In Airborne Maintenance and Allied Services, Inc. v. Arnulfo M. Egos, the Supreme Court affirmed that an employer’s failure to provide work and ignoring an employee’s requests for reassignment can constitute constructive dismissal. This decision underscores the employer’s responsibility to actively engage with employees, especially when contracts with clients end. It serves as a reminder that employers cannot simply leave employees in limbo without facing legal repercussions.

When Silence Speaks Volumes: Is Ignoring an Employee a Form of Dismissal?

The case of Airborne Maintenance and Allied Services, Inc. v. Arnulfo M. Egos revolves around Arnulfo Egos, a janitor who was not absorbed by a new contractor after his employer, Airborne Maintenance and Allied Services, Inc., lost its contract with Meralco. Despite being declared fit to work, Egos was not given a new assignment and was essentially ignored by Airborne. This situation led to Egos filing a complaint for constructive dismissal. The central legal question is whether Airborne’s actions, or lack thereof, constituted constructive dismissal, thereby entitling Egos to remedies under labor law.

The Supreme Court’s decision hinged on the principle that constructive dismissal occurs when an employer’s actions render continued employment impossible, unreasonable, or unlikely. This can manifest through a demotion, reduction in pay, or creating intolerable working conditions. In Egos’s case, the Court found that Airborne’s failure to provide work, despite his repeated requests and fitness certification, created such an environment. The Court emphasized that employers have a duty to act in good faith and ensure that employees are not left without work without a valid reason.

The Court also addressed Airborne’s claim that Egos was placed on floating status due to the termination of the Meralco contract. The concept of **floating status**, as derived from Article 301 (formerly Article 286) of the Labor Code, allows for the temporary suspension of employment for up to six months when a business operation is suspended. However, the Court clarified that this is not an absolute right and comes with conditions. Article 301 states:

ART. 301 [286]. When Employment Not Deemed Terminated. — The bona fide suspension of the operation of a business or undertaking for a period not exceeding six (6) months, or the fulfilment (sic) 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.

To validly place an employee on floating status, the employer must prove that the suspension of business operations was bona fide and temporary, not exceeding six months. Furthermore, the employer must notify both the Department of Labor and Employment (DOLE) and the affected employee at least one month prior to the intended suspension. The employer must also demonstrate a clear and compelling economic reason for the temporary shutdown and prove that no alternative positions were available for the employee. In this case, Airborne failed to meet these requirements.

The Supreme Court referenced PT & T Corp. v. National Labor Relations Commission to underscore the six-month limit for floating status. After this period, the employer must either recall the employee or permanently retrench them, following legal requirements. Failure to do so is considered an illegal dismissal, making the employer liable.

x x x Article 286 [now Article 301] may be applied but only by analogy to set a specific period that employees may remain temporarily laid-off or in floating status. Six months is the period set by law that the operation of a business or undertaking may be suspended thereby suspending the employment of the employees concerned. The temporary lay-off wherein the employees likewise cease to work should also not last longer than six months. After six months, the employees should either be recalled to work or permanently retrenched following the requirements of the law, and that failing to comply with this would be tantamount to dismissing the employees and the employer would thus be liable for such dismissal.

Furthermore, the court cited Lopez v. Irvine Construction Corp., highlighting the economic justification needed for a valid suspension. The case explicitly requires employers to demonstrate a dire exigency compelling the temporary layoff.

In this case, Irvine failed to prove compliance with the parameters of Article 286 of the Labor Code. As the records would show, it merely completed one of its numerous construction projects which does not, by and of itself, amount to a bona fide suspension of business operations or undertaking. In invoicing Article 286 of the Labor Code, the paramount consideration should be the dire exigency of the business of the employer that compels it to put some of its employees temporarily out of work.

Airborne’s failure to comply with the notice requirements, prove the economic necessity of the suspension, and demonstrate the unavailability of other positions led the Court to conclude that the floating status claim was a mere afterthought. The court emphasized that Airborne had not shown any evidence of notifying DOLE about the business suspension.

