Can Employers Force Employees to Use Leave During Skeletal Work? (Philippine Private-Sector Rules)

Updated for general guidance; not legal advice.

Executive summary

Yes, sometimes—an employer may require employees to use company-granted paid leave during periods of skeletal work or temporary slowdown if a written policy, CBA, or established practice allows it and the measure is reasonable, non-discriminatory, and communicated in advance.
Employers cannot invent a deduction from pay if no leave exists, nor treat the legally mandated Service Incentive Leave (SIL – 5 days/year) in a way that defeats its purpose (e.g., forcing usage when the employee would rather encash or reserve it, absent a clear, lawful policy).
If leave credits are exhausted, days not worked during skeletal operations are ordinarily leave without pay, unless the employer voluntarily shoulders pay or there is a contractual/CBA guarantee.
Any flexible work arrangement—including skeletal workforce—should be documented, time-bounded, and compliant with general standards on pay, hours, and benefits.

The legal building blocks

Management prerogative—tempered by law and fairness. Philippine employers may organize work (including schedules and staffing) to meet legitimate business needs, provided changes are lawful, reasonable, made in good faith, and not discriminatory. Written policies and consistent application matter.
Service Incentive Leave (SIL). The Labor Code grants at least 5 days of paid SIL per year to eligible rank-and-file employees who have rendered at least one year of service, subject to well-known coverage exceptions (e.g., certain small establishments or employees already enjoying equivalent paid vacation). Unused SIL is commutable to cash at year-end if company policy requires or as recognized in practice. Any policy that strips SIL of its intended benefit risks being challenged.
Company-granted leaves (vacation/sick/emergency, etc.). These are contractual benefits arising from company policy, practice, or a CBA. Employers have more latitude to schedule and require their use during business downturns—if the governing policy or CBA says so, or if a reasonable, consistently applied rule is adopted and properly announced.
Flexible work arrangements and skeletal workforce. “Skeletal workforce” means keeping only the minimum number of employees necessary to sustain key operations. While not a Labor Code term, it is an accepted flexible work arrangement. Employers should document (a) the business grounds, (b) the coverage and duration, and (c) the pay/leave treatment.
No-work-no-pay—baseline rule. If an employee does not work on a regular workday and there is no available paid leave (and no contrary agreement), wages are usually not due for that day. This is the default if credits run out during skeletal operations.

When can employers require leave usage?

A) For company-granted leave

Usually permitted during skeletal work if:
- There is a written policy/CBA authorizing management to schedule or require the use of accrued vacation leave during shutdowns or reduced operations.
- The policy is reasonable (e.g., applies company-wide or by objective criteria), announced in advance, and time-bound.
- It respects minimum standards (e.g., premium pay rules if work is actually performed on rest days/holidays).
Good practices:
- Allow some employee choice (e.g., pick dates within a window).
- Cap the number of forced-leave days and preserve a buffer for personal emergencies.
- Provide alternatives (e.g., work re-assignment, WFH, reduced hours) where feasible.

B) For Service Incentive Leave (SIL)

Riskier to mandate across the board. While some employers align SIL with vacation leave and schedule it, doing so over employee objection—especially to offset management-driven skeletal days—can be challenged as defeating the SIL’s purpose or impairing accrued benefits.
Safer approaches:
- Encourage (not compel) employees to use SIL first, with written consent.
- Offer incentives (e.g., preserve company-granted credits if SIL is used).
- If policy allows conversion to cash, clarify whether encashment remains available and when.

C) If no leave is available

Employer may place employees on leave without pay for non-worked days during skeletal periods (absent a contrary agreement).
Avoid rotating “LWOP” in a way that targets specific employees; use objective rotation or seniority rules.

Pay, hours, and benefit implications

Worked days under skeletal staffing are paid normally; overtime, night shift, and holiday premium rules still apply when triggered.
Non-worked days:
- If charged to paid leave, they are paid per the relevant leave policy.
- If LWOP, they are unpaid but should not reduce daily wage rates going forward.
13th month and other accrual-based benefits continue to be computed on actually earned wages; fewer paid days may reduce totals unless the company provides a cushion.
SSS/PhilHealth/Pag-IBIG contributions follow actual payroll; employers should keep remittances timely even during reduced operations.
No “negative leave” unless a policy expressly allows advance leave (with clear rules on clawback/recovery if employment ends before replenishment).

Documentation & process checklist (employer side)

Business justification. Brief memo stating the operational reason for skeletal work and the intended duration/review date.
Coverage & rotation. Who is critical to report, who is rotated, and by what objective criteria (e.g., function, skill, seniority).
Leave treatment. Spell out whether days not worked are (i) charged to company leave, (ii) voluntary SIL use, or (iii) LWOP; include limits and buffers.
Notice and consultation. Provide written notice to affected employees (and to the union, if any). Invite feedback; consider reasonable accommodations.
Record-keeping. Keep timesheets, leave ledgers, and payroll proofs synchronized; issue payslips that clearly show leave deductions and LWOP.

Employee rights and practical remedies

Ask for the written policy. If forced leave is announced, employees may request the policy basis, the number of days to be charged, and the remaining balance.
Negotiate sequencing. Employees can propose using company leave first (if more generous) or preserving some days for personal needs.
Contest unreasonable applications. Policies that are inconsistent, target specific individuals, or erase legally mandated benefits (e.g., SIL) can be brought to HR, the union, or the DOLE’s Single-Entry Approach (SEnA) for conciliation.
Check final pay. On separation, ensure unused, commutable leave is monetized per policy/practice.

Common scenarios

Temporary plant shutdown (1–2 weeks): Employer may require use of company vacation leave up to a cap; beyond that, days are LWOP unless the company offers discretionary pay. SIL is encouraged but not compelled.
Rolling skeletal shifts for a quarter: Rotate fairly; allow employees to choose which available leave bucket to use; revisit policy monthly.
No existing leave policy: Adopt a time-limited guideline after brief consultation; avoid retroactive deductions; do not force SIL without a clear, lawful basis.

Policy language tips (for employers)

State the trigger (“material business interruption or drastic demand fall”).
Limit the duration and set a review cadence (e.g., every 30 days).
Prioritize voluntary leave selection; if mandatory use is needed, cap it and exclude SIL unless the employee consents in writing.
Preserve at least 2–3 days of paid leave for personal emergencies where feasible.
Promise non-retaliation and equal application across similarly situated employees.

Quick answers

Can we force employees to burn leave on days they’re not scheduled due to skeletal staffing? Company-granted leave: typically yes, if policy/CBA allows and application is reasonable. SIL: be cautious; better to seek consent or offer incentives rather than compel.
What if the employee has zero leave? Then the day is generally unpaid (LWOP), unless a contract/CBA says otherwise or the employer voluntarily pays.
Must we pay people we didn’t schedule to work? Not for ordinary days under no-work-no-pay, unless a law, CBA, or policy requires pay.
Is skeletal work itself legal? Yes, as a flexible work arrangement—so long as it’s documented, justified, and compliant with standards on pay, benefits, and fair treatment.

Bottom line

During skeletal operations, employers have room to manage schedules and—within limits—require use of company-granted leave. Treat SIL carefully, avoid one-sided or arbitrary rules, document everything, and prefer consent-based solutions. When in doubt, write it down, apply it fairly, and time-limit the measure.