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VIII. RETIREMENT - Coggle Diagram

- - - - D. ACCRUAL
        
        E. PRIVATE PLAN
        
        RB MUST BE GRANTED BY
        
        LAWS
        
        CBA
        
        CONTRACT
        Under Article 287 of the Labor Code, entitlement of employees to retirement benefits must be specifically granted under existing laws, a collective bargaining agreement or employment contract or an established employer policy.
        
        OBLIGATIONS NOT IMPOSED BY ART. 287
        ● As stressed in Llora Motors, Inc., Article 287 does not in itself purport to impose any obligation upon employers to set up a retirement scheme for their employees over and above that already established under existing laws, like the Social Security Act.
        
        ● Respondent is not asking for retirement benefits due him under the Social Security Law. He does not claim that there is a collective bargaining agreement or other applicable contract or an established company policy, granting him retirement benefits.
        
        ASYMMETRY IN SP FOR 1-YEAR WORKERS AN RB OF RETIREMENT AGED PEOPLE
        ● The asymmetry in the law in granting separation pay to employees who have served the company for at least one year but denying retirement benefits to those who have reached retirement age in the absence of agreements granting the same, is for the legislature to remedy
        
        RETIREMENT PLAN GOVERNS RB & SP
        The employees’ right to payment of retirement benefits and/or separation pay is governed by the Retirement Plan executed by the parties.
        (Cruz v. Philippine Global Communications, Inc.)
        
        RP MAY
        DISJUNCTIVELY PROVIDE FOR SP or RB
        IT it is clear that the right of the concerned employees to receive both retirement benefits and separation pay depends upon the provisions in the Retirement Plan.
        ● In this case, under the said plan, petitioners are not entitled to both separation pay and retirement benefits.
        ● Specifically, in Section 6(b), Article XI of the Retirement Plan states that petitioner “shall only be entitled to whichever is the greatest among them.”
        ● Here, respondents opted to pay petitioners’ separation benefits, as it is higher than what was provided in Article 283.
        (Cruz v. Philippine Global Communications, Inc.)
      - ONE-HALF MONTH SALARY INCLUDES:
        
        15-DAY SALARY-BASED ON LATEST RATE
        
        5- DAY SIL
        a. CASH
        
        1/12 OF 13TH-MONTH PAY
        
        OTHERS AGREED UPON BY ER-EE
        For the purpose of computing retirement pay, “one-half month salary” shall include all of the following: (Reyes v NLRC)
        1) 15 days salary based on the latest salary rate;
        2) Cash equivalent of 5 days of service incentive leave (or vacation leave);
        3) 1/12 of the 13th month pay;
        4) Other benefits as may be agreed upon by employer and employee for inclusion.
        
        NOT INCLUDED IN RB
        But, it shall not include the following:
        
        COLA
        
        PROFIT-SHARING PAYMENTS
        
        BENEFITS NOT INTEGRATED IN REGULAR SALARY
        1) cost of living allowance;
        2) profit-sharing payments; and
        3) other monetary benefits which are not considered as part of or integrated into the regular salary of the employees
        
        BENEFITS NOT ACTUALLY COMMISSION
        As correctly ruled by NLRC, the “overriding commissions” paid to him by Universal Robina Corp. could not have been ‘sales commissions’ in the same sense that Philippine Duplicators paid its salesmen sales commissions. Unit Managers are not salesmen; they do not effect any sale of article at all.
        Therefore, any commission which they receive is certainly not the basic salary which measures the standard amount of work of complainant as Unit Manager.
        Accordingly, the additional payments made to petitioner were not in fact sales commissions but rather partook of the nature of profit-sharing business.
        Petitioner filed for optional retirement upon reaching the age of 60. However, the basis in computing his retirement benefits is his latest salary rate of P10,919.22 as the commissions he received are in the form of profit-sharing payments specifically excluded by the foregoing rules. Insofar as what constitutes “basic salary,” the foregoing discussions equally apply to the computation of petitioner’s 13th month pay.
    - - LAW IS MINIMUM AND CAN BE EXCEEDED
        The law merely establishes the minimum retirement benefits as it recognizes that an employee may receive more under existing laws and any CBA or other agreements.
        (Capitol Wireless, Inc. v. Confesor)
        
        CBA EXPRESSLY DISALLOWING
        RB UPON RETRENCHMENT
        The Court found that the CBA between NSC and their employees explicitly disallows payment of retirement benefits in case of retrenchment, and that such retirement plan is a binding agreement, not being contrary to law, morals, good customs, public order or public policy and must, therefore, be upheld. Furthermore, under Artl. 283 of the Labor Code, she has been terminated for a just cause (retrenchment [but isn't that auth cause tho]).
        
