I. Introduction
In the Philippines, “vacation leave” (VL) after probation is not governed by a single, comprehensive statute. Instead, it sits at the intersection of:
- The Labor Code (especially on service incentive leave and probationary employment),
- Civil Service rules (for government workers), and
- Company-specific policies, CBAs, and employment contracts.
This article explains how vacation leave works once an employee passes probation, with emphasis on:
- What the law actually requires,
- What is usually just a company benefit, and
- How those rules apply in practice to different kinds of employees.
II. Statutory Framework on Leave
A. Service Incentive Leave (SIL) – the legal minimum
Under the Labor Code, the only universally applicable “vacation-type” leave for private-sector employees is the Service Incentive Leave (SIL):
- Minimum of 5 days leave with pay per year,
- Granted to employees who have rendered at least one (1) year of service,
- Convertible to cash if unused within the year (by law and jurisprudence),
- May be used as vacation or sick leave, at the employee’s option, subject to reasonable company procedures.
This SIL is not the same as company vacation leave. Companies can, and often do, provide more generous leave benefits, but the statutory minimum is 5 days.
B. SIL exclusions
Not all employees are covered by SIL. The Labor Code and implementing rules exclude, among others:
- Managerial employees and certain officers,
- Field personnel whose hours and workplace cannot be determined with reasonable certainty,
- Domestic helpers and persons in the personal service of another,
- Employees already enjoying at least 5 days of vacation leave with pay,
- Employees in establishments exempted by DOLE regulations in specific cases.
If an employee already enjoys at least 5 days of paid vacation leave per year, SIL is deemed satisfied and does not stack on top of that—unless the company policy expressly grants both separately.
III. Probationary Employment in the Philippines
A. Nature and duration
Under the Labor Code, probationary employment is allowed, typically up to a maximum of six (6) months, except in certain lawful exceptions (e.g., apprenticeship, learners). During this time:
- The employer may terminate the employee for a just or authorized cause or for failure to meet the reasonable standards made known at the time of engagement.
- If the employee continues working beyond the probation period without valid termination, they are deemed regular by operation of law.
B. Leave during probation
The Labor Code does not require employers to grant vacation leave during the probationary period. Common arrangements are:
- No vacation leave during probation, then full VL entitlement upon regularization;
- Pro-rated leave during probation, credited monthly;
- Full leave entitlement from Day 1, but often this is a more generous benefit than the law requires.
However, for SIL purposes, the probationary period counts as part of the “one year of service” needed to qualify for the 5-day service incentive leave.
IV. Vacation Leave After Probation – Private Sector
A. Regularization and entitlement
After probation, an employee typically becomes a regular employee. At this point, two layers of entitlements may exist:
Statutory minimum:
- Once the employee completes one (1) year of service (including probation), they become entitled to 5 days SIL with pay (if not excluded and not already enjoying equivalent or better leave).
Contractual / company-based vacation leave:
- The company may grant more than 5 days of paid vacation leave (e.g., 10, 15, or 20 days per year) as part of its benefits program, employment contract, employee handbook, or CBA.
After probation, the vacation leave benefit is primarily a matter of contract and policy, so long as it does not fall below the legal floor established by SIL.
B. Non-diminution of benefits
Once a vacation leave benefit is:
- practiced and consistently granted over time, or
- expressly written into contracts or policies,
the employer cannot unilaterally reduce or withdraw it if doing so would amount to diminution of benefits (which is prohibited if the benefit is: established, consistent, and not due to error).
Thus, if a company has historically given regular employees 15 days vacation leave per year, it cannot simply cut it down to 5 days without risking a violation of the non-diminution of benefits rule, unless done through a valid, mutual, and properly negotiated change (e.g., via CBA renegotiation).
C. Credit for probationary service
For most purposes, including SIL, service is counted from the date of first engagement, not from the date of regularization.
In practice, companies often:
- Start counting vacation leave entitlement from the date of regularization, or
- Allow pro-rated credits for the period after regularization within the first year.
However, for SIL:
- Once the employee hits one year of service, they’re entitled to SIL, even if part of that year was served as a probationary employee.
V. Coverage and Exclusions After Probation
A. Rank-and-file vs. managerial employees
- Rank-and-file employees (who are not excluded by the rules) are generally covered by SIL once they complete one year of service.
- Managerial employees may be excluded from SIL, so their vacation leave is purely contractual/benefit-based. If the company gives them 15 days vacation leave, that’s entirely because of policy or contract, not because of SIL.
B. Field personnel and others
Field personnel, such as those whose workplace and hours cannot be determined with reasonable certainty, may be excluded from SIL. For them, vacation leave is again a matter of company policy.
