Published 7 July 2023, The Daily Tribune

Sixty years is the age, under the law, that is considered a retiring age. Aside from discounts on basic necessities and prime commodities, senior citizens who are still part of the working sector may avail themselves of retirement benefits under the law.

Retirement benefits, as explained by the Supreme Court, are “intended to help the employee enjoy the remaining years of his life, lessening the burden of worrying about his financial support, and are a form of reward for his loyalty and service to the employer.” (Pantranco North Express Inc. v. NLRC, 328 Phil. 470 [1996])

Article 302 (287) of the Labor Code mandates that in the absence of a retirement plan or agreement providing for retirement benefits of employees in an 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 is considered as one whole year.

Thus, retirement is optional at the age of 60 and compulsory at 65.

The retirement pay law 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. They include part-time employees, employees of service and other job contractors, and domestic helpers or persons in the personal service of another.

The law, however, does not cover (1) employees of retail, service, and agricultural establishments or operations employing not more than 10 employees or workers; and (2) employees of the national government and its political subdivisions, including government-owned and/or controlled corporations, if they are covered by the Civil Service Law and its regulations. (Postigo v. Philippine Tuberculosis Society, G.R. 155146, 24 January 2006)

Further, the law applies only to a situation where (1) there is no Collective Bargaining Agreement (CBA) or other applicable employment contract providing for retirement benefits for an employee, or (2) there is a CBA or other applicable employment contract providing for retirement benefits for an employee, but it is below the requirement set by law. (Grace Christian High School v. Lavandera, G.R. No. 177845, 20 August 2014).

Clearly, the determining factor in choosing which retirement scheme to apply is still superiority in terms of benefits provided. (Elegir v. Philippine Airlines Inc., G.R. 181995, 16 July 2012). In other words, the retirement pay under the Labor Code is simply the minimum benefit to which a retiree is legally entitled and will not apply if there are higher benefits provided under the CBA, employment contract, or existing company policies or practices.

The phrase “one-half (1/2) month salary” means 22.5 days: 15 days plus 2.5 days representing one-twelfth (1/12) of the 13th month pay, and the remaining five days for service incentive leave. (Elegir v. Philippine Airlines Inc.).

It is not uncommon that companies offer early retirement benefits to their employees. While such offer may be acceptable to some employees, it may not be financially feasible for others who still need to earn for themselves and their families. Thus, jurisprudence requires that for early retirement programs to be valid, acceptance by the employees of an early retirement age option must be explicit, voluntary, free, and uncompelled. (Robina Farms Cebu v. Villa, G.R. 175869, 18 April 2016).

For more of Dean Nilo Divina’s legal tidbits, please visit For comments and questions, please send an email to