The employee who has rendered at least one year of service is entitled to a yearly service incentive leave (SIL) of five days with pay.[1]

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Industry Practices: Some companies have policies or practices on vacation leaves or sick leaves. In the Labor Code, the service incentive leave is the equivalent of a vacation leave observed by these industries so long as it is not less than five days. On the other hand, as there is no provision for sick leaves in the law, these are discretionary on the employer.

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The SIL applies to all employees, except:[2]

  • Government employees, including GOCCs;[3]
  • Domestic helpers and persons in the personal service of another;[4]
  • Managerial employees;[5]
  • 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;[6]
  • If the employee already enjoys vacation leave of at least five days;[7]
  • If he is employed in an establishment regularly employing less than 10 employees;[8] and
  • If he is employed in an establishment exempted from granting SIL by the DOLE Secretary after considering the viability or financial condition of such establishment.[9]

For the purpose of the rule on service incentive leave, those who are exempted from the above list are referred to as “covered employees”.

The phrase “at least one year of service” refers to “service within 12 months, whether continuous or broken reckoned from the date the employee started working, including authorized absences and paid regular holidays unless the working days in the establishment as a matter of practice or policy, or that provided in the employment contract is less than 12 months, in which case said period shall be considered one year.”[10]

The SIL is commutable to its money equivalent if not used or exhausted at the end of the year.[11]

 

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[1] LABOR CODE. Article 95 (a).

[2] Ibid. Article 95 (b).

[3] IMPLEMENTING RULES OF BOOK III OF THE LABOR CODE, Section 1, Rule V.

[4] Ibid.

[5] Ibid.

[6] Ibid.

[7] LABOR CODE. Article 95 (b).

[8] Ibid.

[9] Ibid.

[10] IMPLEMENTING RULES OF BOOK III OF THE LABOR CODE. Section 3, Rule V.

[11] Ibid. Section 5, Rule V.