C. Employees already enjoying better leave benefits
If an employee (whether after probation or from Day 1) already enjoys at least 5 days of paid vacation leave per year:
- The law generally considers the SIL requirement complied with.
- SIL is no longer a separate entitlement, unless the employer clearly states that SIL is on top of other leaves.
VI. Accrual and Computation of Vacation Leave
How vacation leave is earned, credited, and computed is not detailed in the Labor Code (beyond SIL); it is determined by company policy, subject to basic principles of fairness and non-diminution.
A. Common accrual schemes
After probation, common schemes include:
Annual crediting
- Full year’s VL (e.g., 12 days) is credited at the beginning of the year or upon regularization.
- If hired mid-year, leave may be pro-rated (e.g., 1 day per month of service for the remainder of the year).
Monthly accrual
- VL is credited monthly (e.g., 1.25 days per month = 15 days/year).
- Some employers allow use of leave even if not yet fully earned; others require that the leave be earned first.
Anniversary-based crediting
- Some companies credit leave based on employment anniversary, not calendar year.
B. Pro-rating
Pro-rating is central to post-probation entitlements:
If regularization occurs mid-year, the employee usually earns only the proportionate number of VL days for the remainder of the year.
Upon resignation or termination, unused VL is typically computed pro-rata, based on:
- Days earned up to the last day of service, minus days already used.
C. Pay rate for vacation leave
When vacation leave is used:
- The employee is paid their current daily rate for each day of approved leave.
- Company policy determines whether the rate includes or excludes specific allowances (though some allowances that are considered part of “regular wage” may need to be included for SIL and final pay computations, depending on jurisprudence).
VII. Scheduling and Approval of Vacation Leave
A. Management prerogative vs. employee rights
Vacation leave is a right, but its timing is subject to management prerogative for legitimate business reasons.
Typical rules:
- Employees must file a leave application in advance (e.g., 5–10 days prior).
- Approvals may depend on staffing needs, peak seasons, scheduled audits, etc.
- Employers may adopt blackout dates (e.g., peak retail seasons, inventory days).
The employer cannot unreasonably or arbitrarily refuse all vacation leave; doing so may undermine the purpose of the benefit and could be questioned if it appears discriminatory or in bad faith.
B. Vacation leave vs. emergency leave
Some employers differentiate:
- Planned vacation leave – needs approval in advance;
- Emergency leave – used for sudden events; may be approved after the fact but still charged to VL credits if allowed.
If not specified in policy, “vacation leave” is usually understood as pre-approved personal time off, and not all sudden absences can be treated as vacation leave at the employee’s unilateral insistence.
VIII. Carry-Over, Forfeiture, and Commutation
A. SIL – legal rule
For SIL (the statutory 5 days):
- If unused at the end of the year, it is commutable to cash, i.e., the employee is entitled to its monetary equivalent.
- Many companies include SIL in a broader pool of leave days, then at year-end either convert unused days to cash or allow carry-over, depending on policy.
B. Company vacation leave
For company-granted vacation leave (beyond SIL), the rules on carry-over and forfeiture depend on policy or CBA, subject to reasonableness and non-diminution:
Use-it-or-lose-it policy
- Unused VL may be forfeited at year-end.
- Must be applied fairly and consistently, and usually with notice.
- Careful: this cannot defeat the statutory requirement to commute at least the SIL portion, unless the employee already enjoyed equivalent leave.
Carry-over with cap
- Employees can carry unused VL to the next year, up to a maximum (e.g., 10 or 15 days).
- Any excess may be forfeited or commuted to cash, depending on policy.
Full commutation to cash
- At year-end, all or part of unused VL is converted to cash.
C. Vacation leave upon separation
Upon resignation, retirement, or termination (whether authorized or not, subject to legality):
- All earned but unused leave credits (SIL and company VL) are usually converted to cash and included in the final pay, following company policy and law.
- Employers commonly include unused leave in the computation of 13th month pay only if it forms part of “basic salary earned,” depending on how the payroll and policies are structured.
IX. Interaction with Attendance, Absences, and Discipline
A. Authorized vs. unauthorized absences
After probation, vacation leave is normally part of an attendance and discipline system:
B. Tardiness and undertime
Tardiness and undertime are usually governed by separate timekeeping rules. Some employers allow:
- Conversion of accumulated tardiness/undertime to leave credits or vice versa,
- But this is a policy choice, not a legal requirement.
C. Probationary absences affecting regularization
While the article focuses on after probation, it’s useful to note that:
- Excessive absences or misuse of leave during probation may lead an employer to not regularize an employee if attendance is part of known performance standards.
- Once regular, leave misuse may lead to disciplinary action, but benefits already granted cannot be withdrawn arbitrarily.
