RETRENCHMENT AND FLOATING STATUS

A look at the legal consequences of being left out to dry by your employer.

Back in March, the President declared a state of National Health Emergency because of the rampant cases of COVID-19 in the Philippines. On March 16, he announced a state of Enhanced Community Quarantine across the country, which was very quickly referred to as “the lockdown”.

Businesses closed their doors, not permitted to open as a means of trying to control the spread of the virus. And for the past six months, many of those businesses either remain closed or are still operating at a reduced staffing level.

Everyone that was not allowed to enter their workplace and could not continue as working from home was placed on a status of No Work No Pay, also known as forced leave, temporary retrenchment, temporary layoff (TLO), or floating. The terms may have varied, but they all meant the same thing. A form of temporary suspension.

Under the Labor Code, employers are permitted to suspend business operations due to financial losses, whether in whole or in part, for up to six months, and can suspend the operations of their employees as well. Hundreds of thousands of employees ended up with no work to go to, and were classed as being on “floating” status.

Article 301 of the Labor Code states:

“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 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.”

Today is the first day that follows the end of the 6-month period for those that were first placed on forced leave on March 17.

Contrary to what your employer may state, 6 months in law is not equal to six calendar months. The Supreme Court has given that the general rule of one month in terms of law should be equal to 30 days, unless the specific month is mentioned by name. So a period of six months, such as used for probation and temporary suspension, is equal to 30 days multiplied by 6, which is 180 days.

The law states that the suspension is permitted for a MAXIMUM period of six (6) months, or 180 days as per the Supreme Court. Since 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 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.

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 the bona fide suspension of operations exceeds six (6) months, the employment is considered terminated and made permanent resulting in illegal or 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 their permanent dismissal.

In International Hardware, Inc. v. Pedroso, the employee (delivery truck driver) was rotated by the employer for over six (6) months, resulting 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.

Such cited jurisprudence is the basis for all other cases of illegal or constructive dismissal following the end of the period of TLO. Any employee that has not been retrenched or reinstated after the 180th day of the suspension period is considered to have been illegally dismissed.

Today is that day! And for those employees that are still not reinstated or retrenched by their employers, you are now able and eligible to file your complaint with the local office of the NLRC for ILLEGAL or CONSTRCUTIVE DISMISSAL.

For more information, or to request help with your claim and complaint, contact us now through our Facebook page at:

https://www.facebook.com/ELPPhilippines/

OUR EXPERT LABOR LAWYERS ARE WAITING TO HELP YOU!

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34 thoughts on “RETRENCHMENT AND FLOATING STATUS

  1. Garland M

    Hello Sir,
    Can a lawyer be sued for always refusing and delaying to receive court orders and motions of complainants? I filed an illegal dismissal case and won. I’m now reinstated as ordered by the LA. However our company’s lawyer always seem to delay in receiving court orders. When we filed for the writ of execution, the courier said our receptionist refused to receive the order. Eventually the LA ordered the bailiff to deliver the order granting writ. Same thing happened. The when we filed for our motion to release garnishment, our receptionist still refused to receive the motion. When I asked them why, they said they were instructed by their lawyer not to receive anything without her consent. Clearly this is some form of dilatory or delaying tactics from them.

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    1. Yes, definitely delaying tactics. But not actually illegal, per se. While the receptionist is the one refusing the delivery, the lawyer is not liable, even if he advised her not to accept anything without his consent. And if the company receptionist can refuse the delivery of the bailiff or sheriff, doing so is tantamount to receipt. Where a delivery is refused deliberately from the process server, it is deemed to be served after five days of notification. And refusing delivery of your Motions does not invalidate them. It merely means they refuse their rightful copy. Your Motion is still valid. And the Arbiter does not need their receipt of the Motion for Release of Garnishment in order to permit that release. The tactic only really works on delaying certain occurrences, such as delaying receipt of the summons or order for submission. Once the Writ of Execution is issued to the Sheriff, the Sheriff does not need them to receive for him to garnish their bank accounts or seize their property. Their refusal is deemed to be a mere waiver of their rights, and the Sheriff just continues to do his job anyway. Has the award of the Arbiter now been settled and the garnishment released?

