Labor - XIX - O. Retirement (LC 302)

1. Types of Retirement

2. Coverage/Eligibility - All employees, so long as they meet the requisites of LC 302 at the time of retirement. Regardless of their position, designation, or status, and irrespective of method of payment.(Brion v. South Phil)

3. Exemption - Traditionally, must meet both requisites in order to be exempted.

4. When Applicable (Universal Robina v. Caballeda) - Applicable when:

  1. There is no CBA or other applicable agreement OR
  2. There is one, but benefits are below the requirement set by law.

Retroactivity of RA 7641 - RA 7641 may be given retroactive effect so long as:

  1. Claimant for retirement benefits was still in the employ of the employer at the time the statue took effect
  2. Claimant had complied with the requirements for eligibility for such retirement benefits under the statute.

5. Components of 1/2 month pay/salary - 1/2 month salary for every year of service, a fraction of at-least (6) months being considered as a whole year.(Reyes v. NLRC)

6. Non-entitlement - Termination for Just Cause (Daabay v. Coca-Cola

7. Management Prerogative - Management prerogative to set the date of effectivity of the retirement, not necessarily the same one set in the application. Unless, done so in bad faith or with malice. (Magdadero v. PNB)

8. Exemption from Tax - Must go through the BIR. Generally, retirement pay is taxable.(Rule II Sec. 6 & Intl. Broadcasting Corp v. Amarilla)

9. Voluntary Retirement - Cannot be later overturned, unless constructive dismissal. (BOIE Takeda)

10. Gratuity Pay vis-a-vis Retirement Pay (Sta Catalina v. NLRC)

III. Social Security Legislation

A. Social Security Act of 1997 (8298)

B. Government Service Insurance Act of 1995 (RA 8291)

C. Employees Compensation and State Insurance Fund PD 442, as amended (Pelagio v. Philippine Transmarine Carriers)

D. Limited Portability Law, RA 7699

Compulsory and Contributory

Retirement by Agreement - Those set-up by agreement in a CBA or other agreements.

Voluntary Retirement

Express Voluntary - When the retirement is announced company policy.

Implied - When the company fails to contest the employee's claim for retirement benefits

Eligibility

  1. (60) years of age for optional retirement, 65 for compulsory.
  2. Employee has served at-least (5) years in the establishment
  3. No retirement plan or other applicable agreement providing for retirement benefits of employees in the establishment. (De La Salle Araneta Univ v. Bernardo)

Early Retirement - Acceptance of an early retirement age must be explicit, voluntary, free, and uncompelled. Absent this, an employment cannot be separated from service before the age of 65 (Laya v. Philippine Veterans Bank)

  1. Government Employees


  2. Retail Employees, service and agricultural establishment or operations regularly employing not less than (10) employees.

Retail - loses character if they engage in the wholesale sale.

Service - One principally engaged in the sale of service to individuals for their own or household use and is generally recognized as such.

Agricultural - employer engaged in agriculture

INCLUDES:

  1. 15 days salary based on latest salary rate
  2. Cash equivalent of SIL or Vacation Leave (5) days worth
  3. 1/12 of the 13th month pay
  4. Other benefits as may be agreed upon

EXEMPTS:

  1. COLA - Cost of Living Allowance
  2. Profit-Sharing payments
  3. Other monetary benefits not considered as part of the integrated regular salary of the employee

General Rule - Entitled to retirement pay.

Exemption - If the employee is dismissed for just cause under LC 297

Gratuity Pay - Paid purely out of generosity. Not intended for services rendered. Purpose is to reward employees who have rendered satisfactory service to the company.

Retirement Pay - Intended to help employee enjoy the remaining years of life, releasing burden of finances. Form of reward for loyalty to the employer.

Elements Must Concur to be Exempted

  1. Reasonable Private Benefit Plan is maintained by employer
  2. Retiring Employee has been in the service of the same employer for at-least 10 years
  3. Retiring official or employee is not less than (50) years old at the time of retirement
  4. Benefit has been availed of only once

HIGHER RETIREMENT - A retirement pay higher than that prescribed by law is demandable only when:

  1. It is granted by CBA or other contract
    OR
  2. It has ripened into company practice or policy

Disability Classification - If the company-designated physician still fails to give his assessment within the extended period of 240 days, then the seafarer’s disability becomes permanent and total, regardless of any justification

Clarification On Labor Code - LC 198 (120) day period on permanent total disability
(240) day period in IRR of Labor Code.

The rule is company physician must issue a final medical assesment within the 120 day period. Failure to do so without any justifiable reason renders the disability permanent and total. If there is valid reason, no more than (240) days.

Seafarer - must be personally given the medical certificate OR via another means sanctioned by the RoC. (Gere v. NLRC)

Minimum Retirement Pay = Daily Rate x 22.5 days x number of years in service