Laws & Jurisprudence
RETIREMENT PAY
8:19 AM
It is axiomatic that a retirement plan giving the employer the option to retire its employees below the ages provided by law must be assented to and accepted by the latter, otherwise, its adhesive imposition will amount to a deprivation of property without due process of law. Acceptance by the employees of an early retirement age option must be explicit, voluntary, free, and uncompelled. While an employer may unilaterally retire an employee earlier than the legally permissible ages under the Labor Code, this prerogative must be exercised pursuant to a mutually instituted early retirement plan. In other words, only the implementation and execution of the option may be unilateral, but not the adoption and institution of the retirement plan containing such option. For the option to be valid, the retirement plan containing it must be voluntarily assented to by the employees or at least by a majority of them through a bargaining representative. (LOURDES A. CERCADO v. UNIPROM, INC., G.R. No. 188154, 13 October 2010)
The third paragraph of Article 287
states that in the absence of a retirement plan or agreement providing for
retirement benefits of employees in the establishment, an employee upon
reaching the age of sixty (60) years or more, but not beyond sixty-five (65)
years which is hereby declared the compulsory retirement age, who has served at
least five (5) years in the said establishment, may retire and shall be
entitled to retirement pay equivalent to at least one-half (1/2) month salary
for every year of service, a fraction of at least six (6) months being
considered as one whole year. (KOREAN AIR CO., LTD. and SUK KYOO KIM v.
ADELINA A.S. YUSON, G.R. No. 170369, 16
June 2010)
In
particular, Article 300 of the Labor Code, as amended, partly provides:
“Any employee may be retired upon reaching the retirement age established in
the collective bargaining agreement or other applicable employment contract. In
case of retirement, the employee shall be entitled to receive such retirement
benefits as he may have earned under existing laws and any collective
bargaining agreement and other agreements: Provided, however, that an
employee's retirement benefits under any collective bargaining and other
agreements shall not be less than those provided herein. In the absence of a
retirement plan or agreement providing for retirement benefits of employees in
the establishment, an employee upon reaching the age of sixty (60) years or
more, but not beyond sixty-five (65) years which is hereby declared the
compulsory retirement age, who has served at least five (5) years in the said
establishment, may retire and shall be entitled to retirement pay equivalent to
at least one-half (1/2) month salary for every year of service, a fraction of
at least six (6) months being considered as one whole year. Unless the parties
provide for broader inclusions, the term one half (1/2) month salary shall mean
fifteen (15) days plus one-twelfth (1/12) of the 13th month pay and the cash
equivalent of not more than five (5) days of service incentive leaves. (ELEAZAR
S. PADILLO v. RURAL BANK OF
NABUNTURAN, INC., ET AL., G.R. No. 199338, 21 January 2013)
Ultimately, the more important
threshold to be considered in construing whether the retirement agreement
provides less benefits, compared to those provided by the Retirement Pay Law,
is that the retirement benefits in the said agreement should at least amount to
one-half of the employee’s monthly salary. (BANCO FILIPINO SAVINGS AND MORTGAGE BANK v. MIGUELITO M. LAZARO, G.R.
Nos. 185346, G.R. No. 185442, 27 June 2012)
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