Employer Options When an Employee Avails of Leave During the Resignation Notice Period in the Philippines

Introduction

In the Philippine employment landscape, the resignation process is governed by a balance between the employee's right to terminate employment and the employer's need for a smooth transition. A key aspect of this is the mandatory notice period, typically 30 days, during which the employee is expected to fulfill remaining duties, such as knowledge transfer and handover. However, complications arise when an employee seeks to avail of accrued leaves—such as vacation or sick leave—during this period. This can disrupt operations, leading employers to evaluate their legal options carefully.

This article explores the full spectrum of employer rights, obligations, and strategies under Philippine labor law when an employee requests or takes leave amid the notice period. Drawing from the Labor Code of the Philippines (Presidential Decree No. 442, as amended), Department of Labor and Employment (DOLE) regulations, and established practices, we examine the legal framework, potential interplay between leave entitlements and notice requirements, available employer responses, consequences of various actions, and practical considerations. While company policies may vary, they must align with statutory minimums to avoid liability.

Legal Framework

Resignation Notice Period

Under Article 300 (formerly Article 285) of the Labor Code, an employee may voluntarily resign without just cause by providing the employer with at least one month's written notice. This "one month" is interpreted as 30 calendar days in practice, unless a longer period is stipulated in the employment contract or collective bargaining agreement (CBA). The purpose is to allow the employer sufficient time to find a replacement, complete handovers, and minimize business disruption.

Failure to serve the full notice without valid reason may expose the employee to claims for damages (e.g., recruitment costs or lost productivity), though such claims are infrequently pursued in court due to evidentiary challenges. Conversely, the employer cannot unilaterally extend the notice period beyond what's agreed or required by law, but they can waive it and accept immediate resignation if beneficial.

Employee Leave Entitlements

Philippine law mandates certain paid leaves, primarily through Article 95, which provides for Service Incentive Leave (SIL). Key points include:

Service Incentive Leave (SIL): Employees with at least one year of service are entitled to five (5) days of paid leave annually. This can be used for vacation (requiring prior employer approval for scheduling) or sick leave (typically approved post-facto with a medical certificate for absences exceeding two days).
Accrual and Carry-Over: Unused SIL accrues and can be carried over, but must be commuted to cash upon separation from employment if not used.
Other Leaves: Additional leaves may apply, such as:
- Sick leave beyond SIL, often provided by company policy (not mandatory under law unless in CBA).
- Maternity leave (105 days for normal delivery under Republic Act No. 11210), paternity leave (7 days under Republic Act No. 8187), solo parent leave (7 days under Republic Act No. 8972), or special leaves for victims of violence (10 days under Republic Act No. 9262).
- Emergency or bereavement leave, which may be company-provided but not statutorily required.
Approval Process: Vacation leaves require employer consent on timing to avoid business prejudice (per DOLE Department Order No. 147-15). Sick leaves are generally non-discretionary if supported by evidence, but fraudulent claims can lead to disciplinary action.

Leaves are considered employee benefits, and during the notice period, the employment relationship remains intact, entitling the employee to these rights until the effective resignation date.

Interplay Between Leave and Notice Period

When an employee avails of leave during the notice period, several dynamics come into play:

Does Leave Count Toward the Notice Period? The 30-day notice is based on calendar days, not working days. Thus, days spent on approved paid leave (e.g., SIL) count toward fulfilling the notice period, as the employment contract continues. The employee is not rendering active service but is still "serving" the period in a legal sense. However, company policies may require "actual service" during notice, potentially leading to disputes—such policies are enforceable only if they do not contravene law and were agreed upon.
Unapproved or Unauthorized Leave: If leave is taken without approval, it may constitute absence without official leave (AWOL), allowing the employer to deduct pay, impose discipline, or even consider it as abandonment (requiring due process under Article 297 of the Labor Code).
Commutation vs. Availment: Employees often prefer cash commutation of unused leaves upon resignation, as it provides immediate financial benefit. However, if they insist on availment during notice, it reduces the payout in final pay computations.
Special Considerations: For leaves protected by law (e.g., maternity), denial is risky and could lead to illegal dismissal claims if the resignation is contested. In cases of illness, the employer must accommodate reasonable requests, potentially extending to medical leave under company policy.

DOLE opinions and advisories emphasize that leaves during notice should not automatically extend the period unless mutually agreed, prioritizing the fixed 30-day timeline to prevent indefinite delays.

Employer Options

When an employee requests leave during the notice period, employers have several legal and practical options. The choice depends on business needs, the employee's role, and the nature of the leave. Employers must act in good faith to avoid constructive dismissal claims or DOLE complaints.

