Labor Code Art.

95

A. Service Incentive Leave (SIL)

Coverage
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. [Art. 95(a)]

Purpose of the Law

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Right to service incentive leave

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Meaning of “1 year of service”

General Rule: "At least one year service" shall mean service for NOT LESS than 12 months, whether
continuous or broken, reckoned from the date the employee started working, including authorized
absences and paid regular holidays.
Exception: Service for LESS than 12 months is counted as “at least one year service” when:
1. The working days of the establishment, as a matter of practice or policy, is less than 12 months;
or
2. The employment contract provides working days that is less than 12 months. [Sec. 3, Rule V,
Book III, IRR]

Conversion to cash equivalent

Usage/Conversion to Cash The service incentive leave may be used for sick and vacation leave
purposes. The unused service incentive leave is commutable to its money equivalent at the end of the
year. In computing, the basis shall be the salary rate at the date of conversion. The use and conversion
of this benefit may be on a pro rata basis.

The service incentive leave is commutable to its money equivalent if not used or exhausted at the end of
the year. The SIL should be converted to cash if unused at the end of the year.

For example, X was hired January 1, 2017 based in NCR. By January 1, 2018 he is already entitled to
the earned SIL of 5 days.

He went on absence without leave January 15, 2018, February 14, 2018, and February 15, 2018 and did
not use anymore leave till the end of the year, by December 31, 2018 he has an unused leave of 2 days.
This should be converted to cash.

Minimum wage in NCR – P512.00

P512.00 x 2 days = P1,024.00

If X for instance did not use his 2017 earned leave credits and resigns effective April 1, 2018, both the
earned in 2017 and the 2018 should be given to him in cash.

Thus:
SIL earned as of December 31, 2017 5 days

SIL earned as of April 1, 2018 1.25 days

TOTAL 6.25 days

6.25 days x P512.00 = P3,200.00

Hence, X’s SIL upon resigning which shall form part his final pay is P3,200.00.

What is the tax implication of this benefit?

It bears noting that under the TRAIN Law service incentive leave benefit is not expressly mentioned as
exempt from tax. Even Sec. 2 (i) of RR 8-2018 does not expressly exempt SIL since the exemption
expressly covers only the holiday pay, overtime pay, night shift differential pay, and hazard pay earned
by an MWE.

Yet, under the TRAIN Law this can be covered by the ceiling on non-taxable limit of P20,833.00 if he is a
MWE considering that the total wage may not breach this amount. However, even if it does exceed, it
can still be exempt under the de minimis benefits rule.

Under RR 5-2011, monetized unused vacation leave credits for private employees not exceeding ten
(10) days during the year shall be considered as de minimis benefits not subject to income tax as well as
withholding tax on compensation income of both managerial and rank-and-file employees.

It is clear that monetized vacation leave credits are not taxable. How about sick leave?

This cannot apply to sick leave credits since an employee must actually go on sick leave to be able to
avail of said leave credits. (BIR Ruling No. 416-2012 dated June 25,2012; BIR Ruling No. 057-2014)

Domestic Worker’s entitlement

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Service Incentive Leave DOES NOT apply to the following employees:

1. Those of the government and any of its political subdivisions, including GOCCs;
2. Domestic helpers and persons in the personal service of another;
3. Managerial employees as defined in Book III of this Code;
4. Field personnel and other employees whose performance is unsupervised by the employer including
those who are engaged on task or contract basis, purely commission basis, or those who are paid a
fixed amount for performing work irrespective of the time consumed in the performance thereof;
5. Those who are already enjoying the benefit herein provided;
6. Those enjoying vacation leave with pay of at least 5 days;
7. Those employed in establishments regularly employing less than 10 employees. [Sec. 1, Rule V,
Book III, IRR]
*Piece-rate employees are entitled to service incentive leave pay provided that they are supervised. If
they are unsupervised, they are not entitled to SIL. [Labor Congress of the Phils. v. NLRC, G.R. No.
123938 (1998)]
*Teachers of private school on contract basis are entitled to service incentive leave. [Cebu Institute of
Technology v. Ople, G.R. No. L-58870 (1987)]
**The law grants annual SIL of five days to domestic workers, but their SIL shall not be converted to cash
or carried over to succeeding years. [Sec. 5, RA 10361]

