Voluntary Retirement vs Illegal Dismissal: When Floating Status Becomes Constructive Dismissal

The line between a temporary "floating status" and outright illegal dismissal can be thin, especially for employees of manpower agencies. In Superior Maintenance Services, Inc. v. Bermeo (G.R. No. 203185, December 5, 2018), the Supreme Court clarified when an agency may keep a worker on hold without pay—and when that waiting period becomes constructive dismissal entitling the employee to separation pay.

The Facts of the Case

Carlos Bermeo worked as a janitor for Superior Maintenance Services, Inc. since 1991. He was assigned to various client establishments over the years, with his last posting at Trinoma Mall ending on March 30, 2008.

On August 28, 2008, the agency deployed him to French Baker at SM Marikina. However, the client asked for a replacement upon learning Bermeo was already 54 years old. Just a week later—on September 5, 2008—Bermeo filed a complaint for constructive dismissal with a claim for separation pay.

The Labor Arbiter ruled in his favor, finding he was constructively dismissed because no work was offered even during the proceedings. The NLRC reversed, saying the complaint was premature since his floating status had not yet reached six months. The Court of Appeals sided with Bermeo, but the Supreme Court ultimately reinstated the NLRC ruling.

What Is Floating Status?

Floating status, also called temporary off-detail, is the period when an agency worker is between assignments—waiting after being relieved from a previous post until transferred to a new one. This typically happens when a client does not renew a contract or requests a replacement.

The Labor Code has no specific provision governing floating status. Courts have treated it as a form of temporary retrenchment or lay-off, applying Article 301 of the Labor Code by analogy. This provision states that a bona fide suspension of business operations for not more than six months does not terminate employment.

The Six-Month Rule

The key rule from this decision: a floating status should not exceed six months. After that period, the employer must either recall the employee to work or permanently retrench them following legal requirements. If neither happens, the employee is considered constructively dismissed, and the agency is liable.

In Bermeo's case, the Court found his complaint premature. When he filed on September 5, 2008, only one week had passed since his failed French Baker assignment. Even counting from his Trinoma Mall assignment ending March 30, 2008, less than six months had elapsed.

The Court also noted the agency had contacted Bermeo about new assignments even after he filed his complaint—evidence it had not abandoned him.

Why the Court of Appeals Erred

The CA had relied on Veterans Security Agency v. Gonzalvo to argue that Article 301 only applies when the employer's business operations are actually suspended. The Supreme Court clarified this was a misreading.

Article 301 applies by analogy to floating status situations, which arise not from business suspension but from a lack of available posts with the agency's existing clients. The temporary off-detail is a normal consequence of the agency business model, not a cessation of operations.

The Court distinguished Veterans, where the employee had been floating for eight months, was pulled from a three-year post after complaining about unpaid SSS contributions, and was given shifting excuses by his employer—circumstances showing intent to dismiss.

Practical Takeaways

• Six months is the limit. An agency cannot keep a worker on floating status indefinitely. Once six months pass without recall or proper retrenchment, the worker is constructively dismissed.
• Premature complaints can fail. Filing for constructive dismissal too early—before the six-month period lapses—may result in dismissal of the case, as happened to Bermeo.
• Document everything. Workers should keep records of their assignments, dates of deployment, and any communications about new postings. Evidence that an employer attempted to offer new assignments can defeat a constructive dismissal claim.
• The rule applies beyond security guards. While many floating status cases involve security agencies, the Court confirmed it applies to other industries where services are farmed out to independent contractors.
• Constructive dismissal entitles separation pay. If floating status exceeds six months without recall or valid retrenchment, the employee may claim separation pay for constructive dismissal.

This article is general information and not legal advice. For your specific situation, consult a lawyer or ask ASG Legal AI.