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      1. Garland M.

        Wow it all makes sense now. Thank you for your detailed response. The issue with our case is that we weren’t reinstated at once. During the pre execution conference last year they wanted us to immediately transfer to another location which we refused since we thought it was inconvenient and looks more of a punishment for filing the case. After a few months the commission sustained the LA’s ruling. We immediately filed the motion for writ of execution upon receiving the entry of judgement by the commission with prayer for re-computation of accrued wages which the company opposed saying it was management prerogative to transfer us and that we were the ones who refused to go back to work. The LA granted our writ and prayer for re-computation of accrued wages (from date of LA decision to Commission’s entry of judgement date) since we weren’t reinstated yet . The LA already granted the release of the cash bond (the awards from the LA’s decision, full backwages from dismissal to decision) because there’s no TRO from the petition they filed with the CA. Because of the unfavorable order from the LA, our company immediately sent a notice to return to work which we complied. They want to stop our “taxi meter”. After receiving our cash bond the sheriff then proceeded to company’s bank to garnish the accrued wages. Upon submitting his report we filed our motion to release garnished amount with prayer for another re-computation of accrued wages from date of entry of judgement until actual reinstatement. Can they still appeal the release of garnished amount from accrued wages considering the LA has already decided on their opposition? They didn’t file any appeals or motion to quash on the order granting writ by the LA.

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      2. No, they cannot oppose or appeal the garnishment. Such motions are prohibited and will not be allowed. There is actually nothing they can file to stop the Sheriff from garnishing and the Arbiter from recomputing, if the Arbiter agrees that it is necessary. And since there is no appeal from judgment, they are bound to pay everything the Arbiter orders paid. Motions to quash the order granting the writ are also prohibited.

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      3. Garland M.

        Noted sir. Good to know that. I read something about a verified petition extraordinary remedy. Can they use that against us?

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      4. No. This is applied only in special proceedings and granted only where absolutely necessary. There is no way the courts would allow an application through special remedy just for something like this. There are no grounds other than their desire to get out of their obligations.

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      5. Garland M.

        Thank you sir for your time. At least now I’m a bit more confident there would be no more obstacles in getting that reward.

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  2. Michael

    Good Day Sir!

    I recently won an illegal dismissal case. The arbiter found my retrenchment as illegal. Hence I was awarded reinstatement and backwages. During the pendency of the case I was able to find a new job. Of course I can’t just sit around waiting for the decision of the case hence I looked for other opportunities. My question is, can I request for separation pay instead of reinstatement? Or should I still go back to my previous employer then eventually resign? My current job pays more and has better benefits. Thank you.

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    1. Normally, if the Decision is for reinstatement and you do not want to be reinstated, or have already found another job, you should file an appeal to the Commission asking for separation pay in lieu of reinstatement, due to new employment and breakdown of relations. There is also the possibility that you can file a Motion for Reconsideration based on the same grounds. However, you must do these within ten days of receipt of the decision.

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  3. Melinda Maata

    Dear Atty. Charles,

    Good day!

    We are manpower agency. Since march 16, 2020 one of our big client temporary closed as of the moment due to CIVID 19 virus pandemic. But since all our other clients are also implementing a skeletal force so we cannot transfer those affected employees. What will we do since its almost a year they are on a floating status?

    Thank you.

    Mhel

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    1. First and foremost, you need to ensure that you have filed the correct paperwork (Establishment Report RKS Form 5) with the DOLE, or you may find you have problems later on. You also need to have obtained the agreement of your employees before implementing the extension of the floating status under DO 215-20.

      (https://www.dole.gov.ph/news/do-215-20-rule-amending-section-12-of-rule-i-rules-implementing-book-vi-of-the-labor-code-on-suspension-of-employment-relationship/)

      Since they have already been on floating status for a year, and there can be no further extension of this, you only have two options – reinstate or retrench.

