Forced Early Retirement: Philippine HR and Labor

Can management, pursuant to a stipulation in a Collective Bargaining Agreement (CBA), retire an employee who has not yet reached the minimum compulsory retirement age under the Labor Code?

Yes.

Retirement, as a specie of termination of employment, is different from dismissal for just or authorized causes under Articles 282 and 283 of the Labor Code. Retirement, governed by Article 287 of the Labor Code, is the result of a bilateral act of the parties, a voluntary agreement between the employer and the employee whereby the latter after reaching a certain age agrees and/or consents to sever his employment with the former.

By their acceptance of the CBA, the union and its members are obliged to abide by the commitments and limitations they had agreed to cede to management. Yet, retirement provisions agreed upon in the CBA are not absolutely beyond the ambit of judicial review and nullification. A CBA, as a labor contract, is not merely contractual in nature but impressed with public interest. If the retirement provisions in the CBA run contrary to law, public morals, or public policy, such provisions may very well be voided (for instance, a provision which allows the management to unilaterally “retire” employees after one month of service, or entitles the retiring employee to benefits less than what is guaranteed under the Labor Code.

On the other hand, a CBA may validly accord management the prerogative to optionally retire an employee under the terms and conditions mutually agreed upon by management and the bargaining union, even if such agreement allows for retirement at an age lower than the optional retirement age or the compulsory retirement age.

In the recent case of Cainta Catholic School vs. Cainta Catholic School Employees Union (G.R. No. 151021, 4 May 2006), the CBA between the school and the union provides that the school has the option to retire an employee upon reaching the age limit of 60 or after having rendered at least 20 years of service. In other words, the CBA provision validly allows the employee to be retired even before reaching the age of 60, provided that he/she had rendered 20 years of service. Twenty years is a more than ideal length of service an employee can render to one employer.

Atty.Fred

5 thoughts on “Forced Early Retirement: Philippine HR and Labor

  1. Avatarseanjames

    There are laws, so i think following the rules would be better. though i found this Philippine Retirement Website and i hope this could help… well i found it useful. there are lot of ways to be productive while being just comfortable and all…

    Reply
  2. AvatarCharles

    Living cheaper real estate investment in Philippines a retirement perspective of property income, taxes and Philippine investment prospects.

    Reply
  3. AvatarGrace A.

    Hi, our company is very young just about 3 years in operation and when they started, they hired one who is 57 years old. So this June she is turning 60 and based on our handbook, when one reaches 60, he must send a written request to the employer for an extension of another year, this can be done yearly until such time when one or both of them have decided not to continue. my question is, should the employer decide or opt not to grant an extension and considering that she has rendered only 3 years in service, would there be any violation on the part of the employer? here is a what is stated in our handbook;
    N. RETIREMENT

    An employee upon reaching the age of sixty (60) years and who has served at least five (5) years in the company, 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.

    Late retirement requires yearly consent from the employer; however, this does not extend beyond age 65.
    would the company be violating any law if we will not allow her to continue after she celebrates her 60th this June?

    Reply
    1. AvatarAnna Lea

      what if an employee reach his 60 years old last March 3,2017 and the company will not allow him to continue after he celebrate his 60th birthday last March 2017.is there any violation on the company . and the employee only works on that company for 3 years. upon offering him the retirement .the company will offer him to be a consultant. is there any violation?

      Reply
  4. AvatarLeonardo

    Hi. Our company offered an Early Retirement Program to all qualified employees. Being in the 50s and served the company for 22 years, I immediately applied so I can avail the additional 100% being offered under the program. Unfortunately, I was disapproved because according to the management I am indispensable. A month after, I filed for reconsideration of my original application after knowing that some Department Heads applications were granted. I wrote a letter to the management explaining to them my reasons why I am availing such retirement program.

    After series of follow ups and talking to my superiors, I was told to fill up another form and my application was finally approved. However, I was surprised to know that I could not get the 100% additional retirement for every year of service. I was again surprised to know that there were employees given additional 100% which is not supposedly entitled.

    There are inconsistencies in the decision making of our management with regards to the application of the retirement program which I felt being descriminated.

    Is the management decision for not granting me additional 100% equivalent salary for every year of service correct? Is the law allows to reduce the benefits despite that I only filed reconsideration of my original application? Does this made a difference when I asked to fill up a new form which is already beyond the application validity period?

    Thank you and looking forward for your kind reply.

    Reply

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