 17-A, Series of 2020 (Establishment Report Form)
* Labor Advisory No. 17-B, Series of 2020
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Hi Atty,
Our company has been on temporary closure due to the pandemic. As we are reaching the 6th month, management is talking about retrenchment.
Is the 6mos temporary closed be counted on tenure when computing for separation pay?
Thank you
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H EC,
Yes, when computing tenure for Separation Pay, it is taken right up to the last day of employment, including the period during this recent pandemic where employees where not able to work. They were still employed, so it counts towards tenure.
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Hi:
In terms of pay, so the sequence of events is this:
Employee got temporary layed off on june 1. Then he got notice today Oct5 that he is retrenched effect Oct3. Will he get payed for those months that he was temporary layed off?
What is the minimun retrenchment pay if he started on Jan30-2017 per ph labour laws?
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Aside from retrenchment requiring 30 days notice, the amount paid for Separation Pay on retrenchment is EITHER one month salary OR half a month alary per year of service, WHICHEVER IS GREATER.
If you have been working since Jan 2017, you would be eligible for four years worth of Separation Pay, which would equal two months salary.
And the period of TLO is not paid.
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Hello Sir,
I work in Travel Industry as a permanent/full time employee for more than 5 years. Last April, we were put into 6 months temporary LWOP, and this September we are told to comeback to work in October after the 6 months lapse. However, the working days given to us are only 2 days a week and some are 3 days a week. Is this allowed or legal? We are doubting the decision here, because other department in our company already retrench the members who rendered 6 months of Lwop. We are a group of around 40 or more, we question, why don’t they retrench 20 employees and then recall the other 20 employees as full time, it’s a win-win for both parties. And also, the company has not recover yet and forecasted to recover 2 to 3 yrs since travel industry has been hugely affected by Covid. They also announce the new direction to operate in a Smaller structure.
We are also doubting the legality move by our company because they are claiming they comply with the labor ordinance issued to have flexible working arrangement to avoid further employment loss. And it contradicts because they do not allow us to use our earned leaves during our leave without pay period.
After waiting for 6 months of being floating status we are after for the retrenchment or severance package because as mentioned the company now is under the direction of smaller operations. They are doing this to encourage and force us to resign voluntarily which make us ineligible to get the severance package because of the limited workdays and pay given to us,
Can you please help us understand this.
Thanks a lot in advance.
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The company is actually well within its right when it comes to the Flexible Work Arrangements, as long as they first submitted the Establishment Report Form (RKS Form 5) to the DOLE. Reduction of Workdays is one of the allowable measures of companies to reduce their losses during the pandemic, and these allowances have been given throughout several Labor Advisories, namely 17, 17-A, and 17-B.
The decision to retrench or not lies solely with the employer, and the law does not get involved in the decision of management prerogative.
That said, the company does not have the right to refuse to allow you to use your leaves during the quarantine, and the law has stated that this is a right that only the employee can decide. Unfortunately, now, this becomes merely an internal issue, as you are already reinstated under the Return to Work Order.
If you feel that the company are restricting your workdays in order to force you to resign, you are going to have to be able to prove that in some way for the law to be used in your defense.
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Thanks a lot for the response sir. Our return to work is next month with reduced working days after rendering 6 months of floating status. Do we still have the right to complain over the refusal to use our Leaves? Our employer at that time said we cannot use our leaves when we are in floating status, but again it contradicts to the fact that they are also utilizing the Labor advisories.
This can be add to our proof or collated complaints that our employer is having malicious intent for us to resign.
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Yes, you can use the fact that they refused to allow you to use your leaves to show that the employer has bad faith.
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Good Day Sir,
Just want to ask when is the start of the floating status of the employee basis because our company never told us or dont have any update that we are in floating status since day one of lock down our company never updated us even though we are asking for update about the reume of the company and they were always telling us that there still no update and our company never stop operating. Thank You I hope you can help me,
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According to the DOLE, and general considerations by the major law firms in Metro Manila, the beginning of the floating status for employees is the first day when you were not working and not being paid.
For many, that was March 17, the first day of the lockdown, despite what many companies are saying about this being excluded.
In law, if you have been on floating status since March 17, then you have now exceeded the 180 days that are permitted for a temporary suspension of business operations.
The law now deems that your employer has dismissed you illegally, and if they are not responding, you may file a complaint in the NLRC for Illegal Constructive Dismissal.
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Hi Sir,
I’m one of the employee of our company placed under temporary layoff for 6 months,
from april 25, 2020 to october 25 2020,
My question is, if the company recalls us lets say on the fifth month of our temporary layoff which is September, and we accept the return to work order and started to work again, and come October they decided to temporary layoff again for a period of another 6 months. Can they do this the second time? will the 2nd temporary layoff for 6 months is valid,
the reason I asked is there are rumors that our company will do this trick to us.
Thanks
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Firstly, let me just explain that six months in terms of law is actually 180 days, not six calendar months. That means the last day of your TLO will fall on October 21, not October 25.
If the company has returned you to work, then it should be because they are able to financially cope after their recovery. If they then try to apply the suspension again, for an additional six months, they MUST prove to the DOLE that they recovered, but were again hit by financial losses that make the TLO valid. If they cannot provide this, then the suspension becomes illegal, and you have grounds for complaint.
I would recommend that, if they do this, to check with the DOLE office in the location of your employer to find out if the suspension is legally applied. And even if the DOLE are unsure, you can still challenge the TLO in the NLRC. The onus of proof is always on the employer.
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Thank you sir for a detailed explanation,
just a followup question, if the company issue a return to work order before the expiration of 6 months of our temporary layoff, but it is partial only, lets say 3 days paid work in a week, can you decline that and demand to be retrench instead? because i thought that it is unfair for us to wait for 6 months without pay hoping that the company will pay us a separation pay, that is why we did not resigned yet with the company. we are also a tenured employee, almost of all of us are working for 5 years and up in the company.
Thank you so much
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If you were issued a RTWO, for whatever amount of hours available, then you are required under law to obey it. Even for only a partial return to work under the allowed Flexible Work Arrangements. There is no right under law for any employee to demand retrenchment. It is a part of Management Prerogative alone.
Moreover, the idea of the floating status is that the company will reinstate its employees, so that they can go back to working. There is no part of this system that makes it “unfair” for employees that are hoping for Separation Pay to be reinstated.
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1.Are six (6) months period of being on floating status included in the computation for separation pay?
2.Starting lockdown on March 17, 2020 I was placed on floating status and ended on September 12, 2020. Then on September 18, 2020 I received Notice of Retrenchment stating among others that my employment will be terminated effective October 18, 2020 pursuant to the requirements of Art 283 of Labor Law on payment of separation pay. Additionaly my employer will pay my FINAL SALARY correponding to the 30 day period from September 18-October 18 during which I am no longer required to report for work.
3.Hence, I am requesting for your reply on my question stated in paragraph 1.
Thanks and my kind regards
FELIPE DL NAPOLES JR
0927.349.4456
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Yes, the six months period of floating status MUST be included in the computation of tenure for Separation Pay. While you may not have been at work, you were still legally employed by your employer, and the law states that this must be included for purposes of Separation Pay.
