Retirement Pay Law Amendments, RA 7641

Article 287 provides that any employee may be retired upon reaching the retirement age established in the collective bargaining agreement or other applicable employment contract.
Upon retirement, the employee is entitled to retirement benefits he has earned under existing laws, the collective bargaining agreement, and other agreements.
Retirement benefits under collective bargaining and other agreements must not be less than the benefits provided under Article 287.
In the absence of a retirement plan or agreement providing for retirement benefits of employees in the establishment, an employee may retire and must receive retirement pay if the employee meets the following conditions:
- The employee reaches the age of sixty (60) years or more but not beyond sixty-five (65) years, which is declared the compulsory retirement age; and
- The employee has served at least five (5) years in the establishment.
The retirement pay in the absence of a retirement plan or agreement must be at least one-half (1/2) month salary for every year of service.
The computation rule requires that a fraction of at least six (6) months counts as one whole year.

Unless the parties provide for broader inclusions, “one-half (1/2) month salary” means:
- Fifteen (15) days; plus
- One-twelfth (1/12) of the 13th month pay; plus
- The cash equivalent of not more than five (5) days of service incentive leaves.

Retail, service, and agricultural establishments or operations employing not more than ten (10) employees or workers are exempted from the coverage of the provision on retirement pay in the absence of a retirement plan or agreement.

Violation of the retirement-pay provision in Article 287 is declared unlawful.
Unlawful violation is subject to the penal provisions provided under Article 288 of the Labor Code of the Philippines.

Republic Act No. 7641 provides that nothing in the Act deprives any employee of benefits to which the employee may be entitled under existing laws or company policies or practices.