In Australia, temp, casual and contract work are just the many other options to gainful employment outside the traditional full time arrangements we are familiar with. It is said the flexibility of working conditions in Australia has been one of the success factors responsible for the country’s sustained economic growth for the past 21 years running. There should be a similar flexibility in working conditions in the Philippines that would allow an employer the ability of hiring employees according to the seasonality of his business needs. Of course, this should not be an excuse to exploit employees similar to the current practice of local employers deliberately churning their employees every 6 months to avoid giving them permanent status.
From BusinessWorld Philippines
Temporary layoff: A concern in call centers
THE CALL centers of today, which constitute the biggest sector of the rapidly growing business process outsourcing (BPO) or off-shoring and outsourcing (O&O) industry, are now acknowledged as growth centers of the Philippine economy. However, while the call centers are the country’s sunrise industry, several issues plague their continuous development; in fact, a number of call centers have pulled out of the Philippines. These concerns relate to the pro-labor bias of our laws, health problems caused by the odd working hours, and the instability in the manpower requirements brought about by the nature of the call center industry.
The nature of the call center business is such that it is subject to seasonal peaks and troughs because of client pullouts, changes in clients’ requirements and demands, and a myriad other factors. Consequently, the work force of a call center is inevitably subject to fluctuations according to the ebb and flow of the clients’ requirements; a perfect ratio between a call center’s current work force and its clients’ needs is seldom, if ever, attained.
By force of circumstance, call centers are constrained to resort to “compulsory time-off,” “voluntary go-home,” “forced leave,” “bench status” or “floating status” of call center agents. In legal parlance, this is known as “temporary layoff” of employees. This simply means that employees do not have work for varying periods — because of business exigencies — but they continue to be employees of the call center company. After the employees are pulled out from, or relieved of their work, they are made to wait until they are given new assignments. The “layoff” period may last for months, but not for more than six months. The problem is that while they remain employees of the company, they do not receive any pay during their “floating status” or “waiting period” (although they may continue to enjoy other benefits like health or medical insurance, etc.).
The “floating status” of such employees is often justified by invoking Article 286 of the Labor Code which allows the suspension of the employment relationship as a result of a bonafide suspension of a business or undertaking for a period not exceeding six months. After six months, the employee should either be recalled to work or, if this is not feasible, permanently separated for cause and paid the appropriate separation pay. Supreme Court decisions have applied this provision to justify the temporary layoff of personnel adversely affected by the completion or lack of service contracts to work on.
The economic impact on the employees kept on floating status is, of course, disastrous. While they are supposed to be still employees of the company, they are not doing any work and, worse, they are not earning any income not just for a day or two but for a possible maximum period of six months. During the waiting period, it is inevitable that some employees may just opt to resign and look for employment opportunities elsewhere. On the part of the company, while the resignation of the employees may save it from the cost of paying their separation pay, the company also stands to lose because of the loss of its investment in the training of the employees.
The instability and uncertainty generated by the floating status arrangement is bad and onerous for the employees and the company. The discontent and unrest among the “floating” employees may likely lead to litigation — an event detrimental to both employees and employer. For the employees, litigation, even if they win, will engender bad blood and hostility in their relations with the company. With respect to the company, litigation may disrupt or prejudice operations and entail substantial litigation expenses. Needless to state, it is not in the best interests of the employees and the call center company to engage in costly litigation over an issue that is neither party’s fault.
The dilemma faced by call centers — which is caused by the nature of the industry — is not easy of solution. Their clients’ requirements are volatile and not predictable and this reality underlies the fluctuations in their work force. The size of their work force rises and falls as the varying requirements of their clients dictate; they are thus forced to place their excess employees on floating status until needed by increased business. When the floating status becomes protracted, that is when tensions and threatened litigation come to the fore and the legal issues involved cry for a solution.
Under our Labor Code, forcing or telling on employee to resign is not a legal option for the call center. Rather than permanently lay off an employee based on redundancy, there is really no better alternative than to suspend the employment relationship or place the employee on a temporary layoff basis. To be fair to the employee, however, he must be clearly informed at the time of hiring that his employment is subject to fluctuations or the exigencies of the business and that he may be placed as a consequence on “floating status” from time to time.
The call centers are morally enjoined to undertake a serious study of the problem and find viable and fair solutions to it. For a more accurate forecasting of their manpower requirements, they should bind their clients to fixed contractual arrangements that do not allow abrupt terminations or terminations without an advanced notice of a reasonable period of time (preferably, six months). If this is feasible, then call centers can accordingly plan their manpower requirements on a more rational and realistic basis and avoid or at least minimize placing employees on floating status for any substantial length of time.
If the growth of call centers is to be encouraged, the government must address the problem of employees placed on “floating status” in light of the peculiar problems of the industry. We must fashion flexible rules to solve this problem with the interests of both employees and employers in mind.
(Joseph Angelo D. Angel is a senior associate of Angara Abello Concepcion Regala & Cruz Law Offices (ACCRALAW). He can be contacted at 830-8000 or e-mail address: firstname.lastname@example.org)