Philippine Labor Law Glossary
Definition: Service Incentive Leave (SIL) is the statutory benefit that generally gives a covered private-sector employee five paid leave days each year after at least one year of service. Unused statutory SIL is generally convertible to cash.
Full guide: Service Incentive Leave Philippines 2026: 5-Day SIL Rules, Cash Conversion & Calculator
Sa Filipino · Filipino Explanation
Ano ang Service Incentive Leave?
Ang Service Incentive Leave (SIL) ay karaniwang limang araw na bayad na leave bawat taon para sa covered private-sector employee na may hindi bababa sa isang taon ng serbisyo. Kapag hindi nagamit ang statutory SIL, karaniwan itong kino-convert sa cash.
Hindi lahat ng worker ay covered. I-check ang classification, laki ng establishment, existing vacation-leave benefit, at company policy.
LaborCode.ph practical tools
Check Your SIL Eligibility and Cash Value
Answer the questions below. This is a preliminary check under Article 95, not a final legal determination.
Unused SIL Cash Calculator
For employees with an established unused, payable SIL balance. Enter the balance from your leave record and the applicable daily salary rate at the date of conversion.
This calculator does not determine eligibility or automatically accrue leave. Pro-rata entitlement on separation may apply. Confirm records, rates, prior usage, and company benefits. See the full SIL guide and DOLE SEnA steps if a claim is disputed.
Basic Entitlement
Short answer: A covered employee is entitled to five paid days of Service Incentive Leave each year after at least one year of service under Article 95 of the Labor Code.
- Five paid days per year: this is the statutory minimum for a covered employee.
- One year of service: generally means at least 12 months of service, whether continuous or broken, counted from the date employment started. Authorized absences and paid regular holidays are included. If the establishment's working year by practice, policy, or contract is shorter than 12 months, that shorter period may be treated as one year under the implementing rules.
- Yearly benefit: once qualified, the employee receives the yearly SIL benefit while coverage continues.
- More favorable benefits are allowed: a contract, CBA, or company policy may give more than the statutory minimum.
For the full rule, examples, exclusions, and computation guidance, see the LaborCode.ph Service Incentive Leave guide.
Use or Cash Conversion
SIL may be used for sick leave, vacation leave, or other leave purposes, subject to reasonable company procedures for requesting and scheduling leave. The statutory benefit should not simply disappear under a “use it or lose it” rule.
If statutory SIL is unused or not exhausted at the end of the year, it is generally commutable to its monetary equivalent. If accrued SIL was neither used nor paid, the remaining amount may also be due upon resignation or separation.
Basic cash-conversion formula: unused SIL days × the employee's applicable daily salary rate at the date of conversion = SIL cash equivalent.
Example: if a covered employee has 5 unused SIL days and the applicable daily salary rate at conversion is ₱800, the basic SIL cash equivalent is ₱4,000 (5 × ₱800). Use the employee's lawful payroll rate or divisor when determining the daily salary rate; overtime pay, holiday premiums, and night-shift differential are separate premium-pay concepts and should not simply be added to the daily rate without a legal or policy basis.
The DOLE Statutory Monetary Benefits Handbook also recognizes that the basis for conversion is the salary rate at the date of conversion and that use or conversion may be handled on a pro-rata basis where applicable.
Coverage and Exceptions
Service Incentive Leave generally protects covered private-sector employees, especially rank-and-file employees, but Article 95 and its implementing rules contain important exclusions.
| Worker or situation | Article 95 SIL treatment |
|---|---|
| Covered private-sector rank-and-file employee with at least one year of service | Generally covered for five paid SIL days each year. |
| Managerial employee or qualifying member of managerial staff | Generally excluded when the employee meets the managerial tests in the implementing rules. |
| Government employee | Not covered by Article 95 SIL. Government personnel may have leave rights under Civil Service and other public-sector rules instead. |
| Employee of an establishment regularly employing fewer than 10 employees | Excluded from the statutory SIL requirement under Article 95, unless a company policy, contract, CBA, or other applicable rule gives the benefit. “Fewer than 10” means 1–9 employees; an establishment with exactly 10 is not excluded on this ground alone. |
| Field personnel or other employees whose time and performance are unsupervised, as defined by the rules | Generally excluded if the regulatory definition is actually met. |
| Employee already receiving the SIL benefit or at least five days of paid vacation leave | The employer may not need to add a separate extra five-day SIL bucket if the existing benefit satisfies the statutory requirement. |
| Employee covered by a more favorable contract, CBA, or company policy | The more favorable benefit may apply; Article 95 is a statutory floor, not a ceiling. |
Coverage should be based on the employee's actual duties and work arrangement, not merely a job title. When classification is disputed, keep the job description, reporting structure, schedules, time records, and leave policy.
