Turning 60 does not automatically mean you have to retire. Philippine labor law sets rules on retirement age, employee consent, and retirement benefits.
Employees in the Philippines may have the option to retire at 60, but reaching that age does not automatically give employers the right to force them out of their jobs.
Under Article 302 of the Labor Code, formerly Article 287, the default retirement ages for private-sector employees are 60 for optional retirement and 65 for compulsory retirement, in the absence of an applicable retirement plan or agreement providing otherwise. The law also allows employers and employees to agree on a different retirement age, subject to legal requirements.
Can an employer force an employee to retire at 60?
The Supreme Court has ruled that an employer cannot simply impose an earlier retirement age without the employee’s valid consent.
In Pulong v. Super Manufacturing Inc., decided on October 14, 2019, the Court ruled in favor of an employee who was retired at 60 under a memorandum of agreement that had not been shown to have his voluntary consent.
The Court explained that an early retirement plan must be voluntarily accepted by employees. Consent must be explicit, free, voluntary, and uncompelled. An employer cannot make an early retirement arrangement binding merely by imposing it on workers.
What are the retirement age rules?
Under the general rule for private-sector employees:
Age 60 — Optional retirement: Employees may generally choose to retire upon reaching 60, provided they meet the applicable legal requirements.
Age 65 — Compulsory retirement: In the absence of an applicable agreement setting another valid retirement age, this is the default compulsory retirement age.
Earlier retirement age — Subject to agreement: A company may establish an earlier retirement age through a valid retirement plan, employment contract, or collective bargaining agreement, provided the arrangement complies with the law and the employee has validly consented.
What about retirement benefits?
The law generally provides retirement pay for covered employees who have served the same establishment for at least five years and retire at 60 or older, but not beyond 65, when no applicable retirement plan or agreement provides retirement benefits.
The statutory minimum is generally equivalent to one-half month’s salary for every year of service, with a fraction of at least six months counted as one whole year. The law sets specific rules for calculating this amount and provides exceptions to coverage, so an employee’s circumstances and applicable company plan should be checked.
What should employees do if they are asked to retire early?
Employees who are told to retire before the default compulsory retirement age should review their employment contract, company retirement plan, and any applicable collective bargaining agreement. They should also ask for the retirement terms in writing and seek guidance from the Department of Labor and Employment (DOLE) or a qualified labor lawyer if they believe the arrangement was imposed without valid consent.
The bottom line: Turning 60 does not automatically mean an employee must leave their job. While an earlier retirement age may be valid under a properly established agreement, employers cannot simply impose early retirement without meeting the applicable legal requirements.
This article is for general information and is not a substitute for legal advice.