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Appreciated much Atty. SIr
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Hi Sir,
I would just want to ask about the process of TLO, I hope you can shed some light…
1. We have been notified that we will be put on TLO from Sep 11, 2020 to March 11, 2020.
2. We were previously told that after the 6 months period and we are not yet reinstated to work – we will be able to get our unpaid 6 months salary back plus any separation pay (if applicable). Can you please confirm po if this is the case for those employee put under TLO/floating status?
3. Our status with this company is “permanent”
Hoping to hear back from you sir 🙂
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Hi Mary,
First, let me correct your dates for your temporary layoff, or floating status, whichever your company like to call it. You said your TLO starts on September 11, 2020, but it will not end on March 11, 2021. The last day of your six (6) month TLO period is actually March 8, 2021. In law, one month is equal to 30 days, since calendar months are not all equal. Thus, a period of six months, for the calculation of terms such as TLO and Probation, is equal to only 180 days. If your agreement states March 11, 2021, you may want to discuss dates with your HR Manager. If you are permitted to remain on TLO after March 8, 2021, you will be considered as illegally terminated and due separation pay.
Second, unless this information about getting your total salary for the six months of TLO if you are not reinstated, this must be in a written agreement that both you and the employer have signed to be effective and legally compensable. Normally, at the end of six months, the employer has to reinstate you or retrench you with the correct amount of separation pay (one month salary including allowances OR one half month for every year of service, whichever is higher). There is no allowance for this in law, so any agreement would be purely contractual.
I hope this sheds a little light on the issue for you.
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Hello po Mr Charles! Hope you can answer my concern po.
I was put on on-the-spot TLO last May and based on my research and readings here, there’s no such thing as on-the-spot. Also wala rin silang notification sa DOLE.
Now, after almost 3 mons, they’re calling me back kasi ramping na raw, eh nakapag file na po ako ng illegal suspension complaint sa NLRC against them at may bagong work na po ako. At gaya ng nabasa ko dito, THIS IS NOT MOONLIGHTING at wala akong violation, ganun din po ang advice ng NLRC law arbiter, na kumuha na ako ng panibagong hanap buhay for me to carry on.
But the HR and Talent Acquisition sa former company ko na ito keeps on reminding me na activated na raw ako ulit at need ko na raw magreport. How should I handle this? Sasabihin ko na po ba sa kanila na I HAVE FILED A LABOR COMPLAINT against them? I worry na baka kasi baliktarin po nila ako for not answering their messages and calls. Sa akin kasi, they had already abused me once, and alam ko na they can do this again so I’d rather file a case sa NLRC (which I did) at mag move on na sa new company.
Can you please let know of what to tell them? Maraming salamat po!
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We have employees who haven’t reported to work since March 17 because of transportation constraints (they live in Pampanga). Is it really necessary for us to retrench them before the maximum 6-month period of floating status? We didn’t give them TLO notice and the only document we submitted to DOLE that says “temporary closure” was the Establishment Report on COVID 19 during the CAMP application. Is that enough?
We honestly do not want to terminate them because they are our seasoned employees who have been with us for many years. They have always shown interest in going back to work but also afraid of the health risks here in Metro especially that most of them are already 50+ yrs. old. I hope DOLE will soon clarify the floating status guidelines and make exemptions.
Anyway, thank you for helping all the confused EEs and ERs in this difficult time.
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Good day Attorney,
It’s clear to me that the Labor code specifically states “a period not exceeding six (6) months” even in the situation of Pandemic. However, can I ask your expert opinion regarding this matter?
1.) What are the processes that the company needs to do if they cannot continue operating due to financial losses?
2.) Is the company still required to give the separation pay?
3.) Are there any benefits that should be given to an employee if the company decided to transfer the employee on a different company but under the same management (sister company)?
Thank you so much in advance.
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Good evening Melody,
1. Suspension of business operations, or floating status, actually has a defined process to apply if the company needs to place people on floating status to allow them to recover. However, if they are unable to continue to operate due to financial losses, then their actions next depend on the type of company we are talking about.
Small to Medium Enterprises, with a relatively low number of employees, can simple close up, terminating the employment of their employees due to the closing or cessation of operation of the establishment or undertaking. In these cases, the employees are thereby retrenched, and paid separation pay of one month or half of one month for every year of service, whichever is greater. Notice must be given to the employees and the to the DOLE 30 days in advance of the date of retrenchment.
For larger businesses that are closing down due to financial losses, such as corporations, they need to go through insolvency first, before any employees that are retrenched can be paid their separation pay. However, the company does have the right to retrench first, and declare closure and insolvency later. This way, the employees get their separation pay without having to wait for insolvency hearings.
2. Yes, as long as they are retrenching you, then you are entitled to separation pay.
3. This is a much more complicated issue than simple retrenchment. As long as the company is willing to offer a transfer to their sister company, which MUST be under the same holding company or parent company, not just where the owner of the current company has another company as well. These would not be sister companies, but completely separate entities.
In this case, as long as you are happy with the move, then they can allow you to move, but are not obliged to pay any incentives or allowances unless they agree to it in advance, or they are required for moving house or region to work in the different location. Only then would the company be liable for benefits to help you relocate.
I hope this all helps. If you have any further questions, or would like more defined legal advice, you can contact us through our Facebook page at:
https://www.facebook.com/ELPPhilippines/
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Hello Atty. I have a quick question po. 🙂
I was given 30 days notification last March 27, 2020 that I will be placed on TLO effective April 27, 2020.
Today, August 7, 2020, I was given a notice that my employment is terminated effective August 7, 2020 due to redundancy and that employer claimed that they don’t need to pay the 30 days redundancy notice since they already paid the 30 days notice for the TLO.
Issue: Whether or not an employee is entitled to a 30-days PAID notice for redundancy under TLO Status?
Thanks in advance and God bless po!
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They are REQUIRED to give you 30 days notice of redundancy, as per the Labor Code. And during that period, if you are currently working, they are obliged to pay you. However, if you are currently on floating status with No Work No Pay, then they are not obliged to pay you.
There is no allowance to pay you instead of giving you the 30-day notice. This is because there are certain rules around redundancy. Philippines labor law recognizes that an employer may unilaterally terminate employment for certain ‘authorized causes’, one of which is redundancy.
A redundancy will exist where the services of an employee are in excess of what is reasonably required by the enterprise ie. a position is redundant where it is superfluous to the business. This may be for any number of reasons, for example, previous over-hiring or a decreased volume of business. It may also result from a restructuring, reorganization or outsourcing of work.
An employer’s decision of whether an employee’s services continue to be necessary is an exercise of business judgment and part of the employer’s management prerogative. Such a decision will not be subject to review provided that it was not made unlawfully, arbitrarily or maliciously.
In addition to establishing the cause of a dismissal was redundancy, for the dismissal to be lawful, an employer must:
1. serve written notice on both the employee and the Department of Labor and Employment at least one month prior to the intended date of termination;
2. pay the employee separation pay equivalent to at least one month pay or at least one month pay for every year of service, whichever is higher;
3. act in good faith in abolishing the redundant position; and
4. apply fair and reasonable criteria in ascertaining what positions are to be declared redundant.
If your employer has not done this, then your dismissal is illegal, and you can make a complaint in the NLRC when they reopen. And based on your account that you were given notice of redundancy on August 7, that would be effective the same day, they have violated the Labor Code, and your redundancy dismissal is illegal.
