How Many Paid Leaves Are Workers Entitled to Under the PH Labor Code?

(SPOT.ph) Not every company is as generous as the other when it comes to the provision of sick and vacation leaves, but have you ever wondered what the basis is for paid time off? With so many variations to paid time off (PTO), it can be good to check in with the law.

Now this might come as a shock, but there is actually no mention of sick and vacation leave in the Labor Code of the Philippines. Instead, Article 95 of the Labor Code introduces the Service Incentive Leave (SIL). This is outside of the legally mandated paternity, maternity, and solo-parent leaves as per different laws: the Paternity Act of 1996, R.A. 11210, and the Expanded Solo Parents Welfare Act.

According to the Department of Labor and Employment’s (DOLE) 2022 Handbook on the Statutory Monetary Benefits, “every employee who has rendered at least one (1) year of service is entitled to Service Incentive Leave of five (5) days with pay.” 

The 12 months of service can be continuous or broken as long as the clock begins at the start of the worker’s employment, which means maternity/paternity leaves, regular holidays, and weekends are part of the 365-day count. This also means no leave is mandated within the first 12 months of service.

The Labor Code isn’t explicit whether the SILs are prorated or not, but DOLE has since adopted this manner of computation based on previous labor court rulings: grant five SILs upon the employee's first year, then prorate SILs moving forward.

To put it simply, employees who have rendered 14 months of service are entitled to six SILs, as one SIL is equivalent to 2.4 months of service.

Also read: 4-Day Workweek Gets DOLE Support, How Will It Work?

Once entitled to SILs, employees can use them for whatever purpose. If left unused, the employer is required to pay the cash equivalent based on the employee’s daily salary rate. 

The case with other companies

Some global companies like Netflix and LinkedIn provide employees with an unlimited number of leaves with the condition that this privilege must not interfere with work.

Companies based in the Philippines aren't as lenient, but it's fairly common in the private sector to have 12 to 15 sick leaves and 12 to 15 vacation leaves upon regularization. The reason behind this more-than-generous offer is for companies to remain competitive in the tight labor market through better employee benefits. 

Of course, such incentives also can boost employee morale and satisfaction, which in turn, result in increased productivity in (and even loyalty to) the workplace. 

Some exemptions in the Labor Code

However, take note that there are a few exemptions to the SIL. This policy will not apply to government employees, field personnel, and those employed in small establishments with less than ten workers.

Employees who already enjoy more paid leave credits than prescribed by law (that is, more than five) are also no longer allowed to claim SILs. Think about it this way: SILs are the barest minimum when it comes to PTO, and companies that have better vacation policies would have no need for such law.

Increasing the number of paid leaves

There's a huge disparity between the private sector's 30 annual PTO versus the rest of the population's five—a concern that eventually gave rise to House Bill No. 988.

In November 2022, the House of Representatives approved the third and final reading of this bill seeking to increase the number of SILs from five to ten in Article 95 of the Labor Code.

“With the increase in the number of leave credits in the form of sick or vacation leaves left purely at the discretion of employers, employees constrained by limited leave credits are left vulnerable to sickness, emergencies, and other fortuitous events that would cost them a day of paid work,” Representative Mark Go said in the explanatory note of the bill. “The granting of paid leaves is not only beneficial to the employees but economically advantageous for employers as well.”

This isn’t the first time a bill of this nature was introduced. During the 18th Congress, a similar measure was sent to the Senate for consideration but was not approved due to the lack of material time.

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