      As you have said, you cannot bring them back to work, as you do not have jobs for them to do., The only option left here is to retrench your remaining employees on floating status before the end of the second six months of their suspension, paying them the correct amount of Separation Pay, at the rate of either ONE MONTH (minimum) or One Half Month per year of service.

      While this may not be the most ideal situation, it is the only one open to you at this time. And while it may be tempting to just let them go without paying them, this is a payment they are rightfully due under law. I would not recommend not paying or just letting them stay on floating, as these are both illegal actions that can be the subject of NLRC Complaints.

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  4. Romel Robles

    Ang company po namin ay nag file ng temporary closure mula june 16 at natapos nuong Dec.16 2020, hindi parin kami pinabalik noong dec172020 at nitong feb 08 2021 ay nag file sila ng permanen closure at gusto nila bayaran kami ng 13days per years of service…
    Tama po ba yung ibabayad nila sa amin?
    At valid po ba na dahilan yung ‘Lack of Raw Materials para payagan na magsara?
    At kapag nagsara ang kompanya permanenteng hindi na ba ito papayagang mag bukas?
    Ano po ang pwede naming Gawin upang hindi nila maisara ang kompanya? Ano ano ba ang mga technikality at require para hindi ma grant ang kanilang application sa pwrmanent closure?

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    1. As employees, there is nothing you can do to prevent their closure, unless you decide to buy out the company. Or you are part of a co-operative. Closure is another of those management prerogatives that have been given to companies under rulings from the Supreme Court.

      As for your Separation Pay, the standard payment for employees on the cessation of business die to financial reasons such as this is One Half Month per year of Service, where a period of at least six months in counted as a full year. For those with less than 3 year’s service, the minimum of One Month’s Salary is given.

      Since there are normally an average of 22.5 days per month (26 days for six-day week workers), then half of that is 11.25 (or 13) days per year of service.

      This is given in Article 298 of the Labor Code, which states:

      The employer may also terminate the employment of any employee due to the installation of labor-saving devices, redundancy, retrenchment to prevent losses or the closing or cessation of operation of the establishment or undertaking… by serving a written notice on the workers and the Ministry of Labor and Employment at least one (1) month before the intended date thereof… In case of retrenchment to prevent losses and in cases of closures or cessation of operations of establishment or undertaking not due to serious business losses or financial reverses, the separation pay shall be equivalent to one (1) month pay or at least one-half (1/2) month pay for every year of service, whichever is higher. A fraction of at least six (6) months shall be considered one (1) whole year.

      While it may not seem like much, it is the correct amount.

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  5. Angel

    Hi Sir Charles, yung concern ko po is we are a manpower agency and we are only depending on our clients. No client, NO work for our employees. Dahil po sa pandemic and lockdown madami po kaming client na ngclose due to business loses and unfortunately went back to their countries. From our 600 employees we have, sadly it went down to 50 employees (those who were willingly stayed on their workplace). We are continuously looking for clients so we could post our employees na nawalan ng work.
    We have eleven (11) employees na ngfile ng illegal dismissal sa DOLE dahil wla pa rin silang work after 6 months from the time ng nglockdown. One of them was offered to go back to work on July 31 but he refused because her wife just gave birth. Some also refused because they don’t want the “stay-in” policy (because of the risk of infection of COVID19) and sabi nila “next year nalang pag normal na”. So we looked for other employees that are willing to stay in their workplace.
    We assure them that by January they will be dispatch on their new workplace because the agency got a new client. But they declined to wait and ask for separation pay.
    Yes we admit that we offered them to go back to work more than the six months rule but still they declined due to their personal reasons. Do we have any other options we can offer to them? Or shall we give them their separation pay even if they rejected it in the first place? Can we still offer them to go back to work even if they already filed a case to DOLE? Please enlighten us. Thank you so much.