If you require help and advice for a complaint with the NLRC against your employer, please get in touch with our legal experts through our Facebook contact page at: https://www.facebook.com/ELPPhilippines/
Or by email at employmentlawphil@gmail.com
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Hi Sir! I wanted to ask about the legality of prolonging “floating status” or NO WORK, NO PAY of employees. Can it possibly be more than six months? Because if the business entity is not yet allowed to resume operations due to Government’s mandate on COVID-19 crisis (e.g Cinemas, Gyms, Sports and recreation facilities) and only essential businesses are allowed to open. What will happen? Or should the company automatically lay off all its employees after 6 months? So what if the business will already be allowed to reopen by the 7th month of closure? Is hiring new staff the only option?
Thank you.
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Since the Labor Code specifically states “a period not exceeding six (6) months”, then there can be no possible extension of the temporary layoff or floating status.
If the company has not reopened or is not yet ready to reinstate all of its employees at the time of the end of the six month period, then those employees MUST be retrenched, complete with the correct amount of separation pay.
The company can offer their staff to come back to work if they reopen a month after the end of the six months, or they can hire new staff for their reopening. But there is no allowance in the Labor Code or any associated Labor Advisory that permits an extension.
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Hi, can we hire you as lawyer for a pending labor case before the NLRC?
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Good morning,
Unfortunately, I am retired from handling cases now. However, I can help with the documents you will need for a small fee, and I can advise you on what to say and expect for each of the various meetings and hearings you will attend. Please get in touch through our Facebook page or email address to discuss this further.
https://www.facebook.com/ELPPhilippines/
employmentlawphil@gmail.com
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Hi, Sir.
I have worked in a BPO company for more than 10 years. I was notified of my TLO status in April, to be effective in May, as my position, per HR, is “in excess of the current business demands.” While they adhered to the 30-day policy, I received no support from them to recall me back to work in the past three (3) months. With the ECQ lifted in NCR and the lockdown protocols easing up but still on GCQ, they have not made any effort in contacting me, as I presume that the business demands have not improved since the issuance of my TLO.
As my financial resources are already depleting, I have sought other opportunities outside, but to no success yet.
Since the labor law states that a TLO should be no longer than 6 months before the separation pay (Art. 283) is given if not reinstated, can I demand the company to shorten this period, since they’re also not keen in reinstating me anytime soon?
To add insult to injury, the company has released numerous ads in different global online platforms announcing the acquisition of another foreign business. It seems ironic, since they’ve put more than 100 employees on TLO during this time. Most are even in the top management roles.
Everyone is struggling because of the pandemic, and with no clear sign of the situation improving in the next months, ergo the company has no intention of recalling us back anytime soon, should the temporary layoff period be withheld and the employees receive our separation pay earlier?
Thank you very much and I’m looking forward to your response.
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Hello Jet,
A temporary layoff is a form of temporary suspension of employees due to financial conditions that can last for UP TO six months. Under the Labor Code, an employer, for valid reasons, can suspend operations of all or a part of their business for a period of up to six months, and cannot be “forced” to reduce this period. Demanding a reduction of the six month TLO is not something that an employee has the right to do. Only the employer can decide to cut the period short.
While you may be on TLO from the company here in the Philippines, your company may have other branches in other countries that are not suffering as much. It is not uncommon for companies here to have US parent companies. However, that does not mean that they are all exactly the same. Each company within a corporate umbrella is an entity in its own right. So it is wrong to assume that, while one branch is having financial issues due to the pandemic here in the Philippines, al other branches globally must be in the same boat.
Unless the company decides to reinstate you or give you separation pay and retrench you early, you will have to either wait out the six months, or resign to find other work elsewhere.
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Hi, Need help. I am one of the floaters since April of this year and I just received a termination notice/letter from the company in less than 6 months.
Based on management’s discretion, they said that they regret to inform me that I can no longer be a part of the Operations effective that day and until such time that I am recalled (no longer than 6 months from issuance of the notice) to take on an active status within the company. They also said that, for me to recall to my department or qualify and get accepted to a new department, there are certain conditions regarding it.
❏ I will undergo a departmental-specific assessment to join the training.
❏ After passing the assessment, I will undergo a training/certification process as a prerequisite to your transfer.
❏ In consideration of the great skills and career development programs, this opportunity offers, one of the major requirements is for you to pass the initial and all future training/certification courses.
❏ In order to maintain the company’s metric-driven assessments, the company will regularly monitor and evaluate your performance. Your consistency to perform within Onerent’s standards of service as well as your contributions to the success of the department may lead to corresponding pay rewards, following the standard guidelines of the company.
❏ Failure to pass any of the certification and training courses is considered a breach of the training agreement, and may prompt management to exercise its prerogative to act based on operational business needs, which may lead to the discontinuance of your employment with Onerent. Rehire provisions will apply.
They have sent me an email to re-apply for a different position. I did respond but they did not reply. Until they sent me today an email that I was terminated due to 1. no response to any interview schedule of Recruitment as the company deem that you are not anymore interested to be employed. 2. I refuse to be re-profiled to a different department. (But I did not) and lastly, 3. This act constitutes a violation under the following:
Section V.A. Insubordination is any act of defiance, disobedience, dissension or resistance to authority.
Section V.A.2. Refusal by an employee to accept a task, shift or work assignment after having given full instructions, orientations or training for the job without valid or justifiable reason.
Corrective Action Level: 4
Section V.A.3. Failure to comply with the given & established procedures or work instructions on the employee’s assigned task and assignment. Corrective Action Level: 4
Please advise. There were employees that were returned and got their job back without following the processes stated above. It is unfair for me that in less than 6 months, they decided to terminate me.
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By the way, I am a regular employee of this company. Id like to know if I can resign or will I still get benefits from the company? Please let me know the best action I can do for this. Thank you Sir!
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Hi Angel,
All of the more complicated details aside, as a regular employee, you are entitled to certain rights under the Constitution. Two of those are the right to tenure and the right to work. As you are already a regular employee, in order for the company to terminate your employment, they MUST follow the procedure of Due Process, as given under Article 294 of the Labor Code, which reads:
“In cases of regular employment, the employer shall not terminate the services of an employee except for a just cause or when authorized by this Title.”
In cases of dismissal for Just Causes under Article 297 of the Labor Code:
Termination by Employer. An employer may terminate an employment for any of the following causes:
(a) Serious misconduct or willful disobedience by the employee of the lawful orders of his employer or representative in connection with his work;
(b) Gross and habitual neglect by the employee of his duties;
(c) Fraud or willful breach by the employee of the trust reposed in him by his employer or duly authorized representative;
(d) Commission of a crime or offense by the employee against the person of his employer or any immediate member of his family or his duly authorized representatives; and
(e) Other causes analogous to the foregoing.
Irrespective of the process that they required for re-interview and other processes for returning to work in other departments, as this is a company-specific requirement and not governed by law, the company MUST follow Due Process in termination.
This means they are required to follow what is known in layman’s terms as the two-notice rule.
Firstly, the employer must personally give you or send to your listed address a Notice to Explain (NTE), giving you five days to respond to the Notice to explain why you should not be considered for sanctions, and listing ALL of the allegations made against you. The Notice must also include a date of Hearing, wherein you can give a verbal rendition and produce evidence to support your claims. This is required in cases where termination may be the sanction.
The second Notice, which must also be handed to you personally or sent to your listed address, is the Notice of Decision (NOD), which is also known as the Notice of Dismissal in cases where termination of employment is the required sanction. This Notice will outline the decision of the panel on your disciplinary action, and give you the reasons for the sanction that was given, up to and including dismissal.
