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Pay
Service Incentive Leave
Service Incentive Leave is five days of paid leave a year for an employee who has rendered at least one year of service, under Article 95. It can be used for vacation or sickness. The Code does not grant a separate.
Also called SIL
How it works
The day vests after twelve months of service, continuous or broken, including days deemed worked. Establishments with fewer than ten employees and some other categories are excluded. A company vacation bank of at least five paid days can satisfy SIL. Unused SIL converts to cash at year-end or on separation. Remote U.S. teams that give ‘unlimited PTO’ still need a countable SIL equivalent that can convert. Unlimited that never converts is a fight waiting for resignation week. Philippine remote hiring makes this concrete because the worker is on a peso file while the manager sits in U.S. Slack. Write the rule into the contract and the payroll calendar before the first cutoff. Do not invent a U.S. substitute and hope DOLE never reads the payslip. Loaded cost moves when this line moves. The local employer, not the founder’s inbox, has to run the actual remittance or the actual notice.
Example: start 1 April 2025. SIL vests 1 April 2026: five days. Unused at year-end 2026: cash at daily rate. Do not invent a use-it-or-lose-it that wipes the statutory five.
How it differs
Maternity and other special leaves are separate statutes. Unused SIL conversion is the cash rule. Bereavement leave is usually company policy.
Common errors
Starting SIL on day one and then clawing it back. Refusing conversion because ‘we use unlimited PTO.’