Evidence That May Matter
| Evidence | Why it matters |
|---|---|
| Employment start date and service records | Show whether the one-year service requirement has been met. |
| Leave policy and employee handbook | Show whether an equivalent or better benefit already exists. |
| Leave ledger and approved requests | Show SIL earned, used and remaining. |
| Payroll and cash-conversion records | Show whether unused SIL was already paid. |
| Employment classification records | Help determine whether an exclusion may apply. |
| Final-pay computation | Shows whether accrued convertible SIL was included upon separation. |
Service Incentive Leave Compared with Vacation Leave and Sick Leave
SIL, vacation leave, and sick leave can overlap in everyday use, but they are not automatically the same legal benefit.
| Question | Service Incentive Leave (SIL) | Vacation Leave | Sick Leave |
|---|---|---|---|
| Legal basis | Statutory minimum under Article 95 for covered employees. | Usually created by company policy, contract, or CBA in the private sector. | Usually created by company policy, contract, or CBA in the private sector, subject to special laws that may apply in particular situations. |
| Minimum amount | Five paid days yearly after qualifying service. | No separate general Labor Code minimum beyond rules such as SIL. | No separate general Labor Code minimum for ordinary sickness. |
| Can it be used when sick or for vacation? | Yes. SIL may be used for sick, vacation, and other leave purposes. | Depends on policy. | Normally for illness or health-related absence under the employer's policy. |
| Unused balance converted to cash? | Generally yes for unused statutory SIL. | Depends on the policy, contract, or CBA unless the benefit is being used to satisfy SIL. | Depends on the policy, contract, or CBA. |
| Must an employer give SIL on top of existing leave? | Not always. If the employee already receives the statutory benefit or at least five days of paid vacation leave that satisfies Article 95, a separate additional five-day SIL benefit may not be required. | ||
Practical Example
Example: Mia is a covered private-sector rank-and-file employee. She completes one year of service and her employer does not provide a separate paid vacation-leave benefit that already satisfies Article 95. She becomes entitled to five days of SIL. If she uses two days, three statutory SIL days remain. If those three days are still unused at the employer's year-end conversion point, they are generally convertible to cash using the applicable salary rate at the date of conversion.
Common Misunderstandings
Misunderstanding: Every employee automatically receives five SIL days on the first day of work.
Correct approach: The statutory entitlement generally arises after at least one year of service.
Misunderstanding: Unused SIL always disappears at year-end.
Correct approach: Statutory SIL is generally commutable to its monetary equivalent if unused, subject to records and any more favorable policy.
Common Questions
What is service incentive leave?
Service Incentive Leave is the statutory five-day paid leave benefit under Article 95 for a covered employee who has rendered at least one year of service.
Who qualifies for service incentive leave?
A covered private-sector employee who has completed at least one year of service generally qualifies, unless an exclusion applies. Common exclusions include government employees, qualifying managerial employees, certain field or unsupervised personnel, employees in establishments regularly employing fewer than 10 employees, and employees already receiving the statutory benefit or at least five days of paid vacation leave.
What does “one year of service” mean?
It generally means at least 12 months of service, whether continuous or broken, counted from the date the employee started work. Authorized absences and paid regular holidays are included, subject to the implementing rules.
Can unused service incentive leave be converted to cash?
Yes, generally. Unused statutory SIL is commutable to its monetary equivalent. The salary rate at the date of conversion is the basis identified in the DOLE handbook.
Can an employer require employees to use SIL?
An employer may impose reasonable leave-request, scheduling, and approval procedures, but those procedures cannot erase the statutory minimum. If covered SIL remains unused, the cash-conversion rule still matters. A blanket “use it or lose it” approach should not be used to defeat Article 95.
Can SIL be used for any reason?
The DOLE handbook states that SIL may be used for sick, vacation, and other leave purposes. Employees should still follow reasonable notice and approval procedures unless an emergency or another applicable rule requires different treatment.
Is SIL separate from vacation leave and sick leave?
Legally, SIL is a statutory benefit while vacation and ordinary sick leave are usually company-policy, contract, or CBA benefits in the private sector. However, an employer that already grants at least five days of paid vacation leave may already satisfy the Article 95 minimum, so an additional five SIL days are not always required.
Does SIL accumulate every year?
The benefit is granted yearly once the employee is qualified. Unused statutory SIL is generally convertible to cash rather than simply forfeited. If an employer has a more favorable accumulation or conversion policy, that policy may control.
Is unused SIL included in final pay?
Accrued statutory SIL that remains unused and unpaid may be included in the amounts due upon resignation or separation, subject to coverage, records, and any more favorable policy.
Can an employer provide more than five days?
Yes. Contracts, collective bargaining agreements, and company policies may provide a more favorable leave benefit.
Continue Exploring
Related Glossary Terms
Practical Guides and Tools
Sources and Legal Citations
- Labor Code Book III — Conditions of Employment, Article 95 (LaborCode.ph statutory text and navigation).
- DOLE Handbook on Workers' Statutory Monetary Benefits (LaborCode.ph reference page for the official DOLE monetary-benefits handbook).
- Service Incentive Leave Philippines: Article 95 Guide (LaborCode.ph detailed guide, examples, exclusions, and related tools).
- Department of Labor and Employment — Book III, Conditions of Employment.
- Omnibus Rules Implementing the Labor Code — Rule V, Service Incentive Leave, Supreme Court E-Library.
- Auto Bus Transport Systems, Inc. v. Bautista, G.R. No. 156367, May 16, 2005, Supreme Court E-Library.
Sources rechecked as of: October 9, 2026
Disclaimer
This entry is general legal information, not legal advice. SIL coverage and conversion depend on the employee’s classification, existing benefits, establishment conditions and records.