If they did not follow this Due Process correctly, then you have been Illegally Dismissed. Both Notices I explain above MUST be given in person or sent by mail to your listed address, so that you have a hard copy of the Notices. Email notification without hard copies is not valid for termination or sanction. So if they sent you an email telling you the reasons for your dismissal, without having first sent the NTE, had a hearing, and sent the NOD, all in hard copy to your listed address, your termination has been done without Due Process, and you have a valid complaint for a case through the offices of the NLRC.
I hope this helps. If you need further help, advice, or aid with a case in the NLRC against your employer, please get in touch through our Facebook page at https://www.facebook.com/ELPPhilippines/
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Good Day Sir Charles,
Our employer had already informed us via Townhall meeting that TLO will be issued to some of our employees. Reason mainly is due to “serious financial losses” brought by the Covid-19.
As far as I recall, during the meeting, they only show us slides/ppt presentation about the following:
a) The management prerogative about the Labor Code on TLO
b) loss of volumes & decline of sales (in %).
c) the excess manpower that will be subjected to TLO
d) timing plan/dates which includes (1) July 7 – advance information via Townhall meeting, (2) July 8- notification to DOLE that the TLO will be effective on Aug 12 &, (3) July 9-11, notification period to affected employee/s
e) criteria for the TLO selection
f) Q&A
The meeting happened last July 7 which is within the timing plan above, the advance information seems to be within the law, and all is valid.
I am hoping that you can shed lights to the following questions which were not raised (or afraid to raise) during the meeting.
Q1: We knew that the reason is a valid “serious financial losses” Management prerogative. But, given that the Management only shows us a power point slide showing the loss of volume & decline of sales based on actual & forecast (volume & sales). Is this a valid justification to show “serious financial losses” clause on the Labor Code? Or does it need to be a report coming from a 3rd party Certified Public Accountant? They did not say this (3rd party CPA report) during the meeting.
Q2: In the meeting, the company will suffer a forecast sales drop of 30-35% at the end of this year (compared to 2020 budget). But this does not mean that the company is in a negative profit loss by the end of the year (just the 30-35% drop compared to the budget). Will this be a valid reason for declaring a “serious financial loss”?
Q3: Is the timing plan/dates justified and valid from July 7 (townhall meeting) – July 11 (notification to affected employees? Or this seems too abrupt and fast?
Q4: It was also discussed in the townhall meeting that upon notification of the affected employee (July 9-11 schedule), he needs to leave the company premises effective immediately. This means that he will render a “force leave” for 1 month prior to the effectivity of TLO. The company reasoned out that they are no longer needed as no work is available for them in the succeeding days until Aug. 12 TLO start. Is the “force leave” valid? Given that all had already suffered a no work schedule rotation rendering us at 0-leave credit at this point.
Hoping for your expert opinion on this matter.
Thank you very much.
More Power,
Joel
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Hello Joel,
Your company really has done their work well, for the most part. Providing all that for TLO is unusual with most companies at the moment, so at least they did it well and followed the correct procedure.
To answer your queries:
Q1. As far as its employees are concerned, the management prerogative to enter employees in to TLO does not require ANY actual data other than advice that the company is having financial losses. The fact that your company provided a PowerPoint to show its financial losses in the decline in the volume of sales is actually a credit to their openness. The only people that are entitled to a detailed report on the financial status of the company for TLOs are the DOLE. And they have forms for stating financial losses.
Q2. This is why the company is required to give you notice of the start of TLO. The 30-day period is not only to give you time to sort out your own concerns, but for the DOLE to investigate the validity of the TLO with the company’s financial status and accounts.
Q3. No, this does not seem fast. In fact, this is quite slow in comparison, especially as they gave you notice one month before the start of the TLO. Most companies at this point, while Labor Advisory No 17-A, Series of 2020 is valid during any form of community quarantine, are giving just a few days notice of the start of the TLO.
Q4. This one is wrong, though. While most of what they are doing is correct, they cannot place someone on “forced leave” for an entire month prior to starting a TLO. Their TLO should start from the day they are not needed to work, and will be on No Work No Pay. This would make the TLO extended to seven months, which is not permitted under the Labor Code.
I hope this clarifies things for you.
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I recently got a temporary suspension from my employer which they clearly stated that it will not last for more than six (6) months. Few days after, they sent an Employee Work Handover where we are to list down all the tasks and processes that sit with us for turnover. Office equipment is also to be turned over. They promised to reinstate us once the revenue of the company goes back the way it was. I am not sure if this qualifies as constructive dismissal because as what I understood in your blog that they can issue a retrenchment once I am reinstated after x number of months (not more than 6).
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It is actually quite normal for a company to request return of company equipment during a period of temporary suspension. It ensures that there is nothing to turnover if they end up retrenching you at the end of the six months, speeding up your payment of final pay and separation pay. This is not yet constructive dismissal, as they have the right to the temporary suspension. At the end of the six months, the company MUST either reinstate you or provide retrenchment. You will normally be notified by the end of the 5th month of what will happen.
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Pingback: HR Talk: 22 Most Common Questions Asked by Employees in GCQ Answered | Tina in Manila
Can companies use the current pandemic issues to extend floating status beyond six months period?
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To put it simply, no. While there has been a lot of temporary changes under the pandemic, the maximum period of floating status can still only be six months. And this six months begins from the first day of floating status under the Community Quarantine, which for many was on March 17.
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In this pandemic where a pregnant employee is on no work no pay arrangement, can she file for maternity benefit? October due date
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you can file for maternity leave and maternity benefit in the normal manner at the normal time for your pregnancy and delivery dates. Since this is normally 30 days before the due date, and your due date is in October, you are not yet entitled to file for maternity benefits.
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Hi Sir,
It’s good to read more about the TLO here because a lot of companies right now are doing this without following the labor code prerequisite of notifying DOLE and giving the employees 30-day notice. This happened to us too, we were put on TLO on the spot.
May I ask the following questions:
1. Since we’re planning to go to NLRC and file a case, what if one of our fellows finds a job and intends to pursue it, would he lose his case for accepting it? Does he need to wait for the case to be dismissed before getting a job (which is very long and unreasonable for his family?)? He’s afraid he’ll lose the battle for accepting another job while we’re about to file a case to NLRC.
2. Is it acceptable for NLRC to tell us that their Labor Arbiters are going to report until the quarantine is over and lifted (which tantamount to finding a vaccine I guess)? We kept going to their office and were told to just wait and return. Next week we intend to visit them again since their lines were always busy. We’re afraid they’d say the same reason again. I mean, they should be serving Filipino workers under the new normal, right? Do we have an advisory for this, that they can just leave their posts? And if we do, isn’t this a violation of their duty and quite embarrassing noting that formal judiciary departments are open and functioning to serve the mass under the new normal whilst a quasi-judiciary like them kept on dodging it especially this pandemic time? (Which is connected to number 1, since if NLRC San Fernando Pampanga keeps telling us they’re out of reach, we wouldn’t be able to file the case formally and we’ll be left to find another job and therefore FREE our former company from justice?)
3. Our group are now intending to find a labor lawyer to represent us since NLRC in our region, region III San Fernando Pampanga seems to be giving us a deaf ear. Will this make sense? And also, will the laywer charge us right away or have his commission on the awarding rather? We hope it’s the latter. We’re at our end ropes.
