1. Service Incentive Leave
Employee Wages and Benefits 2010-02-27
Basis
The basis of the grant of Service Incentive Leave to qualified employees is found in Article 95 (Book
Three,Title I) of the Labor Code.
Section 2, Rule V, Book III of the Omnibus Rules contains the rules and regulations for the implementation
this right.
Employees entitled to SIL
Every employee (subject to the exceptions below) who has rendered at least one year of service is entitled to
yearly service incentive leave of five days with pay.
“At least one year of service” Meaning
The term “at least one-year service” means service for not less than 12 months, whether continuous or
broken.
The 12-month period shall be reckoned from the date the employee started working, including authorized
absences and paid regular holidays.
However, where the operation of the establishment as a matter of practice or policy, or that provided in the
employment contract, is less than 12 months, such period shall be considered as one year.
Employees not covered
The following employees are excluded from entitlement to SIL under the Labor Code (but they may be
entitled to the same or similar benefits if so provided under other laws, or collective bargaining agreement or
employment contract):
1. Those of the government and any of its political subdivisions, including government-owned and controlled
corporations;
2. Domestic helpers and persons in the personal service of another;
3. Managerial employees as defined in Book Three of the Labor Code;
4. Field personnel and other employees whose performance is unsupervised by the employerincluding those
who are engaged on task or contract basis, purely commission basis, or those who are paid a fixed amount
for performing work irrespective of the time consumed in the performance thereof;
5. Those who are already enjoying the benefit herein provided;
6. Those enjoying vacation leave with pay of at least five days; and
7. Those employed in establishments regularly employing less than ten employees. (Omnibus Rules)
Manner of availment
The service incentive leave may be used for sick and vacation leave purposes. And, at the end of the year,
the unused SIL may be commuted to cash.
Commutability to cash
Under the Omnibus Rules, the unused service incentive leave is commutable to its money equivalent at the
end of the year.
Accumulation of Leave Credits
Instead of using up SIL, the employee may accumulate it and opt for its commutation to cash upon his
resignation or separation from employment.
Computation of SIL
In computing SIL, the basis shall be the salary rate at the date of commutation. The availment and
commutation of this benefit may be on a pro rata basis. (DOLE Handbook)
Illustration

2. An employee was hired on January 1, 1997, and resigned on March 1, 1998. Assuming he has not used or
commuted any of his SIL credits, he is entitled upon his resignation to the commutation of his accumulated
SIL as follows:
SIL earned as of Dec. 31, 1997 = 5 days
Proportionate SIL for Jan. and Feb. 1998 = (2/12) x 5 days = 0.833 day
Total as of March 1, 1998 = 5.833 days
Part-time Workers
Are part-time workers entitled to the full five days SIL, or should the entitlement be on pro-rata basis? Part-
time workers are entitled to full five days SIL. (BWC Advisory Opinion)
The reason is that the Labor Code speaks of number of months worked in a year, not number of hours
worked in a day, as basis for entitlement.
Vacation and Sick leave
The Labor Code treats vacation leave and sick leave under the same category as Service Incentive Leave or
leave with pay.
Thus, the grant of vacation or sick leave with pay of at least five days may be credited as compliance with
SIL. For example, if a company is giving its employees 15 days vacation leave, five days of which is with
pay, the five-days paid vacation leave may be credited as SIL.
Case
1. Petitioner CIT claimed that teachers are not entitled to SIL because they are engaged by the school on
contractual basis. The claim was not sustained. It was held that the phrase “those who are engaged on task or
contract basis” as mentioned in the Omnibus Rules should be read in relation to “field personnel”. Teachers,
not being field personnel, are entitled to SIL. (CIT vs. Ople, 1987.)
2. Applying Article 291 of the Labor Code in light of this peculiarity of the service incentive leave, we can
conclude that the three (3)-year prescriptive period commences, not at the end of the year when the
employee becomes entitled to the commutation of his service incentive leave, but 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. Petitioner’s contention that respondent is not entitled to the grant of
service incentive leave just because he was paid on purely commission basis is misplaced. What must be
ascertained in order to resolve the issue of propriety of the grant of service incentive leave to respondent is
whether or not he is a field personnel.)
3. Exemptions. To claim exemption from payment of service incentive leave pay, it is the employer’s duty to
prove that it is covered under the exemption. Thus, where the employer claims that the employee is not
entitled to service incentive leave pay inasmuch as establishment employing less than ten (10) employees
are exempted from paying service incentive leave pay, it has the duty to prove that there were less than ten
employees in the company.
Guide to Sick Leave Policies
"The policy for sick leave is purportedly to benefit employees when the need arises."Sick leave is one of the
types of paid benefits granted to regular employees - regularization in the Philippinesare granted to
employees on the sixth month of tenure. Employees can avail of this benefit when you are unableto report to
work due to an illness, accident, or any other debilitating medical causes. Even with this absence, itis a
company's obligation to pay you equivalent to a full-day salary as mandated in the Philippine Labor
Laws,given that an employee still has leave "credits" equivalent to seven work days or a total of 56 hours in
a year.Sick leaves, however, are the most abused benefits everywhere with employees thinking they can just
make upmedical excuses to be absent from work. Although it's inviting to have a paid leave using your sick
leave, thereare actually more important reasons why employees should not use sick leaves for the wrong
reasons.
Understanding your Sick Leave Policy
Although technically called "sick" leaves and used supposedly only when you're sick, some times will
requireyou to get advance leave approval for a non-emergency sick leave, such as a visit to your doctor. For

3. suddenoccurrences, such as a sudden onset of fever that prevents you to report to work, a standard policy on
sick leavewould be to inform the human resource office and/or your supervisor at least a couple hours before
your shift.Failing to call may invalidate your sick leave and consider it unauthorized.You may use your sick
leaves for medical, dental, or optical appointments, and in the following medical cases:
Suffering from a sickness or injury;
Maternity reasons;
To care for a sick or injured member of the family;
If reporting to work can jeopardize your health and that of your colleagues;
Death of a member of your immediate family.A sick leave policy is to have your medical leave
supported by a medical certificate as proof and for documentation purposes.
Why YouShould Save Your Sick Leave
Sick leaves are created as benefits for a reason because, after all, we are not perfectly healthy. You can
never tell when you'll get seriously ill and need your sick leaves just when you've used up all your credits.
With your sick leaves untouched and a medical situation arrives, you still enough leave to cover your entire
absence.Policies on sick leave entitles employees to paid leaves, but also mandates the following when you
are left witha limited to zero leave credits:
Salary deduction equivalent to the number of days you are absent;
You will not earn vacation and sick leave during holidays
Sick Leave Abuse
The policy for sick leave is purportedly to benefit employees when the need arises. This is why abusing
your sick leave when you use it on non-medical and non-emergency events are never a good idea. You also
risk losing your job when found loitering around the city when you called in for a sick leave.