Five days does not mean every leave type
Service incentive leave in the Philippines is a statutory benefit for covered employees after at least one year of service. It provides five paid days annually. It can be used for sick or vacation purposes.
It is distinct from the organization’s wider leave policy. Do not rename every leave balance SIL without checking the terms.
Check the exclusions
The Labor Code excludes, among others, employees already enjoying the benefit or at least five days’ paid vacation leave, and establishments regularly employing fewer than ten employees. Other coverage rules and exemptions also matter.
Document which policy or legal basis applies. If your policy is more favorable, preserve it rather than replacing it with a minimum entitlement.
Convert the eligible unused balance
Unused SIL can be converted to its cash equivalent. Confirm the correct applicable salary basis and the balance. Do not apply the same cash-conversion rule to every company leave type.
For an illustrative eligible balance of three days and an applicable daily rate of ₱800, the arithmetic is 3 × ₱800 = ₱2,400. The example assumes those inputs have been reviewed. It does not determine coverage.
Make leave records easy to reconcile
Keep opening balance, accrual or entitlement, approved usage, corrections and conversion visible. Have HR reconcile the balance before year-end or separation. Tell the employee which leave type the payment covers.
OLi HR brings leave requests, approvals and records into one portal. Demonstrate one request and one conversion during setup. Link the approved balance to the payroll review instead of manually copying totals between files.
Sources and scope
Checked. 5 October 2026. Labor Code service incentive leave · DOLE-CAR labor standards. Examples are illustrative. Coverage, exceptions and more favorable terms matter. For a specific legal or tax issue, obtain advice based on the facts.
Quick answers
Does every employee receive statutory SIL?+
No. Service and coverage rules, exclusions and existing benefits must be checked.
Are all unused leave types convertible?+
No. SIL and company-provided leave can have different conversion rules.
Original practical guidance prepared for OLi with AI assistance. It focuses on workflow and product evaluation. It does not replace your organization’s policies or professional advice.