4. If the answer for no. 3 is yes, do you know some labor lawyer to represent us?
Thank you so much! You are a big help during this desperate times!
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Good morning,
Thank you for your comments. I will help all I can for you. Firstly, it is good that you realized that there is no such thing as an immediate TLO. You are correct in that it requires a 30-day notice o both the DOLE and the employee. If the employer did not follow due process, the suspension is illegal, and if you resign because of it, it can be construed as Constructive Dismissal.
Let me answer your questions as fully as possible.
1. If you are planning on filing a case with the NLRC for Illegal Suspension, then you should understand that nothing, and I mean NOTHING, can harm your case at any point. Once you have filed your complaint, the case will continue, no matter what. Your friend can still get another job, and work normally while the case is progressing.
2. The offices of the NLRC are not all open yet, due to the pandemic, so you will have to be patient about filing your complaints. You actually have three years from the date of the incident to file the complaints in the NLRC, and NOTHING you do, with the exception of signing a waiver of rights and indemnity clause with your former employer can stop you from making your complaint. So you do not have to worry about losing the right t file the case because of the pandemic.
Please understand that the Labor Arbiters and the staff of the NLRC and DOLE offices have not just been lazing around while their offices are closed. As well as handling all of the CAMP handouts for the DOLE’s ayuda of 5,000 pesos, the staff have been handling inspections and company visits to ensure that the companies conform to the guidelines of the DTI and DOLE and DOH in the prevention of COVID-19 in the workplace.
As far as I am aware, only the NCR office in Quezon City and a few provincial offices are open at present, but other offices will be opening up again once the status of areas reaches MGCQ. Please be patient, as the New Normal has not yet begun here in the Philippines. Once the offices are open, you will still be able to file your complaints. I currently have more than 2 dozen cases waiting for filing, once the offices open.
3. The NLRC is not turning a deaf ear. They have more work than they can manage at the moment, which is why the offices are still closed. The DOLE hotlines are not much use either, as it takes forever to get through, and in my opinion, the advice is not always very sound. Unfortunately, these hotlines are not staffed by lawyers, and they have little knowledge of the law aside from the scripts they are given.
Finding a lawyer to represent you can turn out to be very expensive, though it is a good idea. However, you can expect to pay a lot of expenses just to get the lawyer to work for you, before they even get to write the legal drafts you will need for the case. Most lawyers charge a fee to take you as clients, often around 50k. Then you will pay individually for each consultation and for each visit they make to the NLRC on your behalf, which usually stands at around 5k a time. And then they will charge you on top for the legal documents, which can be around 20k each, unless they are making your complaint as a class action. And then they will require 10% of the total awards as their legal fees. Lawyers are very expensive.
4. Lawyers are very expensive, and while you can find a lawyer to represent you, you do not need one. The NLRC does not require a lawyer to represent you, which is why they use the Single Entry Approach (SEnA) forms for filing of complaints. No court actually REQUIRES you to use a lawyer, though the lawyers will not tell you this, or they would all be out of business. But with the NLRC, they actually prefer it if you handle the case yourself, rather than involve lawyers in representing you. One of the reasons for this is the mediation and conciliation meetings you will attend. It is easier to mediate and come to an amicable settlement if you are representing yourself. The lawyer will only do what you tell him to, nothing more, nothing less. But if you are at the mediation meetings, you can make agreements based on your own opinions. And change your mind if you wish to. And the Labor Arbiter will aid you in coming to an agreement for settlement if he can.
These mediation and conciliation meetings are designed to reduce the number of cases that continue to Position Papers by reaching out-of-court type settlements between you and the employer. If you can reach an agreement, then it saves you the cost of the rest of the case filing.
The final part of any complaint in the NLRC WILL require you to have a lawyer, unless you know how to write legal Position Papers. These are the submissions you will make if an agreement cannot be reached, and the Labor Arbiter requests submission of Papers.
These legal documents are normally drawn up by lawyers, and if you use a normal lawyer, it will cost you around 20k each paper. However, we do offer a service for this, as you may have seen on the website. All of our advice is free, and we will gladly help you and advise on the best way to handle the mediation and conciliation meetings, as well as your rights and what to expect. However, when it comes to writing the Position Papers, Response Papers, and Rejoinder Papers, we do need to charge to cover our costs. Rest assured, they are not as high as other lawyers.
If you want to discuss these costs further, you can contact us from the website’s Contact page, or get in touch with us through our Facebook Page here:
https://www.facebook.com/ELPPhilippines/
I hope this helps.
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Our company intends to put some sales personnel on floating status due to financial losses. If some of those employees have not reported back to work since the malls re-opened and were not able to commit a return to work date due to transportation issues, will the 30-day notice still apply to them?
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Yes. Because the notice is required to let both the employee and the DOLE know of the intent to place them on a floating status, the notice is always required before the temporary suspension can begin. When it comes to Labor Law, as a general rule of thumb, it is always best to err on the side of caution and provide due process.
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Thank you!
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Hi! May I know the DOLE mandated procedure for the temporary layoff?
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In order to legally complete the temporary layoff under the DOLE guidelines, the employer must notify the employee and the DOLE at least 30 days in advance of the start of the layoff period. Failure to do so makes the temporary layoff illegal and void, and leaves the employer open to complaint and sanction. The layoff mus last for no more than six (6) months, or 180 days, by which time the employer must reinstate the employee in his former position or offer retrenchment if the position is no longer available.
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Hi Sir,
I hope you can help me with this.
I was notified only last Friday, July 10 that I would be on temporary layoff starting yesterday, July 13. I asked the HR why it has to be effective immediately. They said that they have consulted this with DOLE and that DOLE is not strict with the one-month notice rule during this time of pandemic. Is there any truth to this? Is there a Labor Advisory or any document from DOLE that can be used as reference?
Thank you.
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Hi,
While it is not ideal, during the ECQ, MECQ, GCQ, and MGCQ periods, employers only need to give moderate notice of placing employees on temporary layoff. This was given in the Labor Advisory No 17-A, Series of 2020, in the Establishment Report Form, and is for a temporary period only. Once the area you are in goes on to the New Normal, this allowance will end, and the requisite 30-day notice will apply.
Normally, it is best recommended by the DOLE to give employees at least a week’s notice, but as long as the issue was discussed with the employees prior to the implementation of the temporary layoff, a form of Flexible Work Arrangement (FWA), then even giving one day’s notice is adequate. What is not permitted is immediate layoff with no notice (i.e. coming in to work and being told to go home on temporary suspension).
The implementation of any FWA, including temporary layoff or forced leave, must follow the requirements of Labor Advisory No 9, Series of 2020, supplemented by Labor Advisory No 11, Series of 2020, which has the following requirements:
1. Prior consultation and due notice.
2. The terms must be acceptable to both the employer and employees.
3. Posting a copy of the Advisory in a conspicuous location in the workplace.
4. Notify the DOLE through the Regional / Provincial / Field Office which has jurisdiction over the workplace.
In your case, while 3 days may not have been much, it is classed as adequate notice under the circumstances.
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Sir Charles,
I read your reply stating:
The implementation of any FWA, including temporary layoff or forced leave, must follow the requirements of Labor Advisory No 9, Series of 2020, supplemented by Labor Advisory No 11, Series of 2020, which has the following requirements:
1. Prior consultation and due notice.
2. The terms must be acceptable to both the employer and employees.
3. Posting a copy of the Advisory in a conspicuous location in the workplace.
4. Notify the DOLE through the Regional / Provincial / Field Office which has jurisdiction over the workplace.
In your case, while 3 days may not have been much, it is classed as adequate notice under the circumstances.
