Optional retirement

Dear Atty. Vlad,

I am an owner of a restaurant in Malolos, Bulacan. On 10 June 2019, I hired one of my supervisors. When I hired him, he was already 57 years. After four years, said supervisor applied for early retirement. I told him to wait until he reaches the compulsory retirement age of 65. He claimed, however, that since he is more than 60 years, he is already entitled to optional retirement. Is he correct? Please help me.

Mildred

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Dear Mildred,

From what you shared, while your supervisor is already more than 60 years of age when he applied for retirement, he has just been with you for less than five years. Despite this, however, he is already applying for optional retirement.

Article 302 (formerly Article 287) of the Labor Code, as amended, provides the following:

“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 60 years or more, but not beyond 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 one-twelfth 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 provisions, while your supervisor is already 60 years, he is less than 65 years. As such, it is required that he should have rendered at least five years of service with your company before he is entitled to optional retirement. Since he has only rendered four years of service, he is not yet eligible for optional retirement.

I hope I was able to help based on the facts you stated.

Atty. Vlad del Rosario