Claiming Length of Service Pay for Absent Employees Under Philippine Labor Law
(A Comprehensive Legal Overview)

In Philippine labor law, “length of service” plays a pivotal role in determining various entitlements and benefits of an employee, such as separation pay, retirement pay, service incentive leave (SIL), and in some cases, backwages and other forms of monetary awards. A recurring question for employers and workers alike is how periods of absence (especially prolonged, habitual, or unauthorized absences) affect the computation of one’s length of service and the corresponding pay or benefits derived from that length of service.

This article provides an overview of the legal bases, relevant jurisprudence, and administrative issuances concerning length of service pay or benefits, with particular attention to how absences influence an employee’s eligibility and computation of such entitlements.

1. Relevant Concepts Under the Labor Code of the Philippines

Service Incentive Leave (SIL)
- Statutory Basis: Articles 95 (formerly Article 82) of the Labor Code and related Department of Labor and Employment (DOLE) issuances.
- Definition: Employees who have rendered at least one (1) year of service are entitled to a yearly service incentive leave of five (5) days with pay.
- Impact of Absences:
  - A “year of service” is typically interpreted as having worked for at least 12 months, whether continuous or broken, in the same establishment or undertaking.
  - Occasional absences do not automatically break service for SIL entitlement. However, if an absence is so prolonged that the employee is effectively no longer deemed in service (e.g., abandonment, or an approved long-term leave without pay that extends beyond the employment’s continuity), it may affect the computation of the one-year requirement.
  - Where an employee’s absences are excessive but are covered by approved leaves, the period covered by such leaves generally still counts toward continuity of service, unless the company’s rules or a specific agreement state otherwise (and provided those rules do not contravene minimum labor standards).
Separation Pay
- Statutory Basis: Articles 298-299 (formerly Articles 283-284) of the Labor Code.
- Definition: Separation pay is due to employees whose services are terminated due to authorized causes such as redundancy, retrenchment, closure of business not due to serious losses, or the employee’s disease rendering them unfit to continue working.
- Formula: Typically:
  - One (1) month salary for every year of service (for closures not due to serious losses or redundancy), or
  - One-half (1/2) month salary for every year of service (for retrenchment or disease).
- Impact of Absences:
  - Absences per se do not automatically reduce years of service for separation pay purposes unless such absences legally severed the employment (e.g., the employee was considered to have abandoned the job, was validly terminated, or resigned).
  - If the employee remains on the company’s rolls (i.e., not terminated, not resigned, or not considered as having abandoned their post), that period generally counts toward the employee’s length of service.
Retirement Pay
- Statutory Basis: Republic Act No. 7641 (the Retirement Pay Law) amending Article 302 (formerly 287) of the Labor Code.
- Definition: Employees (except those in specific exempt industries or with specific retirement plans) who have reached the age of 60 (optional) or 65 (compulsory) and have served at least five (5) years in the company are entitled to retirement pay.
- Impact of Absences:
  - The law generally speaks of five (5) years of continuous service. Authorized leaves or absences (e.g., sick leave, maternity leave, paternity leave, or other approved leaves) do not typically break continuity.
  - Unauthorized absences that lead to disciplinary action or termination may interrupt the employee’s continuous service if they result in a legitimate severance of employment before the five-year mark or before the retirement age.
13th Month Pay
- Statutory Basis: Presidential Decree No. 851.
- Definition: Rank-and-file employees are entitled to 13th month pay, equivalent to at least one-twelfth (1/12) of the total basic salary earned within a calendar year.
- Impact of Absences:
  - 13th month pay is computed based on the actual basic salary earned. Prolonged absences without pay affect the “salary earned” and thus reduce the total base for computing the 13th month pay. However, they do not necessarily break an employee’s length of service.
Backwages and Other Monetary Awards (in Case of Illegal Dismissal)
- Statutory Basis: Article 294 (formerly Article 279) of the Labor Code and jurisprudence such as Bustamante v. NLRC and Session Delights Ice Cream and Fastfoods v. Court of Appeals.
- Definition: When an employee is illegally dismissed, they may be entitled to reinstatement without loss of seniority rights and full backwages.
- Impact of Absences:
  - Should an employee be illegally dismissed and later reinstated, the Supreme Court has consistently ruled that the employee’s length of service includes the period of dismissal until actual reinstatement.
  - Absences prior to dismissal do not generally reduce backwages unless they were periods of actual unpaid suspension or if the employee was on no-work-no-pay status during certain days.

2. Determining Whether Absences Affect Continuous Service

The Labor Code does not expressly define “continuous service” in a way that excludes ordinary or approved absences; rather, continuity is broken when:

The employee resigns or voluntarily severs the employment relationship;
The employer legally terminates the employee for a just or authorized cause;
The employee abandons the job and the employer deems the employment relationship ended.

Prolonged Absences

A prolonged absence may suggest abandonment if accompanied by a clear intention not to return to work (e.g., ignoring return-to-work orders, failure to communicate with the employer).
If the employee is on an approved leave (medical leave, maternity leave, or personal leave sanctioned by the employer), that period remains credited to employment.

