MEAL PERIOD

our questions can be answered by an evaluation of the provisions of the Labor Code of the Philippines.
Article 85 thereof mandates that it shall be the duty of the employers to give its employees not less than
60 minutes time-off for their regular meals. The employees can use this period to have their lunch and
to take a rest so they may be more efficient in doing their respective jobs. A 60-minute meal period is
considered as a time-off or non- compensable time. The Implementing Rules of the Labor Code allows a
meal period of less than 60 minutes in some cases but such shortened meal period, say 30 minutes,
should be with full pay (Azucena, Everyone’s Labor Code, Fourth Edition, page 66)

Section 7, Rule I of the Implementing Rules of Book III of the Labor Code enumerates the instances
where a shorter meal period may be given by the employer to its employees.

Sec. 7. Meal and Rest Periods. – Every employer shall give his employees, regardless of sex, not less than
one hour time-off for regular meals, except in the following cases when a meal period of not less than
twenty (20) minutes may be given by the employer provided that such shorter meal period is credited as
compensable hours worked of the employee:

a. Where the work is non-manual work in nature and does not involve strenuous physical exertion;
b. Where the establishment regularly operates not less than sixteen (16) hours a day;

c. In cases of actual or impending emergencies or there is urgent work to be performed on machineries,

equipment or installations to avoid serious loss which the employer would otherwise suffer; and
d. Where the work is necessary to prevent serious loss of perishable goods.

Rest periods or coffee breaks running from five (5) to twenty (20) minutes shall be considered as
compensable working time.

You may choose to give your employees a 60-minute off as their meal period or a shorter period
depending upon the circumstances of the business that you are planning to put up. In either case, you
should give to your employees the benefits that they are duly entitled to especially those mandated by
the Labor Code of the Philippines and other laws.

OVERTIME PAY

Man is not a machine. At the end of the day, he has to rest to rejuvenate and prepare himself for
tomorrow’s work. That is why labor standard laws in many countries set up maximum hours of
work for employees. In the Philippines, our Labor Code fixed the maximum at eight (8) hours a
day (see Article 83, Labor Code of the Philippines) for six consecutive work days (Article 91,
LCP). If the employee works beyond eight hours, the employer is required to pay an additional
compensation equivalent to the employee’s regular wage plus at least twenty-five percent (25%)
of such regular wage. The rate is increased to thirty percent (30%) if the worker renders overtime
on a holiday or rest day. (Article 87, LCP).  

Who are covered?

All employees in all establishments and undertakings whether for profit or not are entitled to
overtime pay for work rendered beyond eight (8) hours. But this does not apply to managerial
employees, field personnel, members of the family of the employer who are dependent on him
for support, domestic helpers, persons in the personal service of another, and workers who are
paid by results. Employees in the government are also entitled to overtime pay but they are
governed by Civil Service laws and rules. Only employees in the private sector are covered by
the Labor Code.

Special rules for health personnel

For health personnel in (1)cities and municipalities with a population of at least one million
(1,000,000) or in (2)hospitals and clinics with a bed capacity of at least one hundred (100), their
normal hours of work are eight (8) hours a day, for five (5) days a week, exclusive of time for
meals. (Article 83, LCP)

Health personnel includes resident physicians, nurses, nutritionists, dietitians, pharmacists, social
workers, laboratory technicians, paramedical technicians, psychologists, midwives, attendants
and all other hospital or clinic personnel.

Overtime work by health personnel included in the two abovementioned instances is, as a rule,
not allowed since it involves strenuous physical work considering the number of patients or
clients they must attend to.  However, they may be compelled to work beyond such hours where
the exigencies of the service require that they work for six (6) days or forty-eight (48) hours. But
the employer is required to pay an additional compensation of at least thirty percent (30%) of
their regular wage for work on the sixth day.

Can an employee be compelled to render overtime?

