Annual Sick Leave Entitlements Under Philippine Labor Law
Key takeaway: The Philippine Labor Code does not establish a stand-alone, across-the-board paid sick-leave scheme for private-sector employees. Instead, protection comes from a mosaic of provisions: the Service Incentive Leave (SIL), the SSS Sickness Benefit, special-purpose leaves in various social-legislation statutes, and—where applicable—collective bargaining agreements (CBAs) and company policy. Public-sector personnel follow an entirely different Civil Service Commission (CSC) regime. Understanding how these layers interact is essential for compliance and for crafting workplace leave policies.
1. Statutory Sources of Sick-Leave-Type Protection
| Instrument | What it grants | Notes / Eligibility |
|---|---|---|
| Labor Code, Art. 95 (Service Incentive Leave, “SIL”) | 5 paid days per year, convertible to cash if unused. | For employees ≥1 year tenure; may be used for sickness or vacation. Exemptions: establishments with <10 data-preserve-html-node="true" employees; field personnel; managerial employees; government employees; domestic helpers (kasambahay) unless covered by R.A. 10361. |
| Social Security Act (R.A. 11199) — SSS Sickness Benefit | Daily cash allowance = 90 % of average daily salary credit; up to 120 days per calendar year (240 for the same illness). | Payable by SSS, advanced by employer for the first 3–4 days. Employee must have paid ≥3 monthly contributions within the last 12-month period and must be incapacitated for ≥4 consecutive days. |
| Employees’ Compensation Program (ECP) (P.D. 626) | Income benefit for work-related sickness/injury; medical services; rehab; disability or death benefits. | Can run concurrently with SSS sickness but subject to ECP rules. |
| Special-purpose leaves for medical conditions | • Maternity Leave (R.A. 11210) – 105 days (+15 for solo parents). • Paternity Leave (R.A. 8187) – 7 days. • Special Leave for Women (R.A. 9710, Magna Carta of Women) – 60 days after gynecological surgery. • Violence Against Women Leave (R.A. 9262) – 10 days. • Solo Parent Leave (R.A. 8972) – 7 days/year. • Adoption Leave (R.A. 8552 / 9523) – up to 60 days. • COVID-19 isolation leave for health workers (R.A. 11712) – unlimited while infected/exposed. |
Each has its own qualifying criteria; all are with pay and separate from SIL. |
| Civil Service Rules (for government workers) | 15 days sick + 15 days vacation leave credits yearly, cumulative and monetizable. | Governed by CSC Omnibus Rules. |
2. Service Incentive Leave (SIL) in Detail
Accrual & Conversion
- One (1) SIL credit per month of service after the first year, reaching five (5) at the anniversary date.
- Unused SIL must be commuted to cash at the year’s end or upon separation, at the employee’s latest daily wage.
Usage as Sick Leave
- The Labor Code is silent on documentation, but employers commonly require a medical certificate for absences > 2 days to avoid abuse.
- SIL need not be exhausted before the employee can claim SSS sickness, but most employers require it before treating the absence as leave without pay.
Exemptions & Gray Areas
- Field personnel—whose time & performance are unsupervised—remain the most litigated category. Jurisprudence (e.g., Auto Bus Transport v. Bautista, G.R. 156367, 2005) stresses the actual nature of supervision, not mere job title.
- Companies with <10 data-preserve-html-node="true" workers are exempt, but if headcount later exceeds 10, SIL applies retroactively from that point.
Pending Legislation
- Bills in both chambers propose to increase SIL from 5 to 10 days and to exclude field personnel from the exemption list, but none has been enacted as of 31 July 2025.
3. SSS Sickness Benefit Mechanics
| Step | Responsibility | Key Points |
|---|---|---|
| 1. Notify employer within 5 days of start of illness. | Employee (or family). | If confined in hospital, notice within 1 year from discharge. |
| 2. Advance payment of benefit. | Employer. | Must pay not later than the employee’s next regular payday. |
| 3. Reimbursement claim to SSS within 1 year from last compensable day. | Employer. | Attach medical records & duly accomplished SSS forms. |
| 4. Offset with salary | Employer. | The advanced benefit is not an additional cost; it replaces salary for the covered days. |
Tip: Employers often integrate SSS sickness with payroll so that the first 2–3 days (which SSS does not cover) are charged against SIL, then the SSS rate applies.
