All employees regardless of their position, designation or status and irrespective of the method by which their wages are paid are entitled to retirement benefits provided under Republic Act No. 7641 upon compulsory retirement at the age of sixty-five (65) or upon optional retirement at sixty (60) or more but not 65.
This benefit does not apply to the following:
Government employees
Employees of retail, service and agricultural establishments or operations regularly employing not more than ten (10) employees
B. Amount of Retirement Pay
The minimum retirement pay due covered employees shall be equivalent to one-half month salary for every year of service, a fraction of at least six (6) months being considered as one whole year.
For the purpose of computing retirement pay, "one-half month salary" shall include all of the following:
15 days salary based on the latest salary rate
Cash equivalent of 5 days or service incentive leave (or vacation leave)
One-twelfth of the 13th month pay (where the 13th month pay is the total basic salary for the last twelve months of service divided by twelve)
Other benefits as may be agreed upon by employer and employee for inclusion.
To illustrate:
A = One half month Salary
B = Latest Salary Per Day
C = 13th Month Pay
D = Number of Years in Service
E = Minimum Retirement Pay
A = (15 x B) + (5 x B) + ( C / 12)
E = D x A
For covered workers who are paid by results and do not have a fixed monthly salary rate, the basis for the determination of the salary for fifteen days shall be their average daily salary (ADS). The ADS can be derived by dividing the total salary or earnings for the last twelve months reckoned from the date of retirement by the number of actual working days in that particular period, provided that the determination of rates of payment by results are in accordance with the regulations.
C. Retirement Under RA 7641
Compulsory
Where there is no retirement plan or applicable agreement providing for retirement benefits of employees in an establishment, an employee shall be retired upon reaching the age of sixty-five (65) years and shall be entitled to the retirement pay above described.
Optional
An employee below sixty-five (65) years of age may retire and shall be entitled to retirement pay under RA 7641 if: (a) there is no retirement plan or applicable agreement on retirement benefits in an establishment, (b) he has reached sixty years or more and (c) he has served for at least five (5) years in the said establishment.
D. Retirement Under the Collective Bargaining Agreement/Applicable Contract
Any employee may retire or be retired by his employer upon reaching the retirement age established in the CBA or other applicable agreement contract and shall receive the retirement benefits granted therin provided, however, that such retirement benefits shall not be less than the retirement pay required by RA 7641 and provided further that if such retirement benefits under the agreement are less, the employer shall pay the difference.
Where both the employer and the employee contribute to a retirement fund pursuant to the applicable agreement, the employer's total contributions and the accrued interest thereof should not be less than the total retirement benefits to which the employee would have been entitled had ther been no such retirement fund. If such total portion from the employer is less, the employer shall pay the deficiency.
E. Other Benefits Upon Retirement
The retirement benefits under RA 7641 are other than those granted by the Social Security System.
Upon optional or compulsory retirement, the employee is likewise entitled, under the law, to the proportionate 13th month pay for the calendar year and to the cash equivalent of leave benefits, if demandable.
