Leave credits are the running balance of time off an employee has earned and not yet used. In the Philippines, how those credits grow is mostly a company policy problem. Statutes fix some benefits—five-day Service Incentive Leave for covered employees, and event-based leaves such as maternity—but they do not prescribe one monthly vacation formula for every employer. TimeBoxHR is designed to support configurable entitlement policies, accrual batches, balances, and manual adjustments so the method you wrote is the method the batch uses.
Last reviewed: September 2026.
Government rules and contribution schedules may change. This article is provided for general information and should be verified against the latest official government issuance before payroll processing.
This article is the calculation companion to the employee leave benefits overview. Peso treatment of those credits is in how to compute leave pay.
Policy-driven credits versus statute-fixed benefits
Start by classifying the leave type.
Company vacation leave and sick leave need an accrual method, a proration rule, rounding, carry-over, and conversion because the law does not hand you those numbers.
SIL needs a five-day annual value for covered employees after one year of service, with handbook-recognized pro rata use and conversion. You still choose whether you grant five days on the anniversary, accrue toward that five, or satisfy SIL through VL of at least five days.
Event-based statutory leaves do not accrue monthly for the whole workforce. You do not give every male employee 0.58 paternity days per month. You record seven days when a covered delivery occurs.
If software cannot configure those differences, someone will force maternity into a VL accrual table.
Annual, monthly, and daily accrual
Three company patterns appear over and over.
Annual grant: the full entitlement posts on a fixed date, often 1 January or the hire anniversary. Example: 12 VL days on 1 January. Simple to explain. You then need a recovery rule if the employee uses 12 days and resigns in February.
Monthly accrual: annual days divided by 12, posted once a month. Example: 12 VL days a year = 1.00 day per month. Example: 15 VL days a year = 1.25 days per month. Example: 10 SL days a year = 0.8333 days per month before rounding.
Daily accrual: annual days divided by working days or calendar days in the year. Example: 12 VL days / 261 working days ≈ 0.0460 day per worked day. This tracks attendance closely and is harder to explain at the water cooler.
| Annual VL days | Monthly equivalent (÷ 12) | Daily equivalent (÷ 261 workdays, illustrative) |
|---|---|---|
| 10 | 0.8333 | 0.0383 |
| 12 | 1.0000 | 0.0460 |
| 15 | 1.2500 | 0.0575 |
The 261-day divisor is an illustration, not a legal factor. If you accrue daily, publish the divisor (calendar days, scheduled days, or paid days) and keep it stable.
SIL can be granted as 5.000 days after one year, or recognized pro rata in a resignation year as the handbook illustrates (for example, 2/12 × 5 = 0.833 days for two months). Do not invent a daily SIL rate that undercuts the official commutation approach.
Mid-year hire
A hire on 1 April should not receive a full company annual grant unless policy says so.
Completed-month method, 12 VL days, hired 1 April, year ends 31 December:
9 completed months × 1.00 = 9.00 days
Hire-month-excluded method, hired 16 April:
8 completed months × 1.00 = 8.00 days
Half-month method, hired 16 April:
0.50 for April + 8.00 = 8.50 days
Write which one you use. Apply it to SL the same way if SL is also prorated. Do not prorate VL monthly and then grant full SL on day one without saying why.
For SIL, the first-year question is entitlement after one year of service, not a casual half-year grant. Once covered, resignation-year SIL may be proportionate under handbook principles. See the SIL article for the ₱610 commutation illustration and recompute with live dates and rates.
Probationary employees
State two sentences in the handbook:
- Company VL/SL begin on this date or event (often regularization, sometimes date hired)
- SIL for covered employees is assessed after one year of service, regardless of the probation label
If VL starts at regularization on 15 March, the first monthly VL credit should follow the posting rule (15 March, 31 March, or next batch). If you wait until 1 April “for convenience,” write that delay.
Do not tell a probationary employee that “the law gives no leave of any kind.” That may be false for a later SIL analysis and is always incomplete if another statute (maternity, paternity) already applies.
Leave without pay and other unpaid time
If policy says credits accrue only for paid service, a full month of LWOP should add 0.00 VL/SL for that month under monthly accrual. Under daily accrual, unpaid days should add nothing.
If the employee is on unpaid maternity extension (the optional 30 days), decide whether that month earns company VL. Many employers pause VL/SL accrual during unpaid maternity extension. Paid maternity days may or may not earn VL depending on policy; write it.
Long AWOL should not continue to earn VL because a batch runs on headcount alone. Accrual batches need an eligibility test: active, paid status, or scheduled days, as you configured.
SIL’s “one year of service” includes authorized absences and certain unworked days as the implementing rules describe. Do not use a VL LWOP pause to argue that the statutory one-year mark never arrives, unless current official rules support that reading for the facts you have.