My questions are:
1. Does this mean companies can just implement TLO without following the 30-day rule?
2. Our company gave us an on-the-spot TLO stating this has the blessing of DOLE. On-the-spot is now allowed too?
3. Our company did not notify DOLE using the premise of pandemic COVID. Is our company doing the TLO properly?
Let us know
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In response to your questions:
1. Only in cases concerning the COVID-19 pandemic. If the employer is initiating FWAs, one of which is forced leave, then they do not need to apply the 30-day notice rule. This was given in the IRRs for the current pandemic advisories. In instituting the FWAs, the employer must complete the RKS 5 Form, specific to FWAs and submit it to the DOLE. This is the proof that the layoff is in conjunction with the pandemic and the rules on Flexible Working Arrangements. For any other reason for temporary layoff, the 30-day notice rule given by the Supreme Court in PT&T vs. NLRC will apply.
2. It depends on what you mean by “on-the-spot”. If the notice came from them today that you would be on forced leave from tomorrow, then it is adequate. Telling you to “go home, you are on forced leave” halfway through your shift is not acceptable behavior. They must allow you to complete the shift you are working first.
3. If your company did not notify DOLE using the RKS 5 Form for Flexible Working Arrangements, then your TLO may be illegally applied. I would need to know the reasons your company gave to the DOLE for the TLO in order to advise you fully.
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I work in a BPO company and our account was dissolved in March. We were advised ahead in February regarding the account closure and if there is no account to work for after 6 months of floating status, we will received our separation pay. Now my question is, when will the 6 months period commence? Will it be from February or March?
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The suspension period can only start after your requisite 30-day notice period has expired. If you were notified in February, your floating status would start in March for six months.
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Sir Charles, this is Henry G. Thanks a lot for your reply. It means a lot. I may have lost my livelihood by now and struggling but knowing that you’ve put the effort replying to my concerns is something I’m very grateful for.
By the way, if this is not too much to relay too, an officer from DOLE called me and have found about my concerns today. In our conversation, he said he wasn’t able to find notification coming from my company regarding lay off, however he thought they might have filed in another DOLE branch, say for instance in NCR since filing is centralized.
He then proceeded to my concerns of 30-day notice and said he “might have read a labor advisory” saying that companies are allowed to do “on the spot” layoff nowadays, due to pandemic.
Though he clarified this is not sure yet, but to be honest, it seems the call was about clearing all my concerns and making sure it has no merit at all. It’s a good thing I was able to read your message prior hand.
I then told him of the following below:
1. How come is that? We do have Article 298 of Labor Code, a law, instructing companies to follow a 30-day notice period. Is it easy to repeal this law and bring forth new options that allow companies to do “on the spot” layoff? Especially this pandemic? I find this ironic to the government’s call on employers to, in as much as possible, not lay off workers this time. And then all of a sudden there’s this “on the spot” layoff advisory coming from DOLE allowing employers to do so?
2. He then detoured and reminded me, “he’s not sure, he must have read it somewhere but would double check.” However, he then went on to say that Article 298 is only good for permanent layoff only, this 30-day notice is not applicable for TLOs. Having read your reply first that this 30-day notice is a “statutory requirement” for TLO to become valid, I refuted him and told him otherwise.
3. He then told me of SENA under NLRC, in which I agreed.
4. He then opened up that in case they’d hear my case, one option they’d likely push is for me to return to work in which I said, “not likely” since I got so traumatized by their mistreatment.
Is it correct to say that it would only be fair not to return to them, to that kind of employer as I understand Article 300 (285) of P.D No. 442 of Labor Code which implies that an employee may put an end to the employment relationship due to serious insult, inhuman and unbearable treatment, and commission of a crime or offense? In which I do think I felt from them due to this on the spot TLO, in the middle of pandemic.
5. I don’t see myself returning to my former company after all of the ordeal I had gone through, I told the DOLE officer. I spent almost two months away from my own family just to work for them during the height of ECQ and was forced to live in a company-provided shelter so I could report to office unhampered, and after all of that they just threw me away, on the spot. I am just looking for repayment of every damage they have caused on me.
And then I told the DOLE officer that I’m the “only one put under TLO” as far as my department is concerned and this happened on the spot and that the company is still working and operating now. I said this because he said “on the spot” can be likely done by company if their operation is hampered like earthquakes, no more production supplies, and etc. I told him this was not the case and my former company still operates and is intact.
I do hope to get your thoughts again. I found out that had it not been to your reply, I might have been running into circles agreeing on whatever is being mentioned to me without regards to my rights as a Filipino worker.
Thank you so much!
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Good morning Henry,
I am not really surprised with the response of the people from DOLE, since they are effectively call center agents, with no legal training and a bare minimum of training in the Labor Code. Most of the staff you will encounter have a mere modicum of knowledge about the Labor Code when you get to the DOLE and the NLRC in most offices, though some do fare better than others in advising the general workforce. Overall, however, it is usually only the actual Labor Arbiters that understand enough of the Labor Code to apply it to an individual issue.
With reference to your DOLE officers claim that he “may have read somewhere” that the employer may be able to lay off staff without notice, he is very much mistaken. All changes to employment must be completed using RKS Form 5 of 2020, which can be found in Labor Advisory No. 17-A, Series of 2020, or the Establishment Report Form.
This form MUST be completed for all employers that are adopting a) Flexible Work Arrangement or Alternative Work Scheme; b) Temporary Closure; c) Retrenchment/ Reduction of Workforce; and d) Permanent Closure. While this form only requires a 30-day notice for establishments that will retrench or permanently close, in your case, none of the above are happening, so the standard rules apply to a TLO where the company remains operating.
I have checked through the list of all the Labor Advisories, Department Orders, and Department Circulars that can be found on the DOLE BWC website, at http://bwc.dole.gov.ph/issuances/labor-advisories?fbclid=IwAR218ujP5fyTNZJtdl3V2OjOB8XqK1ZgYJtvl64_HBBMGSbG1gkSEwJsxLU. This IS a comprehensive list, and if the advisory he is referring to is not here, which it is not as far as I can see, it does not exist.
And for the statement of the DOLE officer that thinks the company might have made the Establishment Report in another DOLE branch, it MUST be filed in the Regional Field office for the area in which the employer’s workplace is located. Only those inside NCR may file at the main office in Quezon City. Filing is not centralized in that way.
Moving on to the main concern I see here, I agree that you should file the complaint in the NLRC office through use of the Single Entry Approach (SEnA) form. I would still recommend that you wait for a short time to file, until after the date of the end of your probationary period, as I mentioned before. That way, you can be guaranteed to be able to negate any termination under the probationary rules.
Yes, it is fair to say that you do not wish to return to work, and would be able to get separation pay due to the irretrievable breakdown of relations between you and your employer and the breakdown of trust you had previously. And when you go through the system at the NLRC, one of the questions asked will be “Do you want to return to work?” If you respond in the negative, then the Arbiter will look at it for the payment of separation pay on top of the normal award of back pay.
I do believe that most NLRC offices are now open for filing of the SEnA, so check your local Field Office in person for their opening times. I have found that they do not always have the time to answer local phone queries.