Leave with pay

Prescriptive period of SIL

Arbitration or Administrative Action

The grant of benefit IN EXCESS of that provided herein shall not be made a subject of arbitration or any
court or administrative action. [Art. 95 (c)]

Commutable nature of benefit

The service incentive leave shall be commutable to its money equivalent if not used or exhausted at the
end of the year. [Sec. 5, Rule V, Book III, IRR]

When Entitled EE’s Cause of Action Accrues

1. If the employee did not make use of said leave credits but instead chose to avail of its
commutation into money:
The cause of action to claim his SIL pay accrues from the moment the employer refuses to
remunerate its monetary equivalent.

2. If the employee wishes to accumulate his leave credits and opts for its commutation upon
his resignation or separation from employment:
The cause of action to claim the whole amount of his accumulated SIL shall arise when the employer
fails to pay such amount at the time of his resignation or separation from employment. [Auto Bus
Transport v. NLRC, G.R. No. 156367 (2005)]

Leaves pursuant to company policy or practice

B. Special laws

1. Paternity leave [RA 8187 (Paternity Leave Act of 1996)]

Paternity Leave – leave of 7 calendar days with full pay for every married male employee in the
private and public sectors
Coverage and Purpose
Paternity leave is granted to all married male employees in the private and public sectors, regardless of
their employment status (e.g. probationary, regular, contractual, project basis).
The purpose of this benefit is to allow the husband to lend support to his wife during her period of
recovery and/or in nursing her newborn child. [Sec. 3, RA 8187]
Benefit
It shall be for 7 calendar days, with full pay, consisting of basic salary and mandatory allowances fixed
by the Regional Wage Board, if any, provided that his pay shall not be less than the mandated minimum
wage. [Sec. 2, RA 8187]
It shall apply to the first 4 deliveries of the employee’s lawful wife with whom he is cohabiting.
Cohabiting means the obligation of the husband and wife to live together. [Sec. 1, IRR, RA 8187] If the
spouses are not physically living together because of the workstation or occupation, the male employee
is still entitled to the paternity leave benefit.
Usage of the benefit
Usage of the leave shall be after the delivery, without prejudice to an employer’s policy of allowing the
employee to avail of the benefit before or during the delivery, provided that the total number of days shall
not be more than 7 days for each covered delivery. [Sec. 5, IRR, RA 8187]

Conditions for entitlement [Sec. 3, IRR, RA 8187]

1. He is married;
2. He is an employee at the time of the delivery of his child
3. He is cohabiting with his spouse at the time that she gives birth or suffers a miscarriage
4. He has applied for paternity leave with his ER within a reasonable period of time from the expected
date of delivery by his pregnant spouse, or within such period as may be provided by company rules
and regulations, or by CBA; and,
5. His wife has given birth or suffered a miscarriage.

Application for paternity leave

See d. under conditions for entitlement.

In case of miscarriage, prior application for paternity leave shall not be required. [Sec. 4, IRR, RA 8187]
Non-conversion to cash
In the event that the paternity leave is not availed of, it shall not be convertible to cash and shall not
be cumulative. [Sec. 7, IRR, RA 8187]
Crediting of existing benefits
o If the existing paternity leave benefit under the CBA, contract, or company policy is greater than 7
calendar days as provided for in RA 8187, the greater benefit shall prevail.
o If the existing paternity leave benefit is less than that provided in RA 8187, the ER shall adjust the
existing benefit to cover the difference. [Sec. 9, IRR, RA 8187]
Where a company policy, contract, or CBA provides for an emergency or contingency leave without
specific provisions on paternity leave, the ER shall grant to the employee 7 calendar days of paternity
leave. [Sec. 9, IRR, RA 8187]

