Dear Atty. Angela,

I am about to turn 60 years old this coming March 2026 and have worked in our company for over 15 years. I want to enjoy my remaining years and intend to retire already. When I consulted with our HR Manager to have my retirement pay computed, I was informed that according to our company policy, I could only retire and get my retirement pay when I reach 65 years. Is this true and legally correct?

Gina

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Dear Gina,

No, this is not the policy under our labor laws. The company policy cannot override the Labor Code policy and RA 7641 on retirement pay benefits.

Under the law, an employee upon reaching the age of 60 years or more, but not beyond 65 years which is 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 (1/2) 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 (1/2) month salary shall mean 15 days plus one-twelfth (1/12) of the 13th month pay and the cash equivalent of not more than five days of service incentive leaves.

The labor law is clear that when an employee reaches 60 years old and has served at least 5 years in the company, he or she shall be entitled to the retirement pay that cannot be lower than what the law provides.

Thus, you have the right to retire by the time you reach 60 years old. As for the retirement pay, you are entitled to at least 22.5 days computation for every year of service which includes the base half month salary, proportionate 13th month, and cash equivalent of your SIL. The company’s Retirement Policy must cover the 22.5 days computation under the law, and may include higher rates that would be favorable to the employee.

Atty. Angela Antonio