4. Employees’ Compensation Program (Work-Connected Illness)
- Coverage: Automatic for all SSS members; funded by employer’s monthly ECC premium.
- Benefits: Sickness income, medical services without cost limitation, permanent partial/total disability pension, rehabilitation services, and death benefits.
- Maximum sick-type compensation: 240 days; beyond this the worker may be classified as permanently disabled.
5. Public-Sector Framework
Government employees accrue 1.25 sick-leave credits per month (15 days a year). Unused credits accumulate indefinitely and may be:
- Monetized: Up to 30 days every 3 years, or all credits upon retirement/resignation.
- Converted to service credit for teachers.
- Commutation rate: Highest salary received during conversion period.
6. Interaction with Company Policy & CBAs
Best-practice private packages often provide separate sick leave of 10–15 days with pay, on top of SIL, to stay competitive and to reduce presenteeism.
Hierarchy of sources (Art. 1700 Civil Code):
- Constitution & statutes
- Collective Bargaining Agreement
- Company Policy / Employee Handbook
- Individual Employment Contract
Non-diminution rule: Once additional sick leave is granted, it becomes part of the employee’s rights and cannot be withdrawn unilaterally (Art. 100 Labor Code).
7. Record-Keeping & Compliance
| Document | Retention Period | Core Contents |
|---|---|---|
| SIL ledger / leave cards | 3 years under Rule X, Book III of the IRR | Accrual, usage, balance, cash conversions |
| SSS sickness files | 10 years (per SSS Circular 2018-009) | STL-105 forms, medical certificates, reimbursement vouchers |
| DOLE inspection reports | 3 years | Proof of leave compliance |
Failure to keep records shifts the burden of proof to the employer in disputes.
8. Tax Treatment
- Converted SIL and other leave commutations are subject to income tax and withholding if they exceed the ₱ 10,000 de minimis threshold (Rev. Reg. 5-2011).
- SSS sickness reimbursements are not taxable because they are benefits under a social-insurance program.
9. Relevant Jurisprudence
| Case | G.R. No. | Ruling |
|---|---|---|
| Asian Transmission v. CA | 179594 (2012) | SIL applies even if company already grants vacation & sick leave but cash conversion of SIL could be offset if existing leave benefits are more generous. |
| Auto Bus Transport v. Bautista | 156367 (2005) | Clarified definition of field personnel, emphasizing actual (not nominal) supervision. |
| David v. Macasio | 195466 (2016) | Laborers paid on pakyao basis and unsupervised are exempt from SIL. |
10. Common Pitfalls for Employers
- Misclassifying employees as field personnel.
- Not converting unused SIL to cash on separation.
- Requiring SIL exhaustion before allowing SSS sickness without a written policy.
- Ignoring special leaves (e.g., Magna Carta 60-day leave), leading to double payment when ordered by DOLE.
11. Best-Practice Recommendations
- Draft clear leave rules covering documentation, notification periods, and integration with SSS claims.
- Maintain a digital leave management system to avoid record-keeping violations.
- Train payroll officers on the difference between SIL, company sick leave, and SSS sickness to ensure correct pay computations.
- Review CBAs annually to harmonize with new social legislation (e.g., maternity leave extensions).
- Benchmark against industry norms (typical 15 days sick leave) to remain competitive in talent retention.
12. Looking Ahead
- Legislative trend: doubling SIL to 10 days and creating a stand-alone paid sick leave law (separate Senate and House bills filed in 2024–2025).
- Expanded coverage: proposals to cover gig-economy and platform workers under SSS and ECC, which would indirectly widen sickness benefits.
Conclusion
While the Philippine Labor Code does not award a discrete annual paid sick-leave bucket, employees are protected through SIL, SSS and ECC benefits, and a suite of special-purpose leaves—all of which employers must integrate into compliant, practical leave policies. HR and legal practitioners should monitor pending legislation and jurisprudence to adjust policies promptly and avoid costly disputes.
This article is for educational purposes and does not constitute legal advice. For specific cases, consult qualified Philippine labor counsel or the Department of Labor and Employment.