Sick Leave and Vacation Leave Entitlements for Regular and Contract Employees Philippines

Here’s a comprehensive, practitioner-style explainer on Sick Leave and Vacation Leave Entitlements for Regular and Contract Employees (Philippines). It’s general information, not legal advice.


The core truth (TL;DR)

  • There is no stand-alone statutory “sick leave” or “vacation leave” for private-sector employees under the Labor Code.
  • What the law does guarantee is the Service Incentive Leave (SIL): at least 5 days of paid leave per year after an employee completes one (1) year of service with the employer. SIL is usable for any purpose (sick or vacation).
  • Many employers grant more generous company leaves (e.g., 12 SL + 12 VL). Those are contractual/voluntary benefits layered on top of the legal minimum.

Who gets SIL (and who doesn’t)

Covered by SIL (minimum 5 days with pay):

  • Rank-and-file private-sector employees who have rendered at least one (1) year of service with the employer (whether continuous or broken within 12 months).
  • Employment status doesn’t matter for coverage once the 1-year mark is hit: regular, probationary, fixed-term, casual, project, seasonal, or agency-deployed (the direct employer/contractor bears the obligation).

Common exclusions (no SIL under the Labor Code):

  • Managerial employees.
  • Field personnel and other employees whose hours cannot be determined with reasonable certainty (e.g., true route-based roles without daily supervision), and those paid on task/contract/commission basis under the same “hours-uncertain” logic. (Be careful: not every salesperson is “field personnel.” If they keep fixed schedules/reports and are supervised, they’re usually covered.)
  • Employees who are already enjoying a leave benefit of at least 5 days with pay (e.g., a company policy granting ≥5 days VL/SL combined).
  • Employers with fewer than ten (10) employees are exempt from SIL under the implementing rules.
  • Government and domestic workers (kasambahay) are under separate statutes (see special notes below).

Practical rule: If your company policy gives ≥5 paid days (in any mix), that satisfies the legal minimum—but whatever you promised beyond 5 becomes a contractual obligation.


How SIL works (minimum legal standard)

  • Accrual trigger: employee completes 1 year of service. The Code does not require pro-rated SIL before the 1-year mark (some employers still allow pro-rata by policy).
  • Usability: for any purpose—illness, emergencies, personal days, vacation. Employers may require reasonable proof for paid SIL if policy says so (e.g., medical certificate after 2–3 consecutive days).
  • Convertibility: unused SIL is commutable to cash at the end of the year and upon separation, at the employee’s current basic daily rate.
  • Carry-over: the Code’s default is cash conversion, not carry-over. Employers may choose carry-over or a hybrid (e.g., carry up to 5 days, pay the rest).
  • Rate: one day of basic wage (no OT/premiums/allowances unless company policy says otherwise).

What counts as “one year of service”? Any 12 months of service whether continuous or broken with the same employer (leaves with pay count; certain unpaid suspensions don’t).


Company sick leave (SL) & vacation leave (VL): contract rules

Because the law’s minimum is only 5 SIL days, everything beyond (e.g., 12 SL + 12 VL, emergency leave, birthday leave) is governed by your policy, CBA, or employment contract. Key drafting/administration points:

  • Accrual & waiting periods: e.g., SL/VL accrue monthly after a 3-month wait; or cliff-grant at regularization.
  • Proof: set thresholds (e.g., MC after 2+ SL days). Avoid rules that discourage legitimate sick use (that can be unsafe and invite disputes).
  • Scheduling: VL ordinarily requires approval; SL is as-needed subject to notice practicable under the circumstances.
  • Carry-over & cash-out: define whether unused VL/SL carry over, lapse, or cash out. (Note: SIL minimum is cashable if unused; you can’t write that out.)
  • Separation payout: specify which leaves are paid out on resignation/termination. (Legally, unused SIL must be paid; beyond SIL, follow your policy/CBA.)

Special notes by worker type

1) Regular vs. probationary

  • Probationary employees don’t get statutory SIL until they complete 1 year; many employers give pro-rata SL/VL by policy to stay competitive.
  • Upon regularization, company leaves apply as written; the SIL floor kicks in at 1 year.

2) Fixed-term / project / seasonal

  • Reaching an aggregate 1 year with the same employer (even across broken stints within 12 months) triggers SIL.
  • If the project ends before 1 year, no legal SIL is due unless your policy/CBA grants it; all contractual leaves you promised still apply.

3) Agency-deployed (contracting)

  • The contractor (agency) is the employer responsible for SIL and any promised SL/VL. The principal can be solidarily liable if it’s labor-only contracting or for unpaid statutory benefits.

4) Managerial & field personnel

  • Often excluded from SIL, but if your policy grants VL/SL, those become contractual rights. Define eligibility clearly to avoid disputes over who is “field personnel.”

Interplay with other statutory leaves (these are separate from SIL/SL/VL)

  • Maternity leave: 105 days with full pay (plus 15 days for solo parents; option +30 days unpaid).
  • Paternity leave: 7 days with full pay for the first four deliveries/miscarriages of the lawful spouse or cohabiting partner (per latest amendments/practice).
  • Solo parent leave: 7 working days with pay (subject to service length and eligibility conditions under the expanded Solo Parents’ Welfare law).
  • Women’s special leave (gynecological surgery): 2 months with full pay (eligibility conditions apply).
  • VAWC leave: 10 days with pay for victims under the Anti-VAWC law.
  • Special leaves for government employees (not applicable to private sector).
  • SSS Sickness Benefit: not a leave but a cash benefit from SSS if you’re unable to work for ≥4 days, have sufficient contributions, and have exhausted company sick credits. Many employers advance and get reimbursed by SSS.
  • Emergency/Calamity leaves: no general national mandate for private sector; widely provided by company policy or LGU ordinances (check local rules).

