Labor Standards

SSCRM

Atty. Fallar

NOTES ON LEAVES

A. Concept

Leaves are authorized absence from work, whether paid or unpaid.

Most leaves are employee-initiated, like the leave in fulfillment of military or civic duty
(Art. 301, Labor Code). A few are employer-initiated, like medical leave for ailment that
could be cured within six (6) months (Book VI, Title I, Section 8 , Rules to Implement the Labor
Code).

A leave may be viewed as a right. One cannot be obliged to report for work if one is
sick, for example, due to pregnancy-related issues Such prolonged could not be a
ground for disciplinary sanction (Del Monte Phil. v Velasco, GR No. 153477, 06 March
2007).

But leaves may also be viewed as privilege, subject to management conditions like prior
approval and to company verification of the truth of the proffered reason for the
absences. Giving a false cause for the absences could be treated as a disciplinary
offense ( Japos vs First Agrarian Reform Multi -Purpose Cooperative, GR No. 208000, 26
July 2017) while excessive absences and tardiness would constitute gross and habitual
neglect of duty subject to dismissal from employment ( Mansion Printing Center vs
Bitara , GR No. 168129, 25 January 2012).

Leaves are either granted by statutes, or sourced from company policies and collective
bargaining agreements.

B. Service Incentive Leave (SIL)

This is the statutory leave with pay (Art. 95, Labor Code) which provides that, in
general,e very employee who has rendered at least one year of service shall be entitled to a
yearly service incentive leave of five days with pay.

Albeit case law has pronounced that the purpose of the SIL is to afford employees the
opportunity to take a break from work ( a rationale also underlying rest days), the Labor
Code does not limit the purpose of the SIL to vacation. It could be used for any
purpose, including sick leave ( and even for finding better job opportunities!).

When companies give both vacation leave (VL) and sick leaves (SL), the cumulative
total of which exceed the five (5) days of SIL, the SIL is subsumed in the VL.

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In the absence of further limitations in the Labor Code (e.g., one year service ) and
implementing regulations ( e.g., monetization), the employer has the prerogative to
regulate leave policies (see Baltazar vs San Miguel Brewery, L-23076, 27 Feb 1969). In
the grant of vacation and sick leave privileges to an employee, the employer is given
leeway to impose conditions on the entitlement to the same .Thus, it is well within the
power and authority of an employer to deny an employee’s application for leave and the
same cannot be perceived as discrimination or harassment (Sugue vs Triumph
International Phil., GR No. 164804-164784, 30 January 2009).

The term "at least one-year service" is defined to mean service for not less than 12
months, whether continuous or broken reckoned from the date the employee
started working, including authorized absences and paid regular holidays
unless the working days in the establishment as a matter of practice or policy, or that
provided in the employment contract is less than 12months, in which case said period
shall be considered as one year.

Unauthorized absences are excluded from the computation of the one-year service
requirement for vesting of SIL, since the employee is not working for that period. How
about absences due to disciplinary suspension?

The Labor Code does not mandate monetization of leave credits. But the
implementing regulations require cash conversion and implies that the leave credits
must be used within the next year after they become vested ( Book III, Rule V, Sec. 5,
Rules to Implement the labor Code). If not used within the next year, they are
commuted to cash equivalent. This seems to preclude employers from setting a policy
of utilization beyond one (1) year.

Domestics helpers are now entitled to 5-day SIL . But their SIL is neither cumulative
nor convertible to cash, by express provision of the law (Section29, Kasambahay Law).
The rationale for the prejudicial treatment on kasambahays is not made clear.

Monetization seems inconsistent with the supposed rationale of SIL ( necessary break
from work), as cash conversion would encourage employees to forego vacation.

Albeit the issue of mandatory monetization has never been squarely questioned, the
Supreme Court in several cases has allowed monetization of SIL.

The Supreme Court has even ruled that monetization could be made not necessarily
at the end of the succeeding year so much so that an employees could demand for
commutation of all SIL credits at the end of their employment and not merely the last
three (3) years ( see e.g., Auto Bus Transport Systems vs Bautista , GR No. 56367, 16
May 2005; Rodriquez vs Park N Ride Inc., GR No. 222980, 20 March 2017). The ruling is
extremely burdensome on employers which would effectively be compelled to keep
employee time and payroll records beyond the statutory period of three (3) years.

