Vacation Leave and Sick Leave Policy in the Philippines

PUBLISHED ON: September 30, 2020
LAST UPDATED ON: May 1, 2021

Vacation Leave (VL) is provided by the company to afford the employee to rest and relax and Sick Leave (SL) is to compensate employees who are unable to work on the designated work days. Vacation Leave (VL) and Sick leave (SL) may be given by an employer as an alternative to Service Incentive Leave (SIL).

Defining Vacation Leave and Sick Leave

What is Vacation Leave (VL) and Sick Leave (SL)?

There are different types of leave benefits mandated by the Labor laws in the Philippines. Quite interestingly however, Vacation Leave and Sick Leave is not explicitly mandated by the Labor Code. What is indicated in the Labor Code is Service Incentive Leave (SIL).

What is Service Incentive Leave (SIL)?

It is important to know about Service Incentive Leave (SIL) as it is the primary leave benefit mandated by the Labor Code of the Philippines and the minimum required by the General Labor Standards (GLS). According to Article 95 of the Labor Code regarding Service Incentive Leave (SIL):

(a) 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

(b) This provision shall not apply to those who are already enjoying the benefit herein provided, those enjoying vacation leave with pay of at least five days and those employed in establishments regularly employing less than ten employees or in establishments exempted from granting this benefit by the Secretary of Labor and Employment after considering the viability or financial condition of such establishment.

(c) The grant of benefit in excess of that provided herein shall not be made a subject of arbitration or any court or administrative action.

If you have Service Incentive Leave (SIL), it is unlikely you would have Vacation Leave (VL) and Sick Leave (SL) and vice versa.

How many Vacation Leave (VL) and Sick Leave (SL) should I receive?

As there is no explicitly mandated Vacation Leave (VL) and Sick Leave (SL) by the Labor Code of the Philippines or the Department of Labor and Employment (DOLE), there is no minimum or maximum number of leaves. However if Vacation Leave (VL) and Sick Leave (SL) offered is below what is mandated in the Labor Code regarding Service Incentive Leave (SIL) then the latter should be offered instead. What exempts employers is the following provision in the Omnibus Rules of the Labor Code:

[xxx]
(e) Those who are already enjoying the benefit herein provided;
(f) Those enjoying vacation leave with pay of at least five days; [xxx]

Section 1, Rule V, Book three (3) regarding "Conditions of Employment"

Entitlement of Vacation Leave (SL) and Sick Leave (SL)

When should I be entitled of Vacation Leave (VL) and Sick Leave (SL)?

The entitlement of Vacation Leave (VL) and Sick Leave (SL) is dependent upon the company policy or the Collective Bargaining Agreement (CBA).

Why does my company provide Vacation Leave (VL) and Sick Leave (SL) instead of Service Incentive Leave (SIL)?

The Labor Code only requires Service Incentive Leave (SIL) and not Vacation Leave (VL) or Sick Leave (SL). Providing VL and SL already exempts the employer from providing SIL.

So what is the basis of Vacation Leave (VL) and Sick Leave (SL) that almost every company provides to it's employees? It is simply the discretion of the company in order to entice retention of its employees as it is often more favorable to them.

Although on a side note, Government Human Resources / Civil Service offers such benefit and Labor Advisories from the Department of Labor and Employment (DOLE) mentions it.

Management of Vacation Leave (SL) and Sick Leave (SL)

Do I need a reason when filling my Vacation Leave (VL) or Sick Leave (SL)?

A good company practice is to allow the person to use their Vacation Leave (VL) or Sick Leave (SL) regardless of the reason or explanation as the company has provided such benefit; Disapproving the applied leave may lower morale of the employee. However, common practice is to ask for the reason of the leave application.

Can a filed Vacation Leave (VL) be disapproved?

Yes, it is under management prerogative of the company if they would approve Vacation Leave (VL) applications. Employers are allowed to plan out who would be allowed to avail the VL at a certain period or day to prevent any disruptions in the workplace.

Can my Vacation Leave (VL) or Sick Leave (SL) expire?

The expiration of Vacation Leave (VL) and Sick Leave (SL) is dependent on company policy. It can expire if unused based on the limitation as set by the employee handbook or Collective Bargaining Agreement (CBA) of the company.

Can I convert my Vacation Leave (VL) and Sick Leave (SL) to cash?

The Labor Code states that the company is already exempted from providing the five (5) SIL if they are enjoying more than what is required.

If strictly applied, Vacation Leave (VL) and Sick Leave (SL) should NOT be convertible to cash as it only applies to Service Incentive Leave (SIL) as they are not providing Service Incentive Leave (SIL); It is purely company policy or collective bargaining agreement that the leave benefits are convertible to cash.

Can Sick Leave (SL) be used for Vacation?

It is dependent on company policy should Sick Leave be used for vacation.

Does a resigned or retrenched employee still allowed to receive the cash equivalent of the remaining Vacation Leave (VL) and Sick Leave (SL)?

The receipt of the remaining cash equivalent to be added to your Final Pay is dependent on the company policy or the Collective Bargaining Agreement (CBA).

Miscellaneous

What is VL and SL?

VL and SL are acronyms for Vacation Leave and Sick Leave respectively

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