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  6. Jay dy

    Hi Sir Charles. My concern po is we are a manpower agency. 5 regulars are deployed to a client who decided not to renew the contract with us next year (expiring on dec 31) but willing to retain our regulars to be absorbed by the new agency. Pero si staff ayaw magpa absorb since alam nila ang track record nung new agency when it comes to labor issues. Sabi nila mag papa retrench na lang sila. Right now we are trying our best para Makahanap ng bagong work with the same pay for them kahit na Hindi pa dec 31. While we don’t have problems of separating them by dec 31 and give separation pay, we are thinking na ilagay sila SA floating status starting Jan 1 para Hindi masayang yung tenure nila SAmin especially if we get to find new jobs for them.. We only plan to float them for 3 months tapos Kung wala talaga, e di saka bayaran ng separation pay. On the principle of Management Prerogative, are we right and making sense? Can they demand to just get the money by dec 31? Appreciate your feedback. Thank you.

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    1. Hi Jay,

      With agency employees that are at the end of the contract with the principal, you have three months from the last date of work for the principal in which they can be considered to be on floating status before you must either find them new positions or separate them with pay. In your case here, if they will stop working at the end of the contract on December 31, then they can be floating for up to three months, without the need for the one month notice required for Temporary Suspension under the Labor Code.

      This is bound under Department Order 174, Series of 2017, RULES IMPLEMENTING ARTICLES 106 TO 109 OF THE LABOR CODE, AS AMENDED. Here, it states that,
      “Where the termination results from the expiration of the Service Agreement, or from the completion of the phase of the job or work for which the employee is engaged, the latter may opt to wait for re-employment within three (3) months to resign and transfer to another contractor-employer. Failure of the contractor to provide new employment for the employee shall entitle the latter to payment of separation benefits as may be provided by law or the Service Agreement, whichever is higher, without prejudice to his/her entitlement to completion bonuses or other emoluments, including retirement benefits whenever applicable. The mere expiration of the Service Agreement shall not be deemed as a termination of employment of the contractor’s/subcontractor’s employees who are regular employees of the latter.”

      Effectively, this means that they can wait up to three months for a new placement, but if you cannot give one inside that time, then you are liable to pay separation pay at the end. However, if they decide to leave PRIOR to the end of the three months, they can resign and not receive any Separation Pay at all, as this is considered to be a Voluntary Resignation.

      Whether you retrench on December 31 or March 31 is up to you, not at the demand of the employees. You are legally permitted to do either, especially if you do not have work for them at the time of the end of the principal’s contract. If you decide to retrench by December 31, them make sure that you give the required 30 days notice first.

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      1. Joy

        Hi Atty. Charles,
        Need your legal advice about our case.
        Meron po kaming isa employee na ka floating status, unfrotunately hindi namin naissuehan ng floating status memo or any documents.
        The reason for this our client want him to be removed because he was former employee on the said account and was have bad records.
        So what we did we talked to him personally and verbally we informed him that he will be floating status and no work no pay sya. And we can re assign him sa upcoming new project which he agreed. Then he returned the laptop we issued on him kasi work from home yung account.
        Weeks came hindi nya nakuha yung floating status memo because he had flu and need to be quarantine and nakalimutan na rin issue ng HR namin.
        Few weeks, tinatawagan cya ng Manager nya because we have client and this time it will be onsite unfortunately he declined and he preferred work from home, we informed him na wala na ibang account na available for work from home and only onsite lang meron.
        Then December 12, our HR called him and remind him to report to get the floating status amd if he can be part sa new account which onsite.
        After three days he message our HR telling na wala sa contract nya and no work no pay and we need him to pay the days na hindi cya nakapasok.
        As what we told him we only pay is his holiday pay kasi naka floating status cya.
        Bale po 45 days na cya naka floating status. Ano po ba puedeng solusyon ang gawin namin Atty?
        Because according to him he will file a case with the company.

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      2. This is an awkward situation. Placing an employee on floating status is usually done when the company does not have a position open for the employee, but does not want to go through redundancy or retrenchment. However, in these times, it can also be done without the 30-day notice period where a company has had to reduce workforce due to the pandemic for financial reasons.

