How to Setup the Service Incentive Leave in your Human Resource Management System

In the Philippines, employees who have worked for a company for at least one year will be entitled to Service Incentive Leave of five days with pay.

There are typically 2 ways to set this up in your Human Resource Management System (HRMS) or Human Resource Information System (HRIS).

  1. Accrue Leave Credits Monthly

If you want employees to earn Service Incentive Leave credits monthly, set the accrual rate to 3.33 hours, with the accrual frequency set to Monthly. So at the end of 12 months (or 1 year), the employee would have earned 40 hours or 5 days.

  1. Accrue Leave Credits Annually

If you want employees to earn Service Incentive Leave credits yearly, set the accrual rate to 5 days or 40 hours, and set the accrual frequency to yearly or annually.

But who is entitled to Service Incentive Leave anyway? The following section, taken from the Department of Labor and Employment’s Handbook, explains who is eligible to receive the Service Incentive Leave benefit:

Service Incentive Leave


(Article 95)

A. Coverage

Every employee who has rendered at least one (1) year of service is entitled to Service Incentive Leave (SIL) of five (5 ) days with pay.
This benefit applies to all employees except:

  1. Government employees, whether employed by the National Government or any of its political subdivisions, including those employed in government-owned and/or controlled corporations with original charters or created under special laws;
  2. Persons in the personal service of another;
  3. Managerial employees, if they meet all of the following conditions:
    1. Their primary duty is to manage the establishment in which they are employed or of a department or subdivision thereof ;
    2. They customarily and regularly direct the work of two or more employees therein; and
    3. They have the authority to hire or fire other employees of lower rank; or their suggestions and recommendations as to hiring, firing, and promotion, or any other change of status of other employees are given particular weight.
  4. Officers or members of a managerial staff , if they perform the following duties and responsibilities:
    1. Primarily perform work directly related to management policies of their employer;
    2. Customarily and regularly exercise discretion and independent judgment;
    3. (a) Regularly and directly assist a proprietor or managerial employee in the management of the establishment or subdivision thereof in which he or she is employed; or (b) execute, under general supervision, work along specialized or technical lines requiring special training, experience, or knowledge; or (c) execute, under general supervision, special assignments and tasks; and
    4. Do not devote more than twenty percent (20%) of their hours worked in a workweek to activities which are not directly and closely related to the performance of the work described in paragraphs 4.1, 4.2, and 4.3 above;
  5. Field personnel and those whose time and performance is unsupervised by the employer;
  6. Those already enjoying this benefit;
  7. Those enjoying vacation leave with pay of at least five (5) days; and
  8. Those employed in establishments regularly employing less than ten (10) employees.

B. Meaning of “one year of service”

The phrase “ one year of service” of the employee means service within twelve (12) months, whether continuous or broken, reckoned from the date the employee started working. The period includes authorized absences, unworked weekly rest days, and paid regular holidays. If through individual or collective agreement, company practice or policy, the period of the working days is less than twelve (12) months, said period shall be considered as one year for the purpose of determining the entitlement to the service incentive leave.

C. Usage/Conversion to Cash

The service incentive leave may be used for sick and vacation leave purposes. The unused service incentive leave is commutable to its money equivalent at the end of the year. In computing, the basis shall be the salary rate at the date of conversion.

The use and conversion of this benefit may be on a pro rata basis.

Illustration: An employee was hired on 1 January 2000 and resigned on 1 March 2001. Assuming that he/she has not used or commuted any of his/her accrued SIL, he/she is entitled to the conversion of his/her accrued SIL, upon his/her resignation, as follows:

SIL earned as of 31 December 2000
 5 days
Proportionate SIL for January and February 2001
(2/12) x 5 days 0.833 day
Total accrued SIL as of 1 March 2001
 5.833 days