The Supreme Court ruled that security guards who are not reassigned within six months of being placed on floating status, without a valid business reason such as a lack of available client contracts, are considered constructively dismissed. This decision clarifies the responsibilities of security agencies to their employees, emphasizing that prolonged floating status can be deemed an illegal termination if not properly managed or justified.

The Case of the Unassigned Guards: When Does ‘Floating Status’ Sink to Constructive Dismissal?

This case arose from a complaint filed by Igmedio C. Sarmiento, Jose Jun Cada, and Ervin R. Robis against Soliman Security Services, Inc. and Teresita L. Soliman for illegal dismissal, underpayment of wages, and other labor violations. The guards claimed they were constructively dismissed after being relieved from their posts and not given new assignments. The security agency, however, argued that the guards were placed on floating status due to client requirements and were directed to report for new assignments, which they allegedly failed to do. The central legal question is whether the prolonged unassigned status of the security guards constituted constructive dismissal, thereby entitling them to backwages and separation pay.

The Supreme Court’s analysis hinged on the concept of **floating status** in the security services industry. While recognizing this practice as a valid exercise of management prerogative, the Court emphasized that it must be exercised in good faith. The court acknowledged that security agencies often operate under contracts allowing clients to request guard replacements. The employer has the prerogative to transfer employees, provided there is no demotion and the transfer is not discriminatory. However, the Court also recognized that security guards do not receive salary or financial aid during floating status, which creates potential for abuse.

The Court then addressed the issue of **constructive dismissal**. While the guards were not explicitly terminated, the lack of reassignment after a significant period led the Court to find that they were effectively dismissed. The Court applied Article 292 (formerly Article 286) of the Labor Code by analogy, setting a maximum of six months for temporary off-detail. This provision, however, does not permit agencies to keep guards on floating status for up to six months without valid reason, but instead relates to business suspensions. The Court stated clearly that placing employees on floating status requires a bona fide suspension of operation.

The Court scrutinized the agency’s claim that the guards were directed to report for new assignments. The agency provided notices directing the guards to “clarify their intentions” for not seeking new assignments. However, the Court deemed these notices as mere afterthoughts, sent after the illegal dismissal complaint was filed. The Court noted that the agency had an opportunity to clarify the assignment issue during a labor arbiter hearing but failed to provide specifics. The court stated,

We rule that such notices were mere afterthoughts… The complaint clarified the intention of respondents. Indeed, respondents’ complaint for illegal dismissal with prayer for reinstatement is inconsistent with the agency’s claim that respondents did not report for reassignment despite the notices directing them to do so. It is evident that the notices sent by the agency were mere ostensible offers for new assignments. It was intended to cover the illegality of the termination of respondents’ employment.

The Court further elaborated on the employer’s obligations when facing a lack of service agreements, referencing Department Order No. 14, Series of 2001 (DO 14-01) of the Department of Labor and Employment. Section 9.3 of DO 14-01 allows for dismissal with separation pay if the agency cannot provide work after six months, to wit:

If after a period of 6 months, the security agency/employer cannot provide work or give assignment to the reserved security guard, the latter can be dismissed from service and shall be entitled to separation pay as described in subsection 6.5

According to Section 6.5, lack of assignment for six months is an authorized cause for termination, requiring separation pay. However, the Court stressed that this only applies when the agency experiences a surplus of guards due to a lack of clients. Otherwise, placing a guard on floating status without justification is constructive dismissal. If the floating status is justified, the lapse of six months creates an authorized cause for termination, but with entitlement to separation pay.

Procedurally, the Court emphasized compliance with Article 289 (previously Art. 283) of the Labor Code, requiring written notice to the employee and DOLE one month before termination. Sec. 9.2 of DO 14-01 reiterates this requirement. The court summarized the key points on floating status and DO 14-01:

• The floating status should not exceed six months.
• Before six months, the agency must recall the guard for a new assignment.
• If no reassignment occurs due to lack of service agreements, the guard may be permanently retrenched with procedural compliance.

The Court emphasized that bad faith placement on floating status, such as failure to reassign with sufficient agreements, leads to liability for illegal dismissal. And the lapse of six months without either reassignment or valid dismissal with separation pay constitutes constructive dismissal. Finally, the Court upheld the appellate court’s decision regarding the monetary claims and deferred to the NLRC’s quasi-judicial authority on factual computations, holding that certiorari cannot be used to correct errors of judgment.

FAQs

What is floating status for security guards?	Floating status refers to the period when a security guard is between assignments, waiting for a new post after being relieved from a previous one. During this time, they are temporarily off-duty.
How long can a security guard be on floating status?	The Supreme Court has set a maximum of six (6) months for temporary off-detail or floating status, drawing an analogy from Article 292 of the Labor Code.
What happens if a security guard is not reassigned after six months?	If a security guard is not reassigned after six months, it may be considered constructive dismissal, especially if the lack of reassignment is not due to a valid business reason, such as a lack of available client contracts.
What is constructive dismissal?	Constructive dismissal occurs when an employer makes working conditions so unbearable that an employee is forced to resign or, as in this case, is effectively terminated due to prolonged lack of assignments.
What are the employer’s obligations if they cannot reassign a guard?	If a security agency cannot provide work or give an assignment to a security guard after six months, they can dismiss the guard but must provide separation pay as outlined in Department Order No. 14, Series of 2001.
What notice is required before terminating a guard due to lack of assignment?	The employer must serve a written notice on the security guard and the Department of Labor and Employment (DOLE) at least one month before the intended date of termination, as per Article 289 of the Labor Code and DO 14-01.
What if the agency fails to comply with these obligations?	If the agency fails to reassign the security guard or validly dismiss them with corresponding separation pay after six months, the security guard may be considered to have been constructively dismissed, entitling them to remedies like backwages and separation pay.
What constitutes bad faith placement on floating status?	Placing a security guard on floating status in bad faith includes failure to reassign the guard despite the existence of sufficient service agreements. This means there’s no legitimate business need for the temporary retrenchment.
What happens if a guard files an illegal dismissal case and refuses reassignment?	The Court deemed notices from the agency to report for reassignment as afterthoughts, especially after an illegal dismissal complaint was filed. The intention behind the filing of the complaint is inconsistent with the claim that the guard did not report for re-assignment despite the notices to do so.

The Supreme Court’s decision in Soliman Security Services clarifies the responsibilities of security agencies in managing the floating status of their employees. Security agencies must ensure that employees are not left in prolonged uncertainty without reassignment or proper compensation. Compliance with labor laws and regulations, including timely reassignment or proper termination with due notice and separation pay, is essential to avoid liability for illegal dismissal.

For inquiries regarding the application of this ruling to specific circumstances, please contact ASG Law through contact or via email at frontdesk@asglawpartners.com.

Disclaimer: This analysis is provided for informational purposes only and does not constitute legal advice. For specific legal guidance tailored to your situation, please consult with a qualified attorney.
Source: SOLIMAN SECURITY SERVICES, INC. VS. IGMEDIO C. SARMIENTO, G.R. No. 194649, August 10, 2016