Previously, we discussed the entitlement to unused leave benefits of Ab Sintero and established that he was only entitled to a maximum of 10 vacation leaves (VL) while the remaining balance of 5 days was validly forfeited by the management, Manigong Bagong Company.
In this article, we will show how to compute the leave conversion of Mr. Ab Sintero under different scenarios and tackle as well the underlying legal principles that must be observed by HR practitioners.
The following must be considered as regards leave conversion:
1. Check if there are special policies in conversion or commutation. Special policies mean those which grant benefits beyond what is provided by law just like in the case of Ab Sintero whose company gives 10 days instead of the minimum 5 days of leave benefits per year. If there is a CBA, follow its provisions.
2. Regardless of any existing agreement or policy, the total number of VL that may be subject for conversion each year should not be less than 5 days (assuming it is not used by the employee).
3. It must be based on the last prevailing salary or salary at the date of conversion (See Republic Planters Bank, now known as PNB-Republic Bank, vs. NLRC, et al., G. R. No. 117460, Jan. 6, 1997)
4. Accrued and unused VL may be computed on pro rata basis.
Now, let us compute the VL conversion of Ab Sintero.
Scenario A. Assuming that he was hired on January 1, 2010, and his salary is P20,000.00 per month, his accrued and unused VL as of January 1, 2011 shall be computed as follows:
1. Get the daily equivalent of monthly salary. Formula: Monthly salary x 12 / 365 days
Thus: P20,000 x 12 / 365
240,000 / 365
(For extensive discussion on the use of factors and divisors, please see the author’s book on Guide on Employee Compensation and Benefits Volume 1 available online through manilabooksales.com as well as major book stores like National Book Store.)
2. Multiply the daily rate by the number of days constituting the balance of VL credits. Thus,
P657.53 x 10 days = P6,575.30
Scenario B. Assuming Ab Sintero got irked by the management’s decision to forfeit his 5 days of VL and resigns on February 1, 2011, his VL conversion shall be:
1. VL earned as of December 31, 2010 - 10 days
2. VL earned for January and February 2010
Get the proportionate number of days. Thus:
2 /12 x 10 days
.17 x 10 days
3. Get the total number of days
As of December 31, 2010, 10 days
January – Feb 2011, 1.7 days
Total: 11.7 days
4. Compute the monetary equivalent
11.7 days x P657.53 = P7,693.10
In the absence of any other policy, the above is the computation of Ab Sintero’s leave conversion based on the foregoing scenarios. Next week, the author will discuss other leave benefits.
Guest author for this post is Atty. Elvin Villanueva, HR and Labor Law specialist as well as author of HR guides: Valid Dismissal of Employees, Compensation and Benefits Guides 1 and 2, and Gabay ng Mga Karapatan ng OFW.
Atty. Villanueva is also a regular speaker at seminars and workshops for HR practitioners. Catch him at the Edsa Shangri-la on January 14, 2010 where he will conduct a review of the Supreme Court’s most recent decisions on employee dismissal from 1-4 p.m.
You may also listen to him speak at the Manila Peninsula Hotel on February 24, 2010 where his discussion will focus on “Guide to Valid Dismissal of Employees”, from 9:00 a.m.-3:00 p.m.
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