The Supreme Court has said that leaves credits are normally converted into their cash
equivalent based on the last prevailing salary received by the employee ( Republic
Planter Bank vs NLRC, GR No. 117460, 06 January 1997). But this was in the context of the
CBA, and the Supreme Court did not explain whether it was invoking the judicial notice
rule. Indeed, in the same case, the award for bonuses was based "on the existing
salary rate at the time of their accrual".

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May employers require, as a matter of company policy, that employees should go on
actual leave with pay within a prescribed period or else the leave credits are deemed
forfeited?

The only reference to forced leaves in DOLE regulations is in Dept. Advisory No. 2 (S.
2009) on "Guidelines on the Adoption of Flexible Work Arrangements". Item III.6
speaks of "forced leaves" as referring to "where the employees are required to go on
leave for several days or weeks utilizing their leave credits if there are any". The
premise of this forced leave scenario is that the company is suffering from financial
distress and the forced leave program is with the consent of the employees and a report
is submitted to the DOLE for its monitoring.

C. Forced Leaves

There are instances allowed by law in which the employer may place the employee on
forced leave , usually without pay.

An employer my place the employees on temporary lay off for a period not exceeding
six (6) months (Art. 301, Labor Code) . The most common reason would be business
losses or lack of work. Resort to floating status is premised on there being less work
than employees available (Innodata Knowledge Services Inc. vs. Inting, G.R. No. 211892,
06 December 2017). The Supreme Court has ruled that in implementing this measure,
the employer must also comply with the 30-day prior written notice to the DOLE and the
employees concerned (Airborne Maintenance and Allied Services, Inc. vs. Egos, G.R. No.
222748, 03 April 2019).

Temporary closure may also be caused by force majeure ( e.g., a fire gutted down the
factory) or act of State ( e.g., the closure of Boracay by presidential fiat or the
pandemic lock down). The closure being fait accompli, the 30-day prior notice cannot
apply.

If the temporary closure exceeds six (6) months, the employees would be deemed
permanently terminated and entitled to separation pay ( Lopez vs Irvine Construction,
G.R. No. 207253, 20 August 2014). Should the 30-day prior notice rule be still deemed
mandatory? If the permanent closure is beyond the employer's control ( e.g.,
entertainment centers catering to children cannot still operate more than a year from
the start of the lock down due to the government's continuing covid-19 restrictions),
there is no reason to impose prior notice as a mandatory requirement.

Art. 301 of the Labor Code is also the basis of another kind of forced leave, long
recognized by the Supreme Court. This is the case of security guards placed on
"floating status" while the security agency is looking for a new assignment for the
guards. The floating status cannot exceed six (6) months; otherwise, the employee will
deemed constructively dismissed and entitled to redundancy benefits (Padilla vs
Airborne Security, GR No. 210080, 22 November 2017).

Jurisprudence puts on the employer the burden of proving that there are no posts or
assignments available to which the employee temporarily out of work can be assigned
(Exocet Security vs Serrano,, GR No. 198538, 29 September 2014). Should this prove to
be a mere ruse, as when only a general return-to-work order and not a new
assignment to a particular client is issued , the employee will be deemed illegally
dismissed and entitled to reinstatement with payment of back wages and other benefits.
benefits (Padilla vs Airborne Security, supra).

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The fulfillment by the employees of a military or civic duty would allow them to go on
leave without pay, and the period is not limited to six (6) months. Since it is the
employees which seek the leave, the 30-day notice rule is inapplicable. The law further
provides that the employer shall reinstate the employees to their former position
without loss of seniority rights if they indicates their desire to resume work not later
than one (1) month from his relief from the military or civic duty (Art. 301, Labor Code).

