Can You Use Leave Credits Before Your Last Day at Work?

A Philippine Labor Law Guide (private-sector focus)

Bottom line: In the Philippines, you may use your remaining leave credits before separation if your employer approves the leave under company policy and operational needs. You are not legally entitled to “offset” your 30-day resignation notice with leave unless your employer agrees. Any unused legally mandated Service Incentive Leave (SIL) and any unused company-granted leave that your policy says is “commutable” must be paid out with your final pay.

1) What counts as “leave credits” under Philippine law?

Service Incentive Leave (SIL) – Minimum of 5 days with pay per year after you complete one (1) year of service. Unused SIL is commutable to cash at year-end or upon separation. Common exemptions: employees already enjoying at least 5 days of vacation leave with pay, certain field personnel/commission-based roles, and some small establishments (among others). Check if an exemption applies to you in your contract or handbook.
Company-granted leave – Many employers grant Vacation Leave (VL) and Sick Leave (SL) beyond SIL, plus other paid days off. Convertibility (encashment) and carry-over rules depend on your company policy.
Special statutory leaves (separate from SIL):
- Maternity leave (RA 11210) – 105 days (or more in limited cases). Administered via SSS; not “leave credits” you encash like VL/SIL.
- Paternity leave (RA 8187) – 7 days with pay (conditions apply). Typically not convertible to cash.
- Solo Parent leave (amended RA 8972/RA 11861) – 7 working days with pay (eligibility and documentary requirements apply). Not generally commutable.
- VAWC leave (RA 9262) – Up to 10 days with pay for victims of violence (eligibility required). Not a cash credit.
- Special leave for women after gynecological surgery (Magna Carta of Women) – With specific documentary requirements; typically not a cash-convertible “credit.”

Key idea: SIL and many company leaves can be encashed if unused (subject to policy for company leaves). Special statutory leaves are use-it benefits tied to specific events and generally not encashable.

2) Can you use your remaining leave before your last day?

A. If you resigned (with 30-day notice)

You may apply to take your remaining VL/SL/SIL during your notice period, but approval is discretionary (exigencies of service, handover, and your employer’s policy matter).
Offsetting the 30-day notice with leave credits is not a legal right. Your employer may:
1. deny the offset but let you use some leave on selected dates,
2. approve full/partial offset (ending your reporting earlier), or
3. require you to work through turnover and encash unused leave on separation.
Sick leave during notice follows normal rules—usually requires a medical certificate for multi-day absences per policy.

B. If you are terminated for authorized causes (e.g., redundancy, closure)

You generally receive 30 days’ written notice before the effectivity date. Applying leave is still subject to approval.
Unused commutable leave (SIL and company leaves that are convertible under policy) should be paid with your final pay, regardless of whether you used leave during the notice period.

C. If you are dismissed for just cause

Dismissal typically takes effect immediately after due process. There is no right to take leave in lieu of reporting pending dismissal.
Unused commutable leave earned before dismissal still forms part of your final pay, unless your policy says otherwise for non-commutable company leaves (SIL remains commutable).

D. Fixed-term or project completion

You can apply to use available leave before end-date; approval remains discretionary.
Unused commutable leave should be encashed upon separation.

3) May the employer force you to use up leave during notice?

Employers may schedule leaves to manage operations. Some policies allow “garden leave” (you stay on payroll but are told not to report).
As a rule, an employer cannot deprive you of the cash value of commutable leave (e.g., SIL) upon separation. However, if the employer lawfully requires you to consume your leave with pay before your last day (consistent with policy and applied fairly), that simply means there’s nothing left to encash.
If you prefer encashment, you can request it—final decision depends on the policy for company leaves. SIL encashment upon separation is required if unused.

4) Encashment and your final pay

SIL: Any unused SIL must be paid at your current daily wage (the basic daily rate used for 8 hours of work).
Company leaves: Follow your policy. Many employers pay out unused VL; some encash a portion of SL (or none at all).
Final pay timing: DOLE guidance expects employers to release final pay (including encashable leave) within a reasonable period (commonly referenced as 30 calendar days from separation). Policies may require clearance first, but clearance should not be used to unreasonably delay payment.

Tax note: Tax treatment of monetized leave can be technical and fact-specific (timing, caps, and classification). Expect standard withholding unless your payroll confirms an exemption. When in doubt, ask HR/payroll or a tax professional.

5) Using leave vs. offsetting the 30-day notice

The Labor Code requires at least 30 days’ advance written notice for voluntary resignation (unless you have a just cause for immediate resignation).
There is no automatic legal right to offset that notice with leave credits or cash. Your employer’s written consent is required to:
- shorten your rendering period,
- accept payment in lieu of notice, or
- place you on garden leave.

