Retirement Benefits of Employees in the Philippines


In the absence of a retirement plan or agreement providing for retirement benefits of employees, an employee upon reaching the age of sixty (60) years (optional) or more, but not beyond sixty-five (65) years (mandatory) which is 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 (1) whole year.

Under the Labor Code of the Philippines, 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.

Thus, the minimum retirement pay is one-half (1/2) month salary for every year of service, a fraction of six (6) months being considered as one (1) whole year. "1/2 month salary" shall include all of the following:

1. 15 days salary based on the latest salary rate

2. Cash equivalent of 5 days service incentive leave

3. 1/12 of the thirteenth month pay (1/12 x 365/12 = 2.53)

This article does not constitute and is not intended to be legal advice. If you have any question or need any legal assistance, please feel free to send us an email at roselle.jean@nonatolaw.com.


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