A medical leave for a maximum of six (6) months is also a species of forced leave:

Section 8. Disease as a ground for dismissal.—Where the

employee suffers from a disease and his continued employment is
prohibited by law or prejudicial to his health or to the health of his
co- employees , the employer shall not terminate his employment
unless there is a certification by competent public health authority
that the disease is of such nature or at such a stage that it cannot
be cured within a period of six(6) months even with proper
medical treatment. If the disease or ailment can be cured
within the period, the employee shall not terminate the
employee but shall ask the employee to take a leave of
absence. The employer shall reinstate such employee to his
former position immediately upon the restoration of his
normal health (Book VI, Title I, Section 8 of the Rules to Implement
the Labor Code).

Employees on floating status and medical leave are not entitled to salary during such
period ( Pido vs NLRC, G.R. No. 169812, 23 February 2007), following the "no work, no
pay" principle. And while the employment status is not interrupted, it is opined that the
period of forced leave or floating status should not be included in computing the
separation or retirement benefits (Esco Hale Shoes vs NLRC , GR No.87051, 07 February
1991).

Preventive suspension pending disciplinary proceedings, for a maximum period of 30

days is also an instance of forced leave without pay. Beyond 30 days and if the
disciplinary proceedings have yet to be concluded, , the employee may still be placed
on actual leave but must be reinstated on the payroll In such case, the worker shall not
be bound to reimburse the amount paid to him during the extension if the employer
decides, after completion of the hearing, to dismiss the worker (Book V, Rule XXIII, Secs.
8-9, Rules to Implement the Labor Code).

The employer may also declare a lock out (Art. 278, Labor Code ). Provided the legal
requirements are satisfied, the locked out employees are effectively placed on valid
forced leave without pay.

When an employer implements a lay off, it may no longer require the affected
employees to report for work during the last 30 days equivalent to the notice period.
This is known as "garden leave" in other jurisdictions. It has been ruled that here is no
prohibition under Philippine labor laws against a garden leave clause in an employment
contract ( Mejila vs Wrigley Phil, GR No. 199469, 11 September 2019). Garden leave is
paid leave.

D. Special Statutory Leaves

These leaves may be termed ‘special’ in the sense that they are granted not by the
Labor Code but by various special laws ( Paternity Act and Solo Parent’s Welfare act )
or ‘embedded’ in codes (SSS Law, VAWC and Magna Carta for Women). They are
also 'special' in the sense that they are granted only to employees who qualify as

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beneficiaries or when certain contingencies occur, unlike SIL which is generally
applicable to all who have rendered one (1) year of service. The special laws all aim to
put into effect societal goals, but place the economic burden on the employers.

These special laws, unfortunately, are not always consistent with each other on specific
aspects (e g. service requirement) and even the implementing regulations do not always
clarify certain vague items that make administering them problematic.

a. Maternity Leave

Features of RA 11210 ( Expanded Maternity Leave Law o EMLL : 11 March 2011)

Female workers in both private and public sectors can now enjoy:

 105-day paid maternity leave benefit for every live childbirth, regardless of the
type of delivery.

 60-day paid leave in case of a miscarriage or an emergency termination of

pregnancy (ETP), including stillbirth.

 Additional 15-day paid leave to a female employee, who qualifies as a solo

parent under the Solo Parents’ Welfare Act.

 Maternity leaves can be extended for another 30 days, but without pay.

 Maternity leave benefit is paid not by the employer but by the SSS. Thus,
the requirement not of length of service but of updated SSS contributions. The
member must have paid at least three (3) months of contributions within the 12-
month period immediately before the semester of her childbirth or
miscarriage/emergency termination of pregnancy

The female member shall be given a daily cash allowance equivalent to 100% of
her average daily salary credit for a compensable period of 105, 120, or 60
days, as the case may be. Since the SSS salary credit has a limit (based on the
level of contributions), high-earning employees would end up getting paid a
lesser amount compared to their actual salaries.

The EMML however provides that employers shall pay a salary differential
(between actual cash benefits received from SSS and the average weekly
or regular wage of the female member) for the duration of the
maternity leave.

 The payment is advanced by the employer which has the task of determining the
qualification of the beneficiary. The employer runs the risk of not being
reimbursed by the SS, if it turns out the employee is not qualified. Question: In
such case, may the employer seek compensation from the employee? If so, can
it be done through salary deduction?

