Service Incentive Leave (SIL) in the Philippines
Guide to the 5-day paid leave benefit — who's covered, cash conversion, and how SIL relates to final pay and retirement.
What Is Service Incentive Leave?
Service Incentive Leave (SIL) is a statutory leave benefit that entitles every employee who has rendered at least one year of service to five (5) days of paid leave per year. The leave may be used for sick leave, vacation leave, or any personal purpose.
SIL is one of the simplest yet most important leave benefits under Philippine labor law. It also factors into retirement pay computation (as part of the 22.5-day formula under RA 7641).
Legal basis: Labor Code of the Philippines, Article 95 (Service Incentive Leave)
Who Is Covered?
All employees who have rendered at least 1 year of service are entitled to SIL, whether they are paid on a monthly, weekly, daily, or piece-rate basis.
Exemptions
The following are exempt from providing SIL:
- Employees already enjoying at least 5 days of vacation leave with pay (SIL is deemed already satisfied)
- Establishments regularly employing less than 10 workers
- Government employees (covered by civil service rules)
- Managerial employees
- Field personnel whose hours cannot be reasonably determined
- Domestic workers (kasambahay) — governed separately by RA 10361
- Workers paid by results on a purely piece-rate basis, where the nature of the work makes it not feasible to determine working time
Cash Conversion of Unused SIL
Under the Labor Code, unused SIL is commutable to its money equivalent at the end of the year. This means:
- If an employee does not use their 5 SIL days during the year, the employer must pay the cash value
- Cash conversion is typically computed as: Daily Rate × Number of Unused SIL Days
- This is commonly paid out in December or included in the final pay upon separation
SIL Cash Conversion = Daily Rate × Unused SIL Days
SIL and Retirement Pay
The service incentive leave is a component of the retirement pay formula under RA 7641. The 22.5-day retirement pay includes:
- 15 days of salary
- 5 days of SIL (cash equivalent)
- 1/12 of 13th month pay (2.5 days)
This means even if an employer provides more than 5 vacation days, the retirement pay formula still uses the 5-day SIL component.
Compute Your Final Pay
SIL cash conversion is part of your final pay. Use our calculator to compute your total last pay.
Open Final Pay Calculator →Frequently Asked Questions
How many service incentive leave days am I entitled to?
Under Article 95 of the Labor Code, every employee who has rendered at least 1 year of service is entitled to 5 days of service incentive leave (SIL) with pay per year. This applies regardless of whether the employee is on monthly or daily pay.
Can unused service incentive leave be converted to cash?
Yes. Under the Labor Code, the SIL is commutable to its money equivalent if not used or exhausted at the end of the year. This means any unused SIL days are paid out as cash, typically at the end of December or as part of final pay upon separation.
Does SIL carry over to the next year?
The Labor Code does not explicitly require SIL to carry over. If unused SIL is not commuted (converted to cash) at year-end, the company policy on leave carryover applies. Many employers convert unused SIL to cash annually rather than carrying it over.