Here’s a complete, practice-oriented legal article—Philippine context—on Sick Leave (SL) and Vacation Leave (VL) entitlements for regular and contract employees. This covers the hard legal floor, who’s covered/excluded, how SL/VL are typically structured in private companies, treatment for fixed-term/project/seasonal/agency workers, payroll/tax, separation, and compliance traps. (No external sources used.)

Sick & Vacation Leave in the Philippines: What the Law Actually Guarantees

1) The legal floor is Service Incentive Leave (SIL)—not SL/VL

In the private sector, there’s no universal national law that grants separate, paid sick or vacation leave. What the Labor Code guarantees is Service Incentive Leave (SIL):

Minimum: 5 working days with pay per year.
When it vests: After the employee renders at least one (1) year of service (continuous or broken) with the employer within a 12-month period.
What it’s for: SIL is generic—employers may let employees tag it as “sick” or “vacation” (or any personal leave). Many employers grant SL and VL on top of SIL as a company benefit.

SIL coverage—common exclusions (any one may exclude):

Government employees (civil service regime).
Field personnel and comparable roles paid by results where hours can’t be determined with reasonable certainty and without regular supervision.
Employees already enjoying at least 5 days leave with pay (SIL floor deemed satisfied).
Domestic workers (kasambahay) have a separate law with its own leave rules.
Small establishments with fewer than 10 employees (traditional IRR exemption).

Commutation & carry-over

Unused SIL is commutable to cash at year-end, unless the company or CBA grants a more favorable arrangement (e.g., carry-over + cash conversion options).

Bottom line: In private companies, the only statutory minimum is 5 paid days (SIL). Separate SL and VL are policy/CBA-based extras.

2) SL/VL beyond SIL are company policy or CBA benefits

Most private employers voluntarily grant, for example, 10 SL + 10 VL per year. Because these are contractual, the company’s policy/CBA governs:

Accrual (e.g., monthly accrual vs. upfront credit)
Eligibility (e.g., vesting upon regularization vs. day-one)
Proof (e.g., medical certificates for 2–3 consecutive SL days)
Scheduling (notice and approval for VL)
Carry-over caps and cash conversion rules
Payout on separation (which buckets convert to cash)

Public sector rules are different (commonly 15 SL + 15 VL per year), but do not apply to private employers.

Who’s Covered: Regular, Probationary, Fixed-Term, Project, Seasonal, and Agency-Deployed

1) Regular & probationary employees

Both are “employees” under the Labor Code. SIL vests after one year of service (subject to exclusions).
Company-granted SL/VL can vest on regularization or accrue from day one—policy/CBA controls, but the SIL floor must be honored once the one-year mark is hit.

2) Fixed-term/project/seasonal employees

They can qualify for SIL if they accumulate one year of service, even if the service is broken across contracts within the relevant 12-month window.
If the stint is < 1 year and there’s no pro-ration by policy/CBA, no SIL is due yet (but any company-granted SL/VL still applies if your policy says so).

3) Contracting/outsourcing (agency-deployed)

For legitimate contracting, the contractor (agency) is the employer of record and must provide SIL and any promised SL/VL.
In labor-only contracting, the principal and contractor may be solidarily liable for statutory benefits (including SIL) and for promised benefits under the employment contract.

Special Statutory Leaves (Independent of SL/VL/SIL)

These are in addition to SIL and company SL/VL, each with its own eligibility and documentation:

Expanded Maternity Leave (R.A. 11210): 105 days with pay for live childbirth (+15 if solo parent); 60 days for miscarriage/EMTOP; up to 7 days transferable to father/alternate caregiver.
Paternity Leave (R.A. 8187): 7 days with pay for the first four deliveries/miscarriages of the lawful spouse.
Solo Parent Leave (as expanded): 7 workdays with pay per year for qualified solo parents.
VAWC Leave (R.A. 9262): 10 days with pay for women employees who are victims of violence, extendible by court order.
Magna Carta of Women—Special Leave (R.A. 9710): Up to 2 months with full pay for gynecological surgery.

These leaves are not charged against SL/VL/SIL unless a statute or your policy clearly says so (and even then, don’t undercut statutory floors).

Designing a Compliant SL/VL Program (Private Sector)

A) Structure & accrual

Keep SIL as the statutory floor.
Layer SL and VL above SIL with clear accrual (e.g., VL 1 day/month; SL 1 day/month), eligibility (e.g., vest at regularization), and caps (e.g., carry-over up to 10 VL).