        CBA DISJUNCTIVELY PROVIDES
        SEP PAY OR RB
        The SC held that the CBA showed that the petitioners, who were dismissed for just cause, are ONLY entitled to EITHER the separation pay (if they are terminated for cause, OR optional retirement benefits if they rendered at least 15 years of continuous services.
        Here, the petitioners were separated from service for cause. In keeping with the CBA, what the petitioners actually received was separation pay-- not retirement benefits.
  - - - EXCLUDED FROM RB WITHOUT RP
        
        ESTABLISHMENTS:
        a. RETAIL
        b. SERVICE
        c. AGRICULTURAL
        
        LESS THAN 10 EMPLOYEES
        Special Rules
        SPC: Retail, service and agricultural establishments or operations employing not more than ten (10) employees or workers are exempted from the coverage of this provision.
        
        BOTH ER & EE CONTRIBUTE
        
        BOTH ER & EE CONTRIBUTE TO RP:
        
        ER'S CONTRIBUTION CANNOT BE LESS THAN TERMINATION PAY (w/o RF)
        
        IF LESS, ER PAYS DEFICIENCY
        Where both the employer and the employee contribute to the retirement plan (B6, R1, S14(b), IRR)
        
        TRIG: Where both the employer and the employee contribute to the retirement plan, agreement or policy,
        ● EFF: the employer’s total contribution thereto shall not be less than the total termination pay to which the employee would have been entitled had there been no such retirement fund.
        ○ TRIG: In case the employer’s contribution is less than the termination pay the employee is entitled to receive,
        ■ EFF: the employer shall pay the deficiency upon the retirement of the employee.
        
        PRIVATE RETIREMENT PLANS/BENEFITS:
        PRP NOT APPLICABLE GOV'T WORKERS
        For Private Retirement Plans/Benefits RA 4917 (note that this is only applicable for PRIVATE industry and NOT government workers)
        
        HOME DEVELOPMENT MUTUAL FUND
        20-YEAR MEMBERSHIP
        EXCEPT WHEN
        
        RETIREMENT
        
        DISABILITY
        
        INSANITY
        
        DEATH
        
        DEPARTURE FROM COUNTRY
        
        OTHER CAUSES BY BOARD OF TRUSTEES
        Retirement Vis-a-vis Membership In The Home Development Mutual Fund (RA 7742, sec 6)
        
        SPC: Membership in the Fund shall be for a period of 20 years, except when earlier terminated by reason of retirement, disability, insanity, death, departure from the country or other causes as may be provided for by the Board of Trustees:
        
        3 KINDS OF RETIREMENT SCHEMES (CAV)
        
        COMPULSORY & CONTRIBUTORY IN CHARACTER
        
        AGREEMENT BETWEEN ER-EE
        a. (CBA OR ANY OTHER AGREEMENT)
        
        VOLUNTARILY GIVEN BY ER
        a. EXPRESSLY (POLICY)
        b. IMPLIEDLY (FAILURE TO CONTEST BENEFITS CLAIM)
        Retirement schemes (Gerlach v Reuters Ltd. Phils.)
        There are three kinds of retirement schemes:
        1) Compulsory and contributory in character.
        2) Agreement between the employer and the employees in collective bargaining
        agreements or other agreements between them.
        3) Voluntarily given by the employer, expressly as in an announced company policy or
        impliedly as in a failure to contest the employee's claim for retirement benefits.
        
        2 more items...
        
        RETIREE MUST BE:
        
        10 YRS OF SERVICE MINIMUM
        
        50 YRS OLD OR MORE
        ● REQUISITES TO APPLY: That the retiring official or employee
        
        has been in service of the same employer for at least 10 years and
        
        is not less than 50 years of age at the time of his retirement.
        ● QLF: that in case of separation of an official or employee from the service of the employer due to death, sickness or other physical disability or for any cause beyond the control of the said official or employee, any amount received by him or by his heirs from the employer as a consequence of such separation shall likewise be exempt as hereinabove provided
        
        TAX EXEMPTION & NON-LEVY FOR PB
        ● “The retirement benefits received by officials and employees of private firms, whether individual or corporate, in accordance with a reasonable private benefit plan maintained by the employer shall be exempt from all taxes and shall not be liable to attachment, garnishment, levy or seizure by or under any legal or equitable process whatsoever ○
        
        1 more item...
        