The Supreme Court agreed with the NLRC’s observation that Airborne’s letters to Egos, directing him to report to work, were sent after he had already filed the complaint for constructive dismissal. The Court, echoing the NLRC, noted that these letters seemed like attempts to feign compliance and were sent with incomplete addresses, preventing Egos from actually receiving them. The Court cited Skippers United Pacific, Inc. vs. NLRC, emphasizing that afterthoughts should not be given credibility.

The concept of **constructive dismissal** was further clarified by the Supreme Court by citing Morales v. Harbour Centre Port Terminal, Inc. The court defined it as a dismissal in disguise, which occurs when continued employment becomes impossible or unreasonable due to the employer’s actions.

Constructive dismissal exists where there is cessation of work because “continued employment is rendered impossible, unreasonable or unlikely, as an offer involving a demotion in rank or a diminution in pay” and other benefits. Aptly called a dismissal in disguise or an act amounting to dismissal but made to appear as if it were not, constructive dismissal may, likewise, exist if an act of clear discrimination, insensibility, or disdain by an employer becomes so unbearable on the part of the employee that it could foreclose any choice by him except to forego his continued employment.

The Court found that Airborne’s actions, including failing to inform Egos and DOLE about the suspension, not proving a bona fide suspension, and ignoring Egos’s request for reassignment, amounted to constructive dismissal. Therefore, the Court affirmed the CA’s decision, holding Airborne liable for illegal dismissal.

This ruling serves as a crucial reminder to employers about their obligations to employees during business transitions. It highlights the importance of clear communication, adherence to labor laws, and the need to act in good faith when dealing with employees’ employment status. The decision underscores that employers cannot simply ignore employees’ requests for work or leave them in a state of uncertainty without facing legal consequences.

FAQs

What was the key issue in this case?	The key issue was whether Airborne Maintenance’s failure to provide work to Arnulfo Egos after the termination of a contract, despite his requests and fitness to work, constituted constructive dismissal. This involved examining the employer’s responsibilities during business transitions.
What is constructive dismissal?	Constructive dismissal occurs when an employer’s actions or inactions make continued employment impossible, unreasonable, or unlikely for the employee. It is considered a dismissal in disguise.
What is floating status?	Floating status refers to a temporary suspension of employment, typically due to the suspension of business operations or lack of available work. However, it is subject to specific conditions and limitations under the Labor Code.
What are the requirements for a valid floating status?	For a floating status to be valid, the employer must prove a bona fide suspension of business operations, notify DOLE and the employee, demonstrate a compelling economic reason, and show that no alternative positions are available. The suspension also cannot exceed six months.
What happens if an employer fails to comply with the requirements for floating status?	If an employer fails to comply with the requirements for floating status and does not recall or properly retrench the employee after six months, it is considered an illegal dismissal. The employer becomes liable for backwages and separation pay.
What did the court find regarding Airborne’s letters to Egos?	The court found that Airborne’s letters directing Egos to report to work were afterthoughts, sent after he had already filed the constructive dismissal complaint. The letters also had incomplete addresses, preventing Egos from receiving them.
What evidence did Egos present to support his claim?	Egos presented a medical certificate declaring him fit to work, which Airborne disregarded. He also testified that he made several follow-ups for a new assignment, which were ignored by Airborne.
What is the significance of this ruling for employers?	The ruling highlights the importance of employers communicating and acting in good faith with their employees, especially during business transitions. It underscores the employer’s duty to provide work and the consequences of ignoring employee requests for reassignment.
What remedies are available to an employee who is constructively dismissed?	An employee who is constructively dismissed is entitled to backwages, separation pay, and other applicable benefits as determined by the court.

This case reinforces the importance of employers adhering to labor laws and acting in good faith when managing their workforce. Ignoring employee requests and failing to provide work can have significant legal consequences. Employers must ensure transparent communication and compliance with legal requirements to avoid liability for constructive 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: AIRBORNE MAINTENANCE AND ALLIED SERVICES, INC. V. ARNULFO M. EGOS, G.R. No. 222748, April 03, 2019