Post-Employment: Art.

301-302
Krystel Merianne A. Engcoy
Suspension of Operations; “Floating
Status”
• A floating status requires the dire exigency of
the employer’s bona fide suspension of
operation, business or undertaking.
• When a “floating status” of an employee lasts
for more than 6 months, he may be considered
to have been illegally dismissed from the
service.
• In the case of security services, this happens when
the clients that do not renew their contracts with a
security agency are more than those that do and the
new ones that the agency gets.
Article301–WhenEmployment
NotDeemedTerminated
The bona-fide suspension of the
operation of a business or undertaking for a
period not exceeding six (6) months, or the
fulfillment by the employee of a military or
civic duty shall not terminate employment.
In all such cases, the employer shall
reinstate the employee to his former
position without loss of seniority rights if he
indicates his desire to resume his work not
later than one (1) month from the
resumption of operations of his employer or
from his relief from the military or civic duty.
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Article 302 –Retirement
Any employee may be retired upon reaching the
retirement age established in the collective bargaining
agreement or other applicable employment contract.
In case of retirement, the employee shall be entitled to
receive such retirement benefits as he may have
earned under existing laws and any collective
bargaining agreement and other agreements:
Provided, however, That an employee’s retirement
benefits under any collective bargaining and other
agreements shall not be less than those provided
herein.
In the absence of a retirement plan or agreement
providing for retirement benefits of employees in the
establishment, an employee upon reaching the age of
sixty (60) years or more, but not beyond sixty-five (65)
years which is hereby declared the compulsory
retirement age, who has served at least five (5) years
in the said establishment, may retire and 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.
Unless the parties provide for broader inclusions, the
term ‘one-half (1/2) month salary shall mean 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.
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Article 302 –Retirement
An underground or surface mining employee upon Violation of this provision is hereby declared unlawful
reaching the age of fifty (50) years or more, but not and subject to the penal provisions provided under
beyond sixty (60) years which is hereby declared the Article 303 of this Code.
compulsory retirement age for both underground and
Nothing in this Article shall deprive any employee of
surface mine workers, who has served at least five (5)
benefits to which he may be entitled under Section 12-
years as underground or surface mine worker may
B of Republic Act No. 1161, as amended, otherwise
retire and shall be entitled to all the retirement
known as the Social Security Act of 1997 and other
benefits provided for in this Article.
existing laws or company policies or practices.
For purposes of this Act, surface mine workers shall
only include mill plant workers, electrical, mechanical
and tailings pond personnel.
Retail, service and agricultural establishments or
operations employing not more than ten (10)
employees or workers are exempted from the
coverage of this provision.

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 PreviousLawsand Amendments
Llora Motors, Inc. vs Drilon, G.R. No. 82895,
November 7, 1989:
• Entitlement to retirement benefits may accrue either
a. under existing laws; b. under a collective bargaining
agreement or other employment contract.
R.A. No. 7641:
• In the absence of a retirement plan or agreement
providing for retirement benefits of employees in the
establishment, an employee upon reaching the age of
sixty (60) years or more, but not beyond sixty-five
(65) years which is hereby declared the compulsory
retirement age, who has served at least five (5) years
in the said establishment, may retire and 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.

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 Retirement
• A withdrawal from office, public station,
business, occupation, or public duty.
• It is the result of a bilateral act of the
parties, a voluntary agreement between
the employer and the employee whereby
the latter, after reaching a certain age,
agrees and/or consents to sever his
employment with the former.
• Retirement pay applies to private sector
employees either full-time or part-time
employees, regular or non-regular.
• Exception: Retail, service and agricultural
establishments or operations employing
not more than ten (10) employees or
workers are exempted from the coverage
of retirement benefits

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 Amountof RetirementPay

The retirement pay is equal to half-month’s

pay per year of service – expanded.
• 15 days plus 1/12 of the 13th month pay and the cash
value of five day service incentive leave = 22.5 days
• Multiplied by the retiree’s years of employment; a
fraction of six months considered one year
• For workers who are paid by results & no fixed
monthly rate:
ADS = x/ 12 months, ADS x 15 days
• The basis of computation should be the CBA between
the parties where such CBA or the company’s
retirement plan provides for retirement benefit
greater than that under the Labor Code.

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Two Kinds of Retirement
Compulsory
• Takes place at age 65 provided employee has served
at least five years in the establishment concerned.
• R.A. 8558: An underground or surface mining
employee upon reaching the age of fifty (50) years or
more, but not beyond sixty (60) years which is hereby
declared the compulsory retirement age for both
underground and surface mine workers, who has
served at least five (5) years as underground or
surface mine worker may retire and shall be entitled
to all the retirement benefits provided for in this
Article.
Optional
• Determined by the CBA or other employment
contract or employer’s retirement plan.
• Employees Option.
• In the absence of any provision on optional retirement in
a collective bargaining agreement, other employment
contract, or employer’s retirement plan, an employee
may optionally retire upon reaching the age of 60 years
or more but not beyond 65 years, provided he has served
at least 5 years in the establishment concerned.
• Employer’s Option
• Where the CBA itself gives the option to retire to either
the employer or employee such provision is valid and the
employer’s act of retiring an employee who is retriable
age as defined in the CBA is a valid exercise of the option.
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 SourcesandConditions

