Article 302 [287] of the Labor Code: Retirement
The number in brackets, [287], is the article's number before the 2015 renumbering of the Labor Code.
Status: Amended
Amended
This provision has been amended. The text below is the current version.
- Amended by: Republic Act No. 7641 (Earlier wording; Republic Act No. 10757 rewrote the whole article.)
- Amended by: Republic Act No. 8558 (Earlier wording; Republic Act No. 10757 rewrote the whole article.)
- Amended by: Republic Act No. 10757 (Wording as amended by this law.)
What does Article 302 [287] say?
Any employee may be retired upon reaching the retirement age established in the collective bargaining agreement or other applicable employment contract.
In case of retirement, the employee shall be entitled to receive such retirement benefits as he may have earned under existing laws and any collective bargaining agreement and other agreements: Provided, however, That an employee’s retirement benefits under any collective bargaining and other agreements shall not be less than those provided herein.
In the absence of a retirement plan or agreement providing for retirement benefits of employees in the establishment, an employee upon reaching the age of sixty (60) years or more, but not beyond sixty-five (65) years which is hereby declared the compulsory retirement age, who has served at least five (5) years in the said establishment, 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 (1) whole year.
Unless the parties provide for broader inclusions, the term ‘one-half (1/2) month salary shall mean fifteen (15) days plus one-twelfth (1/12) of the 13th month pay and the cash equivalent of not more than five (5) days of service incentive leaves.
An underground or surface mining employee upon reaching the age of fifty (50) years or more, but not beyond sixty (60) years which is hereby declared the compulsory retirement age for both underground and surface mine workers, who has served at least five (5) years as underground or surface mine worker may retire and shall be entitled to all the retirement benefits provided for in this Article.
For purposes of this Act, surface mine workers shall only include mill plant workers, electrical, mechanical and tailings pond personnel.
Retail, service and agricultural establishments or operations employing not more than ten (10) employees or workers are exempted from the coverage of this provision.
Violation of this provision is hereby declared unlawful and subject to the penal provisions provided under Article 302 of this Code.
Nothing in this Article shall deprive any employee of benefits to which he may be entitled under Section 12-B of Republic Act No. 1161, as amended, otherwise known as the Social Security Act of 1997 and other existing laws or company policies or practices.
What does it mean in plain language?
Article 302 (Article 287 before the 2015 renumbering) sets the minimum retirement pay in the private sector. If the employer has no retirement plan or agreement, an employee who is 60 to 65 years old and has served at least five years in the establishment may retire and receive at least one-half month salary for every year of service. Small retail, service and agricultural businesses with not more than ten workers are exempt.
The text on this page is Article 302 as rewritten by Republic Act No. 10757 (2016), which added surface mine workers. Earlier wordings came from Republic Act No. 7641 (1992) and Republic Act No. 8558 (1998).
How does it work in real life?
Jun: a hardware store with 25 workers
Jun is 62 and has worked 7 years at a hardware store with 25 workers. The store has no retirement plan. He meets the age and five-year requirements, and the store is not exempt, so he may retire and receive at least one-half month salary for each of his 7 years of service.
Rey: a mill plant worker
Rey is 51 and has worked 6 years in the mill plant of a surface mine. Mill plant workers count as surface mine workers under the RA 10757 wording, so he may retire with the benefits of Article 302.
Nora: a small store
Nora is 63 and has worked 9 years at a sari-sari store with three workers. A retail establishment with not more than ten workers is exempt from Article 302, so this statutory retirement pay does not apply to her employer. Her SSS benefits are a separate matter.
What does this mean in practice?
- Retirement pay is a money claim. In De La Salle Araneta University, the Supreme Court held that the claim accrued only when the employer refused to pay it, and the claim filed after that refusal was within the three-year period for money claims ([Article 306 [291]](/law/labor-code/article-306)).
- A company retirement plan may give more than Article 302, never less.
- Retirement pay is different from separation pay for authorized causes ([Article 298 [283]](/law/labor-code/article-298)).