These special leaves do not reduce the SIL minimum. Company policies should state how they coordinate (e.g., when paid SL runs first vs. SSS sickness benefit).


Tax angle (quick note)

  • Monetized unused vacation leave (beyond SIL) of private-sector employees up to 10 days per year generally qualifies as de minimis (tax-exempt) under BIR rules; amounts beyond that are taxable.
  • Monetized SIL (the 5-day legal minimum) forms part of compensation; follow prevailing BIR guidance and your payroll provider’s setup.

HR compliance checklists

For employers

  • Write it down: Have a single Leave Policy that: (i) identifies who is covered/excluded by SIL, (ii) grants or coordinates SL/VL, (iii) defines accrual, proofs, carry-over, cash-out, separation payout, and (iv) clarifies interaction with statutory leaves and SSS.
  • Don’t undercut the floor: Ensure at least 5 paid days are available (via SIL or combined SL/VL).
  • Eligibility clarity: Define “managerial” and “field personnel” narrowly and fact-specifically; over-broad exclusions are risky.
  • Recordkeeping: Track SIL separately from company SL/VL buckets so end-year and separation cash-outs are accurate.
  • Agency workforce: Contractually require contractors to comply; audit compliance.
  • Non-discrimination: Never penalize sick leave use (e.g., “points” that lead to dismissal) without a defensible attendance system; apply proofs consistently.

For employees

  • Ask for the policy and track your balances (SIL vs. SL/VL).
  • Give notice as soon as practicable for SL; secure medical certs where required by policy.
  • On exit, confirm your SIL cash-out and any VL/SL payouts promised by policy/CBA.

Worked examples

Example A – Rank-and-file, 14 months tenure, no company SL/VL

  • Legal entitlement: 5 days SIL with pay (usable for sick or personal).
  • At year-end: unused SIL is cashed out at current daily basic rate.

Example B – Company grants 12 SL + 12 VL

  • SIL floor is already satisfied. Follow the company rules on proofs, carry-over, and cash-out. On separation, pay out unused SIL (if tracked) and any additional payouts your policy promises.

Example C – Project worker, 7 months on Project 1 + 6 months on Project 2 (same employer)

  • Aggregate 13 monthsSIL applies in Project 2. If the employer tries to “reset” tenure through breaks purely to avoid SIL, that’s risky.

Example D – “Field personnel” dispute

  • If a “field” salesperson has fixed start/end times, GPS logs, daily reports, and real-time supervision, hours are determinablelikely covered by SIL (plus any company SL/VL).

Special groups (outside the Labor Code SIL, but with their own minimums)

  • Kasambahay (Domestic Workers) Law: after 1 year with the same employer, at least 5 days of paid service incentive leave yearly; unused is typically not convertible to cash (check the statute and DOLE guidance).
  • Government employees: Civil Service rules apply (separate leave matrices).

Model policy language (you can adapt)

Service Incentive Leave (SIL) All eligible employees who complete one (1) year of service are granted five (5) working days of Service Incentive Leave with pay per calendar year, usable for any purpose. Unused SIL is commutable to cash at year-end and upon separation at the employee’s current basic daily rate.

Company Sick Leave (SL) & Vacation Leave (VL) In addition to SIL, the Company grants [•] SL and [•] VL per year to eligible employees. SL may be availed for illness; a medical certificate is required for absences of [•] consecutive days or when reasonably requested. VL requires prior approval. Carry-over of up to [•] days is allowed; the excess lapses on [date]. Unused VL/SL is [cashable/non-cashable] upon separation as provided herein.

Coordination with Statutory Leaves and SSS Statutory leaves (e.g., maternity, paternity, solo parent, VAWC, special women’s leave) are separate from SIL/SL/VL. For SSS sickness benefit claims, employees shall first utilize available company sick credits; the Company may advance benefits subject to SSS reimbursement.


FAQ (quick hits)

  • Is paid sick leave required by law? Not as a separate bucket. The law guarantees 5 days SIL after one year; the rest is by policy/CBA.
  • Can we require a medical certificate? Yes, if reasonable, consistently applied, and stated in policy (e.g., for 2–3 successive SL days).
  • Do probationary employees get SIL? Only after they complete one year of service; before that, it’s policy-based.
  • Are managers entitled to SIL? They’re generally excluded from the statutory SIL, but company-granted VL/SL still bind the employer.
  • Must unused SIL be paid at year-end? Yes (or at separation) at the current basic daily rate.
  • If my company gives 10 VL days but no SL, is that OK? Yes—as long as the total paid leave is at least 5 days, the law’s minimum is met; your policy governs the rest.

Bottom line

For private-sector employees, the legal floor is 5 paid days (SIL) after 1 year—usable for sick or vacation needs. Everything beyond is policy/CBA-driven. Employers should write clear rules, keep SIL distinct in payroll, and avoid over-broad “exclusions.” Employees should know their buckets, follow proofs/notice, and ensure SIL cash-outs are paid at year-end or on exit.

If you share your setup (workforce size, roles, current leave table, and pain points), I can draft a leave matrix and policy addendum that’s compliant, easy to administer, and competitive.

Disclaimer: This content is not legal advice and may involve AI assistance. Information may be inaccurate.