Using Leave Credits During the 30‑Day Resignation Notice Period in the Philippines
A comprehensive legal guide for employees and HR practitioners
1. 30‑Day Notice: Where the Obligation Comes From
| Legal Source | Key Provision | Practical Effect |
|---|---|---|
| Labor Code, renumbered Art. 300 (old Art. 285): “Termination by Employee” | An employee may terminate employment by serving a written notice at least 30 days in advance, unless resignation is due to an employer’s serious breach or other just causes. | During those 30 days the employment relationship—and the duty to work—continues, unless the employer expressly waives the service requirement. |
| Jurisprudence (e.g., United Coconut Chemicals v. Valmores, G.R. No. 201018, 21 Jan 2015) | The 30‑day notice can be shortened, extended, or entirely waived only by mutual consent. | The employee cannot unilaterally “deem” leave credits as notice; the employer’s approval is indispensable. |
Bottom line: The 30‑day period is not a penalty but a buffer so the employer can recruit a replacement or re‑arrange work. You are still legally bound to render work—unless the employer says otherwise.
2. Understanding “Leave Credits” Under Philippine Law
Statutory credits
- Service Incentive Leave (SIL): Five (5) paid days per year for rank‑and‑file workers who have rendered at least one year of service (Labor Code, Art. 95). Unused SIL is automatically convertible to cash at year‑end or upon separation.
- Special laws leave (maternity, paternity, solo parent, violence‑against‑women leave, etc.)—these are strictly for the specific purpose and generally non‑convertible.
Contractual / Company‑granted credits
- Vacation Leave (VL) and Sick Leave (SL) beyond the 5‑day SIL.
- Birthday, calamity, wellness, or other “special” leaves under CBAs or handbooks.
- Whether they may be converted to cash or used to offset the notice period depends entirely on policy.
Key distinction: Only SIL conversion is mandated by law. Everything else lives or dies by company rules or CBA terms.
3. May You “Charge” Your Leave Credits Against the 30‑Day Notice?
| Scenario | Is It Allowed? | Legal/Policy Basis |
|---|---|---|
| You apply VL/SL during the notice period and HR approves | ✅ Yes. Approval = employer consent to your absence. | Employer’s management prerogative + Labor Code Art. 300 waiver doctrine. |
| You have earned VL but HR denies the leave request | ❌ No. Obligation to work prevails; denial is valid as long as not discriminatory. | SC doctrine: Leave is a privilege, not a right, unless statutory (SIL). |
| You propose to convert unused VL/SIL to cover the notice (i.e., be paid but no longer report for work) | 🤝 Possible only by written agreement. Common HR practice is to accept a “commutation in advance” or set‑off, but the law does not force acceptance. | |
| You resign for just cause (e.g., serious insult, inhuman treatment, or commission of a crime by employer) | 🚪 You may quit without notice, so leave‑credit offset is irrelevant. | Labor Code Art. 300 (b). |
| You walk out, citing leave credits, without employer consent | ⚠️ Risk: illegal abandonment, possible disciplinary action, forfeiture of benefits, damages. | SC cases emphasize that unilateral leave‑credit offset is invalid. |
4. Cash Conversion vs. Offset: Which Is Better Financially?
Conversion to cash
- Included in “final pay” under DOLE Labor Advisory 06‑20 (30 Jan 2020)—must be released within 30 days from separation.
- Tax‑exempt if it pertains to SIL up to 10 days per 2018 TRAIN amendments (NIRC § 32 (B)(7)(e)).
Offsetting notice
- Effectively pays you now (you don’t have to report) but you lose the salary for unused credits—same peso value unless you anticipate overtime premiums or allowances in those 30 days.
- Leaves critical tasks to remaining staff; may affect clearance smoothness or rehire prospects.
5. Steps for Employees Who Want to Use Leave Credits During the Notice Period
Review the handbook/CBA. Look for provisions on “terminal leave,” “offsetting,” or “commutation in advance.”
File a written request simultaneous with or shortly after your resignation letter. Specify:
- Dates you propose to be on leave
- Type and number of credits to be used
- Willingness to comply if disapproved
Secure written approval (email, memo, HRIS screenshot). No approval = you must report.
Turn over all tasks, assets, and passwords before your last physical day to avoid disputes.
Follow up on final pay and certificate of employment (COE). HR must issue the COE within 3 working days (Labor Advisory 06‑20).
6. Employer’s Perspective and Best‑Practice Pointers
Draft clear rules in the handbook:
- Whether VL/SIL can be offset against the notice and up to what limit (e.g., “maximum 10 days”).
- A clause that managerial positions require full turnover and therefore cannot be offset without explicit VP‑level approval.
- A cut‑off date for resignations near peak season (e.g., December) when offsets are disallowed.
Document consent: Sign a “notice‑period waiver” stating that the employee’s leave offsets X days and that the company waives work service for that span. This guards against future claims of constructive dismissal or underpayment.
Coordinate payroll: If offsets are permitted, treat the days as paid leave (not salary‑in‑lieu) so statutory deductions and 13th‑month accrual remain consistent.
7. Illustrative Scenarios
| Example | Outcome |
|---|---|
| Ana, rank‑and‑file, 5 unused VL days, resigns July 1 effective July 31. HR approves VL July 27‑31. | She works July 1‑26, is on paid leave July 27‑31, last day on payroll July 31. VL balance becomes zero; SIL (if any) is still convertible to cash at separation. |
| Ben, sales manager, 15 VL days, middle of peak cycle. HR denies offset but agrees to pay out VL. | Ben must report the full 30 days; VL balance is monetized in final pay released no later than Aug 30. |
| Carla, rank‑and‑file, resigns without notice citing intense harassment (just cause). | 30‑day notice not required; leave credits are all convertible to cash; employer may investigate harassment claim but cannot charge Carla with abandonment. |
| Dan files VL for entire notice period without waiting for HR reply and stops working. | Treated as AWOL; employer may deduct unserved notice days from final pay, impose disciplinary action, or even claim damages if business loss is proven. |
8. Frequently Asked Questions
| Question | Short Answer |
|---|---|
| Does the Labor Code force employers to allow leave usage during the notice period? | No. Approval is discretionary. |
| If HR rejects my leave, can I insist because I “earned” it? | No. Earning credits ≠ absolute right to schedule them. |
| Can I mix offset and cash conversion? | Yes, if policy allows (e.g., offset 5 days, cash‑out 10). |
| Do unused maternity/paternity leaves convert to cash? | Generally no; these are for the specific contingency only. |
| Will my 13th‑month pay be prorated if I offset? | Offset days count as paid days; they are still included in the 13th‑month computation. |
| Can the company deduct my unserved notice from my final pay? | Yes, if you failed to work the 30 days without employer waiver. |
9. Key Takeaways
- The 30‑day notice is a statutory obligation; leave credits do not automatically cancel it.
- Employer consent is the legal hinge: without it, offsetting leave credits is invalid.
- Employees should weigh the financial neutrality of converting to cash vs. offsetting, and the potential impact on references and goodwill.
- Employers should adopt clear, written policies to avoid disputes, and issue prompt, written waivers when they agree to offsets.
⚖️ Disclaimer: This article provides general information and is not a substitute for individualized legal advice. Labor‑management relations often turn on unique facts, CBAs, or company policies. When in doubt, consult a Philippine labor law practitioner or the nearest DOLE Regional Office.