X. Government Employees (Civil Service Context)
For employees in the public sector, vacation leave after probation (or equivalent period) is governed primarily by Civil Service Commission (CSC) rules, not the Labor Code. Key distinctions:
- Government employees generally enjoy at least 15 days vacation leave and 15 days sick leave per year, with full pay, accruing monthly.
- Accrual often starts once the employee becomes permanent/regular in their plantilla position, though hiring mechanisms (casual, contractual, job order) may differ.
- Accumulated leave credits can usually be carried over indefinitely and converted to cash (terminal leave pay) upon separation, subject to rules.
Thus, the vacation leave framework for public servants is significantly more generous than the statutory minimum for many private-sector employees.
XI. Special Employment Arrangements
A. Project and seasonal employees
For project-based or seasonal workers:
- SIL may still apply if they meet the one-year service requirement, depending on continuity of service and coverage.
- Vacation leave beyond SIL is still a matter of contract.
- If the worker does not reach one year of service, there is no statutory SIL entitlement, and VL is purely a contractual benefit.
B. Fixed-term employees
Fixed-term contracts (e.g., 1-year contracts) may:
- Provide pro-rated vacation leave proportional to the contract duration, or
- Provide a lump sum leave entitlement for the term.
If the fixed-term employee completes one year of service and is covered by SIL rules, they become entitled to SIL, even if their contract is not renewed afterward.
C. Part-time employees
The Labor Code doesn’t comprehensively detail part-time leave mechanics, but in practice:
- Leave may be pro-rated based on work hours or days (e.g., a part-timer working 3 days a week might earn leave based on that schedule).
- For SIL, eligibility hinges on the length of service, not hours per day, although coverage and exclusions can still apply (e.g., field personnel).
XII. Documentation, Policies, and Contracts
A. Importance of written policies
Because much of vacation leave after probation in the Philippines is policy-driven, clear documentation is crucial:
Employee handbooks and HR manuals should spell out:
- Number of VL days per year,
- Accrual method (annual, monthly, etc.),
- Rules on scheduling and approval,
- Carry-over, forfeiture, and cash conversion,
- Treatment of leave upon resignation or termination.
Employment contracts may highlight key leave entitlements, especially for managerial or specialized employees whose packages differ from the standard.
B. Consistent implementation
Even a good policy can become problematic if:
- It is applied inconsistently between employees or departments, or
- The employer silently tolerates more generous practices than written (which can create a new “established benefit” that cannot later be unilaterally withdrawn).
Consistency is key to avoiding claims of discrimination or bad faith, and to preventing arguments that a more generous, unwritten benefit has become vested.
XIII. Practical FAQs
1. Does passing probation automatically give me vacation leave?
Not automatically by law. Passing probation makes you a regular employee, but the amount and timing of vacation leave depends on your company policy and contract, subject to the SIL rules once you’ve completed one year of service (if you are covered and not excluded).
2. Is my one-year service for SIL counted from my first day or from regularization?
Service is counted from the date of first engagement—so the probationary period is included in computing the one-year period needed for SIL.
3. If I already get 15 days of paid vacation leave, do I still get an extra 5 days SIL?
Usually no, because your existing 15 days already exceed the 5-day SIL minimum. SIL will typically be considered integrated in your VL unless the company expressly grants SIL on top of other leave.
4. Can my employer refuse my vacation leave request?
Yes, the employer can deny or reschedule a vacation leave request for valid business reasons (management prerogative), but cannot completely deny the leave benefit in practice or do so in a discriminatory or arbitrary manner.
5. What happens to my unused leave when I resign?
Generally, all earned and unused leave credits (SIL and VL) are converted to cash in your final pay, following company policy and the legal requirement to commute SIL.
6. Can the company reduce our vacation leave entitlement?
It is legally risky to reduce established benefits. If VL has been consistently granted over time, reducing it may constitute illegal diminution of benefits, unless done through proper negotiation and justified changes with employee consent or via a new CBA.
XIV. Conclusion
Vacation leave entitlements in the Philippines after probation are a blend of:
- Statutory rights (most notably the 5-day service incentive leave after one year of service for covered employees), and
- Contractual and policy-based benefits granted by employers or required under Civil Service rules for public-sector employees.
Once an employee becomes regular, their vacation leave entitlements are generally more stable and protected—especially under the non-diminution of benefits principle—but remain heavily influenced by how the company’s policies are drafted and implemented.
For specific situations, especially where there are disputes or unusual arrangements (e.g., multiple fixed-term contracts, complex project-based engagements, or unclear policies), it is prudent to consult a qualified Philippine labor law practitioner or directly check the latest DOLE or CSC issuances and applicable CBAs.