        Citing the client requirement as the reason for floating status is not a valid reason per the Labor Code. Floating status does not really expressly appear in the Philippine Labor Code. However, it is considered as a valid management action but subject to compliance with Article 301 of the Labor Code which states:

        “ART. 301. When employment not deemed terminated.- The bonafide 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 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.”

        When implementing this measure, it is incumbent upon the employer to notify the Department of Labor and Employment (“DOLE”) and the affected employee, at least one month prior to the intended date of “suspension of business operations”, except for reasons given regarding temporary cosures due to the COVID-19 pandemic.

        Further, an employer must also prove the existence of a clear and compelling economic reason for the temporary shutdown of its business or undertaking and that there were no available posts to which the affected employee could be assigned. Care must be taken in placing an employee under floating status. Such action must be made in good faith.

        The placing of an employee on floating status presupposes, among others, that there is less work than there are employees. Hence, it would be a badge of bad faith if you hire new employees while some of your old employees were placed on floating status. It can also be considered to be bad faith by placing your employee on floating status for an invalid reason.

        Effectively, placing this employee on floating status because of a client demand is an act of illegal suspension, and may be a valid ground for Illegal Constructive Dismissal if the employee files a complaint with the DOLE.

        In this case, I would recommend coming to an arrangement with the employee to bring him back to work with as little fuss as possible. If he has already been on floating status for 45 days, then it may be best to pay his lost earnings and reinstate him to an account at the earliest possible opprtunity.

        You may also want to discuss how the HR did not pick up on the fact that this would be counted as a potentially illegal suspension of employment, and deal accordingly with their mistakes. And to prevent this happening in the future, your HR should pass any decisions on such matters through your legal department before implementing them. They may be HR professionals, but they are not lawyers.

        If you do not have a legal department, we can recommend a company thatcan provide outsourced legal assistance for a reasonable cost for future actions.

        Like

  7. Honey Jane Gersalina

    Hi Charles,

    My employer, at the start of lockdown, decided to require the employees to stay at our workplace. We cannot go in and go out of the building unless we have a personal car. If we will not comply with the “stay in” policy, we are not allowed to go to work.

    We are paid only during the regular holidays, because they are just following the rules for holiday pay.

    Four employees, including me, did not agree with that stay in policy because of the risk. The tenants in the bldg are Chinese nationals. Also, I am a conservative person, I cannot the guarantee of being safe.

    More than 6 months had already passed. I contacted our employer but still the management cannot give us the answer when are we allowed to go back to work.

    Is forcing us to stay at our workplace illegal?
    Are we considered as under the floating status?
    Do we have the right to file a complaint about this?

    Like

    1. Hi Honey Jane,

      Because of the lockdown in March, there were some employers that required their employees to stay somewhere in or near to work because of the risk of infection. This is not illegal, per se, but it is not an ideal situation if your accommodation is not suitable.

      This does mean that you would be considered to be on floating status, No Work No Pay, which can only last for a maximum of six months or 180 days.

      If your employer has not reinstated you or offered you retrenchment with separation pay, you can now file a complaint for Illegal Constructive Dismissal with the NLRC.

      Like

  8. Pingback: FLOATING STATUS, THE ECQ, AND ILLEGAL CONSTRUCTIVE DISMISSAL – Employment Law Project

  9. aldwin duran

    Dear Atty. Charles,

    Our company placed me under LWOP for three months (April-July) without the 30-day advance notice and it has already lapsed last July. They did not get back to me after it has lapsed and many of my colleagues are also waiting for their advice on our employment status since the LWOP period that they communicated has ended. The announcement was sent via email on April 1 and it was effective the next day without the 30-day advance notice. Is this legal since they assumed that it was still extended until October with announcing the extension period? Can the LWOP automatically extend without any proper advisory from the employer since I read that they can maximize the LWOP for up to six months.

    Summary:
    April-July (3 months LWOP) – was communicated via email but without the 30-day advance notice
    Aug-Oct (3 months LWOP extension) – no announcement or documentation, our employer just assumed that they extended it.

