RETIREMENT POLICY
Retirement benefits shall be granted in accordance with applicable laws or the Company’s retirement plan, whichever provides more favorable terms to the employee.
Coverage
This policy applies to all regular employees of the Company in accordance with Republic Act No. 7641 (Retirement Pay Law) and other applicable labor laws.
Retirement Age
- Optional Retirement
An employee may voluntarily retire upon reaching the age of sixty (60) years, provided that the employee has rendered at least five (5) years of continuous service with the Company.
- Compulsory Retirement
An employee shall be compulsorily retired upon reaching the age of sixty-five (65) years, provided that the employee has rendered at least five (5) years of continuous service with the Company.
Retirement Benefits
In the absence of a company retirement plan or Collective Bargaining Agreement (CBA), eligible employees shall be entitled to retirement pay equivalent to twenty-two and one-half (22.5) days of pay for every year of service, consisting of:
- Fifteen (15) days basic salary,
- One-twelfth (1/12) of the 13th month pay, and
- Five (5) days of service incentive leave (SIL), if applicable.
- A fraction of at least six (6) months shall be considered as one (1) whole year for computation purposes.
Creditable Years of Service In computing retirement benefits, a fraction of at least six (6) months of service shall be considered as one (1) whole year. Any fraction of less than six (6) months shall not be counted.
Examples
- Employee service: 20 years and 6 months
- 6 months = 1 full year
- Credited service = 21 years
- Employee service: 20 years and 5 months
- Less than 6 months
- Credited service = 20 years only
- Employee service: 10 years and 11 months
- 11 months = 1 full year
- Credited service = 11 years
🟢 6 months or more = round UP to 1 year
🔴 Less than 6 months = do not count
Collective Bargaining Agreement (CBA) Provision
In cases where a Collective Bargaining Agreement exists, the terms of the CBA shall apply, provided that such terms are not less favorable than the provisions of law. For example, if the CBA provides a higher computation of retirement pay or additional benefits, those shall take precedence over this policy.
Service Computation
The length of service shall be computed from the employee’s first day of employment up to the effective date of retirement. Authorized absences, approved leaves, and holidays shall not reduce the length of service or retirement benefits.
Effectivity
This retirement policy shall take effect immediately and shall remain in force unless amended to provide more favorable benefits to employees, in accordance with law or an applicable CBA.
Retirement Pay Computation
- Computation Example
- Basic daily rate: ₱1,000
- Years of service: 20
- Calculation:
- (₱1,000 × 22.5) × 20 = ₱450,000 retirement pay
Breakdown of 22.5 Days
Each 22.5 days of pay consists of the following components:
| Component | Equivalent Days |
|---|---|
| Basic Salary | 15.0 Days |
| 1/12 of the 13th Month Pay | 2.5 Days |
| Service Incentive Leave (SIL) | 5.0 Days |
| Total Standard Multiplier | 22.5 Days |
Legal Note
- The computation above reflects the minimum retirement pay under RA 7641. The formula may be enhanced if provided by a Company retirement plan or a Collective Bargaining Agreement (CBA).
- If the employee is not entitled to SIL, the computation shall only include basic salary and 1/12 of the 13th month pay (17.5 days per year of service)**.
Attendance and Leaves
Authorized absences, approved leaves, and holidays shall not reduce the retirement pay calculation.
RESIGNATION vs. RETIREMENT PAY
Resignation Prior to Retirement Age
- An employee who voluntarily resigns from employment before reaching the optional retirement age of sixty (60) years shall not be entitled to retirement pay, regardless of length of service, unless otherwise provided by law, an applicable Company retirement plan, or a Collective Bargaining Agreement (CBA).
❌ Employees who resign prior to retirement age are not entitled to:
- Retirement pay
- Separation pay (unless applicable under law)
Benefits Due Upon Resignation
Employees who resign before retirement age shall be entitled only to:
- Final pay (last salary)
- Pro-rated 13th month pay
- Unused service incentive leave (if applicable)
- Other earned but unpaid benefits
Note
- Retirement pay becomes due only upon retirement, not resignation
- Employees with less than 5 years service are not entitled
- Compulsory retirement cannot be beyond 65
- Completion of five (5) years of service alone does not entitle an employee to retirement pay**.
Company Closure / Bankruptcy
In the event the Company permanently ceases operations or becomes insolvent, retirement pay shall no longer be automatically payable. Employees shall, however, be entitled to final pay, accrued benefits, and any statutory separation pay, subject to available assets and applicable laws.