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

Here’s a practice-oriented legal explainer—Philippine context—covering what employers and workers need to know about sick leave and vacation leave (SL/VL) for regular and contract (fixed-term/project/seasonal/agency-deployed) employees. I’ll anchor this on the Labor Code and special statutes, and flag where things are statutory versus policy/CBA-based (i.e., up to company rules).


The baseline under Philippine law

1) No general statutory SL/VL—what the law does guarantee is Service Incentive Leave (SIL)

  • SIL: a minimum of 5 working days with pay per year after the employee renders at least one (1) year of service.

  • Who generally gets SIL: rank-and-file private-sector employees who meet the one-year threshold (the “one year” may be continuous or broken service within the relevant 12-month period).

  • Common exclusions under the Labor Code IRR (any one may take an employee outside SIL coverage):

    • Government employees (covered by civil service rules, not the Labor Code).
    • Field personnel and others paid by results whose work hours cannot be determined with reasonable certainty (e.g., certain commission-only roles without supervision).
    • Employees already enjoying at least 5 days leave with pay (SIL does not stack with an equal-or-better benefit).
    • Domestic workers are governed separately by the Kasambahay Law (see below).
    • Small establishments employing fewer than 10 employees (traditional IRR exemption).
  • Commutation/Carry-over: As a floor rule, unused SIL is typically commutable to cash at year-end. Many CBAs/policies allow carry-over or conversion—whatever is more favorable to the employee prevails.

Practical use: SIL is generic leave—employers may let employees tag it as vacation or sick (often called “VL/SL”—but legally it’s the same SIL bucket unless the company grants separate VL and SL over and above the 5-day minimum).

2) SL and VL beyond SIL are policy/CBA-based

  • Outside the 5-day SIL, there is no nationwide law mandating specific counts for paid sick leave or paid vacation leave in the private sector.
  • The public sector has its own regime (commonly 15 SL + 15 VL annually), which does not apply to private employers.

Special statutory leaves (independent of SL/VL)

These exist in addition to SIL and any company-granted SL/VL. Key examples (private sector):

  • Expanded Maternity Leave (R.A. 11210): 105 days with pay for live childbirth, + 15 days if solo parent; 60 days for miscarriage/EMTOP. Up to 7 days transferable to the father/alternate caregiver (separate from paternity leave).
  • Paternity Leave (R.A. 8187): 7 days with pay for the first four deliveries/miscarriages of the lawful spouse.
  • Solo Parent Leave (Expanded law): 7 workdays with pay per year for qualified solo parents (service/eligibility requirements apply).
  • VAWC Leave (R.A. 9262): 10 days with pay for women employees who are victims of violence, extendible by the court.
  • Magna Carta of Women – Special Leave (R.A. 9710): up to 2 months with full pay for gynecological surgery (eligibility and documentation requirements apply).
  • Special industry/agency leaves may exist by statute or regulation for defined sectors (check CBAs or sectoral rules).

These are not charged to SL/VL unless a specific statute/regulation says otherwise.


Regular vs. “Contract” employees (fixed-term/project/seasonal/agency)

1) SIL accrual and contract forms

  • Fixed-term/project/seasonal employees can qualify for SIL if they complete one year of service (continuous or broken, as defined in the IRR).
  • Shorter stints (<1 data-preserve-html-node="true" year): no SIL accrues yet (unless company/CBA grants pro-ration).
  • Successive contracts with the same employer (or contractor): service typically tacks for SIL if the aggregate meets one year within the relevant period.

2) Contracting/Outsourcing

  • For legitimate contractors, the employer of record (the contractor) bears SIL and leave obligations.
  • In labor-only contracting, the principal and contractor may be solidarily liable for underpayment/non-grant of benefits.

3) Probationary vs. regular

  • Probationary employees are employees under the Labor Code. If they hit one year of service, they qualify for SIL just like regulars (unless an exclusion applies).
  • Separate SL/VL packages (e.g., “10 SL/10 VL”) are policy/CBA decisions—some employers pro-rate during probation; others vest on regularization. That’s lawful so long as the SIL floor is respected.

Company SL/VL programs (best practice architecture)

If you’re designing or auditing a leave program:

  1. SIL floor: Make clear that at least 5 paid days per year are guaranteed once the one-year service condition is met (or better, grant day-one accrual by policy).