Habitual or Excessive Absences

While habitual absenteeism may be grounds for disciplinary action (and ultimately dismissal for a just cause if it violates company policy and due process is followed), it does not necessarily strip away the count of those days or months from the employee’s length of service unless the disciplinary process culminates in termination.
In short, for so long as the employee remains in the company’s rolls (i.e., not terminated, not separated), service continues to be counted.

3. Jurisprudential Guidelines

Philippine jurisprudence provides clarifications on how absences interact with length of service. Some general points distilled from case law:

Abandonment of Work
- Abandonment requires two elements: (1) the failure to report for work or absence without valid reason, and (2) a clear intention to sever the employer-employee relationship.
- Mere absence or failure to report for work is insufficient to prove abandonment. Without proof of intent to sever ties, continuous service remains.
Effect of Illegal Dismissal
- If an employer dismisses an employee (for alleged absences, for example) without just or authorized cause or without due process, and the dismissal is declared illegal by the labor tribunal or court, the employee is deemed to have been in continuous service from the time of dismissal up to reinstatement. This includes the computation of separation pay, backwages, and seniority rights.
Approved Leaves or Medical Absences
- Courts typically treat periods of approved leaves—whether with or without pay—as part of continuous service unless company policies or a collective bargaining agreement (CBA) explicitly state otherwise (again, subject to compliance with minimum labor standards).
- For medical absences, the Labor Code’s provisions on disease as an authorized cause of termination apply only if the employee’s continued employment poses a risk to themselves or others, certified by a competent public health authority, and no reasonable accommodation or compliance measure can be made.

4. Practical Scenarios

Employee A takes frequent but approved sick leaves
- The frequent absences do not break the continuity of service. As long as the leaves are approved and do not violate any company rules leading to legal termination, Employee A’s length of service remains unbroken.
Employee B goes AWOL (Absent Without Official Leave) for two weeks
- If the employer initiates due process (issuance of notices to explain and subsequent disciplinary action), and eventually decides to terminate B for a just cause (prolonged absenteeism, abandonment), the employment ends as of the effective termination date. The period before that date is still counted in B’s length of service.
- If the employer does not terminate the employee, and the employee eventually reports back to work with a valid explanation or the employer condones the absence, the continuity of service is ordinarily deemed uninterrupted.
Employee C is illegally dismissed for alleged absenteeism
- If a labor tribunal or court rules the dismissal illegal, Employee C is deemed to have been continuously employed for the entire period of dismissal until reinstatement (or in lieu of reinstatement, the date of finality of the decision).
Employee D files for retirement after a series of leaves
- Provided D has not severed employment and has complied with the statutory minimum (e.g., five continuous years under RA 7641), those leaves do not necessarily disqualify or reduce the credited years of service for retirement, unless they break the employment relationship.

5. Documentation and Company Policies

In practice, employers should maintain clear documentation to determine whether absences affect length of service:

Leave Applications and Approvals
- A paper trail or digital record of leave approvals clarifies that absences are authorized and do not break service.
Policies in the Employee Handbook
- Clearly define the nature of leaves, the process for requesting them, and the consequences for unauthorized absences.
- However, note that no company policy can go below the minimum labor standards set by law.
Disciplinary Procedures
- If absences merit disciplinary action, the employer must comply with due process (the “two-notice rule” under Philippine labor jurisprudence).
- If discipline leads to termination, it affects length of service only from the effective date of separation onwards.

6. Key Takeaways

Basic Principle: Mere absences—approved or otherwise—do not automatically disqualify an employee from “length of service” benefits or pay unless those absences lead to a legitimate severance of the employment relationship (resignation, legal termination, or abandonment).
Continuity of Service: For as long as an employee remains on the payroll (not validly separated from employment), the employment is deemed continuous for purposes of computing statutory benefits tied to length of service.
Company Policies vs. Law: While employers can craft policies on absences and leaves, these must always respect the minimum standards set forth in the Labor Code and DOLE regulations.
Legal Severance: Length of service is only cut short when the employment is legally severed. If the employee is eventually found to have been illegally dismissed, the period of dismissal is tacked on to the length of service.
Document, Document, Document: Clear documentation is the best protection for both employers and employees when disputes arise about absences and their effect on length of service or pay.

7. Conclusion

Under Philippine labor law, an employee’s length of service is a crucial factor for determining various monetary entitlements such as separation pay, retirement pay, service incentive leave, and backwages. Absences—by themselves—do not negate the accrual of these benefits unless they lead to a valid termination or a clear, documented act of abandonment.

In all instances, employers must observe due process before using absences as a ground for termination. Employees, on the other hand, should ensure that any absence (especially prolonged ones) is well-communicated and duly authorized to maintain undisputed continuous service status. Ultimately, the guiding principle is the protection of the employee’s rights to security of tenure and due process, balanced against the employer’s prerogative to discipline employees and maintain efficient operations.

Disclaimer: This article provides general information only and does not constitute legal advice. For specific cases and disputes, consultation with a qualified labor lawyer or professional is highly recommended. The laws, regulations, and jurisprudence cited herein may be amended or superseded; always check for the most recent updates and issuances from the Department of Labor and Employment (DOLE) and relevant court rulings.