QuestionsQuestions (Republic Act No. 7641)
RA 7641 amends Article 287 of Presidential Decree No. 442 (the Labor Code of the Philippines). The amendment focuses on retirement benefits for private sector employees, particularly where there is no retirement plan or agreement in the establishment.
An employee may be retired upon reaching the retirement age established in the collective bargaining agreement (CBA) or other applicable employment contract.
The employee is entitled to retirement benefits they have earned under existing laws, the CBA, and other agreements. However, retirement benefits under any CBA and other agreements must not be less than those provided in Article 287 as amended.
In the absence of a retirement plan or agreement providing retirement benefits, an employee who reaches at least age 60 but not beyond 65 (compulsory retirement age), and who has served at least five (5) years in the establishment, may retire and is entitled to minimum retirement pay under the law.
The employee must be at least 60 years old but not beyond 65 (inclusive), and must have served at least five (5) years in the same establishment.
At least one-half (1/2) month salary for every year of service, with a fraction of at least six (6) months considered as one whole year.
Any fraction of at least six (6) months is counted as one whole year in the computation of retirement pay.
It means 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.
The computation includes: (1) fifteen (15) days, (2) one-twelfth (1/12) of the 13th month pay, and (3) the cash equivalent of not more than five (5) days of service incentive leaves.
No. The law states that retirement benefits under any CBA and other agreements shall not be less than those provided in Article 287.
No. Section 2 provides that nothing in the Act shall deprive any employee of benefits to which they may be entitled under existing laws or company policies or practices.
Retail, service, and agricultural establishments or operations employing not more than ten (10) employees or workers are exempted.
Violation is declared unlawful and subject to the penal provisions under Article 288 of the Labor Code.
Retirement under the absence-of-plan rule applies to employees who reach age 60 years or more but not beyond 65 years, which is declared the compulsory retirement age.
It means the enumerated components of “one-half month salary” are the default/limited inclusions; parties may agree to broader inclusions in their CBA, contract, or other arrangements, provided they are more favorable.
The Act takes effect fifteen (15) days after its complete publication in the Official Gazette or in at least two (2) national newspapers of general circulation, whichever comes earlier.