When an employee spends additional time for work, he puts in more physical and mental effort.
It is but proper that he be compensated for that. He is also delayed in going home and cannot
spend time with family and enjoy the comforts of his home. As such, the law discourages
employers to require employees to work overtime. Generally, he cannot compel the employee to
render overtime, except in certain instances (Sec 10, Rule I, Bk. III, IRR) to wit:

1) When the country is at war or when any other national or local emergency has been declared
by the National Assembly or the Chief Executive;

2) When overtime work is necessary to prevent loss of life or property, or in case of imminent
danger to public safety due to actual or impending emergency in the locality caused by serious
accident, fire, floods, typhoons, earthquake, epidemic or other disaster or calamities;
3) When there is urgent work to be performed on machineries, installations, or equipment, in
order to avoid serious loss or damage to the employer or some other causes of similar nature;

4) When the work is necessary to prevent loss or damage to perishable goods;

5) When the completion or continuation of work started before the 8th hour is necessary to
prevent serious obstruction or prejudice to the business or operations of the employer;

6) When overtime work is necessary to avail of favorable weather or environmental conditions

where performance or quality of work is dependent thereon.

Can an employee insist on working overtime?

The employee cannot compel his employer to allow him to work overtime when the
circumstances does not require him to do so as when there is actually no work to be performed.

Under time cannot be offset by overtime

Under time work on any particular day shall not be offset by overtime work on any other day
(Article 88, LCP). The reason behind this is fairness. If the employee works for less than eight
hours, he will be paid only for the corresponding number of hours he had actually worked. If on
another day he works beyond the maximum hours, he should be given additional compensation.

Non-payment of overtime pay is not only illegal but also contrary to public policy. The employer
cannot use the overtime to offset the under time because payment of overtime pay is mandatory.
However, he may either deduct the under time from the wage of the employee, or through other
approaches. Although these methods are not provided by law, these may be found in company
policies or established by company practices.

Computation of wages

The computation of overtime pay, pay for work done on holidays, premium on nightshift and
13th month pay are set out by the following rules:

Computing Overtime:

On Ordinary Days

Number of hours in excess of 8 hours (125% x hourly rate)

On a rest day, special day or regular holiday

Number of hours in excess of 8 hours (130% x hourly rate)

Computing pay for work done on:

A special day (130% x basic pay)

A special day, which is also a scheduled rest day (150% x basic pay)

A regular holiday (200% x basic pay)

A regular holiday, which is also a scheduled rest day (260% x basic pay)

Computing Night Shift Premium Where Night Shift is a Regular Work:

On Ordinary day (110% x basic hourly rate)

On a rest day, special day, regular holiday (110% of regular hourly rate for a rest day, special
day, regular holiday)

Computing Overtime on Night Shift:

On ordinary day (110%) x overtime hourly rate)

On rest day, special day or regular holiday (110% x overtime hourly rate for rest days, special
days, regular holidays)

Computing 13th Month Pay:

Total basic salary earned for the year exclusive of overtime, holiday, and night shift differential
pay divided by 12 = 13th month pay.

HOLIDAY PAY

omputation of pay for holidays: Regular, special non-working, special working

Published by Atty. Fred July 28th, 2006 in Corporate and Investments and Litigation and Labor Law. 14 Comments
29Share

One of the more confusing matters, for employees and HR people alike, is the computation of
holiday pay, complicated by the fact that there are different “kinds” of holidays. This is cleared
by Memorandum Circular No. 1 of the Department of Labor and Employment (DOLE), the
full text of which is reproduced and discussed below.