Who can retire under Article 302?
The core rule is the third paragraph:
In the absence of a retirement plan or agreement providing for retirement benefits of employees in the establishment, an employee upon reaching the age of sixty (60) years or more, but not beyond sixty-five (65) years which is hereby declared the compulsory retirement age, who has served at least five (5) years in the said establishment, 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 (1) whole year.
In De La Salle Araneta University v. Bernardo (2017), the Supreme Court listed three requisites for this statutory retirement pay: 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 retirement benefits in the establishment. In that case, a part-time lecturer qualified.
What does "one-half month salary" mean?
The fourth paragraph defines it:
| Part | What the article says |
|---|---|
| Basic part | 15 days of salary |
| 13th month part | 1/12 of the 13th month pay |
| Leave part | The cash equivalent of not more than 5 days of service incentive leave |
The parties may agree to include more. As an illustration only: for an employee whose 13th month pay equals one month of salary, and counting a month as 30 days, 1/12 of the 13th month pay is 2.5 days of salary, so one-half month salary works out to about 22.5 days of salary per year of service. The article itself states the three parts, not this total. For the 13th month pay, see the 13th month pay guide.
What about retirement plans and early retirement?
The first two paragraphs let the parties set their own terms, with a floor:
Any employee may be retired upon reaching the retirement age established in the collective bargaining agreement or other applicable employment contract.
The employee is entitled to the retirement benefits earned under existing laws and any collective bargaining or other agreement, but benefits under such agreements "shall not be less than those provided herein." In United Doctors Medical Center v. Bernadas (2017), the Supreme Court said Article 302 [287] "allows employers and employees to mutually establish an early retirement age option."
What are the rules for mine workers?
Republic Act No. 10757 added these paragraphs:
An underground or surface mining employee upon reaching the age of fifty (50) years or more, but not beyond sixty (60) years which is hereby declared the compulsory retirement age for both underground and surface mine workers, who has served at least five (5) years as underground or surface mine worker may retire and shall be entitled to all the retirement benefits provided for in this Article.
For purposes of this Act, surface mine workers shall only include mill plant workers, electrical, mechanical and tailings pond personnel.
Who is exempt?
Retail, service and agricultural establishments or operations employing not more than ten (10) employees or workers are exempted from the coverage of this provision.
Is this the same as the SSS pension?
No. Retirement pay under Article 302 is owed by the employer. The SSS retirement pension is a separate benefit under the Social Security Act. The last paragraph of Article 302 says nothing in it shall deprive an employee of benefits under Section 12-B of Republic Act No. 1161, as amended (the Social Security Act of 1997), and other laws or company policies or practices. See the SSS retirement pension guide and the SSS pension calculator.
Frequently asked questions
At what age can I retire under the Labor Code?
Without a retirement plan or agreement, an employee may retire at 60 or older, and 65 is the compulsory retirement age. Underground and surface mine workers may retire from 50, and 60 is their compulsory retirement age.
How much is retirement pay under Article 302 [287]?
At least one-half month salary for every year of service, a fraction of at least six months counting as one whole year. Unless the parties agree to more, one-half month salary means 15 days plus 1/12 of the 13th month pay and the cash equivalent of not more than 5 days of service incentive leave.
How many years must I have worked to get retirement pay?
At least five years in the same establishment. Mine workers need at least five years as underground or surface mine workers.
Who is not covered by retirement pay under Article 302?
Retail, service and agricultural establishments or operations employing not more than ten employees or workers are exempted. A company with its own retirement plan or agreement pays under that plan, but the benefits may not be less than those in Article 302.
Is Labor Code retirement pay the same as the SSS pension?
No. Retirement pay under Article 302 is paid by the employer. The SSS retirement pension is a separate benefit under the Social Security Act, and Article 302 says nothing in it deprives an employee of SSS benefits.
General information, not legal advice. For your case, ask a lawyer, the Public Attorney's Office (PAO) or the agency.
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