2. Parental leave for solo parents [RA 8972 (Solo Parents’ Welfare Act of 2000)]

Parental leave for solo parents – Leave benefits granted to a solo parent to enable him/her to perform
parental duties and responsibilities where physical presence is required. [Sec. 3 (d), RA 8972]
Coverage
Any solo parent or individual who is left alone with the responsibility of parenthood due to:
a. Giving birth as a result of rape or and other crimes against chastity even without a final conviction
of the offender: Provided, That the mother keeps and raises the child;
b. Death of spouse;
c. Spouse is detained or is serving sentence for a criminal conviction for at least one (1) year;
d. Physical and/or mental incapacity of spouse as certified by a public medical practitioner;
e. Legal separation or de facto separation from spouse for at least one (1) year: Provided, that he/she
is entrusted with the custody of the children;
f. Declaration of nullity or annulment of marriage as decreed by a court or by a church: Provided, that
he/she is entrusted with the custody of the children;
g. Abandonment of spouse for at least one (1) year;
h. Unmarried father/mother who has preferred to keep and rear his/her child/children, instead of
having others care for them or give them up to a welfare institution;
i. Any other person who solely provides parental care and support to a child or children: Provided,
that he/she is duly licensed as a foster parent by the Department of Social Welfare and
Development (DSWD) or duly appointed legal guardian by the court; and
j. Any family member who assumes the responsibility of head of family as a result
k. of the death, abandonment, disappearance, or prolonged absence of the parents or solo parent for
at least one (1) year. [Sec. 3 (a), RA 8972]

Conditions for Entitlement

A solo parent employee shall be entitled to the parental leave under the following conditions:
 He/she has rendered at least one (1) year of service, whether continuous or broken;
 He/she has notified his/her employer that he/she will avail himself/herself of it, within a reasonable
period of time; and
 He/she has presented to his/her employer a Solo Parent Identification Card, which may be obtained
from the DSWD office of the city or municipality where he/she resides. [Sec. 19, Art. V, IRR, RA
8972]

Availment
The parental leave is in addition to leave privileges under existing laws with full pay, consisting of basic
salary and mandatory allowances. It shall not be more than seven (7) working days every year. [Sec. 8,
RA 8972]
Grant of Flexible Work Schedule
The employer shall provide for a flexible working schedule for solo parents: Provided, That the same
shall not affect individual and company productivity: Provided, further, That any employer may request
exemption from the above requirements from the DOLE on certain meritorious grounds. [Sec. 6, RA
8972]
Protection against Work Discrimination
No employer shall discriminate against any solo parent employee with respect to terms and conditions of
employment on account of his/her status. [Sec. 7, RA 8972]

Termination of the Benefit

A change in the status or circumstance of the parent claiming the benefit under the law, such that he/she
is no longer left alone with the responsibility of parenthood, shall terminate his/her eligibility for these
benefits. [Sec. 3 (a), RA 8972]
See III. E. 7. for discussion on other working conditions for solo parents*
See also VII. E. for discussion on support for solo parents*

3. Expanded maternity leave [RA 11210 (105-Day Expanded Maternity Leave Law)]
Expanded Maternity Leave -- Maternity leave of 105 days with full pay , with an option to extend for
an additional 30 days without pay. [Sec. 3, RA 11210]
Coverage
Every female worker in government and the private sector, including those in the informal economy,
regardless of civil status or the legitimacy of her child, is entitled to the maternity leave benefits.
This is applicable to pregnancy and miscarriage, or emergency termination of pregnancy, regardless
of frequency. [Sec. 3, RA 11210]

Maternity leave for female workers in private sector, requisites

Contribution: The female worker must have paid at least 3 monthly contributions in the 12-month period
immediately preceding the semester of her childbirth, miscarriage, or emergency termination of
pregnancy.
a. In determining the female member’s entitlement to the benefit, the SSS shall consider only those
contributions paid prior to the semester of contingency; and

b. Notice: The female worker shall have notified her employer of her pregnancy and the probable
date of her childbirth, which notice shall be transmitted to the SSS in accordance with the rules
and regulations it may provide. [Sec. 1, Rule VI, IRR of RA11210]