MEMORANDUM CIRCULAR NO. 01

(8 March 2004)

Pursuant to the provisions of the Labor Code, as amended in relation to the observance of
declared holidays and in response to the queries received every time a Presidential Proclamation
or a law is enacted by Congress which declares certain days either as a regular holiday, a special
day or a special working holiday, the following guidelines shall be observed by all employers in
the private sector:

1. For regular holidays as provided for under EO 203 (incorporated in EO 292) as amended by
RA 9177:

New Year’s Day – January 1

Maundy Thursday – Movable Date
Good Friday – Movable Date
Araw ng Kagitingan – April 9
Labor Day – May 1
Independence Day – June 12
National Heroes Day- Last Sunday of August
Bonifacio Day – November 30
Eidul Fitr – Movable Date
Christmas Day – December 25
Rizal Day – December 30

the following rules shall apply:

1. If it is an employee’s regular workday

* If unworked – 100%
* If worked

 1st 8 hours – 200%

 excess of 8 hours – plus 30% of hourly rate on said day

2. If it is an employee’s rest day

* If unworked – 100%
* If worked

 1st 8 hours – plus 30% of 200%

 excess of 8 hours – plus 30% of hourly rate on said day

2. For declared special days such as Special Non-Working Day, Special Public Holiday, Special
National Holiday, in addition to the two (2) nationwide special days (November 1, All Saints
Day and December 31, Last Day of the Year) listed under EO 203, as amended, the following
rules shall apply:

1. If unworked

* No pay, unless there is a favorable company policy, practice or collective bargaining

agreement (CBA) granting payment of wages on special days even if unworked.
2. If worked

* 1st 8 hours – plus 30% of the daily rate of 100%

* excess of 8 hours – plus 30% of hourly rate on said day

3. Falling on the employee’s rest day and if worked

* 1st 8 hours – plus 50% of the daily rate of 100%

* excess of 8 hours – plus 30% of hourly rate on said day

3. For those declared as special working holidays, the following rules shall apply:

For work performed, an employee is entitled only to his basic rate. No premium pay is required
since work performed on said days is considered work on ordinary working days.

Please be guided accordingly.

———————–

Note: If you still don’t know it yet, one of the more helpful government websites is that of the
DOLE. It boasts of useful features such as the Frequently Asked Questions (FAQs), and, to my
delight, a fully functional email-query system.

To test the email-query system, I sent a query regarding holiday pay for regular holidays falling
on the employee’s rest day (in this case, 29 April 2006, Araw ng Kagitingan). In an hour or so, I
received a reply. Here’s my e-mail:

Gentlemen:

I write in connection with DOLE Memorandum Circular No. 01, which provides a summary of
an employee’s entitlement to holiday pay for regular, special working and special non-working
holidays.

As stated in said Circular, if a regular holiday falls on an employee’s rest day and it is
UNWORKED, the employee receives 100% of his/her daily salary. This, however, has caused
confusion because some MONTHLY-paid employees believe that they are entitled to an
additional payment of one day. This is exacerbated by the news item which appeared on 7 April
2006 on your website (“DOLE issues Araw ng Kagitingan pay rules“), which states that “[i]f the
day falls on an employee’s rest day and is unworked, he or she is paid on that day. xxx” Kindly
clarify that there should be a distinction between monthly-paid and daily-paid employees, as the
former is deemed paid for the entire month, even on regular holidays.

Your usual prompt action on this matter is highly appreciated.

Here’s the reply:

Dear Mr. Pamaos:

Good afternoon.

Anent your query, MONTHLY PAID EMPLOYEE refers to one who is paid his wage or salary
for every day of the month, including rest days, Sundays, regular or special days, although he
does not regularly work on these days.

DAILY PAID EMPLOYEE refers to one who is paid his wage or salary only on the days he
actually worked, except in cases of regular holidays wherein he is paid his wage or salary even if
he does not work during those days, provided that he is present or on leave of absence with pay
on the working day immediately preceding the regular holiday.

As distinguished from monthly-paid employees who are assured of being paid for every day of
the month, the provision of the Labor Code on holiday pay is principally intended to benefit a
daily-paid employee who is normally bound by the principle of “no work no pay”. Before the
advent of the Labor Code, they are not paid for unworked regular holidays.