    Hoping for your clarification.

    Thank you.

    AJ

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    1. The assumption of an extension is a dangerous thing, and while it may be done in certain circumstances, others leave the employer open to complaints and penalties.

      However, since the employer does have the right to suspend without 30 days notice for a period of “up to” a MAXIMUM of six months (180 days), then there is nothing illegal in allowing the original three months suspension of business operations (or parts thereof) for a further three months.

      The employer can place employees on floating status without 30 days notice as per Labor Advisory No. 17-A, Series of 2020, as long as they correctly complete and submit to the DOLE the RKS Form 5.

      That said, your employer could have given you notice, and was just being lazy in not doing so.

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  10. Ely

    16 March is the order of the government to suspend work in majority of the companies due to national health emergency hence I submit that it is not the correct day of reckoning to begin counting the floating status. Floating status or temporary shutdown must be initiated by the employer and not the government.

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    1. Johnny

      I have to agree with this. ECQ is a government-initiated restriction. forcing all non-essential businesses to close shop and rendering them incapable of providing work for their employees, regardless if they were capable of the same or not. A bonafide suspension of business, which is the basis of an employee’s designation into floating status, should be employer-initiated. In NFL vs. NLRC (G.R. No. 127718), the Supreme Court stated that “the closure contemplated under Article 283 of the Labor Code is a unilateral and voluntary act on the part of the employer to close the business establishment as may be gleaned from the wording of the said legal provision that ‘The employer may also terminate the employment of any employee due to…’ The use of the word ‘may,’ in a statute, denotes that it is directory in nature and generally permissive only.” Furthermore, near the end of that decision, the Supreme Court specifically stated something that is very appropriate to the current situation brought about by the ongoing pandemic. “Article 283 of the Labor Code does not contemplate a situation where the closure of the business establishment is forced upon the employer and ultimately for the benefit of the employees.” Hence, the period of the ECQ should not be counted when computing the six month limit on an an employee’s floating status. The said six month period should only be counted once the ECQ (and MECQ for certain industries) was downgraded to GCQ and most businesses were allowed to open shop. If businesses chose to remain closed or to otherwise displace their employees temporarily during the GCQ, such would be their decision and only then will they fall under the purview of the six month period contemplated by law.

      This is not a knack on Charles, however. He is answering – and quite admirably with all the effort he so patiently extends – queries based on the standpoint he is most familiar with: on the side of employee’s rights. His arguments are tenable, of course. But as with my opinion above, agreeing with Ely, they are not conclusive. Only upon a final judgement rendered by the Supreme Court on a matter of similar import can we have a definite answer.

      Sadly, that is years away.

      The immediate solution to this quandary lies with the DOLE, but it seems like they are purposefully evading the issue. Many of my people have tried seeking clarifications from them regarding this very matter but they themselves cannot provide a concrete reply. The most common response? “Intay na lang po kayo ng Department Order.” This is quite frustrating for both distressed employers and desperate employees. The DOLE has already tackled the suspending effect of the ECQ on probationary employment and prescriptive periods. Why can’t they issue a similar clarification on something that affects a greater number of people?

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      1. While I do encourage arguments and discussion on the legality of issues, it does behoove one to understand all of the aspects of law that you are pertaining to before making such a long and complex statement.

        Allow me to re-educate you in the law on Suspension of Business Operations and the changes over the last 20 years.

        As you said, a bona fide suspension of business operations is the basis for this current situation, and the employer does have the right to use this in times of uncertain financial situations to reduce the potential losses of the company.

        In the case you cited, NFL vs. NLRC (G.R. No. 127718), it was indeed decided that Article 283 (now 301) of the Labor Code did not apply to the situation at bar. And you chose some very clever arguments from that jurisprudence to press home your point.

        However, before assuming that your arguments are valid, you should also have cited the other aspects and verbatim of the case, in order to put your comments more into perspective.