1. Labor Code (Art. 302)

1. Retirement Age
2. Service of at least 5 years in the
establishment
• Applicable to both optional and
compulsory requirement.
• Because retirement ends employment, the
employer cannot demand continuing
service from the retiree as a condition to
the receipt and enjoyment of retirement
benefit.
2. Collective Bargaining Agreement
3. Employee’s Contract
4. Employer’s Retirement Plan
• Employee’s Assent
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 Retroactivity

Oro Enterprises, Inc. vs NLRC, G.R. No

110861, November 14, 1994

1. The claimant for retirement benefits was

still the employee of the employer at the
time the statute took effect.
2. The claimant was in compliance with the
requirements for eligibility under the
statute for such retirement benefits.

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Retirement Benefit v. Gratuity Pay
Retirement Benefit
• Retirement benefits are intended to help the
employee enjoy the remaining years of his life,
releasing him from the burden of worrying for his
financial support and are a form of reward for his
loyalty to the employer.
Gratuity Pay
• Gratuity pay is paid to the beneficiary for the past
services or favour rendered purely out of the
generosity of the giver or grantor.
• It is a money benefit or bounty given to the worker,
the purpose of which is to reward the employees who
have rendered satisfactory service to the company.
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Retirement Benefit v. Separation Pay
Retirement Benefit
• Retirement Benefits where not mandated by law may
be granted by agreement of the employees and their
employer or as a voluntary act on the part of the
employer.
Separation Pay
• Separation Pay is required in the cases enumerated in
Articles 298 and 299 of the Labor Code which include
retrenchment and is computed at least one month
salary or at the rate of one-half month salary for every
year of service, whichever is higher.
• It is held that it is a statutory right designed to
provide the employee with the wherewithal during
the period that he is looking for another employment.
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Company Policy or CBA May Make Separation Pay and Retirement Benefit Mutually
Exclusive ( Salomon, et al. vs Association of International Shipping Lines,Inc., G.R. No 156317, April
26, 2005)

Facts: Petitioner Employees contend that the CA erred in holding that they are not entitled to retirement benefits.
Petitioners invoke Secs. 1 and 3 of the parties CBA expressly providing that retirement benefits may be granted to
them in addition to their separation pay. They likewise call attention to Aquino vs. NLRC holding that payment of
separation benefit does not exclude payment of retirement benefits.
For its part, respondent employer maintains that the parties’ CBA expressly prohibits the payment of
retirement benefits to employees terminated for a cause, thus, petitioner’s reliance on Aquino vs. NLRC is misplaced.
Moreover, they executed valid quitclaims.

Ruling: While it is axiomatic that retirement laws are liberally construed in favor of the persons intended to be
benefited, however, such interpretation cannot be made in this case in light of the clear lack of consensual and
statutory basis of the grant of retirement benefits to petitioner.

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Separation Disguised as Retirement (S.Villenavs. NLRC and BLTB Co., G.R. No. 90664,
February 7, 1991)
Facts: Mr. Villena started working with BLTB Co., as a bus conductor when he was only 25 years old. He rose from the
rranks until he became traffic operations manager in 1987 at the age of 57, directing the traffic operations with three
traffic supervisors under him.
On April 30, 1987 he received the shock of his life when a letter was handed to him by a company official
advising that he was compulsorily retired from the service effective immediately.

Ruling: Why Villena was singled out for compulsory retirement when he was only 57 years old and after having served
32 years in the company has not been explained. While the purpose was allegedly to carry out a retrenchment
program to cut losses, the legal procedure for the retrenchment of personnel was not followed. It appears therefore,
that the so-called “compulsory retirement” was a scheme employed by the company to terminate Villena’s
employment without complying with due process requirements of the law and without regard for his right to security
of tenure.
The “compulsory retirement” of Villena was in effect a dismissal in violation of law. He still had a full three
years to serve the company when his employment was peremptorily terminated by his employer. Having been
illegally dismissed, he is entitled to receive full compensation for the remaining three years of his work life. Upon
reaching the age 60, he may be retired and shall be entitled to receive the normal retirement benefits.

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 Isitlegaltoretireunionmembers,
Extension of Service of Retireee therehirethematlowerpay?
• The matter of extension of service of such
employee or official is addressed to the sound
discretion of the employer. It is a privilege only The court decided that Article 100 does not
prohibit a union from offering and agreeing
the employer can grant. to reduce wages and benefits of the
employees. The diminution is decided
bilaterally with the union, not unilaterally by
Financial Assistance For an Uncovered the management.
Retiree
• Financial assistance based on “compassionate
justice” may be granted even to an employee who
was not dismissed but who had to retire without
being covered by the company’s retirement plan.

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 fin

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