We hope that this answers your query.

Please be informed that our opinion on the matter is strictly advisory and may not be invoked in
any court of law or before any administrative body.

Thank you for writing.

Legal Service, DOLE

By the way, please note that the opinion contained in the reply is merely “advisory” and, for one
reason or another, you may not necessarily agree that it’s correct.

Nevertheless, credit must be given where it is due. Congratulations to the DOLE’s electronic
portal team.

Chapter II
WEEKLY REST PERIODS

Art. 91. Right to weekly rest day.

1. It shall be the duty of every employer, whether operating for profit or not, to provide each of
his employees a rest period of not less than twenty-four (24) consecutive hours after every six (6)
consecutive normal work days.

2. The employer shall determine and schedule the weekly rest day of his employees subject to
collective bargaining agreement and to such rules and regulations as the Secretary of Labor and
Employment may provide. However, the employer shall respect the preference of employees as
to their weekly rest day when such preference is based on religious grounds.

Art. 92. When employer may require work on a rest day. The employer may require his
employees to work on any day:

1. In case of actual or impending emergencies caused by serious accident, fire, flood, typhoon,
earthquake, epidemic or other disaster or calamity to prevent loss of life and property, or
imminent danger to public safety;

2. In cases of urgent work to be performed on the machinery, equipment, or installation, to avoid

serious loss which the employer would otherwise suffer;

3. In the event of abnormal pressure of work due to special circumstances, where the employer
cannot ordinarily be expected to resort to other measures;

4. To prevent loss or damage to perishable goods;

5. Where the nature of the work requires continuous operations and the stoppage of work may
result in irreparable injury or loss to the employer; and

6. Under other circumstances analogous or similar to the foregoing as determined by the

Secretary of Labor and Employment.

Art. 93. Compensation for rest day, Sunday or holiday work.

1. Where an employee is made or permitted to work on his scheduled rest day, he shall be paid
an additional compensation of at least thirty percent (30%) of his regular wage. An employee
shall be entitled to such additional compensation for work performed on Sunday only when it is
his established rest day.

2. When the nature of the work of the employee is such that he has no regular workdays and no
regular rest days can be scheduled, he shall be paid an additional compensation of at least thirty
percent (30%) of his regular wage for work performed on Sundays and holidays.

3. Work performed on any special holiday shall be paid an additional compensation of at least
thirty percent (30%) of the regular wage of the employee. Where such holiday work falls on the
employee’s scheduled rest day, he shall be entitled to an additional compensation of at least fifty
per cent (50%) of his regular wage.

4. Where the collective bargaining agreement or other applicable employment contract stipulates
the payment of a higher premium pay than that prescribed under this Article, the employer shall
pay such higher rate.

Night shift differential

 Philippine Labor Law and Jurisprudence

If a particular rule in computing overtime pay is provided in the CBA, this rule with prevail.
(Shell Oil Workers Union vs. Shell Oil Co., 70 SCRA 223). The comprehensive guidelines for
determining the components of regular wage as basis for overtime pay were outlined in
Philippine National Bank vs. PEMA, 115 SCRA507, thus: First, the pertinent stipulations in the
CBA are controlling, provided the result is not less than the statutory requirement;

In the absence of any specific provision in the CBA, what are decisive are two germane
considerations: a) whether or not the additional pay is for extra work done or services rendered;
and b) whether or not the same is intended to be permanent and regular, not contingent nor
temporarily and given only to remedy a situation which can change anytime.
Hence, COLA and longevity pay are excluded as unrelated to work done or services rendered.
(PNB vs. PEMA, supra) In an En Banc resolution, the Supreme Court held that "productivity
bonuses" are generally tied to the productivity or capacity for revenue production of a
corporation; such bonuses closely resemble profit-sharing payments, and have no clear, direct or
necessary relation to the amount of work actually done by each individual employee. (Phil.
Duplicators Inc. vs. NLRC, 241 SCRA 380). The decision in the PEMA case did not state when
the additional pay is considered permanent and regular implicitly leaving this question to be
resolved on a case-to-case basis. But in the NAWASA case, supra, it was held that extra benefits
given for at least three months were deemed to be regular.