As I mentioned previously, we can help with your case with advice, consultations, and legal documents.
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Is the company required to give 30-day notice to employees that will be placed in floating status?
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Yes. As this is part of the rules on allowable temporary suspension, the IRRs of the Labor Code require that all employers putting their employees on a temporary suspension, lay-off, or temporary retrenchment, must provide the employee and the DOLE with at least 30 days notice before the start of the suspension period.
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Hi Sir Sanderson,I’d like to hear your thoughts about my situation.
I was put under temporary laid off on the spot on May 22nd. The next day, I already lost by work and was put under floating status until 6 mos. I was an employee for almost 5 months which means I’m still under probation.
However, this happened on the spot without any notification or memorandum. I was just singled out and spoken with in a private room. No other work arrangement was offered like skeletal or even just reduction of hours. I also begged if I could at least work until the end of the month just so to be prepared. They only said it’s the company’s prerogative. I suffered from depression and trauma that I couldn’t even eat, sleep, nor talk for two weeks.
When I regained my strength, I went to PAO where a lawyer have affirmed that by law, “a company must comply with the one-month notice rule to both the Department of Labor and Employment and the employee/s prior to the suspension of its business operations, for your temporary lay-off to be valid and in accordance with our laws (Article 298 (Former Art. 283).”
My question are the following.
1. Is it justified to inform an employee of the TLO on the same day? Without giving ample notice for employees to prepare?
2. I do have the TLO notice in which same day time frame is written. Having said, can I go to NLRC and have this escalated? Or should I even wait for 6 months? The thing is, I feel they did this in bad faith and I was mistreated and therefore I don’t see the need to wait for 6 months if all I have in mind is to put them in light of justice.
3. I too went to DOLE to ask if they were notified accordingly. They said they’d reply but still to no avail. I mentioned this to the PAO lawyer and he said the company should notify DOLE with legit documents signed by an external CPA regarding their business loss. And even if DOLE declares they had notified them, it wouldn’t erase the unfair labor practice of putting me under TLO on the spot. What is your take on this?
4. What are the possible penalties of my company for not handling this laying off properly?
I will appreciate your reply, and many thanks!
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Hello Henry,
Thank you for getting in touch regarding your TLO. I understand your situation, and will answer your questions to give you some clarity on this issue.
1. Is it justified to inform an employee of the TLO on the same day? Without giving ample notice for employees to prepare?
No. No matter what the reason, it cannot be justifiable to issue the notice for a Temporary Lay Off that begins on the same or the following day. Article 301 of the Labor Code does justify the bona fide suspension of employees due to a number of reasons, financial losses being one of them. During this pandemic, hundreds of thousands of employees were placed on TLOs across the country, due to companies not being able to continue operating during the quarantines.
However, as your PAO lawyer informed you, the company is required to give a 30-day notice to both you and the DOLE in order to conform to the statutory requirements of the TLO. Under Article 298, this is considered to be a “temporary retrenchment” by the Supreme Court, due to the need of the employer “to prevent losses or the closing or cessation of operation of the establishment or undertaking”. The employer is required under law to provide the aforementioned 30-day notice period.
2. I do have the TLO notice in which same day time frame is written. Having said, can I go to NLRC and have this escalated? Or should I even wait for 6 months? The thing is, I feel they did this in bad faith and I was mistreated and therefore I don’t see the need to wait for 6 months if all I have in mind is to put them in light of justice.
Whether this was done in bad faith or just because of their misunderstanding of the law around temporary suspension, you do not have to wait for it to end in six months to go to the NLRC to file your complaint. In fact, I would recommend that you do it immediately, depending on certain circumstances.
Nothing that your employer does or says can prevent or bar you from filing a complaint with the NLRC and the DOLE. And if you feel that you have been treated badly, all the more reason to file the complaint through the Single Entry Approach (SEnA) procedure as soon as possible.
That said, I would recommend you wait for one more thing; your regularization date. While the probationary period is normally suspended for employees that are on TLO due to the quarantine, this cannot be deemed to have been applied in your case, since your suspension is actually illegal.
Labor Advisory 14-A of 2020, supplemental to LA 14-20, states:
“For purposes of the six-month probationary period, the period during which the enhanced or general community quarantine is enforced where the establishment has temporarily ceased or closed operations and/or the worker was temporarily not required to report for work on account thereof, is not included in the six-month probationary period as required under Article 296 of the Labor Code. As renumbered.”
Since your TLO is not legal, it voids the validity of the Labor Advisory to be applied to your case, and your probationary period will continue as normal. If you have not previously been on any form of layoff during the community quarantine, you can calculate your 180 days from the first day of your employment, and file your case in the NLRC for illegal suspension and constructive dismissal the day following.
This way, of the company then terminate you under the probationary rules because you filed a complaint against them in the NLRC, you also have the additional ground of illegal dismissal that can be claimed in the hearing with the Labor Arbiter.
3. I too went to DOLE to ask if they were notified accordingly. They said they’d reply but still to no avail. I mentioned this to the PAO lawyer and he said the company should notify DOLE with legit documents signed by an external CPA regarding their business loss. And even if DOLE declares they had notified them, it wouldn’t erase the unfair labor practice of putting me under TLO on the spot. What is your take on this?
I wholeheartedly agree with your PAO lawyer. Even if they did file the correct documents in the DOLE, as per the requirements, they have failed to follow due process by not giving you the requisite 30-day notice. These procedural failures make the claim just as valid, whether they notified the DOLE or not.
4. What are the possible penalties of my company for not handling this laying off properly?
Normally, a company would not collapse during the mediation and conciliation meetings, and you would be moved to the hearing with the Labor Arbiter. Rarely, the company caves and agrees to settle in the Arbiter hearing, which ends the process with an agreement on terms and conditions.
If the company does not back down here, then you will both be required to provide the legal submission of Position Papers, which you will need a lawyer to write for you. Once your documents are submitted from both sides, the Arbiter will make his decision based on points of law and settled jurisprudence.
If found in favor of the employee, the employer is normally required t pay back wages from the date of the illegal or constructive dismissal (the date of your TLO) to the date of the resolution from the Arbiter. The Arbiter will also direct the employer to reinstate you with no loss of pay or seniority, unless the relationship has broken down to such an extent that returning to work is not possible. In this instance, they will also be required to provide your final pay, separation pay, etc. You can also claim an additional 10% of the award as legal fees, to pay for your lawyer, since you were “forced into litigation to settle the issue”.
I hope this answers your queries. If you need any further help, we can offer advice on the meetings for mediation and conciliation, as well as providing our legal services in the writing of your legal papers for submission, if necessary. You can contact our lawyers through our Facebook page at:
https://www.facebook.com/ELPPhilippines/
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Hi there,
Just as an example, I was hired last February, there is a 6 month probationary period that was part of the contract. We were on floating status (forced leave) on April due to the pandemic and was recalled to work in May. Is that going to affect our 6 month probationary period? Our employer said that it stopped when we were forced to leave and resumed when we got recalled back to work. Is there a legal basis on that?
Thanks
Adrian
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For a change, the employer is actually correct. Labor Advisory 14, Series of 2020 initially suspended the probationary period for a month due to the ECQ. Labor Advisory 14-A extended this to include all periods of the Community Quarantine whereby the worker was not working or the employer had closed temporarily. Only those still in active work would not be included in this. The period you were on forced leave is not included as part of your probationary period, and is added to your original regularization date.
