Leave Without Pay: The Complete 2026 Guide for Philippine Employers

So, one of your employees wants to take a few days off, but their paid leave has already ran out? That’s where Leave Without Pay (LWOP) comes in. It allows employees to take time off without pay, and while it’s not heavily regulated by law, it’s one of the most misunderstood HR processes in the Philippines.

This guide is designed to help HR teams confidently manage LWOP. We’ll cover how it differs from other types of absences, whether it’s mandatory in the Philippines, how it impacts pay and benefits, and what steps HR leaders can take to create a compliant policy that protects both employees and your business.

Leave Without Pay (LWOP) is an approved absence from work where the employee does not receive salary. It is typically requested when an employee has already used up their paid leave credits or needs additional time off for personal, medical, or other reasons.

Note that the keyword here is approved, which means LWOP isn’t the same as unexcused absences. It must go through the company’s formal approval process so that both the employee and employer are aligned on the duration and conditions of the leave.

Under Philippine labor standards, there is no legal requirement for employers to grant LWOP, but companies often include it in their internal policies to provide flexibility and support employees during exceptional circumstances.

The image below clarifies the most common types of absences in the Philippines and how they differ from Leave Without Pay (LWOP).

Unlike LWOP, AWOL is unapproved and considered a breach of company policy. It often happens when employees are suddenly absent without explanation or fail to follow the company’s leave request procedure

HR teams must carefully document each incident and address it consistently to maintain fairness and compliance, as repeated AWOL can lead to disciplinary action or even termination.

Forced leave is leave applied by the employer, usually using the employee’s accrued paid vacation or other leave credits. It’s used to:

• Prevent forfeiture of unused leave at year-end
• Manage workforce requirements during slow business periods
• Comply with internal policies that encourage employees to take rest periods

Suspension of operations, or floating status, happens when the employer temporarily halts work due to business conditions such as seasonal slowdowns, equipment maintenance, or other operational needs. Depending on company policy, employees may be placed on LWOP during this period. 

HR must ensure that employees are informed in writing, that payroll and benefits are correctly adjusted, and that the suspension does not exceed six months as required under Philippine labor law. 

LWOP is typically not a statutory entitlement, but treated as a management prerogative or a company‑granted benefit. This means that employers have the discretion to approve or decline LWOP requests, especially when such leaves are not covered by existing paid leave credits. 

However, there are critical exceptions and risks employers should be aware of, especially when dealing with recurring or prolonged unpaid leave requests. 

Denial of LWOP must not be arbitrary, discriminatory, or inconsistent with the company’s existing policy. If leave-approved employees are later treated as if they committed unapproved absences, or if policies are applied unfairly, this may raise legal concerns around unfair labor practice or even constructive dismissal. 

• For example, the doctrine of constructive dismissal arises when employer actions (including deceptive or unfair leave‑related policies) make continued employment “impossible, unreasonable or unlikely.” In such cases, an employee may claim that they were effectively forced out of their job, even if there was no formal termination notice.
• Employers might also implement unpaid leave as part of formal flexible work arrangements (such as during business slowdowns or temporary suspension of operations), but such arrangements are subject to specific guidelines. For instance, under Department of Labor and Employment (DOLE) guidelines on flexible work arrangements, employers considering “forced leave” or unpaid leave during operational stoppages must ensure the arrangement is temporary and applied in good faith. 

Managing LWOP affects multiple aspects of employee compensation and benefits, including:

For days an employee is on LWOP, the salary for that period is not paid. To calculate the daily rate for deduction purposes, divide the employee’s monthly basic salary by the number of working days in that month. For example, if the monthly salary is PHP 30,000 and there are 22 working days, the daily rate is PHP 30,000 ÷ 22 = PHP 1,363.64. Multiply this by the number of LWOP days to determine the total deduction.

The 13th-month pay is computed as: Total Basic Salary Earned During the Year ÷ 12

Days spent on LWOP reduce the “total basic salary earned,” which in turn slightly lowers the 13th-month pay. For example, if an employee earns PHP 300,000 in the year but had 10 days of LWOP, the total paid salary is adjusted accordingly before applying the formula.

If an employee is on LWOP immediately before or after a regular holiday, they may not be entitled to holiday pay for the unpaid period. HR must adjust payroll to reflect this.

SIL accrual is generally based on actual days worked. Days on LWOP are typically excluded from accrual calculations, which can affect future leave balances if not properly tracked.

During LWOP, both employer and employee contributions to SSS, PhilHealth, and Pag-IBIG are usually suspended for the unpaid period. Payroll teams must adjust remittances accordingly to avoid overpayment or compliance issues.

HR leaders need to create a clear, compliant LWOP policy to manage requests consistently, avoid payroll errors, and protect the company from legal risks. Here’s a practical step-by-step approach for developing your LWOP policy:

Start by clearly stating the purpose of the LWOP policy. Specify who the policy applies to (e.g., all full-time employees or certain departments) so there’s no ambiguity.

Outline which employees are eligible for LWOP and under what circumstances. Common reasons include exhausting paid leave, personal matters, medical needs, or extended education. Clearly define conditions for approval to prevent misunderstandings.

Establish a standard process for requesting LWOP, including timelines, forms, and necessary approvals. Define who can approve the request, how employees should submit it, and how HR will document the decision.

Specify maximum allowable LWOP durations and whether extensions are permitted. Include conditions for granting extensions, such as workload considerations or operational requirements.

State the employee’s rights and obligations when returning from LWOP. This includes resuming their previous position, updating payroll and benefits, and any requirements for notice before returning.

Tracking requests on paper or spreadsheets makes it easy to miscalculate payroll, forget to adjust benefits, or miss approval steps. And these can lead to compliance problems and employee dissatisfaction. 

With Sprout HR, the entire leave process (from request to approval to payroll adjustment) is automated. Employees can file LWOP requests digitally, managers can approve them with a few clicks, and balances are automatically updated in real time. 

What’s more, it integrates seamlessly with payroll, automatically adjusting salaries, 13th-month pay, holiday pay, and benefits contributions for any LWOP periods. This means more time for the HR team and more accurate payroll processing every cycle. 

Yes, employers can deny a Leave Without Pay (LWOP) request, as granting LWOP is generally a matter of company policy and managerial discretion. However, the decision must be applied fairly and consistently to avoid claims of discrimination or unfair labor practice.

In private companies, LWOP is not mandated by law and is typically handled according to company policy under DOLE guidelines. For government employees, LWOP is regulated by the Civil Service Commission (CSC), which provides more specific rules on eligibility, duration, and documentation.

An employee on LWOP cannot be terminated simply for being on unpaid leave. Termination would only be legal if there are separate, valid grounds for dismissal under Philippine labor law.

LWOP can be granted in addition to maternity leave if the employee requests more time off, but HR must carefully coordinate leave balances, payroll deductions, and benefits contributions. Policies should clearly outline eligibility, approval process, and the impact on service incentive leave, SSS, PhilHealth, and Pag-IBIG contributions, and 13th-month pay.

Leave without pay is an approved absence where the employee does not receive salary but is not considered an unauthorized absence. Understand when and how it applies in our leave without pay guide for Philippine employers.