Exemptions
- National government employees and those under Civil Service Law.
- Domestic helpers and personal service workers.
- Employees in retail, service, or agricultural establishments with 10 or fewer employees.
- Definitions:
- Retail establishment: Primarily selling to end-users for personal/household use; loses exemption if also engaged in wholesale.
- Service establishment: Primarily selling services for personal/household use.
- Agricultural establishment: Farming activities excluding manufacturing/processing of certain farm products.
Retirement under Collective Bargaining Agreement (CBA) or Contract
- Employees may retire at retirement age set by CBA or employment contract.
- Retirement benefits earned under law or agreements, with benefits under CBA not less than the Rule.
- Employer must pay any difference if CBA benefits are less than those under the Rule.
- Employer’s contribution to retirement fund must not be less than benefits due; deficiency must be paid by employer.
Optional and Compulsory Retirement
- Optional retirement at age 60 with at least 5 years of service if no plan/agreement exists.
- Compulsory retirement at age 65 under the same conditions.
- Services may continue post-retirement by mutual agreement.
- Authorized absences, holidays, military/civic duty count toward service years.
Retirement Benefits
- Minimum retirement pay: at least half-month salary per year of service, fractions of 6 months considered whole year.
- Half-month salary includes:
- 15 days salary based on latest rate, including all regular remunerations excluding COLA, profit-sharing, non-regular benefits.
- Cash equivalent of 5 days service incentive leave.
- One-twelfth of the 13th month pay.
- Other mutually agreed benefits.
- For employees paid by results: average daily salary over last 12 months used for computation.
Tax Exemption for Retirement Pay
- Retirement benefits may be tax-exempt if:
- Plan is approved by BIR.
- Employee served employer at least 10 years and is at least 50 years old at retirement.
- Employee hasn’t previously availed of similar benefits from same/other employer.
Penal Provision
- Circumventing or rendering ineffective the Act is punishable under Article 288 of the Labor Code.
Relation to Agreements and Regulations
- Employers cannot reduce or withdraw benefits guaranteed by law or agreements.
- Conflicting rules or orders are repealed or modified accordingly.
Effectivity
- Rule took effect January 7, 1993, concurrent with the Act’s effectivity.