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Hello,
We decided to layoff some of our workers and we selected some workers who will be retained based on their performance. Is there an issue if we retain a probationary employee while a regular employee has been laid off due to poor performance?
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Hi Zack,
There should be no problem legally in retaining some employees that are probationary, based on the individual performance of each employee. As long as you are using the same performance criteria for everyone in assessing which would remain, it is a matter of management prerogative. Some of the regular employees that are being retrenched may not like it, but there is no case for complaint with the DOLE.
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If the employee is on floating status/temporary laid off, and they found a job within that 6 months, should we require them to still submit a resignation letter?Although the management informed me that in case they will not accept to wait for 6 months because we are thinking that they might need to look for another job to sustain their financial needs especially this time, filing of resignation will be acceptable. Thank you!
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Hi Joyce,
It is normal these days for those on temporary suspension for up to six months to find other means of income. For anyone that has found a job they can start within their six month period, they would still normally be required to submit the requisite resignation letter with 30-day notice, as per the DOLE and the Labor Code.
However, it is at the discretion of the employer whether he would require the full notice. While the law says it should be 30 days, management prerogative says that an employer has the right to waive the requirement of the notice period and allow immediate resignation.
If your management is amenable to waiving their 30-day notice period, you can let the employees resign effective immediate. Resignation letters must still be tendered, with a request for immediate resignation, and management can then waive the notice in writing.
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Thank you for your inputs Sir Charles. I appreciated it. Sorry as I was about to ask again another question. We will file a temporary lay off and since we can recall the employees on the upcoming months, what if our business is still not improving during that recall?And we will put them on floating status again,is that another file of temporary lay off again?I’m planning if that’s going to happen its much better to recommend to file a retrenchment just to avoid the floating status again for the 2nd time in case.
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In view of the fact that your employees may already be on floating status at the moment, if you bring them back to work, and then lay them off again, it will be considered a continuation of the first temporary lay off. And the maximum period would be for six months from the start of the initial floating period, minus the time during which they were working.
If you are thinking of retrenchment for employees at a later date, this may be a better option for the employees, to give them the option of finding other work. Just make sure that you compute their separation pay correctly.
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Are the months one is on a temporary work stoppage included in the computation for 13th month pay even if they did not go to work? Thanks in advance!
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The correct computation for 13th month pay is:
1/12th of your annual basic salary for the current year. If your normal salary was 12,000 per month basic, and the same for the entire year, then your 13th month for a full year would be 12,000. However, for those months you did not earn, your total for 13th month pay would drop. For example:
January 12000
February 12000
March 9000
April 0
May 0
June 10000
July 12000
August 12000
September 12000
October 12000
November 12000
December 12000
Total Annual 115000
13th Month 9583.33
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Hi! What if we tried to slowly recall employees back to work and some did not report back because they found “sidelines” somewhere else. They told us they will come back 2 weeks after so that they can get their compensation from their short-term employer. Can we refuse to get them back for now and choose other employees who are willing to report to work immediately? Will these employees be considered floating already, or can we already consider them for laying off since our job orders are already reduced and they did not report back when asked to?
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If you have sent a RTWO already, and they are refusing to come back due to having a second job, then you have several options open to you.
Firstly, you can call in other workers to cover what the company requires, and wait the two weeks for the employees to finish their second jobs.
Secondly, if you do have financial reasons for retrenchment, you can give them and DOLE the required 30-day notice and terminate them with separation pay. You could also give them a 30-day notice of temporary floating status, for up to six months, with the right notifications to them and DOLE.
The third option involves the Return to Work Order. If you have not already sent one, do so, giving them the date when you require them to return to work. Make sure this is by registered mail. If they fail to report to work, or have already failed from a RTWO that you already sent, then it is time to send them the NTE, to give them five days to explain why they are refusing the lawful orders of their employer. Once they have responded, or if they fail to respond, you are within your rights to manage your workforce and terminate them for failing to follow the lawful orders of the employer.
Since there are several just causes for termination in the Labor Code, they can be terminated for both Serious Misconduct and Wilful Disobedience.
While it is good to try and help your employees in this time of trial and tribulation, you must remember that they should also help you. You are their employer, and are probably the one that completed the forms to allow them to receive either DOLE CAMP or SSS SBWS ayuda. Second jobs notwithstanding, they have an obligation to you, just as you had an obligation to them and recalled them for returning to work at the earliest available opportunity.
Labor laws may be in favor of the worker, but in this case, you have the legal right to terminate if they refuse to return to work.
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How does this affect benefits and other payables such as SSS, Pag-Ibig and Philhealth during the floating period? Should the company still shoulder their share should the employee agree to the 6 months float status?
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When placed on “floating” status with the company for up to six months, the employer would not be liable for contributions to SSS, PhilHealth, etc. This is due to the fact that, while you are on lay-off, you are not earning an income. If you have no income, you do not pay SSS, PhilHealth, etc. except for voluntary contributions. Similarly, the employer only pay their portion of the contributions based on your income. So no income, no contributions.
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Thank you. How about benefits, will there be a dimunition? Say a tenure benefit is upcoming ie employee will be granted HMO benefit on the 2nd year of employment and it falls around the date the floating status starts. Will the employee still be eligible to get that whilst on temp lay off? Thank you.
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If you are due to receive a tenure-based benefit, you will need to ask your employer about that direct, since benefits are part of management prerogative, not law.
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HI there,
Just to be clear, Is the 6-month temporary layoff period included in the separation fee computation?
Thanks
Elly
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Good evening, Elly.
Yes, while the six months of lay-off or temporary suspension is a period during which you are not getting paid, it is included in your tenureship with the company, so would be included in the count of tenure for calculation of separation pay on redundancy or retrenchment. During this six months, you are still employed by the company on a “floating” status.
I hope this helps. Please get in touch through the contacts page if you have any specific issues to discuss.
Regards,
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Re: project based employees
Due to this COVID-19 Pandemic, some of our project (construction) will resume work on the end of this month. Is it not illegal not to recall all of the employees since partial work is only to be done and our client is only requiring 50% of the work force to report.
Our problem is some employees might be filing labor cases against us once they are not given a report to work order.
Thank you.
Norman
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Hi Norman,
Assuming that you are only permitted to operate a limited number of projects, there is no reason why any employee would be permitted to file a case against your company for Labor issues. It is not illegal to only recall a percentage of your employees to cover the requirements of the projects that you have ongoing and permitted to operate. This is what most companies have been doing since the change to either MECQ or GCQ.
If your client only requires a certain number of employees, then you can recall those employees without fear of retaliation from the remainder. What you need to do is to explain to all your employees that only certain projects are being resumed under the government’s guidelines on the Community Quarantine and the resumption of construction projects, and that, as soon as you are permitted to operate the remainder of the projects, the rest of the workforce will be recalled.
Do not be afraid to talk to your employees, as this will at least let them know where they and you stand in this dire time.
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Re temporary suspension due to financial losses – hotel industry, can they apply for unemployment insurance?
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In any industry, if the employees are on temporary suspension due to financial losses incurred during the pandemic, then they are not eligible for the SSS Unemployment payments. In order to be qualified, you must have been involuntarily dismissed from work completely. The valid dismissals are for authorized causes such as redundancy or retrenchment.
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thank you very much Sir !
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