The question of when a new employee first becomes entitled to vacation leave is one of the most common sources of confusion in Philippine employment law. The answer depends on whether the employer is bound only by the Labor Code’s minimum standards or has a more generous company policy (which almost all medium-to-large private employers and all government offices have).

1. The Labor Code Minimum Standard: Service Incentive Leave (SIL)

Article 95 of the Labor Code of the Philippines (Presidential Decree No. 442, as amended) provides the irreducible minimum:

“Every employee who has rendered at least one (1) year of service shall be entitled to a yearly service incentive leave of five (5) days with pay.”

Key points from the law and implementing rules:

The employee must complete at least twelve (12) months of service (continuous or broken, counted from date of hiring) before the 5-day SIL is earned.
The 5 days are earned only once the 12th month is completed. There is no automatic monthly accrual under the Labor Code.
The benefit is not pro-rated. If the employee resigns or is terminated at 11 months and 29 days, he/she is legally entitled to zero (0) days of paid SIL (though many companies voluntarily pro-rate anyway).
The SIL may be used for vacation or sick purposes. It is commutable to its monetary equivalent if unused at the end of the year.
Upon separation from employment, any unused SIL must be paid in cash. If the employee has served several years, all accumulated unused SIL must be paid.

Important exemptions (Art. 95 and DOLE Explanatory Bulletin):

Employees already enjoying vacation leave with pay of at least 5 days (most private companies fall under this — their VL policy is deemed compliance with SIL).
Establishments regularly employing less than 10 workers (unless they voluntarily grant it).
Domestic workers (kasambahay) — governed by the Kasambahay Law (RA 10361), which grants 5 days SIL after 1 year.
Government employees — governed by Civil Service rules (separate discussion below).
Field personnel, piece-rate workers, and managerial employees if they are paid vacation leave with pay in their contracts.

Supreme Court rulings confirming the “all-or-nothing” rule for the mandatory 5-day SIL:

Imasen Philippine Manufacturing Corp. v. Alcon (G.R. No. 194884, 22 October 2014)
Elegir v. Philippine Airlines (G.R. No. 181995, 16 July 2012)
JPL Marketing Promotions v. CA (G.R. No. 151966, 8 July 2005) — probationary period is included in computing the 1-year service requirement.

Therefore, purely under the Labor Code floor, a new employee becomes entitled to (mandatory) vacation-type leave only on his/her 12-month anniversary, and only to 5 days.

2. Reality in the Private Sector: Company Vacation Leave Policies (Almost Always More Generous)

In practice, 95%+ of medium and large private employers provide vacation leave (VL) + sick leave (SL) packages that far exceed the 5-day minimum, typically:

15 days VL + 15 days SL per year (most common)
10–20 days VL depending on tenure (banks, BPOs, multinationals often start at 15–20 days)

These company-granted leaves are considered as having absorbed/complied with the SIL requirement (DOLE Explanatory Bulletin on SIL, 1996).

Common crediting/availment schemes in private companies:

A. Monthly accrual (most common and employee-friendly)

1.25 days VL per month (for 15-day VL package)
Crediting usually starts on the first full month of employment or after completion of probation (3–6 months).
Example: Employee hired January 15, 2025 → first VL credit appears end of February 2025 (1.25 days). By December 2025, employee has 13.75 days credited (11 × 1.25).

B. Annual crediting on anniversary date

Full 15 days credited only on the employee’s 1st work anniversary.
Some companies allow “advance” availment during the first year (subject to liquidation if employee resigns early).

C. Crediting only after regularization/probation

Very common. Probation is usually 6 months (maximum allowed by law for rank-and-file).
Leaves start accruing only upon regularization (day 181 or day 183).
Some companies, however, credit leaves even during probation.

D. Immediate crediting upon hiring (rare but increasing, especially in BPOs and tech companies)

Full year’s leave (15–20 days) credited on day 1 or after 1–3 months.

Therefore, in actual Philippine practice, most new private-sector employees become entitled to vacation leave between the 1st and 6th month of employment, depending on the company policy.

3. Government Employees (National & Local Government, GOCCs with original charter)

Civil Service Commission rules (Omnibus Rules Implementing Book V of EO 292, as amended by CSC MC No. 41, s. 1998 and CSC MC No. 14, s. 2016):

15 days vacation leave + 15 days sick leave per year.
Leaves are credited monthly at 1.25 days VL and 1.25 days SL starting from the first month of employment.
A new government employee is therefore entitled to vacation leave from month 1 (1.25 days credited at the end of the first month).
Unused VL is cumulative without limit; cash conversion allowed up to maximum 10 days per year (monetization).

4. Special Cases

Probationary employees
Entitled to company VL/SL if the policy so states. Probationary period counts toward the 1-year service for mandatory SIL (JPL Marketing case).

Project employees / Seasonal employees
Entitled to pro-rated SIL equivalent to the length of their engagement if the project lasts at least 1 year. If multiple successive projects with same employer, service is tacked (continuous service doctrine).

Part-time employees
Entitled to SIL (and company VL) on a pro-rated basis based on hours rendered, provided they complete 1 year of service.

Resigned/Terminated before completing 1 year
Legally entitled to zero mandatory SIL. However, if company policy provides monthly accrual, the accrued VL is usually paid out or offset against final pay.

Employees with existing 5+ days VL policy
The mandatory SIL is deemed included in the VL. The employee follows whatever the company policy says about when VL credits are earned (monthly, after probation, etc.).

5. Payment of Unused Vacation Leave Upon Separation

Mandatory 5-day SIL portion: must always be paid in cash if unused, regardless of reason for separation (even dismissal for cause).
Excess vacation leave (above 5 days) granted by company: payable only if company policy or practice provides for it. The Supreme Court has ruled that if the policy is silent, the excess is not payable (Santos v. San Miguel Corp., G.R. No. 149416, 14 March 2008, and later cases). However, most companies now explicitly state in their handbook that unused VL is paid upon separation.

Summary Table: When New Employees Typically Become Entitled to Vacation Leave

Sector / Type	Earliest Entitlement to Vacation Leave	Typical Number of Days (First Year)
Pure Labor Code minimum	On 12-month anniversary	5 days (full, not pro-rated)
Private sector (most companies)	1st–6th month (monthly accrual or after probation)	7–15 days (pro-rated or full)
BPOs / Multinationals	Often from month 1 or month 3	15–20 days
Government (Civil Service)	End of first month (1.25 days credited)	15 days (full by end of year)
Domestic workers (Kasambahay)	After 12 months	5 days

In conclusion, while the Labor Code grants the absolute minimum of 5 days only after one full year of service, the overwhelming majority of Filipino employees in the formal sector become entitled to vacation leave much earlier — usually within the first six months — because employers provide significantly more generous policies that absorb the SIL requirement. The exact date is always determined by the employment contract, company handbook, or collective bargaining agreement.