How much can a worker get as retirement pay?

AMOUNT & COMPONENTS OF RETIREMENT PAY

Under the Superiority of Benefits Rule, Article 287 does not control. What controls is the retirement plan in the CBA or employment contract.

At the outset, it must be underscored that once an employee retires, it is not Article 287 that is controlling but the retirement plan under the CBA or other applicable employment contract. Article 287 becomes relevant only in the matter of ensuring that the retirement benefits are not less than those provided therein.

When does Article 287 apply?

Article 287 only applies in a situation where: (1) there is no CBA or other applicable employment contract providing for retirement benefits for an employee; or (2) there is a CBA or other applicable employment contract providing for retirement benefits for an employee, but it is below the requirements set by law.

The reason for the first situation is to prevent the absurd situation where an employee, who is otherwise deserving, is denied retirement benefits by the nefarious scheme of employers in not providing for retirement benefits for their employees. The reason for the second situation is expressed in the Latin maxim pacta privata juri publico derogare non possunt. Private contracts cannot derogate from the public law.
One-half (1/2) month salary

In the absence of a retirement plan or agreement providing for retirement benefits of employees in the establishment, an employee, upon reaching the optional or compulsory retirement age specified in Article 287, shall be entitled to retirement pay equivalent to at least one-half (1/2) month salary for every year of service, a fraction of at least six (6) months being considered as one (1) whole year.

Components of one-half (1/2) month salary

For purposes of determining the minimum retirement pay due an employee under Article 287, the term “one-half month salary” shall include all of the following:

[1] Fifteen (15) days salary of the employee based on his latest salary rate. The term “salary” includes all remunerations paid by an employer to his employees for services rendered during normal working days and hours, whether such payments are fixed or ascertained on a time, task, piece or commission basis, or other method of calculating the same, and includes the fair and reasonable value, as determined by the DOLE Secretary, of food, lodging or other facilities customarily furnished by the employer to his employees. The term does notinclude cost of living allowances, profit-sharing payments, and other monetary benefits which are not considered as part of or integrated into the regular salary of the employees;
[2] The cash equivalent of five (5) days of service incentive leave ;
[3] One-twelfth (1/12) of the 13th month pay due the employee; and
[4] All other benefits that the employer and employee may agree upon that should be included in the computation of the employee’s retirement pay.

Meaning of “one-half (1/2) month salary” (22.5 days)

To dispel any further confusion on the meaning of “one-half (1/2) month salary” provided in Article 287, the Supreme Court, in the case of Capitol Wireless, Inc. v. Confesor, (G.R. No. 117174, November 13, 1996, 264 SCRA 68, 77) , simplified its computation by declaring that it means the total of “22.5 days” arrived at after adding 15 days plus 2.5 days representing one-twelfth (1/12) of the 13th month pay plus 5 days of service incentive leave.

Evidently, the law expanded the concept of “one-half month salary” from the usual one-month salary divided by two.

RETIREMENT BENEFITS OF UNDERGROUND MINE WORKERS

The retirement benefits to which an underground mine worker is entitled shall be the retirement benefits provided under Article 287 of the Labor Code, as amended. The components of the retirement benefits consisting of one-half (1/2) month salary are the same as those prescribed in Article 287 as described above.

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