Philippines Leave Encashment: SIL Complete 2026 Guide
The Philippines' 5-day Service Incentive Leave — the only leave the law says must be cashed out — explained in full.
The Philippines guarantees a small but specific slice of paid leave that — unlike most company vacation policies — the law says must be paid out in cash if unused. It is called Service Incentive Leave (SIL), and understanding it is the key to Philippine leave encashment. This guide matches the Philippines Leave Encashment Calculator.
The rule: 5 days of SIL a year
Under Article 95 of the Labor Code, every rank-and-file employee with at least one year of service is entitled to a minimum of 5 days of paid Service Incentive Leave per year. It can be used for either vacation or sick leave.
Why SIL is special: it must be converted to cash
SIL is the only leave type the Labor Code requires to be commuted to cash if it is not used by the end of the year. Any extra vacation or sick leave your employer grants beyond this five-day minimum is a company-policy benefit — whether that is encashable is between you and your employer's policy, not a legal mandate.
Who is exempt from the SIL mandate?
- Companies with fewer than 10 employees.
- Companies that already grant 5 or more days of paid vacation leave (the law does not require this on top of an existing equal or better benefit).
- Certain categories such as government employees, managerial staff, field personnel and those already enjoying the benefit are also outside the specific SIL mandate.
How the cash value is calculated
SIL encashment = daily rate × unused SIL days
The daily rate is your monthly pay ÷ 30. On PHP 20,000/month with all 5 SIL days unused: 20,000 ÷ 30 = PHP 667 daily; 667 × 5 = PHP 3,333.
Worked example
| Monthly pay | Daily rate (÷30) | Unused SIL days | Encashment |
|---|---|---|---|
| PHP 15,000 | PHP 500 | 5 | PHP 2,500 |
| PHP 20,000 | PHP 667 | 5 | PHP 3,333 |
| PHP 30,000 | PHP 1,000 | 3 | PHP 3,000 |
Try your figures on the calculator and read the leave-encashment guide.
SIL and separation
Unused SIL is typically paid out on separation as part of your final pay, alongside any separation pay and pro-rated 13th-month pay. It is a distinct entitlement from separation pay.
For the statute, see the Labor Code (lawphil) (Article 95) and the DOLE Bureau of Working Conditions.
SIL is a floor, not a ceiling
The five-day Service Incentive Leave is a statutory minimum. Many employers grant more generous paid vacation and sick leave on top of it — 10, 15 or more days — as a matter of policy or through a collective bargaining agreement. The crucial point is that only the five-day SIL portion carries the legal requirement to be converted to cash if unused. Whether any leave above that floor is encashable is entirely a matter of your company's policy, so read your handbook to understand what happens to unused company leave at year-end.
Who counts as rank-and-file
SIL applies to rank-and-file employees — broadly, those who are not managerial. Managerial employees, field personnel whose hours cannot be determined, government workers, and certain others sit outside the SIL mandate. If you supervise with genuine managerial authority, your leave arrangements are likely governed by contract and policy rather than Article 95. For most ordinary employees, though, the five-day SIL entitlement applies once they pass one year of service.
SIL in your final pay
When you leave a job, your unused SIL is paid out as part of your final pay, alongside earned but unpaid salary, pro-rated 13th-month pay, and — if the separation was for an authorized cause — separation pay. DOLE guidance encourages employers to release final pay within a reasonable period after separation. Because these components each have their own basis, calculate them separately rather than accepting a single lump-sum figure.
Estimating and verifying your encashment
The calculation is deliberately simple — your daily rate multiplied by unused SIL days — but the inputs matter: confirm your unused SIL balance and your correct daily rate (monthly pay ÷ 30 for monthly-paid staff). Run it on the SIL encashment calculator, and if you are separating, cross-check the rest of your final pay against the tools on the Philippines hub.
Frequently asked questions
What is Service Incentive Leave (SIL) in the Philippines?
A minimum of 5 days of paid leave per year that the Labor Code (Article 95) guarantees to rank-and-file employees with at least one year of service. It can be used for vacation or sick leave.
Is SIL the only leave that must be paid out in cash?
Yes — it is the only Labor Code-mandated leave type that must be commuted to cash if unused at year-end. Any additional vacation or sick leave your company grants is a policy benefit, and whether it is encashable depends on that policy.
Who is exempt from SIL?
Companies with fewer than 10 employees, and companies that already grant 5 or more days of paid vacation leave, are exempt from the SIL mandate specifically. Managerial staff, field personnel and government employees are also outside it.
How is SIL cash value calculated?
Daily rate × unused SIL days, where the daily rate is monthly pay ÷ 30. On PHP 20,000/month with 5 unused days: 667 × 5 = PHP 3,333.
Do I get my unused SIL when I leave a job?
Yes. Unused SIL is typically paid out as part of your final pay on separation, alongside pro-rated 13th-month pay and any separation pay owed.