Dear Atty. Angela,
I own a burger chain with 10 branches in Metro Manila and everything was going well until my main suppliers increased their rates on raw materials and will cause my business to lose significantly. I am currently looking for new suppliers but meanwhile, I need to suspend my entire operations and have to put my commissary staff on hold but I don’t want to dismiss them. Is it legal to put them on floating status and how long can it last?
Marvin
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Dear Marvin,
Yes, it is legal. The placing of an employee on “floating status” presupposes that there is less work than there are employees. The consequence of forced leave after a decrease in work volume, subject to recall upon availability of work, is a valid exercise of management prerogative.
The law allows temporary lay-off or employees to be placed on forced leave for purposes of cost-saving measures in order to prevent further losses. It is important, however, for the employer to discharge the burden of proof and present evidence of actual suspension of business operations due to financial constraints.
In the case of Innodata Knowledge Services Inc. v. Inting, G.R. 211892 (2017), the Supreme Court clarified that while floating status is legally allowed, employees cannot forever be temporarily laid-off. Hence, in order to remedy this situation or fill the hiatus, Article 301 may be applied to set a specific. Article 301 states:
Art. 301. When Employment not Deemed Terminated. The bona-fide suspension of the operation of a business or undertaking for a period not exceeding six 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 month from the resumption of operations of his employer or from his relief from the military or civic duty.
The law sets six months as the period where the operation of a business or undertaking may be suspended, thereby also suspending the employment of the employees concerned. The resulting temporary lay-off, wherein the employees likewise cease to work, should also not last longer than six months.
After the period of six months, the employees should either then be recalled to work or permanently retrenched following the requirements of the law. Failure to comply with this requirement would be tantamount to dismissing the employees, making the employer responsible for such dismissal.
Atty. Angela Antonio