11. NIGHT SHIFT DIFFERENTIAL. Every employee shall be paid a night shift differential of
not less than 10 percent of his regular wage for each hour worked between ten o'clock in the
evening and six o'clock in the morning of the following day. This additional compensation
recognizes the universal fact that regular, normal and ordinary work is that performed during the
day, and that work done at night is very exceptional and justified only on grounds of inevitable
necessity. When there is no other alternative but to perform night work. It is but just that the
worker should earn a greater pay than for ordinary work to compensate him to some extent for
the inconvenience. (Shell Co. of the Phil. vs. National Labor Union, 81 Phil. 315)

Excepted from this rule are the following: a) government employees in the civil service; b) those
of retail and service establishments regularly employing not more than five workers; c) domestic
helpers and persons in the personal service of another, d) managerial employees as defined in
Book Ill of the Code; and e) field personnel and other employees whose time and performance
are unsupervised by the employer; including those who are engaged on task or control basis,
purely commission basis, or those who are paid a fixed amount for performing work irrespective
of the time consumed in the performance thereof (Book Ill, Rule 2, Sec. 1 OR).

When night work coincides with an employee's overtime work, l shall be entitled to his regular
wage plus at least 25 percent thereof and an additional amount of no less than 10 per cent of such
overtime rate for each hour of work performed between 10 P.M. and 6 A.M. When night work is
performed during an employee's rest day, or on national days, he shall be paid an additional
compensation equivalent to his regular wage plus at least 30 percent, and an additional amount of
not less than 10 percent of such premium pay for each hour of the night period covered. By the
same token, for night work during regular holidays, an employee shall be entitled to his holiday
pay plus an additional compensation of no less than 10 percent of such pay for each hour of the
night period covered (Book III, Rule 2, Sec. 3-5 OR). In a proper case, receipt by an employee of
overtime pay will not preclude his right to night differential pay. The latter is payment for work
done during the night, and the former is payment for the excess of the regular eight-hour work.
(NARIC vs. Workers Union, 105 Phil. 891)
An employer is not justified in withdrawing or reducing any benefits, supplements or payments
as provided in existing individual or collective agreements or employer practice or policy by
reason of this statutory policy.

CHAPTER VI WEEKLY REST PERIODS

1. RIGHT TO A WEEKLY REST DAY. It is the duty of every employer, whether operating for
profit or not, to provide each of his employees a rest period of not less than 24 consecutive hours
after every six consecutive normal work days (Art. 91-a LC). The provision does not specify the
rest day, unlike its repealed forerunner, the Blue Sunday Law (Rep. Act No. 946). In this
manner, the Labor Code reflects its developmental character by promoting economic activities
throughout the week, instead of only during six days thereof. Moreover, this requirement induces
employers to hire one more worker to take the place of the worker who is on his rest day in a
seven-day operation schedule. At the same time, it fulfills the worker's need for rest to restore his
energies after a sustained period of work. Hence, a worker's rest day could be any day other than
Sunday which is generally no longer a rest day but a regular working day. However, there are
cases when Sunday could still be a worker's rest day viz:

a) if it is the regularly designated rest day; b) if it is determined as the rest day through the
worker's preference based on religious grounds; and c) when it is deemed the rest day for
employees with irregular work schedules.