        The Supreme Court, in this case, also said:

        “It is clear that Article 283 of the Labor Code applies in cases of closures of establishment and reduction of personnel. The peculiar circumstances in the case at bar, however, involves neither the closure of an establishment nor a reduction of personnel as contemplated under the aforesaid article. When the Patalon Coconut Estate was closed because a large portion of the estate was acquired by DAR pursuant to CARP, the ownership of that large portion of the estate was precisely transferred to PEARA and ultimately to the petitioners as members thereof and as agrarian lot beneficiaries. Hence, Article 283 of the Labor Code is not applicable to the case at bench.”

        It can be clearly construed from this paragraph of the SC decision that the closure of business operations did not fall into the category that would have made it applicable under Article 283. And as such, the case law being cited here has NO bearing on the current situation.

        You also go on to state that:

        “Furthermore, near the end of that decision, the Supreme Court specifically stated something that is very appropriate to the current situation brought about by the ongoing pandemic.”

        Yes, the SC did state: “Article 283 of the Labor Code does not contemplate a situation where the closure of the business establishment is forced upon the employer and ultimately for the benefit of the employees.”

        However, the meaning was clear that it was because the closure of the business was “for the benefit of the employees”. And since the closure was for the benefit of the employees, separation pay was not due.

        This does not, however, mitigate the current situation whereby employers are citing said jurisprudence as the reason why they can exclude the ECQ from their permitted six months suspension of business operations.

        Now, let’s look at the remainder of your argument. You state that the DOLE themselves cannot clarify the situation, and this is of no surprise to me, since most of the people that you speak to in the DOLE are merely phone operators with no legal training. Had you spoken to a lawyer with a little experience, then you would have had your “definite answer”.

        You stated here that:

        “Only upon a final judgment rendered by the Supreme Court on a matter of similar import can we have a definite answer.
        Sadly, that is years away.”

        Unfortunately, you are very wrong while also being very right. It IS years away, but in the past!

        This issue was already resolved in 2010, in the case of MANILA MINING CORP. EMPLOYEES ASSOCIATION-FEDERATION OF FREE WORKERS CHAPTER vs. MANILA MINING CORP. ET AL, G.R. Nos. 178222-23 : September 29, 2010

        This is a case whereby the Manila Mining Corporation (MMC) was forced to close one of their tailings dams because they had not been issued a permit for operation. The permit, an Environmental Compliance Certificate (ECC), which was previously held on the site, expired in July 2001, and MMC failed to obtain said permit after the residents of the community refused to give their consent, which was one of the conditions imposed by DENR-EMB in granting its application for a permanent permit.

        In this case, the SC stated:

        “It is precisely MMC’s faultless failure to secure a permit which caused the temporary shutdown of its mining operations. “

        They effectively removed all liability for the failure from the MMC. The fault clearly lay with the DENR-EMB for not immediately releasing the permit, causing MMC to shut down its operations and suspend its employees.

        However, while MMC were not deemed to be wholly at fault, the SC also deemed the suspension to have been legal from the start. The argument of MMC was that the six months suspension could be continued, as it was started “due to a cause beyond the control of the employer”, very much like the case of ECQ today.

        The SC had this to say on that opinion of the MMC:

        “The Court is not impressed with the claim that actual severe financial losses exempt MMC from paying separation benefits to complainants. In the first place, MMC did not appeal the decision of the Court of Appeals which affirmed the NLRC’s award of separation pay to complainants. MMC’s failure had the effect of making the awards final so that MMC could no longer seek any other affirmative relief. In the second place, the non-issuance of a permit forced MMC to permanently cease its business operations, as confirmed by the Court of Appeals. Under Article 283, the employer can lawfully close shop anytime as long as cessation of or withdrawal from business operations is bona fide in character and not impelled by a motive to defeat or circumvent the tenurial rights of employees, and as long as he pays his employees their termination pay in the amount corresponding to their length of service.”

        “The cessation of operations, in the case at bar is of such nature. It was proven that MMC stopped its operations precisely due to failure to secure permit to operate a tailings pond. Separation pay must nonetheless be given to the separated employees.”

