Dear PAO,

I have been working with a private establishment for 25 years now. I am planning to retire next year upon reaching the age of 60. May I know if I am entitled to a retirement pay from my employer, apart from the SSS pension?

Augusto

Dear Augusto,

The answer to your query can be found under Republic Act 7641 (RA 7641), known as “An Act Amending Article 287 of Presidential Decree No. 442, as amended, otherwise known as The Labor Code of the Philippines, by Providing for Retirement Pay to Qualified Private Sector Employees in the Absence of any Retirement Plan in the Establishment.”

Article 302 [287] of the Labor Code, as amended by RA 7641, provides 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.”

Corollarily, Rule II of Book VI of the Rules Implementing the Labor Code pronounces that RA 7641 applies “to all employees in the private sector, regardless of their position, designation, or status and irrespective of the method by which their wages are paid, except to those specifically exempted under Section 2 hereof.”

The exemptions provided under Section 2 of the same law are: (1) employees of the National Government and its political subdivisions, and (2) employees of retail, service and agricultural establishments or operations regularly employing not more than ten (10) employees.

Clearly, from the foregoing, an employee in the private sector is entitled to retirement pay provided that he/she has fully satisfied the legal requirements for the availment of the said benefit, and does not fall under the exemptions.

In De La Salle Araneta University vs. Bernardo [G.R. No. 190809, 13 February 2017], penned by Chief Justice Teresita J. Leonardo-De Castro, the Supreme Court set forth the requisites that must be met before an employee may avail of retirement pay, viz.: “(1) the employee has reached the age of 60 years for optional retirement or 65 years for compulsory retirement; (2) the employee has served at least five years in the establishment; and (3) there is no retirement plan or other applicable agreement providing for retirement benefits of employees in the establishment.”

Relative thereto, if your situation fits squarely to the afore-cited requirements and you possess none of the disqualifications defined under RA 7641; then, you are entitled to retirement benefits from the company you have been working for, for the past 25 years.

We hope that we were able to answer your queries. This advice was based solely on the facts you have narrated and our appreciation of the same. Our opinion may vary when other facts are changed or elaborated.

Thank you for your continued trust and support.

Editor’s note: Dear PAO is a daily column of the Public Attorney’s Office. Questions for Chief Acosta may be sent to [email protected]