• Retrenched employees can collect retirement benefits, separation pay

    Persida Acosta

    Persida Acosta

    Dear PAO,
    I have been employed for approximately 24 years. Unfortunately, I was informed by my company that a retrenchment program will soon be implemented and I am one of those who will be included in the retrenchment program. Upon clarification with the Human Resource Department I was also informed that I am not entitled to retirement benefits and separation pay despite the number of years of my service and my eligibility. I want to know I,f indeed, I am not entitled to both retirement benefits and separation pay.

    Sincerely yours,

    Dear Patricio,
    Please be informed that Article 287 of the Labor Code governs retirement benefits of employees, to wit:

    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 therein.

    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 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 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.

    Unless the parties provide for broader inclusions, the term one-half (1/2) month salary shall mean fifteen (15) days plus one-twelfth (1/12) of the 13th month pay and the cash equivalent of not more than five (5) days of service incentive leaves.

    Retail, service and agricultural establishments or operations employing not more than ten (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 under Article 288 of the Labor Code.

    Therefore, if all of the abovementioned requirements are present, you are entitled to receive the retirement benefits granted by law or by the collective bargaining agreement.

    Further, as enunciated by the Honorable Supreme Court in the case of Good Year Philippines, Inc. vs. Marina L. Angus (G.R. No. 185449, 12 November 2014) an employee is entitled to the payment of separation pay aside from the retirement pay due him or her:

    In the absence of an express or implied prohibition against it, collection of both retirement benefits and separation pay upon severance from employment is allowed. This is grounded on the social justice policy that doubts should always be resolved in favor of labor rights.

    Hence, the receipt of separation pay due to retrenchment shall not bar your claim for retirement benefits if all of the requirements provided for by the law are present.

    Again, we find it necessary to mention that this opinion is solely based on the facts you have narrated and our appreciation of the same. The opinion may vary when the facts are changed or elaborated.

    We hope that we were able to enlighten you on the matter.

    Editor’s note: Dear PAO is a daily column of the Public Attorney’s Office. Questions for Chief Acosta may be sent to dearpao@manilatimes.net


    Please follow our commenting guidelines.

    Comments are closed.