Entitlement to Unused Leave Credits When an Employer Changes a Resignation Date (Philippines)

Executive summary

In the Philippines, unused statutory Service Incentive Leave (SIL) and company-granted leaves generally convert to cash when employment ends—**regardless of who fixes the final day—**subject to company policy, collective bargaining agreements (CBAs), and tax rules. When an employer unilaterally advances or delays a resignation date, it affects: (1) the classification of the separation, (2) what compensation is due for the shortened/extended period, and (3) how leave credits and final pay are computed. Below is a practical, doctrine-aligned guide.

Legal framework (plain-English map)

Resignation & notice. A resigning employee must give at least 30 calendar days’ written notice, unless there’s a just cause for immediate resignation. The employer may waive all or part of the 30-day notice.
Changing the date.
- Earlier date (employer-set). If the employer insists on an earlier end date than the one in the resignation letter without the employee’s consent, that can resemble employer-initiated separation for pay purposes. If the employer accepts immediate effectivity upon the employee’s request, that’s a valid waiver of the remaining notice.
- Later date (employer-set). The employer cannot compel an employee to render beyond 30 days from notice (absent mutual agreement or special circumstances such as critical handover covered by policy).
Service Incentive Leave (SIL). By law, employees who have worked at least one year get 5 days of paid SIL annually. Unused SIL at year-end (or upon separation) is commutable to cash. Certain categories (e.g., already enjoying at least five days of paid leave, managerial employees, field personnel under specific conditions) may be exempt.
Company-granted leave. Vacation/sick leave beyond SIL depends on company policy/CBA. Many employers convert unused leave to cash upon separation; some require a minimum tenure or exclude encashment of certain leave types (e.g., sick leave).
Final pay timing. Employers are expected to release final pay and employment documents within a reasonable period (commonly 30 calendar days) unless a shorter timeline applies by policy or agreement.
Taxes. Monetized unused vacation/SIL up to 10 days in a year can qualify as de minimis (non-taxable); amounts beyond that threshold are taxable compensation. Government-mandated tax rules prevail.

What changes when the employer moves your resignation date?

A. Employer advances the resignation date (earlier last day)

If the employee agrees (written).
- The employer’s waiver of the remaining notice is valid.
- No penalty may be charged to the employee for not rendering the remainder.
- Leave credits:
  - SIL: Pay the unused balance (and, if the separation occurs mid-year, pay any earned but unused portion for that year—see proration below).
  - Company leaves: Follow the encashment rule in the policy/CBA (most convert; some don’t for specific leave types).
- Salary for unserved days: Not due because parties agreed to end earlier. (Some employers voluntarily pay the “cut” days or allow leave monetization to cushion the early release.)
If the employee does not agree (unilateral advancement).
- This starts to look like employer-initiated separation for the period chopped off.
- Pay for the unserved portion: The safer practice is to pay the employee salary for the remaining notice period or obtain written consent to the early date.
- Leave credits: Same conversion rules apply. The employee should not lose accrued/commutable leave because the employer caused the earlier exit.
- Risk: Disputes over lost earnings or benefits may be framed as constructive dismissal issues if there’s prejudice and lack of consent.

B. Employer delays the resignation date (later last day)

The employee cannot be forced to work beyond the 30-day notice (counted from the resignation letter), barring agreement.
If the employee agrees to a later date (documented), compensation continues until that date and leave usage/encashment follows the actual last day.
If the employee does not consent, they may lawfully exit after 30 days; the last day remains what the law requires (or the employee’s stated date, if ≥30 days from notice).

Leave credits: earning, proration, and cash conversion

1) Statutory SIL (5 days/year)

Eligibility: After 12 months of service (continuous, whether broken or not as long as service within a year totals at least 12 months).
Accrual vs. grant: The law guarantees five paid days per year, but does not dictate the exact accrual method (monthly accrual vs. annual grant). Employers may prorate in a reasonable way consistent with policy.
Upon separation:
- Unused prior-year SIL: Pay in full if not commuted yet.
- Current-year SIL: If policy grants the full 5 days at year start and the employee hasn’t used them, pay the balance. If policy accrues monthly, pay the earned portion to separation date (e.g., 5 days × months worked ÷ 12).
Carryover vs. cash out: By practice, unused at year-end is commuted to cash, rather than carried forward (unless policy allows carryover in addition to, or instead of, commutation).

2) Company-granted vacation/sick leave

Check the handbook/CBA. Typical rules:
- Vacation leave (VL): Often encashable upon separation.
- Sick leave (SL): Sometimes non-encashable unless expressly allowed.
- Maternity/paternity, emergency, birthday, special leaves: Follow specific policy (usually non-encashable unless stated).
Blackouts & approvals: Employers may deny future leave applications due to operational needs, but cannot erase already-accrued encashable credits just because the date moved. If an early exit prevents a planned leave, the unused encashable credit should typically be paid instead.

