General information, not legal advice. This answer was written by the PhilippineLaws team from the law it cites and checked for accuracy to the best of our knowledge, last on Sep 21, 2026. It has not been reviewed by a lawyer. Read the cited law yourself, and for your own situation talk to a lawyer or the Public Attorney’s Office (PAO).
Am I entitled to 5 days Service Incentive Leave (SIL), and can unused leave days be converted to cash?
Yes. Under Article 95 of the Labor Code, every employee who has rendered at least one year of service is entitled to an annual paid Service Incentive Leave (SIL) of five days. Any unused portion of this five-day leave is converted into its cash equivalent at the end of the year, and unused, unconverted leave is paid out on resignation or termination. Some employees are excluded, including those in establishments regularly employing fewer than ten workers and those already given at least five days of paid vacation leave.
Illustrated Legal Brief
Full PlateDaily Basic Rate × Unused SIL Days = Cash Commutation Payout
If an employer already provides at least 5 days of paid annual vacation leave, the statutory SIL is fulfilled.
Why
Article 95 of the Labor Code of the Philippines mandates that every covered employee who has rendered at least one year of service shall be entitled to a yearly service incentive leave of five (5) days with pay. 'At least one year of service' is defined by the implementing rules as service of not less than 12 months, whether continuous or broken, reckoned from the date the employee started working, including authorised absences and paid regular holidays.
Unlike voluntary company vacation leave (VL) or sick leave (SL) packages—which are subject to company discretion unless stipulated in an employment contract or Collective Bargaining Agreement (CBA)—the 5-day Service Incentive Leave is a mandatory statutory minimum benefit created by law.
The implementing rules of the Labor Code (Book III, Rule V, Section 5) expressly mandate cash conversion: the service incentive leave is commutable to its money equivalent if not used or exhausted at the end of the year. The conversion is generally computed on the employee's daily rate at the time it is converted.
Upon separation from employment—whether through resignation, retrenchment, redundancy, or dismissal for just or authorized cause—unused SIL that has not yet been converted should be paid in cash as part of your final pay, which DOLE Labor Advisory No. 06-20 lists among the items of final pay.
Under the implementing rules, certain classes of employees are excluded from mandatory SIL: government employees, domestic workers (who have distinct leave rights under the Kasambahay Law / RA 10361), managerial employees and managerial staff, field personnel and other employees whose performance is unsupervised by the employer, employees in establishments regularly employing fewer than ten (10) workers, employees who already enjoy the benefit or vacation leave of at least five days with pay, and, under Article 95 itself, employees of establishments the Secretary of Labor has exempted because of their financial condition.
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