Legalities of Putting An Employee on Floating Status

Situation:  An employee who was hired as project manager filed an emergency leave of absence and announced her intention to resign following her disappointment over the continued employment of another employee in the company. Because of the importance of her role in the company’s only project at the time, the employer sought her replacement so as not to disrupt business. The disgruntled employee, however, later changed her mind about leaving the company and decided to resume her work. The employer informed her that because they were constrained to hire a replacement when she threatened to leave, she would have to be placed on “floating status” in the meantime.

The disgruntled employee filed a complaint for illegal dismissal challenging the “floating status” as constructive dismissal.  While the case was pending, the employer sent her a notice of termination due to redundancy or lack of a posting similar to the position at her previous project.

What the Supreme Court said:

“Off-detailing” or putting an employee on floating status is not equivalent to dismissal, for as long as the “floating status” does not last more than 6 months.  In this case, there is no constructive dismissal when the employee was placed on floating status “until such time that another project could be secured” for her.

Legal Basis for Off-Detailing:

The legal basis for “off-detailing” is Art. 286 of the Labor Code which has been applied in many industries when, as a consequence of the bona fide suspension of the operation of a business or undertaking, an employer is constrained to put employees on floating status for a period not exceeding 6 months.

(Case of: Nippon Housing Phil, Inc. vs. Leynes, GR. No. 177816, August 3, 2011)

Constructive dismissal can also arise from employee transfers and demotions. While transfers and demotions are generally allowed in the exercise of management prerogative, there are certain rules surrounding their implementation that the employer must observe, in order to avoid costly litigation or illegal dismissal cases in the Department of Labor. HR managers may wish to learn more about transfers and demotions from a guide entitled, “44 Rules on Employee Transfer and Demotion”.