Service Incentive Leave (SIL): Meaning

The Labor Code provision on service incentive leave, as quoted by the Supreme Court in Atienza v. Saluta (2019), says that every employee who has rendered at least one year of service "shall be entitled to a yearly service incentive leave of five days with pay."

The same provision says it does not apply to:

• those who already enjoy the benefit;
• those enjoying vacation leave with pay of at least five days;
• those employed in establishments regularly employing less than ten employees; and
• establishments exempted by the Secretary of Labor and Employment after considering their viability or financial condition.

The 1989 implementing rules (Book III, Rule V) also exclude government employees, domestic helpers and persons in the personal service of another, managerial employees, and field personnel and other employees whose performance is unsupervised by the employer. In Atienza (2019), the Court held that a family driver, as a person in the personal service of another, was not entitled to service incentive leave pay.

Field personnel are read narrowly. In Auto Bus Transport Systems v. Bautista (2005), the Court held that a bus driver paid on commission but under constant supervision was not field personnel and was entitled to SIL.

The implementing rules define it as service for not less than 12 months, whether continuous or broken, counted from the date the employee started working, including authorized absences and paid regular holidays.

The implementing rules say the leave "shall be commutable to its money equivalent if not used or exhausted at the end of the year." Unused SIL is also part of the money an employee may claim when leaving the job. See the final pay calculator.

Kasambahay have their own rule: under Section 29 of Republic Act No. 10361, they also get five days of paid leave a year, but unused days are not carried over and not converted to cash.

Money claims from employment must be filed within three years from the time the cause of action accrued, under [Article 306 [291]](/law/labor-code/article-306). For SIL, Auto Bus held that the three years start when the employer refuses to pay after a demand for commutation, or when employment ends.

Made-up illustration: Carmela has worked 18 months as a cashier in a Pasig store with 15 employees and no vacation leave. This year she used only two of her five SIL days. At the end of the year, the three unused days are converted to cash.

For more, see Service incentive leave: 5 days paid leave and cash conversion and the table of leave benefits.