Service incentive leave: who gets it and how it is paid
Employees who have worked at least one year are entitled to five days of paid service incentive leave a year. Unused days are convertible to cash at the end of the year.
The rule
Article 95 of the Labor Code gives every covered employee who has rendered at least one year of service a yearly leave of five days with pay. The employee can use it as vacation or sick leave.
Cash conversion
Days that are not used by year-end can be converted to cash.
Cash value = daily rate × unused days
Example: a daily rate of ₱1,000 and three unused days gives ₱3,000.
When the employer already gives leave
A company that already grants at least five days of paid vacation leave a year is not required to grant service incentive leave on top of it. Many companies grant more than five days as their own policy.
Keep in mind
- Coverage and exclusions are set in the law. Check them before you rely on a summary.
- Your policy can be more generous, but it cannot fall below the legal minimum for covered employees.
In OneHRIS
Leave types, credits and adjustments are handled under Time, then Leave Balances. See check and adjust leave balances.
Questions people ask
How many days of service incentive leave are required?
Five days with pay each year for employees who have rendered at least one year of service.
Can unused service incentive leave be paid out?
Yes. Unused days are commutable to their cash equivalent, usually at the end of the year or on separation, unless the employer already grants more than the minimum as paid vacation or sick leave.
Who is not covered?
The law lists exclusions, including government employees, managerial employees, field personnel, establishments regularly employing fewer than ten employees, and employers that already grant at least five days of paid vacation leave.
Sources
- Labor Code of the Philippines, Article 95 (right to service incentive leave)