Option 1: Approve the Leave Request

Process: Grant the leave as per standard procedures. For vacation SIL, approval is discretionary but should not be arbitrarily denied.
Implications: The notice period runs concurrently with the leave. For example, if an employee resigns effective October 31 (30 days from October 1) and takes 5 days of leave from October 15-19, the resignation date remains October 31. The employee receives pay for the leave days, and any handover must be completed before or after the leave.
Advantages: Maintains positive employee relations, reduces potential grievances, and complies with benefit entitlements.
Disadvantages: May disrupt workflow if the leave coincides with critical tasks. Employers can mitigate by requiring partial handover before leave.
Legal Note: Approval cannot be conditioned on extending the notice period unless the employee agrees in writing.

Option 2: Deny the Leave Request

Process: For non-mandatory leaves (e.g., vacation SIL), cite legitimate business reasons, such as ongoing projects or understaffing, in a written response. For sick leave, request a medical certificate; denial without evidence of fraud could be challenged.
Implications: The employee must continue working during the notice period. Unused leaves are commuted to cash in the final pay (computed as daily rate x unused days).
Advantages: Ensures continuity and full utilization of the notice period for transition.
Disadvantages: Risks employee dissatisfaction, potential AWOL if ignored, or DOLE mediation if the denial is deemed unreasonable. In jurisprudence (e.g., DOLE advisory opinions), denials must be justified to avoid unfair labor practice claims.
Legal Note: Blanket denials during notice periods could be seen as punitive; document reasons to defend against complaints.

Option 3: Negotiate Alternative Arrangements

Process: Discuss with the employee options like partial leave, rescheduling to before or after key tasks, or offsetting leave against a shortened notice period.
Implications: Could involve mutual agreement to waive part of the notice (e.g., employee takes leave and resigns earlier, with employer waiving the remainder). Or, extend the notice voluntarily to accommodate leave without overlap.
Advantages: Flexible and collaborative, potentially preserving goodwill for references or rehiring.
Disadvantages: Requires employee consent; without it, falls back to approval or denial.
Legal Note: Any agreement must be documented to prevent disputes. Employers cannot coerce negotiations under threat of adverse action.

Option 4: Immediate Acceptance of Resignation with Leave Commutation

Process: Waive the notice period entirely, accept resignation immediately, and pay out unused leaves along with other final dues (e.g., pro-rated 13th month pay, tax refunds).
Implications: Employee separates sooner, avoiding leave during notice. This is common if the role is non-critical or if there's mutual benefit.
Advantages: Quick resolution, frees up resources.
Disadvantages: Loses transition time; may incur replacement costs.
Legal Note: Waiver is at the employer's discretion; no damages claim against the employee since notice was given but waived.

Option 5: Disciplinary Action for Unauthorized Leave

Process: If leave is taken without approval, issue a notice to explain, conduct a hearing, and impose sanctions per company policy (e.g., suspension, but limited utility during resignation).
Implications: Deduct unauthorized days from pay or withhold final clearances until resolved.
Advantages: Deters policy violations.
Disadvantages: Escalates conflict; may lead to DOLE intervention.
Legal Note: Follow twin-notice rule for due process (Article 292); failure could result in backpay awards if contested.

Potential Consequences and Risks

For Employers: Improper handling (e.g., unjust denial) may lead to money claims for unpaid leaves, moral damages, or attorney's fees via DOLE or National Labor Relations Commission (NLRC). In extreme cases, if the employee retracts resignation alleging coercion, it could become an illegal dismissal case.
For Employees: Unauthorized leave risks deductions, negative references, or forfeited benefits. However, protected leaves (e.g., due to illness) offer safeguards.
Tax and Final Pay: Leaves availed are taxable as income; commuted leaves are exempt if due to separation (BIR Revenue Regulation No. 2-98).
CBA and Policy Overrides: If a CBA provides more generous leaves or stricter notice rules, it prevails over general law.

Practical Examples

Scenario 1: An IT specialist resigns with 30 days' notice and requests 3 days' vacation leave mid-period for a family event. The employer approves, ensuring handover is done remotely during leave—resignation proceeds on schedule.
Scenario 2: A sales manager seeks 10 days' sick leave during notice, supported by a certificate. Denial without basis risks a complaint; approval allows the period to run while the employee recovers at home.
Scenario 3: An employee takes unapproved leave, leading to AWOL. The employer deducts pay and commutes remaining SIL, documenting everything to avoid disputes.

Conclusion

Employers in the Philippines have considerable flexibility when an employee avails of leave during the resignation notice period, ranging from approval and negotiation to denial and commutation. The guiding principle is adherence to the Labor Code, ensuring good faith, and documenting actions to mitigate risks. By balancing business needs with employee rights, employers can facilitate orderly separations while protecting operations. For specific cases, consulting DOLE or a labor lawyer is advisable to tailor strategies to unique circumstances.