  2. Distinct SL/VL buckets: Many employers grant separate SL and VL above SIL (e.g., 10 SL + 10 VL).

  3. Accrual: Monthly accrual (e.g., 1.25 days/month to hit 15 days/year) prevents year-end shocks and aligns with payroll.

  4. Sick leave proof: Require medical certificates after a threshold (e.g., ≥2–3 consecutive days). Allow self-certs for one-day ailments as a humane practice.

  5. Vacation leave approvals: Outline notice periods, blackout dates, and minimum increments (half-day/day).

  6. Carry-over & conversion:

    • VL: allow carry-over with a cap (e.g., 10 days) and/or cash conversion at year-end or separation.
    • SL: often non-convertible (promotes use for health) but convertible at separation if policy says so.
    • Ensure SIL commutation at year-end unless a more favorable arrangement exists.
  7. Separation payout: Spell out which balances are forfeited, convertible, or paid out—and always honor statutory commutation for SIL (and any CBA/policy promises).


Documentation, taxation, payroll

  • Policies/handbooks should distinguish statutory (SIL, special leaves) from discretionary (SL/VL, calamity leave).
  • Leave tracking: Maintain a ledger showing accrual, usage, balance, and SIL commutation each year.
  • Tax: Commuted leave conversions can be taxable compensation unless a specific exemption applies; coordinate with your payroll/withholding team.

Kasambahay (domestic workers)

  • Covered by a separate law that grants, among others, at least 5 days of service incentive leave with pay per year after one year of service. (Rules on carry-over/commutation for kasambahay differ from the Labor Code default; many employers provide better terms by agreement.)

FAQs and tricky edges

1) Can an employer deny VL because “workload is heavy”? Yes, for discretionary VL (policy-based), employers may manage timing for operational needs—but they cannot unreasonably prevent employees from using their statutory SIL within the year.

2) Can sick leave be denied without a medical certificate? Policy may require certificates for longer absences or patterned usage; for short one-day illnesses, many policies accept self-certs. Employers should avoid rules that effectively nullify the SIL/SL benefit.

3) What happens to unused SIL/SL/VL on separation?

  • SIL: generally commutable to cash if unused (unless a more favorable arrangement says otherwise).
  • SL/VL (company-granted): depends on policy/CBA—some pay VL only, some pay both, some none.

4) Do managers get SIL? Managers aren’t per se excluded. If they already enjoy at least 5 paid leave days, the SIL floor is satisfied and need not be duplicated.

5) Do part-timers/irregular schedules get SIL? SIL is based on employee status, not hours per se. Once the one-year service threshold is met and no exclusion applies, SIL generally attaches (pro-ration methods can be set by favorable policy/CBA).

6) Project employees who cross one year across back-to-back projects? If service aggregates to a year (continuous or broken, as defined), SIL vests. The employer of record must grant it.


Compliance checklists

Employer

  • Written policy distinguishing statutory leaves (SIL + special leaves) from company SL/VL.
  • SIL mechanics: eligibility after one year, commutation at year-end, tracking.
  • Clear VL/SL accrual, approval rules, carry-over, conversion, separation treatment.
  • Outsourcing agreements assigning benefit responsibility (and budgeted rates) to contractors.
  • Training for supervisors on leave approvals and anti-retaliation (e.g., no penalizing legitimate sick leave).

Employee

  • Know your statutory entitlements (SIL, maternity/paternity/solo parent/VAWC/MCW).
  • Keep copies of handbooks and CBA (if any).
  • File SL with documentation when required; plan VL early to secure approvals.
  • On exit, ask for a leave balance statement and ensure SIL conversion is processed.

Bottom line

  • The only universal private-sector floor for “SL/VL” in the Philippines is the 5-day Service Incentive Leave after one year (subject to classic IRR exclusions).
  • Everything beyond that—separate, bigger SL and VL buckets; accrual; carry-over; conversion; separation payout—comes from company policy or CBA (or special statutes for defined situations).
  • For contract/project/fixed-term/agency workers, form of engagement doesn’t erase SIL once you hit a year (and you’re not excluded); the employer of record must grant it.
  • Design policies that surpass the floor, are clear and documented, and that treat health-related absences in good faith—that’s both legally safer and better for the business.

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