Maternity leave benefit after termination of employment possible

General Rule: Maternity leave with full pay shall be granted even if the childbirth, miscarriage, or
emergency termination of pregnancy occurs not more than 15 calendar days after the termination of
an employee’s service.
Exception: When the employment of the pregnant woman worker has been terminated without just
cause, the employer must pay her the full amount equivalent to her salary for 105 days for childbirth and
60 days for miscarriage and emergency termination of pregnancy based on her full pay, in addition to the
other applicable daily cash maternity benefits that she should have received had her employment not
been illegally terminated. [Sec. 5, Rule IV, IRR of RA 11210]

Benefit received
A daily maternity benefit equivalent to 100% of her average daily salary credit for:
 105 days in cases of live childbirth
 60 days in cases of miscarriage or emergency termination of pregnancy.
The maternity leave can be credited as combinations of prenatal and postnatal leave as long as it does
not exceed 105 days or 60 days as the case may be. In no case shall postnatal care be less than 60
days. [Sec. 2, Rule IV, IRR of RA 11210]
In case the employee qualifies as a solo parent (see III. C. 2. a., above), the employee shall be paid an
additional maternity benefit of 15 days. [Sec. 5 (a), RA 11210]

Extended maternity leave option, requisite notice

In cases of live childbirth, an additional maternity leave of 30 days, without pay, can be availed of, at the
option of the female worker, provided that the employer shall be given notice.
Due notice must be in writing must be given at least 45 days before the end of the female worker’s
maternity leave.
Exception: No prior notice shall be necessary in the event of a medical emergency, but subsequent
notice shall be given to the employer.
The period of extended maternity leave without pay shall not be considered a gap in the service. [Sec. 3,
Rule IV, IRR of RA 11210]

Allocation of maternity leave credits

A female worker entitled to maternity leave benefits may, at her option, allocate up to 7 days of said
benefits to the child’s father, whether or not the father is married to the mother.
The allocated benefit granted to the child’s father is over and above the paternity benefits provided under
RA 8187 (Paternity Leave Act). In case of death, absence, or incapacity of the child’s father, the female
worker may allocate to an alternate caregiver who may be:
 A relative within the 4th degree of consanguinity; or
 The current partner, regardless of sexual orientation or gender identity, of the female worker
sharing the same household.
The option to allocate maternity leave credits shall not be applicable in cases of miscarriage or
emergency termination of pregnancy. [Sec. 1, Rule VIII, IRR of RA 11210]

Death or permanent incapacity

If the female worker dies or becomes permanently incapacitated, the balance of her maternity leave
benefits shall accrue to the child’s father or to a qualified alternate caregiver subject to the following
conditions:
 That the maternity leave benefits have not yet been commuted to cash, if applicable; and
  That a certified true copy of the death certificate or medical certificate or abstract is provided to
the employers of both the female worker and the child’s father or alternate caregiver.
In case the maternity leave benefits have already been paid to the female worker in full, the child’s father
or alternate caregiver shall be entitled to enjoy the remaining unexpired leave credits of the female
worker, if any.
Provided, That such leave without pay shall not be considered a gap in the service of the child’s father or
alternate caregiver. [Sec. 4, Rule VIII, IRR of RA 11210]

