Service Incentive Leave: 5 Days Paid Leave and Cash Conversion

The rule comes from Article 95 of the Labor Code (its number before the 2015 renumbering by the Department of Labor and Employment, or DOLE). As the Supreme Court quoted it in *Auto Bus Transport Systems v. Bautista* (2005), every employee who has rendered at least one year of service is entitled to "a yearly service incentive leave of five days with pay."

The Omnibus Rules Implementing the Labor Code explain the details. The rules described on this page are the 1989 text published on the Supreme Court E-Library. Later DOLE issuances may have changed some details.

Under the rules, "at least one-year service" means service of not less than 12 months:

• continuous or broken, so gaps do not reset the count;
• counted from the date you started working;
• including authorized absences and paid regular holidays.

If the working days in your establishment are fewer than 12 months a year by practice, policy or contract, that shorter period counts as one year.

The 1989 rules list seven groups that do not get SIL under this rule:

1. government employees, including those of government-owned and controlled corporations;
2. domestic helpers and persons in the personal service of another (kasambahay now have their own SIL rule, see below);
3. managerial employees;
4. field personnel and other employees whose performance is unsupervised by the employer;
5. employees who already enjoy this benefit;
6. employees who already enjoy vacation leave with pay of at least five days;
7. employees of establishments regularly employing less than ten employees.

The fourth group is often misread. The rule mentions workers paid "on task or contract basis, purely commission basis" in the same line. In *Auto Bus*, the Supreme Court said these workers are not automatically excluded. They are excluded only if they are true field personnel, meaning they regularly work away from the office and their actual hours cannot be determined with reasonable certainty. A bus driver-conductor paid by commission was entitled to SIL because inspectors, dispatchers and fixed schedules supervised his work.

Yes. The rules say SIL "shall be commutable to its money equivalent if not used or exhausted at the end of the year." In plain words, if you did not use your five days, your employer pays you their cash value.

In *Auto Bus*, the Court also accepted that an employee may let leave credits accumulate and ask for their cash value when he or she resigns or is separated. Unused SIL is one of the items usually included in final pay. You can estimate it with the final pay calculator and read how final pay works in the final pay and separation pay guide.

Yes, under their own law. Section 29 of the Batas Kasambahay (Republic Act No. 10361) gives a domestic worker with at least one year of service an annual SIL of five days with pay. The rule is stricter than for other employees: unused days are not carried over to the next year, and they "shall not be convertible to cash." See kasambahay rights.

As the Court stated it in *Auto Bus*, money claims from employment must be filed within three years from the time the cause of action accrued (old Article 291 of the Labor Code, its number before the 2015 renumbering). For SIL, *Auto Bus* set a special starting point. 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." In that case the driver had never used or cashed his leave and filed one month after his dismissal, so his claim was on time. See the deadline for money claims.

The employer. In Agabon v. NLRC (2004), the Supreme Court said the burden rests on the employer to prove payment, because payrolls and other records are in its custody. The employer in that case could not show proof, so it was ordered to pay the workers' SIL pay even though their dismissal for abandonment was upheld.

These are made-up examples to show how the rules work. They are not advice for any real case.

Ana. Ana is a cashier in a store with 15 employees. She has worked there 18 months and did not use her five days this year. At year end, her employer converts the unused days to cash.

Joy. Joy works in a bakery that regularly has six employees. The SIL rule does not cover establishments regularly employing fewer than ten employees, so she has no SIL under this rule. A better benefit in her contract or company policy would still apply.

Ben. Ben is a delivery driver paid by commission. His employer sets his schedule, tracks his trips and checks his reports every day. Being paid by commission does not by itself exclude him. As in *Auto Bus*, the question is whether his hours of work can be determined with reasonable certainty. With this much supervision, he can argue that he is not field personnel and is entitled to SIL.

Mila. Mila has been a kasambahay for two years. She did not use her five days of leave last year. Under RA 10361, they are not carried over and not paid in cash.

A worker can first raise the matter with the employer in writing and keep a copy. If the issue is not settled, the worker can file a request for assistance under the Single Entry Approach (SEnA) at DOLE. See how to file a labor complaint. The leave benefits table compares SIL with the other paid leaves under Philippine law.

Talk to a lawyer or the Public Attorney's Office (PAO) if your employer says you are field personnel or managerial, if your claim covers many years, or if the SIL claim is part of a dismissal case. A lawyer can check which deadline applies and what records you need.

If you cannot afford a lawyer, see Free legal help in the Philippines.