Practical tip: If you need to leave earlier, propose a handover plan (deliverables, knowledge transfer, successor training) to increase the likelihood your employer will approve a shorter render period or allow leave-offsetting.

6) Accrual, proration, and negative balances

SIL vests after 1 year of service and each year thereafter (i.e., not necessarily “earned monthly” by law, though some employers accrue monthly for convenience).
Company leaves often accrue monthly and are prorated on separation.
If you used more leave than you accrued (negative balance), the value may be deducted from your final pay if your policy allows lawful deductions and you’ve consented (often via signed time-off forms/handbook acknowledgment).

7) Documentation you’ll likely need

Leave application (dates, type of leave, reason)
Supporting proof where required (medical certificate, solo parent ID, marriage/birth certificate, court/PNP certification for VAWC leave, etc.)
Resignation letter with clear effective date (or separation notice from employer)
Handover plan (tasks, files, access, assets)
Clearance forms and asset turn-in receipts (to avoid delays in final pay)

8) Worked examples (for clarity)

Example 1 — SIL encashment

Daily wage: ₱600

Unused SIL at separation: 5 days

Computation: ₱600 × 5 = ₱3,000 (added to final pay)

Example 2 — Company VL policy

VL balance: 8 days; policy says “VL is commutable to cash on separation.”

Daily wage: ₱900

Computation: ₱900 × 8 = ₱7,200 (plus any SIL encashment)

Example 3 — Negative leave

Accrued VL: 5 days; used: 7 days → (-2) days

Daily wage: ₱1,000; policy allows deduction for negative leave

Deduction: ₱1,000 × 2 = ₱2,000 from final pay (subject to lawful deduction rules)

9) Special situations & common questions

Can HR deny my leave during notice? Yes, if consistent with policy and operational needs. You still get encashment for commutable unused leave upon separation.
Can I resign while on maternity/medical leave? Yes. The benefit continues if you meet requirements; your separation date can be set during or after the leave by agreement.
What if my employer won’t pay unused SIL? SIL is statutory; you can raise the issue with HR, and if unresolved, seek assistance from DOLE.
Do leaves “interrupt” the 30-day notice? Not by default. The 30 days are calendar days. Leave during notice doesn’t extend the date unless you and your employer agree to change the effectivity.
Can I be put on “garden leave”? Yes, if the employer opts to keep you on payroll but away from work during notice (policy/contract permitting). You remain employed and paid until the effectivity date.

10) Action checklists

For employees

✅ Read your handbook/contract: encashment rules, accrual, and notice provisions.
✅ File leave early, especially if you want to travel or rest before turnover.
✅ If seeking to shorten your render period, submit a handover plan and request written approval.
✅ Keep copies of approved leaves, resignation letter, and clearance.
✅ Confirm your final pay breakdown (wages, leave encashment, 13th-month pro-rata if applicable, separation pay if any).

For HR/Managers

✅ Apply leave policy consistently and document approvals/denials.
✅ Clarify whether leave is commutable and how to compute proration.
✅ Issue a written acknowledgment of resignation and effectivity date.
✅ Schedule handover and define last working day (if different from effectivity).
✅ Release final pay (including encashable leave) within the standard timeline.

11) Quick templates

A. Leave request during notice

Subject: Leave Application During Notice Period (Name) Dear [Manager/HR], I tendered my resignation effective [Date]. I have [X] days of remaining [VL/SL/SIL]. I’d like to apply for leave on [dates] for [reason]. I will complete handover tasks before these dates and remain available for turnover questions. Thank you for your consideration. Sincerely, [Name], [Position]

B. Request to encash instead of consume leave

Subject: Request to Encash Unused Leave on Separation Dear [HR], As of my separation on [Date], I have [X] days of unused [VL/SL/SIL]. In line with our policy and the law on commutable leave, I respectfully request encashment of my unused leave in my final pay. Thank you, [Name]

12) Compliance notes & cautions

Policies control the details for company-granted leave: approval, blackout dates, commutation, and proration.
Statutory SIL is minimum protection. Employers may grant better benefits but cannot undercut the minimum.
Notice period changes (shortening, offsetting with leave, payment in lieu) require mutual agreement.
Preventive suspension days (during an investigation) are not covered by leave credits unless your policy expressly allows it.
Tax and payroll treatment varies; defer to your employer’s payroll team or a tax professional for specifics.

Final word (not legal advice)

This guide summarizes established rules and common practices in the Philippine private sector. It is general information, not legal advice. For disputes, nuanced situations (e.g., exemptions, special leaves, or complex payroll/tax issues), or public-sector cases (which have distinct “terminal leave” rules), consult your HR, DOLE, or a Philippine labor lawyer.