        This is the jurisprudence that allows the beginning of the period of suspension to start at the beginning o the ECQ period, despite the fact that the employers had no choice but to close.

        But thank you, Johnny, for giving me the opportunity to explain this more fully to you, so that you do not end up failing your employees and finding yourself in the NLRC fighting cases of Illegal Constructive Dismissal that you were not aware were valid and lawful.

        Have a nice day…

        Like

  11. Andromeda

    Hi Charles,

    The CEO and Owner of our company just decided to place 9 employees–including myself, on floating status immediately. The business is not totally shutting down, it’s just that volume of calls is low. So, they are keeping 4 operations managers, 2 film editors, 2 marketing managers, an IT manager, a training manager, 2 agents, 1 admin supervisor, accounting supervisor, liaison officer, and HR manager and placing us on floating status. I questioned the legality of their decision since per DOLE, it is mandatory to give 30-day notice to both employee and DOLE, right? I asked if they will pay us a month salary since, they want the TLO to take effect immediately. They said “we will not get paid” and they don’t care if we file a labor complaint. Should we go ahead and ask DOLE about this? Thank you.

    Like

    1. Unfortunately, your employer is correct. As they are placing employees on floating status due to the temporary suspension of business operations (or a part thereof), the company only has to provide you with notice that they are doing it, and not 30 days in advance.

      Labor Advisory No. 17-A, Series of 2020 stated that the giving of 30 days notice is only needed for retrenchment or redundancy due to the current health emergency. This advisory included the Establishment Report Form update as of June 11, 2020, which stated:

      “1. Accomplish this form when filing a notice of: a) Flexible Work Arrangement/Alternative Work Scheme; b) Temporary Closure; c) Retrenchment or Reduction of Workforce; or d) Permanent Closure.
      2. The report is considered as duly filed when the complete list of workers affected is made part of the submission.
      3. This form should be submitted to the DOLE Provincial/Field Office as soon as possible in the case of adoption of flexible work arrangement or temporary closure.
      4. For establishments that will retrench or permanently close, the form should be submitted 30 days prior to the effectivity of termination.”

      This Labor Advisory removed the need to give 30 days’ notice to employees, when the reason for the suspension was financial losses or reversals, to reduce the impact of COVID-19 on the business, and the RKS Form 5 of 2020 was duly and correctly submitted.

      Like

      1. Andromeda

        Thank you. I just got confused because I read a SC ruling regarding one-month notice rule being mandatory. On the case of PT&T vs NLRC (G.R. No. 147002), it states, “It must be stressed, however, that compliance with the one-month notice rule is mandatory regardless of whether the retrenchment is temporary or permanent. This is so because Article 283 itself does not speak of temporary or permanent retrenchment; hence, there is no need to qualify the term. Ubi lex non distinguit nec nos distinguere debemus (when the law does not distinguish, we must not distinguish).”

        Like

      2. That is correct, under normal circumstances. However, there have been changes temporarily due to the COVID pandemic that have meant interim changes to the general rules. In all circumstances, special rules and laws promulgated during a national crisis override other regular rules of law.

        Like

  12. Marini Joy Doria

    Does the floating status include days where employee was paid even he/she was not reporting to work? and when is the start of counting the six-month floating status if the employee reported to work but in reduced working days? Thank you.

    Like

    1. The floating status of employees begins when that employee was considered as not currently at work for an employer. For some, that was March 17, for others it was later.

      However, there are exclusions to this rule.

      If an employee uses their leave days during the first part of the lockdown, then their floating status begins once said leave days have been used up.

      Similarly, if an employee is being paid his full pay while off work, then he is not considered to be on floating status. However, this does not apply to those employees on floating status that are receiving “cash assistance” from an employer.

      Any employee reporting to work, whether on full time or reduced work days, or on a Work from Home basis, is not considered to be on floating status.

      Floating status in law is the act of placing an employee on a temporary suspension of work without pay for a period of up to six months (180 days). Ergo, if the employee has work, in whatever capacity, he is not considered to be floating.

      Liked by 1 person

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