 Since the EMLL speaks of "every child birth" , the 4-deliveries limit has
effectively been abolished. The old limit was in line with the government’s
population control policy.

 Marital status is not a qualification.

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  Payment of maternity benefit is bar to claims for sickness benefit (administered
also by the SSS) for the same period covered by the leave.

 SSS maternity leave benefits, not being compensation paid by the employer, is
not taxable (NIRC, Sec. 32[B][6][e]). It is also not considered in the computation
of the employee’s 13th month pay.

 If the employee gets pregnant more than once in a year (whether calendar year
or not),can she avail of maternity leave benefits for each contingency? There is
no limitation of this sort provided in the law.

b. Paternity Leave

RA 8187, Paternity Leave Act

Section 3.Definition of Term. - For purposes of this Act, Paternity Leave refers to the
benefits granted to a married male employee allowing him not to report for work
for seven (7) days but continues to earn the compensation therefor, on the
condition that his spouse has delivered a child or suffered a miscarriage for
purposes of enabling him to effectively lend support to his wife in her period of
recovery and/or in the nursing of the newly-born child.

 The 4-deliveries limit is not specific to a particular employer or to a particular

spouse.

 The 7-day leave not need be continuous, and the DOLE allows employers the
prerogative to schedule the leave before or after delivery. There is no specific
time frame in which the leave (counted from the delivery) must be taken.
“Reasonable period of time” is the standard laid down by the DOLE. Like all
leave polices, employers would have the management prerogative to set
mechanics for administration of paternity leave.

 Unutilized paternity leave cannot be monetized. Can they be accumulated, for

future deliveries? The law and the IRR are silent. A prudent employer would
stipulate a specific policy on this issue.

In one case, the company denied this benefit to the claimants for failure to notify the
management of the pregnancy of their wives and the expected date of delivery as
required by the IRR of the Paternity Leave. The union argued that the company was
relying on technicalities by insisting that the denial was due to the two employees’
failure to notify it of the pregnancy of their respective spouses. It maintained that the
notification requirement runs counter to the spirit of the law. Both the NLRC and the
Court of Appeals decided in favor of the company. Unfortunately, the Supreme Court
did not make a ruling on this issue which was among the several issues involved in the
case ( Supreme Steel Corp. vs Nagkakaisang Manggagawa sa Supreme Steel Independent,
GR No. 185556, 28 March 2011).

c. Solo Parent Leave

RA 8972, Solo Parents Welfare Act

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 Sec. 8.Parental Leave. - In addition to leave privileges under existing laws,
parental leave of not more than seven (7) working days every year shall be
granted to any solo parent employee who has rendered service of at least
one (1) year.

Comments:

“Solo parent” has a technical definition, and the claimant employee need not be a
parent. It includes “any family member who assumes the responsibility of head of
family as a result of the death, abandonment, disappearance or prolonged absence of
the parents or solo parent”.

 The one-year service requirement is aligned with the SIL provision in the Labor
Code. Logically, the definition of ‘one year service “in the IRR on SIL should also
apply.

 Marital status is not a requirement in all cases.

 The employee must secure a Solo Parent ID from the DSWD, as proof of status
as such.

d. Violence Against Women & Children (VAWC) Leave

The constitutionality of this law , that it does not violate the equal protection clause, has
been was sustained (Garcia vs Drilon, GR No. 179267, 25 June 2013).

RA 9662, VAWC Law

Sec. 43.Entitled to Leave. – Victims under this Act shall be entitled to take a paid
leave of absence up to ten (10) days in addition to other paid leaves under the
Labor Code and Civil Service Rules and Regulations, extendible when the
necessity arises as specified in the protection order. Any employer who shall
prejudice the right of the person under this Section shall be penalized in accordance
with the provisions of the Labor Code and Civil Service Rules and Regulations.
Likewise, an employer who shall prejudice any person for assisting a co-employee who
is a victim under this Act shall likewise be liable for discrimination.

 "Paid leave of absence" would mean there would be no deduction on the

employee's salary for the absence from work.

 "Victims" would refer to "any woman who is [the offender's] wife, former wife, or
against a woman with whom the person has or had a sexual or dating
relationship, or with whom he has a common child" ( Section 3).

