Question B.20, Labor Law, 2019 Bar Exam

Discuss the differences between compulsory and voluntary/optional retirement as well as the minimum benefits provided under the Labor Code for retiring employees of private establishments. (2.5%)

Suggested Answer:

Under the Labor Code, the age for compulsory retirement at 65 years, while the minimum age for optional retirement is set at 60 years.

The retirement pay shall be computed as follows:

Minimum Retirement Pay = Daily Rate x 22.5 days x number of years in service

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.

The term “one-half month salary” is equivalent to 22.5 days, as it consists of the following:

1. Fifteen (15) days salary based on the latest salary rate;

2. Cash equivalent of five (5) days of service incentive leave;

3. One-twelfth (1/12) of the thirteenth-month pay.                                                                                &...

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