Computation guide & examples

Key rule: Compute final pay based on the actual last day. Then add leave conversions and other terminal entitlements, minus lawful deductions (e.g., taxes, unreturned property).

A. Prorating SIL (if policy accrues monthly)

Formula: Earned SIL = 5 × (months worked in the current year ÷ 12)
Example: Last day is April 15; worked 3.5 months. Many employers round to whole months actually worked (Jan–Mar = 3 months).
- Earned SIL = 5 × (3/12) = 1.25 days (company may round up/down per policy).
- If 0 used → 1.25 days for cash conversion.

B. Encashing company vacation leave

Example: Balance 8 VL days, policy says encash upon separation at basic daily rate (exclude allowances unless policy says otherwise). If daily rate is ₱1,200, VL encashment = ₱9,600.

C. When the employer advances the date by 10 days without consent

Unserved notice (10 days): Best practice is to pay 10 days’ salary or obtain written consent to waive.
Leave credits: Add all encashable balances (SIL earned + encashable VL).
Taxes: If total monetized vacation/SIL doesn’t exceed 10 days for the year → non-taxable (de minimis). Any excess is taxable.

Tip: If policy allows, employees sometimes request to offset the remaining notice using available vacation leave. This requires employer approval; absent approval, the default is to pay salary for required workdays and encash unused leave separately.

Documentation you’ll want

Resignation letter stating notice date and intended last day.
Employer reply confirming acceptance, and any changes (earlier or later date) with employee’s written consent.
Leave ledger (SIL and company leaves), indicating grants, usage, balances, and encashability.
Final pay computation sheet (salary to last day, 13th-month proration, leave encashment, tax/wtax, other benefits, authorized deductions).
Quitclaim & Release (optional)—if used, it must reflect correct, complete amounts and be voluntarily signed, with the employee understanding the terms and ideally receiving payment contemporaneously.

13th-month pay, bonuses, and other items that interact with moved dates

13th-month pay: Pro-rated up to the actual last day (basic wage only, unless policy/CBA is more generous).
Performance bonuses/profit share: Follow policy/CBA (eligibility cut-offs and “employed on payout date” clauses).
Separation pay: Not due on a resignation unless the separation is actually for authorized causes (redundancy, retrenchment, closure, illness) or your policy/CBA grants it. A unilateral advancement that effectively terminates employment earlier may expose the employer to claims; many employers simply pay the shortened period to avoid disputes.
Deductions/set-offs: Only lawful deductions (e.g., government-mandated contributions due, tax, unreturned company property) and those authorized in writing.

Frequently asked questions (practical answers)

1) If the employer moves my last day earlier, can they refuse to pay my unused leave? No for SIL; likely no for encashable VL. Accrued, encashable leave should be paid upon separation. Policy governs company-granted leaves, but SIL is statutory.

2) Can the employer force me to stay beyond 30 days? No, unless you agree. You may lawfully leave after 30 calendar days from notice (absent just causes that allow earlier departure).

3) Are monetized leaves taxable? Up to 10 days of monetized vacation/SIL in a year can be non-taxable (de minimis). Excess is taxable and subject to withholding.

4) What if I planned to use my VL during the notice period, but the employer cut my last day earlier? You ordinarily shift from usage to encashment (for encashable leave). You shouldn’t lose the value because of the employer-moved date.

5) Do I get paid for the “remaining” notice days if the employer ends it earlier without my consent? You have a good claim to be paid for the cut portion (or to insist on working it) unless you consent to the early release in writing.

Employee checklist (do this before you sign anything)

Confirm, in writing, the final last day.
Ask for a leave balance statement and how each leave type is treated on separation.
Request a draft final pay computation (salary to last day, SIL/VL encashment, 13th-month proration, tax).
If the employer advanced the date without your consent, request either (a) pay for the unserved period or (b) formalize that you do not owe any notice-related penalty.
Return company property against a clearance form to avoid holdbacks.
Read any Quitclaim carefully; amounts should match the computation and be paid on or before signing.

Employer checklist (to reduce dispute risk)

Issue a written acceptance of resignation that confirms the last day. If advancing it, obtain the employee’s written consent or pay the shortened period.
Keep a transparent leave ledger and apply policy consistently.
Encash SIL and encashable VL on separation; document tax treatment.
Release final pay and COE within the expected timeline; record clearance and asset return.
Use a clear, plain-language Quitclaim only after paying correct amounts.

Bottom line

SIL (5 days/year) is statutory and commutable to cash upon separation.
Company leaves follow policy/CBA, but encashable balances are typically paid out when employment ends.
If an employer changes the resignation date, do not allow that change to erase accrued, encashable leave or to short-pay the notice period without your written consent.
Proper paperwork and clean computations prevent most disputes; when in doubt, put it in writing and ask for the computation sheet.