        REASONABLE PRIVATE BENEFIT PLAN (RPBP):
        
        MAINTAINED BY ER
        
        BENEFIT OF SOME/ALL OFFICIALS or EMPLOYEES
        
        CONTRIBUTIONS MADE BY:
        a. BOTH ER OR EE OR BOTH
        
        PURPOSE OF DISTRIBUTING TO EEs
        
        EXCLUSIVELY FOR BENEFIT OF EEs
        ● DEF: As used in this Act, the term "reasonable private benefit plan" means a pension, gratuity, stock bonus or profit sharing plan maintained by an employer for the benefit of some or all of his officials and employees, wherein contributions are made by such employer or officials and employees, or both, for the purpose of distributing to such officials and employees the earnings and principal of the fund thus accumulated, and wherein it is provided in said plan that at no time shall any part of the corpus or income of the fund be used for, or be diverted to, any purpose other than for the exclusive benefit of the said officials and employees.
        
        VIOLATION = PENALTY UNDER 288
        SPC: Violation of this provision is hereby declared unlawful and subject to the penal provisions under Article 288 of this Code.
        SPC: Nothing in this Article shall deprive any employee of benefits to which he may be entitled under existing laws or company policies or practices.
      - RETIREE MUST BE
        
        60 YRS OLD
        
        5 YRS AT LEAST OF SERVICE
        
        65 YRS IS COMPULSORY RETIREMENT AGE
        EFF: An employee reaching the age of 60 years old who has served at least 5 years in the establishment, may retire...and shall be entitled to retirement pay equivalent to at least ½ month salary for every year of service
        
        ● QLF: employees must be above 60 years of age but NOT beyond 65 years -- which the latter is the compulsory retirement age;
        ○ “In the absence of any collective bargaining agreement or other applicable agreement concerning terms and conditions of employment which provides for retirement at an older age, an employee may be retired upon reaching the age of 60 years.” (B6, R1, S13, IRR)
        ● SPC: A fraction of at least 6 months is considered as one whole year
        
        EFFECT: RP OF 1/2 SALARY
        PER YEAR OF SERVICE
        
        "1/2 MONTH SALARY" IS:
        
        15 DAYS
        
        1/12TH OF 13TH MONTH PAY
        
        5 SIL (CASH)
        ● QLF: The term “½ month salary” shall mean 15 days + 1/12th of the 13th month pay and the cash equivalent of not more than 5 service incentives leaves
        
        MORE CAN BE GIVEN BY AGREEMENT
        ○ EXC: Unless the parties provide for broader inclusion
      - FOR UNDERGROUND MINING EMPLOYEE
        
        50 YEARS
        
        5 YEARS AT LEAST OF SERVICE
        
        60 YRS IS COMPULSORY FOR UNDERGROUND MINE WORKERS
        SPC: underground mining employee upon reaching the age of 50 years or more who has served at least 5 years as underground mine worker may retire and shall be entitled to all the retirement benefits provided for in this article
        QLF: 60 years of age is the compulsory retirement age for underground mine workers
    - - CANT BE LESS THAN IN CBA/AGREEMENT
        QLF: An employee’s retirement benefits under any CBA and other agreements shall NOT be less than those provided herein
        
        GIVE WHICHEVER IS HIGHER BETWEEN
        
        ESTABLISHED RB or
        
        1/2-SALARY per YEAR OF SERVICE
        a. FRACTION OF AT LEAST 6 Mos = 1YR
        “An employee who is retired pursuant to a bona-fide retirement plan or in accordance with the applicable individual or collective bargaining agreement or established employer policy shall be entitled to all the retirement benefits provided therein OR to termination pay equivalent to at least ½ month salary for every year of service, whichever is higher, a fraction of at least 6 months being considered as one whole year. (B6, R1, S14(a), IRR)
  - - - CONSULTANT OPTION
        ■ Even if the employee does not want to retire, the employer must pay the retirement pay
        ■ They can still work past 65, but normally they are engaged as consultants-- and are considered retired by the SSS
        
        START RETIREMENT FUND BY
        ANNUAL BUDGET
        ● Practical Advice: Good practice is to start a retirement fund for employees ASAP by allocating an annual budget for it
      - 22.5 DAYS FOR RETIREMENT PAY
        ● Computation
        ○ The SC has become creative with their computation of retirement pay. In several cases, the Court mentioned that it is equivalent to 22.5 days (not 13-15) for retirement pay only; not separation pay.