 The period of extension need not be paid, although the absence would be
authorized (and therefore not subject to disciplinary sanction).

 The IRR is explicit that "[VAWC] leaves not availed of are noncumulative and not
convertible to cash". But can accumulation and monetization be agreed upon by
the employer and the employee? Would such agreement be void for being
contrary to law and public policy ? Of course, who would complain if there is such
an agreement. The question would still be valid though, in case a union puts it on
the negotiating table .

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e. Female surgical Leave

RA 9710, Magna Carta For Women

Section 7.

xxx

M. “Gynecological disorders” refers to disorders that would require

surgical procedures such as, but not limited to, dilatation and curettage and
those involving female reproductive organs such as the vagina, cervix,
uterus, fallopian tubes, ovaries, breast, adnexa and pelvic floor, as certified
by a competent physician. For purposes of the Act and these Rules and
Regulations, gynecological surgeries shall also include hysterectomy,
ovariectomy, and mastectomy;

SEC. 18.Special Leave Benefits for Women. – A woman employee

having rendered continuous aggregate employment service of at least
six (6) months for the last twelve (12) months shall be entitled to a
special leave benefit of two (2) months with full pay based on her
gross monthly compensation following surgery caused by
gynecological disorders.

Comments:

 This medical surgery is in the nature of illness, and perhaps should be treated as
a contingency under the SSS law (like maternity leave benefit). The employer
should not be made the insurer of the employee's health condition.

 The gynecological leave is a greater burden to employers than the maternity

leave benefit, not only because it is paid by the employer but also because it is
equivalent to the employee's "full pay based on her gross monthly compensation"
plus "mandatory allowances".

 Since this is not an SSS income benefit, this paid leave is taxable ( unless the
employee receives minimum wage only).

 The term "continuous aggregate employment service' is confusing and seemingly

self-contradictory. "Continuous" means "forming an unbroken whole without
interruption" while "aggregate" means "a whole formed by combining several
(typically disparate) elements" and the latter thus strongly suggests a gap or
interruption. How can something "continuous" be at the same time an "aggregate
"?
 It is submitted that authorized absences ( like paid or unpaid medical leaves) do
not negate the "continuous" nature of the employment service since these
absences do not sever or cause interruption of the employer-employee
relationship.

Special leave benefit is non-cumulative and non-convertible to cash unless otherwise

provided by a CBA.

E. Leaves under CBA or company policy

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Company policies and collective bargaining agreements may provide for additional
kinds of leaves. These typically include:

 Bereavement leave
 Education/training leave
 Birthday leave
 Calamity leave
 Emergency leave
 Union leave

The definitions and conditions for availment of these leaves are stipulated in company
policies or CBAs.

Union leaves are normally used for attendance at CBA negotiations, grievance
conferences, arbitration and conciliation-mediation hearings, and labor education
seminars.

One of the issues in a certified arbitration case anchored on alleged violation of the CBA
was the employer's refusal to give paid time off to the union officers who attended the
grievance meetings held beyond company time and outside company premises
(Supreme Steel Corporation vs Nagkakaisang Manggagawa ng Supreme Independent
Union, GR No. 185556, 28 March 2011). The Supreme Court affirmed the ruling that
intention of the parties was undoubtedly to compensate the employees for the time that
they spend in grievance meetings. The CBA provision categorically stated that the
company will pay the employee "a paid time-off for handling of grievances,
investigations, labor-management conferences." It did not make a qualification that
such meeting should be held during office hours or within the company premises.

The refusal of union officers to report for work, on the ground that they are entitled to
full-time union leave during their tenure , was the issue in a case for illegal dismissal
anchored on their supposed insubordination (BDO vs Nebres, GR No. 208735, 19 July
2017).

Whether attendance at conferences before the DOLE, NCMB, or NLRC would

constitute paid leaves time would depend on the CBA provision. In the absence of a
relevant CBA, attendance at hearings involving personal cases would not be
considered paid leave (see Sugue vs Triumph International Phil., GR No. 164804-164784,
30 January 2009). PFFALLARJR