Retirement

Dear Atty. Vlad,

I am a customer representative in a business processes outsourcing company and have been working there for 20 years already. I will turn 60 this January 2023 and my manager told me that I will be of retirement age come next month. My manager told me that I do not need to stay until I am 65. Apart from that, he said that the company is providing a very good retirement package. I am thinking about it and I am not sure if I want to accept the retirement since I prefer working than just staying at home. Please give me advice on my options.

Rosendo

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Dear Rosendo,

Republic Act 7641, the Retirement Age Law, provides the following:

SECTION 1. Article 287 of Presidential Decree 442, as amended, otherwise known as the Labor Code of the Philippines, is hereby amended to read as follows:

"Art.287. Retirement. — 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 years in the said establishment, may retire and shall be entitled to retirement pay equivalent to at least one-half month salary for every year of service, a fraction of at least six months being considered as one whole year."

"Unless the parties provide for broader inclusions, the term one-half month salary shall mean 15 days plus 1/12 of the 13th month pay and the cash equivalent of not more than five days of service incentive leaves."

"Retail, service and agricultural establishments or operations employing not more than (10) employees or workers are exempted from the coverage of this provision."

"Violation of this provision is hereby declared unlawful and subject to the penal provisions provided under Article 288 of this Code."

From the foregoing, an employee who has reached the age of 60 years but not more than 65 years, and who has served for at least five years in the establishment or the company, may retire. This means that the option to retire is given to the employee and not to the company. The exception to this is, when there is a retirement plan or agreement (like an employment contract duly signed by the employer and the employee). In such case, the retirement age in the retirement plan or agreement will be followed.

In your case, there was no mention of any retirement plan or agreement with your employer. As such, you have the option to retire at the age of 60 years or more but not beyond 65. Your employer cannot force you to retire at the age of 60 in the absence of any retirement plan or agreement.

I hope that I was able to help you in choosing your options.

Atty. Vlad