B) Evidence & fairness

SL: require a medical certificate after 2–3 consecutive days or patterned absences; accept self-certs for one-day illnesses to avoid deterring legitimate use.
VL: define notice periods (e.g., 5–10 working days), blackout dates, and a fair approval process.

C) Year-end handling

SIL: commutable to cash unless a more favorable scheme applies.
SL/VL: follow policy/CBA—many firms convert VL (full or partial), keep SL non-convertible (except upon separation), and allow limited carry-over to support rest.

D) Separation payouts

Spell out in policy what is paid at separation:
- SIL: typically convert to cash if unused.
- VL/SL (company-granted): follow your policy/CBA (e.g., pay out VL, forfeit SL except if mandated otherwise).
- Observe statutory/contractual timelines for releasing final pay and certificates.

E) Payroll & tax

Converted/commuted leave is generally taxable compensation under regular withholding rules unless exempted; coordinate with payroll.

Kasambahay (Domestic Workers)

Covered by a separate law that grants at least 5 days of service incentive leave with pay per year after one year of service, with rules that can differ from the general Labor Code IRR. Many households agree to more favorable terms in writing.

Frequent Questions & Edge Cases

Q1: Can an employer refuse VL because of workload? For policy-based VL, yes—timing may be managed for operational needs. However, SIL (once vested) should be usable within the year; don’t adopt rules that effectively nullify it.

Q2: Can SL be denied without a medical certificate? Policies may require proof for longer absences. For single-day illnesses, practical policies accept self-certification; overly strict proof rules can be challenged as bad-faith impediments to leave.

Q3: Do managers get SIL? If they already enjoy ≥5 days paid leave, the SIL floor is satisfied (no duplicate grant required). Managers aren’t automatically excluded.

Q4: Part-timers or irregular schedules? Once the one-year service threshold is met (and no exclusion applies), SIL generally attaches. Companies may pro-rate SL/VL (policy-based) but not undermine the SIL floor once vested.

Q5: Successive short contracts with breaks? If service aggregates to a year within the relevant 12 months (and you’re not excluded), SIL vests—even with broken service.

Q6: Can company policy say “no conversion” for SIL? You must still meet the statutory commutation requirement unless you provide a more favorable leave arrangement (e.g., larger paid leave bucket that’s more beneficial than 5 days convertible).

Model Clauses You Can Adapt (Private Sector)

1) SIL floor (statutory)

The Company complies with the Service Incentive Leave (SIL) requirement by granting at least five (5) working days with pay per calendar year to eligible employees upon completion of one (1) year of service, subject to legal exclusions. Unused SIL is commutable to cash at year-end unless a more favorable arrangement under this Policy applies.

2) Company SL/VL (contractual)

In addition to SIL, eligible regular employees receive 10 days Sick Leave (SL) and 10 days Vacation Leave (VL) per year, accruing at 0.833 day per month. SL requires a medical certificate for ≥2 consecutive days of absence. VL must be filed at least 7 working days in advance, subject to operational requirements. Up to 5 VL days may be carried over to the next year; unused SL is non-convertible except upon separation where [state rule] applies.

3) Separation

Upon separation, unused SIL and any leave balances convertible under this Policy shall be paid out together with final pay, subject to statutory deductions and authorized offsets consistent with law.

4) Contractors/agency

For agency-deployed workers, the contractor is responsible for statutory and contractual leave benefits. The Company may require proof of compliance and reserves the right to enforce compliance through contract remedies.

Compliance Traps (and How to Avoid Them)

Assuming SL/VL are legally required: They’re not—SIL is. If you promise SL/VL, your policy/CBA becomes binding.
Policies that nullify SIL in practice: Excessive documentation hurdles or blanket denials—don’t.
Ignoring fixed-term/project workers who hit 1 year (broken or continuous): Track service for SIL vesting.
Agency deployments without compliance checks: Require the contractor to evidence SIL and promised SL/VL accruals.
Separation payouts: Always convert unpaid SIL and follow your policy for SL/VL conversion; release final pay on time.
Field personnel/designation abuse: The exclusion is narrow—it hinges on inability to determine hours with reasonable certainty and lack of supervision; job titles alone don’t decide it.

Bottom Line

In the private sector, the only universal leave floor is SIL: 5 paid days after one year (subject to exclusions).
SL and VL beyond that are policy/CBA benefits—design them clearly (accrual, proof, carry-over, conversion, separation).
Regular, probationary, fixed-term, project, seasonal, and agency-deployed employees can all qualify for SIL once they meet the one-year service requirement and are not excluded.
Keep policies humane and precise; track service and leave balances; convert SIL properly; and align payroll/tax. That’s how you stay compliant—and fair.