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AT A GLANCE
- The Service Incentive Leave is a five-day leave with pay for every employee who has rendered at least one year of service whether continuous or broken.
- The stipulation in the contract for the allowance of a vacation to employees is merely a recognition by management and labor that a short interval of complete rest and relaxation from daily routine with the benefit of full pay is essential to the mental and physical well-being of the workmen.
- The service incentive leave is commutable if not used or exhausted at the end of the year as it is aimed primarily at encouraging workers to work continuously and with dedication to the company.
The Labor Code does not expressly provide for vacation leaves, instead, what is provided is the Service Incentive Leave. Under the law, the Service Incentive Leave is a five-day leave with pay for every employee who has rendered at least one year of service whether continuous or broken.
The law says:
Article 95. Right to Service Incentive Leave – (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. (Article 95, Labor Code of the Philippines)
The stipulation in the contract for the allowance of a vacation to employees is merely a recognition by management and labor that a short interval of complete rest and relaxation from daily routine with the benefit of full pay is essential to the mental and physical well-being of the workmen.
What does “at least 1 year of service” mean?
The law says:
SECTION 3. Definition of certain terms. — The term “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 unless the working days in the establishment as a matter of practice or policy, or that provided in the employment contract is less than 12 months, in which case said period shall be considered as one year. (Sec. 3, Rule V, Book III, IRR)
To whom shall the right to Service Incentive Leave apply?
The right shall apply to every employee except for those enumerated under the law.
The law says:
Article 95. Right to Service Incentive Leave – (b) This provision shall not apply to those 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. (Article 95, Labor Code)
What is the commutability rule of the Service Incentive Leave to its monetary equivalent?
The service incentive leave is commutable if not used or exhausted at the end of the year as it is aimed primarily at encouraging workers to work continuously and with dedication to the company. The basis shall be the salary rate at the date of commutation. The availment and commutation of the SIL may be on a pro-rate basis.
The law says:
SECTION 5. Treatment 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, IRR)
Are vacation leaves legally demandable?
Yes. Vacation leaves in the form of Service Incentive Leaves, under Article 95 of the Labor Code, mandate employers to give their employees a yearly service incentive leave of five days with pay. The SIL shall be granted to a worker who has been in service within 12 months, whether continuous or broken, reckoned from the date the employee started working, including authorized absences and paid regular holidays.
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