2. DESIGNATION OF REST DAY. The employer shall determine and schedule the weekly rest
day of his employees subject to the collective bargaining agreement and to the rules and
regulations of the Secretary of Labor. However, the employer shall respect the preference of
employees as to their weekly rest days when such preference is based on religious grounds.
When the weekly rest schedule is given to all employees simultaneously this shall be announced
by the employer by means of a written notice posted conspicuously in the workplace at least one
week before it becomes effective. If assigned individually, the employer shall post written
notices of the employees" respective schedules in the same manner (Book II, Rule 3. Sec. 3 OR).
Where the choice of employees as to their rest day based on religious grounds will inevitably
result in serious prejudice or obstruction to the operations of the understanding, and the employer
cannot normally be expected to resort to other remedial measures, the employer may so schedule
the weekly rest day of their choice for at least two days in a month (Book II, Rule 3, Sec. 4 OR).

3. WORK ON A REST DAY. Generally an employee cannot be compelled to work on his rest
day. However, he may be required to do so in the emergency and exceptional conditions
described in Art. 92 of the Labor Code. The rules are silent as to whether employees are entitled
to premium pay in these urgent cases. It is noteworthy that it mentions additional compensation
only in cases where an employee volunteers to work on his rest day "under other circumstances"
(than those emergency conditions enumerated). The implication appears to be that in those
enumerated cases no premium pay is forthcoming since they are contingencies affecting lives,
properties, and the jobs of the employees concerned, which call for volunteer services extended
without compensation. (Book III, Rule 3, Sec. 6 OR).

Under circumstances other than the foregoing, where an employee volunteers to work on his rest
day, he should express such desire in writing, in which case he shall be entitled to premium pay
(Book HI, Rule 3, Sec. 6 OR).

4. ADDITIONAL COMPENSATION FOR WORK ON REST DAYS. An employee who is

required or permitted to work on his scheduled rest day shall be paid with an additional
compensation of at least 30 percent of his regular wage. If he works on a Sunday, he. is entitled
to such additional compensation only when Sunday is his established rest day (Book HI, Rule 3,
Sec. 7 OR). When an employee works on a scheduled rest day falling on a national special day,
he shall be entitled to an additional compensation of 50 percent of his regular wage. When he
works on his scheduled rest day which falls on a regular holiday, he shall be entitled to an
additional premium pay of at least 30 percent of his regular holiday pay based on his regular
wage rate. If he performs overtime work on a regular holiday which is also his rest day, he shall
be paid an additional compensation for the overtime work equivalent to his rest day - holiday pay
for the first eight hours, plus 30 percent thereof. The regular rest day--holiday pay of an
employee shall consist of 200 percent of his regular wage plus 30 percent thereof (Book III, Rule
4, Sec. 5 OR).

5. NATURE OF REST DAYS. Generally rest days are considered unpaid off-days.
Consequently, work during rest days entails a compensation of the regular wage plus a premium
pay of 30 percent thereof: However, if it is proved that, by agreement or otherwise, they are paid
off- days, only the premium of 30 percent would have to be paid for work on these days, except
if the CBA or employer practice provides for pay for rest days even if un worked.

PREMIUM PAY

"All employees qualified to a premium pay are entitled to premium payments as compensation
for work hours rendered exceeding the maximum number of working hours."
What is premium pay? Should you be entitled to a premium pay? And how much should you get?
These are the most common questions at the back of the minds of new employees as this is an
entitlement that translates to additional cash in the coming payday.

All employees qualified to a premium pay are entitled to premium payments as compensation for
work hours rendered exceeding the maximum number of working hours. The basis of the
maximum number of work hours per day rests on the fact that humans are not machines. At the
end of the day, we would have been worked out and need to rest. Thus, in many countries
including the Philippines, governments set the maximum work hours to eight. Any hours of work
rendered exceeding that shall be paid with a premium which is based on your daily regular wage.

When do premium pays apply?

In the Philippines, companies are obliged by law to pay premiums when you work on holidays,
on your rest day, and when you render extra hours on any day (overtime). Premium pays are,
however, mandated by law. In most cases, only regular employees are entitled to holiday
premiums, while other companies may pay overtime premiums to probationary or contractual
employees.

How are premium rates computed?