Rounding
Unwritten rounding is a dispute generator.
Examples you can publish:
- Store VL to two decimal places; 10/12 = 0.83 days per month
- Store VL to four decimal places; 10/12 = 0.8333; display two
- Round each monthly posting to the nearest 0.5 day (will drift from 10.00 a year)
- Follow a handbook-style three-decimal SIL remainder for commutation (0.833 days)
Pick a rule per type. Apply it in the batch, not in the encoder’s head. If you convert unused days to cash, the same decimals must reach leave pay.
Never round every remainder down to protect the company, or up to please the employee, without writing that bias. Inconsistent rounding between branches is two policies.
Carry-over
Company VL may carry 5 days, carry everything, or expire. Company SL often expires. Those are policy choices.
SIL unused at year-end is generally commutable for covered employees. A “forfeit all leave on 31 December” switch is dangerous if SIL lives in that same bank.
Paternity, solo-parent, and VAWC unused days are generally not cumulative. Special leave for women is non-cumulative except as a CBA provides.
Configure carry-over per type. A global carry-over flag will violate at least one statute.
Conversion and year-end batches
Conversion means remaining days × a documented daily rate at a documented moment. SIL commutation uses the salary rate at the date of commutation under the handbook. Company VL conversion may use the same rate, a different rate, or none.
Year-end workflow:
- Lock usage through 31 December (or your leave year).
- Identify remaining SIL for covered employees and commute or document a lawful alternative that still protects the statutory value.
- Apply VL/SL carry-over caps.
- Forfeit or convert company days as policy states.
- Reset event-based unused days that do not carry.
- Post opening balances for 1 January.
Do this before January requests consume a number that still included December’s forfeitures.
Resignation and last day
On the last day, compute earned minus used for each type, using the proration rule for the partial year. SIL remaining for covered employees is generally payable. Company VL/SL follow policy. Do not grant a full next-month accrual on the morning of resignation unless the posting rule already earned that month.
If the employee used more VL than earned under an annual-grant design, recover the excess in final pay only if policy allowed the advance and the recovery is documented.
Negative balances from a data error need a manual adjustment with a reason, not a quiet edit.
Worked examples
Example A. Monthly VL, 12 days a year, hired 1 January, resigns 31 August, used 5.00 days, completed-month accrual, no LWOP.
Earned: 8.00. Remaining: 3.00 company VL. Treat those 3.00 under the VL conversion rule. If VL is also the SIL vehicle and the employee is covered, confirm that statutory commutation is not undercut by a forfeiture clause.
Example B. Same employee, two months LWOP in the year, policy pauses monthly VL during full unpaid months.
Earned: 6.00. Used: 5.00. Remaining: 1.00.
Example C. Mid-year hire 1 July, 15 SL days a year, monthly accrual 1.25, hire month counts, year-end forfeiture of SL, used 2.00.
Earned by 31 December: 6 × 1.25 = 7.50. Remaining 5.50 forfeited if that is the SL rule. Do not commute it because SIL commutes.
Example D. Covered employee, SIL granted 5.00 on the anniversary in June, used 2.00, resigns the following March. Apply handbook-style remaining SIL plus any proportionate months in the new year, at the rate on the commutation date. Recalculate; do not copy a blog figure.
What the DTR and payroll need from credits
Credits are not attendance. The DTR shows the day type. The balance decrements when the request is approved and charged. Payroll pays or deducts based on the type. A payroll computation that never sees the leave type will guess.
Holiday calendars affect whether a day is worked, not how many VL days you accrue in May, unless you wrote a bizarre rule that should not exist.
How TimeBoxHR Handles This
TimeBoxHR is designed to support leave types, assigned entitlement policies, leave credit balances, accrual batches, and manual adjustments. You can configure monthly, annual, or other documented methods, including 12 days a year as 1.00 day a month. Employees can check balances and apply in the portal. Approvals decrement the correct type. Approved leave is designed to flow into DTR and payroll. Configurable payroll rules and holiday calendars stay in the same operational picture. Rounding, carry-over, and conversion should be set per type so SIL and company SL do not share a forfeit switch.
Simplify leave-credit calculation with TimeBoxHR
Split SIL, VL, and SL. Attach a policy to each eligible group. Run batches on a schedule you can explain. Preview before posting if your process allows it. When tenure or a mid-year hire was encoded late, use a manual adjustment with a reason instead of editing history without a trail.
TimeBoxHR does not invent a statutory VL formula. It is designed to apply the entitlement math you configure and to keep usage aligned with attendance and pay.
Explore TimeBoxHR leave and timekeeping features, or start a 30-day free trial to see accrual batches and balances beside the DTR.
