Article 95 of the Labor Code: Service incentive leave
Status: In force
What does Article 95 say?
(a) 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.
(b) This provision shall not apply to those who are already enjoying the benefit herein provided, those enjoying vacation leave with pay of at least five days and those employed in establishments regularly employing less than ten employees or in establishments exempted from granting this benefit by the Secretary of Labor and Employment after considering the viability or financial condition of such establishment.
(c) The grant of benefit in excess of that provided herein shall not be made a subject of arbitration or any court or administrative action.
Read the Labor Code on the DOLE website (it uses the article numbers before 2015)
What does it mean in plain language?
Article 95 of the Labor Code gives service incentive leave: five days of leave with pay every year, for every employee who has rendered at least one year of service. Some employees are excluded, such as those who already get at least five days of paid vacation leave and those in establishments regularly employing less than ten employees. Unused days can be converted to cash.
The article keeps the same number after the 2015 renumbering of the Labor Code, as the DOLE renumbered edition shows.
How does it work in real life?
Kris: five days after her first year
Kris joined a call center 13 months ago. Her contract gives no vacation leave. Having served at least one year, she is entitled to five days of service incentive leave with pay each year.
Leo: already has 15 days of vacation leave
Leo's company gives him 15 days of paid vacation leave a year. Under Article 95(b), employees enjoying vacation leave with pay of at least five days are not covered, so he does not get five more days on top.
Mila: unused leave at the end of her job
Mila never used or converted her service incentive leave in four years. When she resigns, she asks for the cash value of all the credits and her employer refuses. Under Auto Bus, the three years to claim start from that refusal.
What does this mean in practice?
- Service incentive leave is a minimum. A contract or collective bargaining agreement may give more, and a benefit given consistently may be protected under Article 100.
- Leaves from special laws (maternity, paternity, solo parent, VAWC leave) are separate: see the leave benefits table.
- Unused leave is part of what is settled at the end of employment: see the final pay and separation pay guide.
- See also Service incentive leave: who gets it, how to file a labor complaint and Free legal help in the Philippines.
What does Article 95 say?
Paragraph (a) gives the right:
(a) 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.
Paragraph (b) lists who is not covered:
(b) This provision shall not apply to those who are already enjoying the benefit herein provided, those enjoying vacation leave with pay of at least five days and those employed in establishments regularly employing less than ten employees or in establishments exempted from granting this benefit by the Secretary of Labor and Employment after considering the viability or financial condition of such establishment.
Paragraph (c) says a grant above five days is a matter of agreement:
(c) The grant of benefit in excess of that provided herein shall not be made a subject of arbitration or any court or administrative action.
Who else is excluded?
Article 95 is in Book Three, Title I. Article 82 leaves out of that title government employees, managerial employees, field personnel, dependent family members of the employer, domestic helpers, persons in the personal service of another and some workers paid by results. In Atienza v. Saluta (2019), the Supreme Court held that a personal driver was not entitled to service incentive leave pay for that reason.
"Field personnel" has a narrow meaning. In Auto Bus Transport Systems v. Bautista (G.R. No. 156367, 2005), a bus driver paid on commission was not field personnel, because his hours were supervised through inspectors, dispatchers and set schedules. He was entitled to service incentive leave.
What happens to unused leave?
The implementing rules of the Labor Code (1989 text on the Supreme Court E-Library), Book III, Rule V, Section 5, say the leave "shall be commutable to its money equivalent if not used or exhausted at the end of the year." In Auto Bus, the Supreme Court added that the employee may choose to keep the leave credits and have the whole amount paid upon resignation or separation from work.
The same rules (Section 3) say "at least one-year service" means service of not less than 12 months, whether continuous or broken, counted from the date the employee started working, including authorized absences and paid regular holidays.
When does the deadline to claim it start?
Money claims prescribe in three years under [Article 306 [291]](/law/labor-code/article-306). For service incentive leave, Auto Bus held that the three years start "from the time when the employer refuses to pay its monetary equivalent after demand of commutation or upon termination of the employee's services, as the case may be", not at the end of each year.
Which Supreme Court rulings are relevant?
Frequently asked questions
How many days is service incentive leave?
Five days with pay every year. Article 95(a) gives it to every employee who has rendered at least one year of service.
Who is not entitled to service incentive leave?
Article 95(b) excludes those who already enjoy the benefit, those with vacation leave with pay of at least five days, those in establishments regularly employing less than ten employees, and those in establishments exempted by the Secretary of Labor and Employment. Article 82 also leaves out managerial employees, field personnel, domestic helpers and persons in the personal service of another, among others.
What happens to unused service incentive leave?
Under the implementing rules (1989 text), service incentive leave is commutable to its money equivalent if not used or exhausted at the end of the year. In Auto Bus Transport v. Bautista (2005), the Supreme Court said the employee may also accumulate it and have it paid upon resignation or separation.
Does one year of service have to be continuous?
No. The implementing rules define at least one year of service as service of not less than 12 months, whether continuous or broken, counted from the date the employee started working, including authorized absences and paid regular holidays.
How long do I have to claim unpaid service incentive leave?
Three years under Article 306 [291]. In Auto Bus Transport v. Bautista (2005), the Court said the three years start from the time the employer refuses to pay the money equivalent after demand, or upon the end of the employee's services, as the case may be.
General information, not legal advice. For your case, ask a lawyer, the Public Attorney's Office (PAO) or the agency.
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