Question & AnswerQ&A (BWC)
Rule II applies to all employees in the private sector regardless of position, designation, or wage payment method, except those specifically exempted in Section 2.
Exemptions include employees of the National Government and political subdivisions covered by Civil Service Law, domestic helpers and personal service persons, and employees of retail, service, and agricultural establishments regularly employing not more than ten employees.
Any employee may retire or be retired upon reaching the retirement age established in the collective bargaining agreement or other applicable employment contract, subject to payment of retirement benefits as per Section 5.
The employee is entitled to retirement pay equivalent to at least one-half (1/2) month salary for every year of service, with a fraction of at least six months considered as one whole year.
It includes 15 days salary based on the latest rate, the cash equivalent of 5 days service incentive leave, one-twelfth of the 13th month pay, and other agreed benefits excluding cost of living allowances and profit-sharing.
The employee must have served at least five (5) years in the establishment, including authorized absences, vacations, regular holidays, and mandatory military or civic duty.
An employee may optionally retire at the age of sixty (60) or more provided they have at least five (5) years of service in the establishment.
The compulsory retirement age is sixty-five (65) years.
Retirement benefits may be exempt from tax if the requirements set by the Bureau of Internal Revenue under Revenue Regulations No. 12-86 are met, including a private benefit plan approval, at least 10 years service with the same employer, and age not less than 50 at retirement.
It is unlawful to circumvent or render ineffective the provisions of the Act, and violations are subject to the penal provisions under Article 288 of the Labor Code of the Philippines.
No, nothing in this Rule justifies withdrawing or reducing benefits, supplements, or payments provided in existing laws, individual or collective agreements, or employment practices.
The retirement pay basis is their average daily salary (ADS) for the last 12 months reckoned from retirement, divided by actual working days as per Rule VII-A, Book III of Labor Code Implementing Rules.