The Labor Code of the Philippines sets premium rates at 25% on your regular wage on regular
days. This is increased to 30% if you render overtime on your rest day or on a holiday. Holidays,
meanwhile, are categorized into special and legal holidays - different rates apply to each
category.

The law mandates that employees be paid an additional 30% on their regular daily wage on
special holidays. An additional 100% premium (equivalent to 100% of your daily wage) is given
to qualified employees. Computations are as follows:

 A special holiday (130% X basic pay)

 A special holiday that falls on a rest day (150% X basic pay)
 A regular holiday (200% X basic pay)
 A regular holiday that falls on a rest day (260% X basic pay)

Who are covered?

Whatever your employment status is, the Philippine Labor Code says you should be entitled to a
premium for any work rendered beyond the maximum hours (eight hours) required of you by the
law and your company. However, this law ceases to apply to employees in management
positions, field personnel, the employer's family members who are dependent on him/her for
support, and employees paid on a per project or output basis. If you are a government employee,
you may refer to Civil Service Laws and rules on premium payment.

How about personnel in the health sector?

For health personnel in the cities and municipalities who serve a population of at least on million
(1,000,000) or in hospitals with at least one hundred bed capacity, maximum work hours should
only be eight (8) hours for five (5) days a week, excluding times for break. Categorized under
health personnel are resident physicians, nurses, midwives, clinic attendants, pharmaceutical
technicians, laboratory technicians, social workers, dieticians, nutritionists, and other hospital
personnel.

Employees in the health sector are, as a rule, not supposed to render overtime because of the high
degree of physical work their jobs demands. Where exigencies of the service require, health
personnel may render extra hours or one day provided that a 30% premium payment shall be
added to his/her regular daily wage.
SERVICE INCENTIVE LEAVE

Philippine Service Incentive Leave for

Employees
Book III, Chapter III of the Labor Code of the Philippines covers the employee's right for Service
Incentive Leaves. This basically entitles the employee working in the Philippines a yearly service
incentive leave, or in other words, a paid leave of five days.

The term 'employee' represents an individual who is legally employed under the Philippine law,
or any person compulsorily covered by the SSS under Republic Act 1161 or any person
compulsorily covered by the GSIS under the Commonwealth Act 186.

The phrase 'one year of service' indicates an employee's length of service, if he/she has provided
service to the same establishment that would total 12 months, whether uninterrupted or broken,
and starting on the day the employee started working for the establishment. Authorized absences,
normally unworked days (restdays and/or weekends), and paid legal and regular holidays are
counted as part of the year of service.

Article 95 or what is otherwise known as the Right to Service Incentive Leave is only applicable
to any employee who has at least rendered one year of service in the same establishment.

There are employees exempt from Article 95 or the Right to Service Incentive Leaves. These are
the employees in the civil service (government employees), administrative employees as defined
in Book III of the Philippine Labor Code, field employees or other employment category whose
hours of work are unascertained, domestic helpers and like (persons whose nature of employment
is in personal service of another), employees who are on task or contract basis, purely on
commission basis, or those paid a fixed amount irrespective of the time involved.

Furthermore, those employees not covered above but who are already enjoying a paid leave in
kind, such as a vacation leave with pay comprising at least five days, are exempt from Article 95.
Employees who are working on establishments with population of less than 10 workers are also
exempt of this provision.

The Service Incentive Leave may be used as a Sick Leave and/or Vacation Leave. However,
service leave incentives may not be interchanged with Vacation Leave as the latter is not a
standard of law but a prerogative of the employer and by extension the establishment or the
management.

If unused after a one year period, the Service Incentive Leave will be commuted to its monetary
equivalent by the end of the year. In computing, the basis shall be the salary rate at the date of
commutation.

(This article features content derived from Art. 95 of the Philippine Labor Code. By no means
shall this article be used to substitute Art. 95 of the Philippine Labor Code)