Other conditions
a. Employer shall advance the full payment subject to reimbursement by the SSS within 30 days
from filing of leave application. [Sec. 3, Rule VI, IRR of RA 11210]
b. SSS shall immediately reimburse the employer the maternity benefits advanced to the employed
female member, only to the extent of 100% of her average daily salary credit for 105 days, 120
days or 60 days, as the case may be, upon receipt of satisfactory and legal proof of such
payment. [Sec. 4, Rule VI, IRR of RA 11210]
c. Availment shall be a bar to the recovery of sickness benefits provided under RA 1161 (Social
Security Law) for the same period for which daily maternity benefits have been received. [Sec. 6,
Rule VI, RA 11210]
d. Sanction: That if an employee should give birth or suffer miscarriage or emergency termination of
pregnancy:
Without
Without thetherequired
latter contributions
having beenhaving been remitted for her by her employer to the SSS, or
previously notified by the ER of time of the pregnancy, the employer shall pay to the SSS
damages equivalent to the benefits which said employee would otherwise have been entitled to.
[Sec. 5, RA 11210]

4. Gynecological leave [RA 9710 (Magna Carta for Women)]

Gynecological Leave - A female employee’s leave entitlement of two (2) months with full pay from
her employer based on her gross monthly compensation following surgery caused by gynecological
disorders, provided that she has rendered continuous aggregate employment service of at least six (6)
months for the last 12 months.
Gynecological Disorders
Disorders that would require surgical procedures such as, but not limited to:
 Dilatation and curettage;
 Those involving female reproductive organs such as the vagina, cervix, uterus, fallopian tubes,
ovaries, breast, adnexa and pelvic floor, as certified by a competent physician;
 Hysterectomy, ovariectomy, and mastectomy.
Gross Monthly Compensation
The monthly basic pay plus mandatory allowances fixed by the regional wage boards. [Sec. 7, Rule II,
IRR, RA 9710]
Basic Requirement
The woman employee should have been with the company for 12 months prior to surgery. An aggregate
service of at least six (6) months within the said 12-month period is sufficient to entitle her to avail of the
special leave benefit.
Employment service includes absences with pay such as use of other mandated leaves, company-
granted leaves and maternity leaves.
Competent Physician
A medical doctor preferably specializing in gynecological disorders or is in the position to determine the
period of recuperation of the woman employee. [Sec. 1, D.O. No. 112, as amended (Guidelines
Governing the Implementation of the Special Leave Benefits for Women Employees in the Private
Sector)]

Conditions for Entitlement

Any female employee, regardless of age and civil status, shall be entitled to a special leave benefit,
provided she has complied with the following conditions:
 She has rendered at least 6 months continuous aggregate employment service for the last 12
months prior to surgery;
 She has filed an application for special leave;
 She has undergone surgery due to gynecological disorders as certified by a competent physician.
[Sec. 2, D.O. No. 112]
Application for Special Leave Before Surgery
The employee shall file her application for leave with her employer within a reasonable period of time
from the expected date of surgery, or within such period as may be provided by company rules and
regulations or by CBA.
Application for Special Leave After Surgery Prior application for leave shall not be necessary in cases
requiring emergency surgical procedure, provided that the employer shall be notified verbally or in written
form within a reasonable period of time and provided further that after the surgery or appropriate
recuperating period, the female employee shall immediately file her application using the prescribed
form. [Sec. 3, D.O. No. 112]
Period of Entitlement
The 2 months special leave is the maximum period of leave with pay that a woman employee may avail
of under RA 9710.
For purposes of determining the period of leave with pay that will be allowed to a female employee, the
certification of a competent physician as to the required period of recuperation shall be controlling. [Sec.
4, D.O. No. 112, as amended]
Availment
The special leave shall be granted to the qualified employee after she has undergone surgery. [Sec. 5,
D.O. No. 112, as amended]

Frequency of Availment
A woman employee can avail of the SLB for every instance of surgery due to gynecological disorder for a
maximum total period of 2 months per year. [Sec. 6, D.O. No. 112, as amended]
Special Leave Benefit vis-à-vis SSS Sickness Benefit
The SLB is different from the SSS sickness benefit. The former is granted by the employer in accordance
with RA 9710.
It is granted to a woman employee who has undergone surgery due to gynecological disorder. The SSS
sickness benefit, on the other hand, is administered and given by thein accordance with RA 1161 as
amended by RA 8282. [Sec. 7, D.O. No. 112, as amended]