Many employees don't realize they are entitled to paid leave by law — regardless of whether their company has a formal leave policy. The Service Incentive Leave (SIL) is one of the most overlooked yet widely applicable labor rights in the Philippines.
What Is Service Incentive Leave?
Service Incentive Leave is a statutory benefit under Article 95 of the Labor Code of the Philippines. It grants every qualified employee at least five (5) days of paid leave per year after completing one year of service.
Who Is Entitled to SIL?
Any employee in the private sector who has rendered at least one year of service — whether continuous or broken — is entitled to SIL, provided they are not covered by any of the exemptions below.
The one-year period may include the probationary period, depending on the nature of the employment arrangement.
Who Is NOT Entitled to SIL?
- Government employees (covered by Civil Service rules)
- Domestic workers (kasambahay) — covered by RA 10361
- Managerial employees
- Field personnel who work away from the principal establishment and whose hours cannot be determined
- Employees already enjoying vacation leave of at least five (5) days with pay
- Workers in establishments regularly employing fewer than ten (10) employees
If your employer already gives you a paid vacation or sick leave policy of 5 days or more per year, the SIL requirement is considered satisfied. They do not need to provide SIL in addition to an existing comparable benefit.
Can Unused SIL Be Converted to Cash?
Yes. This is called leave monetization. Under the Labor Code, unused SIL at the end of the year must be converted to its cash equivalent. The employee may choose to use it, carry it over (if company policy allows), or receive it as cash.
How to Compute SIL Monetization
- Determine the number of unused SIL days
- Compute the daily rate: Monthly Basic Salary ÷ 26 (or applicable working days per company policy)
- SIL Cash Value = Daily Rate × Number of Unused SIL Days
SIL vs. Company Leave Policies
| SIL (Legal Minimum) | Company Leave Policy | |
|---|---|---|
| Days per year | 5 days | Varies (may be more generous) |
| Required by law | Yes | No (must not be less than SIL) |
| Monetizable at separation | Yes | Depends on company policy |
| Applies after | 1 year of service | As specified by company |
SIL in Your Final Pay
When you leave your job, your employer must include the cash equivalent of your unused SIL in your final pay. This applies regardless of whether you resigned, were terminated, or retired. The final pay must be released within 30 days from the date of separation, per DOLE Labor Advisory No. 06-20.
Quick Summary
- Every qualified private-sector employee is entitled to 5 days of paid SIL per year after 1 year of service.
- Unused SIL must be converted to cash at the end of the year or upon separation.
- Field personnel, domestic workers, government employees, and those with equivalent leave benefits are excluded.
- SIL monetization is a required component of your final pay.
Use our Final Pay Calculator — or read more about 13th Month Pay, Separation Pay and How to Compute Final Pay.