Convertible and Non-Convertible Leaves in The Philippines
Connie Barrientos-Carey
6 days ago
1 min read
The Labor Code gives you a choice most founders never knew existed.
Art. 95 mandates 5 days Service Incentive Leave per year. What it doesn't mandate: that unused days get paid out in cash. That part is yours to decide — if it's in writing, in the contract, and signed.
A 20-person team at ₱25,000/month carries roughly ₱76,923 in annual SIL cash liability under a convertible policy. Switch to a documented non-convertible policy and that line item disappears. Legally. No benefit reduction. No Labor Code violation.
The trap: verbal policies don't hold. NLRC defaults to convertible when there's no signed acknowledgment, no contract clause, no paper trail. Art. 100 blocks retroactive application. The burden of proof sits with the employer — always.
And once it's documented correctly, leave becomes a design tool. Tiered convertibility by tenure. Leave banking. Enhanced non-convertible VL/SL as a comp instrument with zero year-end liability.
Compliance isn't the ceiling. It's the floor most founders never built.
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