Primer on Service Incentive Leave

Every employee who has rendered at least one year of service shall be entitled to a yearly service incentive leave of five days with pay. Service incentive leave, as provided in Art. 95 of the Labor Code, is a yearly leave benefit of five (5) days with pay, enjoyed by an employee who has rendered at least one year of service.

At least one year of service

Sn employee is entitled to service incentive leave or SIL after one year of service. The term “at least one year of service” means service within twelve (12) months from the date the employee started working. It does not matter whether the service is continuous or broken. The computation includes authorized absences and paid regular holidays.

Establishments or employers covered

The general rule is this — service incentive leave pay is granted to workers in all establishments. There are a few exceptions and it’s only logical that unless specifically excepted, all establishments are required to grant service incentive leave to their employees. The exemptions provided in the Implementing Rules of the Labor Code are as follows:

  1. Those in government and any of its political subdivisions, including government-owned and -controlled corporations (GOCCs).
  2. Domestic helpers and persons in the personal service of another.
  3. Managerial employees.
  4. Field personnel and other employees whose performance is unsupervised by the employer including those who are engaged on task or contract basis, purely commission basis, or those who are paid in a fixed amount for performing work irrespective of the time consumed in the performance thereof. The phrase other employees whose performance is unsupervised by the employer must not be understood as a separate classification of employees to which service incentive leave shall not be granted. Rather, it serves as an amplification of the interpretation of the definition of field personnel under the Labor Code as those whose actual hours of work in the field cannot be determined with reasonable certainty. The same is true with respect to the phrase those who are engaged on task or contract basis, purely commission basis. Said phrase should be related with field personnel, which means that employees engaged on task or contract basis or paid on purely commission basis are not automatically exempted from the grant of service incentive leave, unless, they fall under the classification of field personnel. In order to conclude whether an employee is a field employee, it is also necessary to ascertain if actual hours of work in the field can be determined with reasonable certainty by the employer. In so doing, an inquiry must be made as to whether or not the employee’s time and performance are constantly supervised by the employer.
  5. Those who are already enjoying the benefit provided.
  6. Those enjoying vacation leave with pay of at least five (5) days.
  7. Those employed in establishments regularly employing less than ten (10) employees.

SIL Commutable to cash

If not used or exhausted at the end of the year, SIL is commutable to its money equivalent. The law does not prohibit its commutation. SIL is a curious animal in relation to other benefits granted by the law to every employee. In the case of service incentive leave, the employee may choose to either use his leave credits or commute it to its monetary equivalent if not exhausted at the end of the year. Furthermore, if the employee entitled to service incentive leave does not use or commute the same, he is entitled upon his resignation or separation from work to the commutation of his accrued service incentive leave.


  1. Good day Sir!

    I am in a certain multi purpose cooperative regular employee for two years and assigned in a rent a car company which 100% in control of us.
    I tried to file a 5 days incentive leave (vacation leave) this February 2014 and our rent a car assistant operation manager told me that I should sign a voluntary recall form.

    Is this Fair? if I sign a voluntary recall, what will happen to me.
    Will this put me in a floating status?

    What possible consequence will I be expecting then?

    Is this considered as management prerogative?

    How could I tackle this kind of management that are quite ignorant?

    Thank you Sir!

    Hoping to hear from you soon.

  2. Good afternoon, I’m working as a professor in college and the administration issues a memo stating that all employees with leave credits must file in advance a scheduled VL of 13 days on certain prescribed dates issued by the admin dept.failure to submit will automatically be given only 5 days service incentive leave and forfeits the remaining VL days. i want to ask if the mngt has full discretion to control the SIL earned by the employees to their dictated date/s of use? thanks and more power!

  3. If Managerial Employees are not entitled to service incentive leaves and other labor standards, what are the benefits they would enjoy…?

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