In the Philippine labor landscape, leave benefits are a combination of mandatory statutory requirements under the Labor Code and discretionary benefits granted through Collective Bargaining Agreements (CBA) or voluntary company policy. As of 2025, while the core of the Labor Code remains the primary reference, the Department of Labor and Employment (DOLE) continues to emphasize the integration of recent jurisprudence and expanded special leave laws.
1. The Service Incentive Leave (SIL): The Statutory Minimum
Under Article 95 of the Labor Code, an employer is mandated to grant its employees a Service Incentive Leave (SIL) of five (5) days with pay, provided the employee has rendered at least one year of service.
Definition of "One Year of Service": This includes authorized absences, paid holidays, and periods where the employee is at work. It is generally understood as 12 months, whether continuous or broken.
Exclusions: The mandate for SIL does not apply to:
Those already enjoying vacation leave with pay of at least five days.
Employees of "retail and service establishments" regularly employing fewer than ten (10) workers.
Government employees (governed by Civil Service rules).
Domestic helpers (covered by the Kasambahay Law).
Commutation to Cash: One of the most critical features of SIL is that if it is unused at the end of the year, it must be converted to its cash equivalent based on the salary rate at the date of commutation.
2. Vacation Leave (VL) and Sick Leave (SL): Contractual vs. Statutory
Contrary to popular belief, the Labor Code does not explicitly mandate "Vacation Leave" or "Sick Leave" by those specific names; it only mandates the SIL. However, in practice:
- Company Policy/CBA: Most employers provide 10 to 15 days of VL and SL as a matter of company policy or through a union contract. Once these are established in the employment contract or Employee Handbook, they become enforceable rights.
- Management Prerogative: The scheduling of vacation leaves remains a management prerogative. Employers have the right to approve or deny specific dates based on operational necessity, provided the benefit itself is not denied.
- Non-Diminution of Benefits: Under Article 100 of the Labor Code, if an employer has a long-standing practice of granting paid VL and SL, they cannot unilaterally withdraw or reduce these benefits.
3. Sickness Benefits under the Social Security System (SSS)
While private employers are not strictly required by the Labor Code to pay for sick leave beyond the SIL (unless specified in a contract), the Social Security Law provides for a Sickness Benefit.
- The Rule: An employee who has paid at least three monthly contributions in the 12-month period immediately preceding the semester of sickness and is confined for more than three days is entitled to a daily cash allowance.
- Employer Obligation: The employer must pay the employee the sickness benefit in advance. The SSS then reimburses the employer 100% of the amount legally paid, provided proper notification was made.
4. Special Leave Benefits (Updated for 2025 Context)
Several special laws provide for specific leave entitlements that exceed the standard SIL:
| Leave Type | Duration | Legal Basis |
|---|---|---|
| Maternity Leave | 105 Days (Paid) | R.A. 11210 |
| Paternity Leave | 7 Days (Paid) | R.A. 8187 |
| Solo Parent Leave | 7 Days (Paid) | R.A. 8972 (as amended by R.A. 11861) |
| VAWC Leave | Up to 10 Days (Paid) | R.A. 9262 (For victims of violence) |
| Special Leave for Women | Up to 2 Months (Paid) | R.A. 9710 (Gynecological surgeries) |
Note on Solo Parent Leave: Under the expanded law, the "one year of service" requirement remains, but the benefit is now mandatory for all solo parents regardless of the cause of their status.
5. Rules on Forfeiture and Carry-over
- SIL: As stated, SIL cannot be forfeited; it must be paid out if unused.
- VL/SL (Company Provided): The rules for voluntary leaves depend entirely on the company policy. Employers may implement a "Use it or Lose it" policy for voluntary VLs, or they may allow a specific number of days to be carried over to the following year.
- Documentation: DOLE strictly requires that any conversion of leaves to cash must be reflected in the payroll records and is subject to withholding tax if the total de minimis benefits exceed the statutory threshold (currently ₱90,000 for gross benefits).
6. Recent Jurisprudence and Compliance
As of 2025, DOLE Labor Inspectors emphasize that "Service Incentive Leave" should not be confused with "Sick Leave" in the context of SSS. If a company provides 5 days of "Sick Leave" and 5 days of "Vacation Leave," they have satisfied the SIL requirement. However, if they only provide 5 days of "Sick Leave" and the employee uses them all while ill, the employee is still technically owed the "Incentive" aspect of the law if the policy does not explicitly state that the SL/VL credits are in lieu of the statutory SIL.
Employers are advised to clearly stipulate in their contracts that "the provided VL/SL shall be inclusive of the 5-day Service Incentive Leave mandated by the Labor Code" to avoid double-charging.