Retirement Pay: Meaning Under the Labor Code

In Article 302, which was Article 287 before the 2015 renumbering. The current text comes from Republic Act No. 10757 (2016). Its core rule says:

More than 15 days. Article 302 says that, unless the parties provide for broader inclusions, it means:

• 15 days, plus
• 1/12 of the 13th month pay, plus
• the cash equivalent of not more than 5 days of service incentive leave.

In De La Salle Araneta University v. Bernardo (2017), the Supreme Court listed three requisites: the employee has reached 60 for optional retirement or 65 for compulsory retirement; the employee has served at least five years in the establishment; and there is no retirement plan or other agreement providing for retirement benefits. In that case, a part-time lecturer qualified.

Other rules in Article 302:

• Company plans. An employer may have its own retirement plan or agreement, but the benefits under it may not be less than those in Article 302. In United Doctors Medical Center v. Bernadas (2017), the Court said the article allows employers and employees to agree on an early retirement age option.
• Mine workers. Underground and surface mine workers may retire from 50, with 60 as their compulsory retirement age, after at least five years as mine workers. For surface mines, the article covers only mill plant workers and electrical, mechanical and tailings pond personnel.
• Exempt employers. Retail, service and agricultural establishments or operations employing not more than ten employees or workers.

Money claims arising from employment must be filed within three years from the time the cause of action accrued, under [Article 306 [291]](/law/labor-code/article-306). In De La Salle Araneta University, the Court held that the claim for retirement benefits accrued only when the employer refused to pay them. See Labor money claims: how long do you have?

• Not the SSS pension. Article 302 says nothing in it deprives an employee of benefits under the Social Security Act and other laws or company practices. See the SSS retirement pension guide.
• Not [separation pay](/law/glossary/separation-pay). Separation pay is due when the job ends for an authorized cause such as redundancy or closure.

Made-up illustration: Ernesto is 62 and has worked 9 years and 8 months as a warehouse helper for a Cebu City distributor with 40 workers and no retirement plan. He decides to retire. The 8 months count as one whole year, so his minimum retirement pay is one-half month salary, as defined in Article 302, for each of 10 years of service. For the full explanation, see Retirement pay in the Philippines.