SERVICE INCENSITIVE LEAVE

• What is Service Incentive Leave?

  Service Incentive Leave (SIL) is a benefit mandated by Article 95 of the Philippine Labor Code. Employees who have worked for at least one year are entitled to five (5) yearly SIL credits. This benefit allows employees to take paid leave from work, even when they are absent, as they continue to receive their regular pay.
• • ART. 95. Right to service incentive leave. (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.
• The benefit applies to all employees except:

  1. Government employees,

  2. Persons in the personal service of another;

  3. Managerial employees,

  4. Officers or members of a managerial staff, if they perform the following duties and responsibilities:

  5. Field personnel and those whose time and performance are unsupervised by the employer;

  6. Those already enjoying this benefit;

  7. Those enjoying vacation leave with pay of at least five (5) days; and,

  8. Those employed in establishments regularly employing less than ten (10) employees.
• Service incentive leaves are five (5) leave credits with full pay given to qualified and covered employees who have rendered at least one (1) year of service.
• Service incentive leave (SIL)

  Leave credits with full pay granted to covered employees after 1 year of service
• Granting of SIL

  1. Employees complete 1 year of service

  2. Entitled to 5 leave credits with full pay
• There is confusion on how SIL credits are given to covered employees after 1 year of service
• Some companies give 5 SIL after work anniversary, others give a fraction and then issue the rest on a prorated basis
• There was no express law or regulation illustrating how SIL should be given
• Labor courts have constantly applied the rule of 5 SIL on the 1st year or work anniversary, then prorate the SIL credits for the second year
• DOLE's Handbook on Statutory Monetary Benefits has also adopted this manner of computation
• Rule for SIL

  • Employees with 1+ year of service receive 5 SIL credits
  • Thereafter, they receive pro rata SIL credits unless there is a stipulation more favorable to employees
• Unused SIL credits should be converted to cash by the end of the work anniversary
• SIL replenishes yearly

  After first 5 SIL credits, covered employees will be entitled to a new set of leave credits on a prorated basis, unless there is a stipulation more favorable
• 1 year of service

  Covered employee has rendered service for at least 12 months, whether continuous or broken, counting from start of employment
• Counting of 1 year is continuous even if employee did not work for several weeks/months, e.g. maternity/paternity leave, hospitalization
• Usage of SIL

  Leave credit which may be used at the discretion of the employee for sick leave, vacation leave, or any other personal reasons
• Employers are prohibited from applying leave credits without the consent of the employees
• Convertible to cash

  Unused SIL are required to be converted to cash at the end of the year or upon termination of employment due to just/authorized causes
• One year of service


  Service within twelve (12) months, whether continuous or broken, reckoned from the date the employee started working. The period includes authorized absences, unworked weekly rest days, and paid regular holidays. If through individual or collective agreement, company practice or policy, the period of the working days is less than twelve (12) months, said period shall be considered as one year for the purpose of determining the entitlement to the service incentive leave.
• Conversion


  The employee may choose to either use his/her leave credits or commute it to its monetary equivalent if not exhausted at the end of the year. If the employee does not use or commute the service incentive leave, he/she is entitled upon his/her resignation or separation from work to the commutation of the same.